The Supreme Court of India upholds disciplinary removal, clarifies need for engagement with employee representations but with limited high court intervention
In the State of Rajasthan and Ors vs. Bhupendra Singh,1 on August 8, 2024, the Supreme Court of India ("Supreme Court") upheld the removal of an employee from service, clarifying that once the disciplinary authority accepts the findings of an inquiry officer, it need not provide elaborate reasons for the punishment. The Supreme Court emphasised that while disciplinary authorities should address employee representations when imposing major penalties, High Courts should only intervene in disciplinary decisions if the findings are based on no evidence or are clearly perverse. The Supreme Court found that the Rajasthan High Court's decision to overturn the removal order was unsustainable, as it improperly reappraised evidence. Consequently, the Supreme Court restored the removal order but ruled that the employee's payments should not be recovered due to his age and retirement status.
Supreme Court rules against retrospective pay scale reductions and recovery orders by the State Government
In Jagdish Prasad Singh vs. State of Bihar and Ors,2 on August 8, 2024, the Supreme Court ruled that the State Government cannot retroactively reduce an employee's pay scale or recover excess payments made, deeming such actions 'grossly illegal and arbitrary'. The Supreme Court quashed the government's order to reduce the appellant's pay scale and recover excess amounts, noting that such measures have severe consequences and should not be applied retrospectively, especially after a significant time lapse. The Supreme Court highlighted that no departmental action can be taken against an employee after their retirement, and any such action not preceded by a show cause notice violates principles of natural justice. The Supreme Court emphasised that recovery of excess payments is permissible only if detected within a short period, not after many years. Consequently, the Supreme Court ordered restoration of the appellant's pay scale and pension, including applicable interest.
Supreme Court orders continuation of service for employee, limits back wages to 50%, and reviews true grounds for termination
In Swati Priyadarshini vs. The State of Madhya Pradesh andOrs,3 on August 22, 2024, the Supreme Court reaffirmed that the form of a termination order is not the final factor; instead, courts can investigate the underlying reasons for an employee's dismissal. In a case involving a woman appointed as an assistant project coordinator under the Sarv Shiksha Abhiyan, the Supreme Court directed her reinstatement with back wages limited to 50% after finding that her contract was terminated due to alleged misconduct related to her reporting on a hostel's conditions. The Supreme Court overturned the Madhya Pradesh High Court's Division Bench decision, restoring the Single Judge's ruling but with modifications. The Supreme Court barred the respondents from taking further action against the appellant related to the past issues but allowed future action in accordance with law.
Lock-in period provision in an employment agreement during the term of employment is valid and does not infringe the fundamental rights of an employee; disputes on lock-in period are arbitrable under the Arbitration and Conciliation Act, 1996
In Lily Packers Private Limited vs. Vaishnavi Vijay Umak and Ors4 ("Lily Case"), a Single Judge of the Delhi HC adjudicated on (a) the validity of the lock-in period provision in the employment agreement(s) of the respondent employees with the petitioner company; and (b) whether the dispute on lock-in period was arbitrable under the Arbitration and Conciliation Act, 1996. The Delhi HC held that the lock-in period as a restrictive covenant in the employment agreements was valid, enforceable during the term of employment and did not infringe the fundamental rights of the employees under the Constitution of India. It also held that the dispute on lock-in period was arbitrable.
The Lily Case validates the enforceability of lock-in period and gives employers the legal sanction to incorporate such negative covenants in the employment agreements provided that these covenants are operative during the period of employment.
For a detailed analysis, please refer to the JSA Prism of August 14, 2024.
Karnataka High Court upheld that unauthorised absence of a workman from industrial employment attracts disciplinary inquiry proceedings for an act of misconduct
In G. Ramesh vs. Karnataka State Seeds Corporation Limited,5 the Karnataka High Court upheld the dismissal of an employee who had been absent for over 900 (nine hundred) days without prior permission. The Court observed that such prolonged absence without leave constitutes misconduct in industrial employment and warrants disciplinary action. The petitioner argued that his extended absence was due to a health issue but failed to provide any medical documentation to support this claim. The respondent contended that no leave application or medical documents were submitted to justify the absence. The Court in this case observed that 'An employee is under an obligation not to absent himself from work without worthy cause during the time at which he is required to be at work. Absence without leave is misconduct in industrial employment warranting disciplinary punishment.'
Punjab & Haryana High Court upheld that transfer of workman from one place to another without any material documents supporting the need of such transfer cannot be considered as a fair decision
In Pappu Giri vs. Presiding Officer, Industrial Tribunal-cum-Labour Court, Panipat,6 the Punjab & Haryana High Court ruled that transferring a workman from one workplace to another without valid justification is unfair. In this case, the petitioner workman was employed as a 'clipper' with the respondent management at a wage of INR 3,640 (Indian Rupees three thousand six hundred and forty) per month. On raising the issue of over time payment, the workman along with other 28 (twenty-eight) workers, was transferred from Panipat to Dadra and Nagar Haveli. However, the appointment letter did not mention any provision for transfer. The workman was not permitted to work at his previous location because he did not join the new location. The Court observed that the employer's decision to transfer the workman was not justifiable in the absence of any supporting documentation, such as a resolution passed by the management or an affidavit explaining the necessity of transfer. The respondent management's argument was insufficient because there was no explicit or implied clause in the appointment letter allowing for such transfers in the event of the establishment of a new unit or factory at a different location.
Footnotes
1. [2024] 8 S.C.R. 154
2 [2024] 8 S.C.R. 377
3. MANU/SC/0916/2024
4. Arbitration Petition 1210/2023
5. 2024: DHC: 5115
6. 2024 LLR 748
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