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Employee Not Entitled To Full Back Wages On Acquittal, Unless His Prosecution Was Found Malicious: Supreme Court

“We do not see any difference between initiation of the criminal proceedings by the department vis-a-vis a criminal case lodged by the police.” The Supreme Court has held that the employer cannot be mulcted with full back wages on the acquittal of an employee by a criminal Court, unless it is found that the prosecution is malicious. Raj Narain, who was working as a Sorting Assistant in Railway Mail Service (RMS) was convicted in February 1997 by the Trial Court finding him involved in forged payments of high value money orders. He was dismissed from service with effect from the date of conviction. Later, the High Court, in 2001, allowed his appeal and acquitted him

The Tribunal allowed the original application and directed the reinstatement by holding that he shall be entitled for seniority and notional fixation of pay with increments from the date of his dismissal till his reinstatement. However, the Tribunal held that he shall not be entitled for any back wages for the period during which he was not in service.

The High court also held that he would 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. He approached the Apex court challenging this judgment by which the payment of back wages was restricted only to the period between the date of his acquittal and the date of his reinstatement. Reliance was placed on the judgment in Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board and Union of India v. Jaipal Singh to contend that in case the criminal proceedings are initiated at the behest of the employer, and the employee is acquitted, he would be entitled to claim full wages for the period he was kept out of duty during the pendency of the criminal proceedings. In this context, the bench observed:

“The learned counsel for the Appellant endeavored to distinguish the prosecution launched by the police for involvement of an employee in a criminal case and the criminal proceedings initiated at the behest of the employer. The observation made in the judgment in Union of India and Others v. Jaipal Singh (supra) has to be understood in a manner in which 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. In all other cases, we do not see any difference between initiation of the criminal proceedings by the department vis-a-vis a criminal case lodged by the police. For example, 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.”

However, taking note of the facts of the case, the bench held that hold that he is also entitled for full wages from 23.10.1979 to 21.10.1987 after adjustment of the amounts already paid towards subsistence allowance. It also approved the High Court judgment that he shall be entitled for back wages only from the date of acquittal on 31.08.2001, till the date of his reinstatement on 20.01.2003.

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