2018 (8) TMI 1746 - SC - Indian Laws

Termination of an employee - quantification of damages - alleged misconduct of the employees - general strike - Since the Board was awaiting the announcement by the Government it was informed to the workers that the management would take a call on the issue on 23.10.2000 and that the workers should not indulge in any disruptive activity. Despite the same are stated to have gone ahead with their threat and at the time when the Annual Function of the Mayo College was being held on 23/24.10.2000 instigated other staff members not to go to work and created disturbances causing grave embarrassment to the Institution - non-compliance of Section 18 of Rajasthan Non-Government Educational Institutions Act 1989. Held that - We cannot lose sight of the fact that we are dealing with an educational institution of great eminence. Persons employed in educational institutions right from Class IV staff to the highest level have a far greater responsibility on account of the nature of activity which takes place in these institutions Education. There are students of all ages starting from younger ones to older teenagers who are studying and living in these campuses. It is a different kind of Gurukul . Thus anything which is done as would cause an adverse impact on the mind of these young people is something which we find difficult to approve even if it is claimed as a right to make certain demands - The mode and methodology of making demands in these educational institutions cannot be at par with an industrial establishment where workmen agitate for their rights. An annual day is always an important day in an educational institution with active participation of parents. It is of great significance even to the passing out batch of students and the sensitivity of the parents and children should have been kept in mind while asserting such rights by the employees. This appears not to have been done. The facts of the present case are covered by the master-servant relationship. There is no adjudication by invocation of a reference to the Industrial Disputes Act 1947. Thus the remedy would only be in damages. Quantification of damages - adequacy of compensation to be awarded to the appellants - Held that - The present case is one where the conduct of the appellants cannot be said to be such that would not result in loss of confidence. The factual matrix in the context of the show cause notice and the replies to it itself clarified the position. However the issue remains that the respondent-Institution failed in the legal compliance of the second proviso to Section 18 of the said Act and must bear the consequences of the same - The methodology of calculation would be based on the principle of wrongful termination of an employee under the master-servant relationship. This in turn would import into it the requirement of the appellants endeavouring to mitigate their losses. In fact in this context we may observe that the claim for back-wages has apparently been raised for the first time only in the present proceedings arising from the manner in which the High Court dealt with the matter where it granted some compensation. The principle of awarding adequate compensation in the form of backwages keeping in mind aggravating and mitigating circumstances would thus have to be observed. The amount cannot be measly nor can it be a bonanza. The High Court in its wisdom awarded the compensation of five (5) years backwages on the last pay drawn. Not only that an additional benefit was conferred by providing for provident fund and retiral dues to be calculated on the premise as if the services would be continued till the appellants attained the age of superannuation. There are no reason to find that such an aforesaid principle can be said to be fallacious or wrong so as to call for our interference. It would not be appropriate to determine the amount on the basis of the last pay and allowances drawn. The calculation should be based on the actual pay and allowances liable to be drawn for the years in question dependent on the period for which this amount is to be calculated. The net impact is an all-inclusive compensation of Rs. 25 lakhs in the case of Kailash Singh and Rs. 18 lakhs in the case of Jeffry Jobard. Needless to say the amount of Rs. 5 lakhs already paid to the appellants in pursuance to the directions of this Court is liable to be adjusted from the said amounts payable - We are not inclined to grant future salary and allowances to Kailash Singh merely because he has not been granted reinstatement with further years of his service still remaining. The appellants are required to vacate the premises within a maximum period of one (1) month of the amount being so paid. Appeal allowed.

Summary

Issues Involved:
1. Termination of employment of Kailash Singh and Jeffry Jobard.
2. Compliance with Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989.
3. Adequacy of compensation awarded to the appellants.
4. The right to reinstatement versus compensation for wrongful termination.

Issue-wise Detailed Analysis:

1. Termination of Employment of Kailash Singh and Jeffry Jobard:
The appellants, Kailash Singh and Jeffry Jobard, were terminated from their employment at Mayo College on 9.11.2000. Kailash Singh had been promoted to an LDC in the Library after starting as a Class IV employee in 1984. Jeffry Jobard began as an LDC in 1985. Their termination was due to their involvement in organizing protests and strikes under the banner of the 'Sangarsh Samiti Mayo College, Ajmer,' demanding bonus payments. The management alleged that their actions during the Annual Function on 23/24.10.2000 caused disturbances and embarrassment to the institution.

2. Compliance with Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989:
The appellants approached the Educational Tribunal, citing non-compliance with Section 18 of the said Act, which mandates obtaining the Director of Education's consent in writing before terminating an employee. The Tribunal and the High Court found that the management failed to comply with this requirement. The Division Bench acknowledged the unanimous decision of the Board of Governors but deemed the lack of consent a "technical defect." Consequently, the Tribunal's decision for reinstatement was upheld, but the Division Bench modified the relief to compensation equivalent to five years' salary, provident fund, and retiral benefits.

3. Adequacy of Compensation Awarded to the Appellants:
The appellants were dissatisfied with the compensation awarded and sought full back-wages and reinstatement. The Supreme Court examined whether the compensation granted by the Division Bench was justifiable. The Court noted that the management's failure to obtain the Director of Education's consent necessitated compensation. The principle of awarding adequate compensation, considering aggravating and mitigating circumstances, was emphasized. The Court concluded that the compensation should not be based on the last pay drawn but on the actual pay and allowances for the relevant period. The final compensation was enhanced to Rs. 25 lakhs for Kailash Singh and Rs. 18 lakhs for Jeffry Jobard, inclusive of provident fund and retiral dues, with deductions for electricity, water, and occupation charges.

4. The Right to Reinstatement versus Compensation for Wrongful Termination:
The Supreme Court held that reinstatement was not appropriate in this case, given the nature of the institution and the conduct of the appellants. The Court emphasized that the relationship between the parties was contractual, and the remedy for wrongful termination should be damages rather than reinstatement. The principles from T.M.A. Pai Foundation v. State of Karnataka were applied, highlighting the autonomy of private unaided educational institutions in managing their staff. The Court rejected the plea for future salary and allowances, stating that it would amount to a bonanza rather than fair compensation.

Conclusion:
The Supreme Court modified the compensation awarded by the Division Bench, directing the respondent institution to pay Rs. 25 lakhs to Kailash Singh and Rs. 18 lakhs to Jeffry Jobard within two months, after adjusting the amount already paid. The appellants were required to vacate the premises within one month of receiving the payment. The appeals were allowed, with each party bearing their own costs.