Employee is entitled to full back wages if charges against him are found to be malicious

Supreme Court: The bench of L Nageswara Rao and MR Shah, JJ held that a man, by virtue of the disciplinary proceedings being dropped, the Appellant becomes entitled to claim full salary for the period from the date of his suspension till the date of closure of the departmental inquiry.

Factual Background

  • The Court was hearing the case of a Sorting Assistant in Railway Mail Service against whom disciplinary proceedings were initiated on the allegations of involvement in forged payments of high value money orders.
  • He was suspended on 23.10.1979 and an FIR under Sections 409, 420 and 467 IPC was filed.
  • The order of suspension was revoked on 21.10.1987 pursuant to which he joined duty and worked till 28.02.1997, when he was dismissed from service in view of his conviction under Section 409, 467 and 420 IPC. He was sentenced to imprisonment for three years.
  • His appeal against conviction was allowed and he was acquitted of the charges for offences under Section 409, 420 and 467 IPC.
  • He claimed that he should be entitled to full back wages from the date of the order of his acquittal i.e. 31.08.2001 till the date of his reinstatement i.e. 20.01.2003.

Ruling

After perusing various judgments, the Court said that the department would become liable for back wages in the event of a finding that the initiation of the criminal proceedings was mala fide or with vexatious intent. It, however, clarified:

“If an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a criminal Court, unless it is found that the prosecution is malicious.”

Noticing that it was the Appellant who was seeking postponement of the departmental inquiry in view of the pendency of criminal case and that the order of suspension was in contemplation of disciplinary proceedings, the Court said:

“the Respondents took four years to reinstate him by revoking his suspension. The order of suspension dated 23.10.1979 came to an end on 21.03.1983 which is the date on which disciplinary proceedings were dropped. The Appellant ought to have been reinstated immediately thereafter unless a fresh order was passed, placing him under suspension during the pendency of the criminal trial which did not happen.”

The Court, hence, held that the Appellant is entitled for full wages from 23.10.1979 to 21.10.1987 after adjustment of the amounts already paid towards subsistence allowance.

[Raj Narain v. Union of India, 2019 SCC OnLine SC 452, decided on 01.04.2019]

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