Illegal Termination Entitles Employee To Full Back Wages Unless Employer Proves Alternative Employment During Suspension: Kerala HC

Background

T.M. George worked as the Secretary of the Arpookara Service Co-operative Bank ('Bank'). He was suspended in October 1998 over allegations of financial mismanagement. Following an inquiry, seven of nine charges were established against him, leading to his dismissal. George filed an appeal to the Board of Directors, but his appeal was dismissed. Subsequently, an Administrator reinstated him in 2003, but the Board, after regaining control, reinitiated the disciplinary actions against him.

Aggrieved, George approached the Kerala Co-operative Arbitration Court. The Arbitration Court ruled in 2017 that the suspension and dismissal were illegal, and awarded full pay for the suspension period. This decision was later affirmed by the Kerala Co-operative Arbitration Tribunal. Aggrieved, the Bank filed a writ petition before the Kerala High Court challenging the decision. The writ petition was dismissed, and the Bank filed the present appeal.

Arguments

The Bank, represented by Mr. Athul Shaji, argued that George was guilty of serious misconduct. They submitted that awarding full back wages was inappropriate as he had been gainfully employed during his suspension. The Bank argued that the burden of proving gainful employment was on George.

George's counsel, Mr. P. Sivaraj, submitted that the dismissal was based on false allegations and that the Bank had failed to prove his employment during the suspension. He relied on Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya ((2013) 10 SCC 324) to assert that illegally dismissed employees are entitled to full back wages unless gainful employment is proven.

Court's Reasoning

Firstly, the court cited Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd. ((1979) 2 SCC 80). It held that employees whose services are illegally terminated should be granted full back wages unless the employer proves they were gainfully employed during their absence.

The court found that the Bank had not substantiated the claim that George was gainfully employed. It ruled that employers have the burden of proof to demonstrate that a dismissed employee was employed elsewhere during the suspension period. In the absence of such evidence, the court held that the employee is entitled to full back wages.

Additionally, the court noted George's affidavit, where he denied being employed during the suspension. It held that the Bank failed to provide any material evidence contradicting this affidavit. Thus, the court upheld the Arbitration Court's award. It granted George full back wages and dismissed the Bank's appeal.

Decided on: 07-01-2025

Case Title: The Arpookara Service Co-operative Bank Ltd v. T.M. George

Citation: 2025 LiveLaw (Ker) 15

Counsel for the Appellants: Mr. Athul Shaji

Counsel for the Respondents: Mr. P. Sivaraj, Sri B. Unnikrishna Kaimal (Government Pleader)

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