Supreme Court Overturns U.P. Power Corporation Order: High Court Erred in Granting Back Wages
The Supreme Court of India, in a significant ruling, has overturned the judgment of the Allahabad High Court in the case of U.P. Power Corporation Ltd. & Anr. v. Satya Ram & Anr.. The judgment has clarified important legal aspects concerning the payment of back wages to employees whose termination was previously held to be illegal by the Labour Court.
Background of the Case
The case involved two employees of the Uttar Pradesh Power Corporation Ltd. (UPPCL) who were engaged on a daily wage basis starting in 1971 and 1973, respectively. Their services were terminated on September 19, 1979, and February 1, 1979. Aggrieved by their termination, they raised an industrial dispute before the Labour Court, Faizabad.
Labour Court’s Decision (1995)
The Labour Court ruled in favor of the employees on December 7, 1995, holding that their termination was illegal. The court ordered that they should be deemed to have continued in service and should receive their salary and other benefits accordingly.
Non-Implementation of the Award
Despite the Labour Court’s ruling, the employees were not reinstated. Instead, they were paid ₹7,05,662 each on May 3, 2016, which was claimed to be for the period up to December 31, 2014. However, the employees contended that they were entitled to additional wages for the period from January 1, 2015, to May 31, 2018, in compliance with the 1995 award.
Deputy Labour Commissioner’s Decision (2021)
The employees moved an application under Section 6H(1) of the Uttar Pradesh Industrial Disputes Act, 1947. The Deputy Labour Commissioner, Devi Patan Division, Gonda, ruled in their favor, directing UPPCL to pay an additional amount of ₹6,53,302 to each of them.
High Court’s Decision (2023)
UPPCL challenged this order in the Allahabad High Court, Lucknow Bench, through Writ C No. 14303 of 2021. The High Court dismissed the writ petition and upheld the order of the Deputy Labour Commissioner, holding that the employees were entitled to receive back wages for the period in question.
Supreme Court’s Analysis
Errors in High Court’s Reasoning
The Supreme Court noted several crucial errors in the High Court’s decision:
- The High Court failed to consider the age of the employees at the time of termination and their eligibility for service continuation.
- It did not verify whether the employees had reached the retirement age before granting them back wages for the period in question.
- The Labour Commissioner’s order was flawed as it failed to assess the validity of continued employment past retirement age.
Retirement Age Consideration
The Supreme Court observed:
“The two respondents were engaged in service in 1971 and 1973. There is no material on record to indicate what their ages were at that time. However, we shall presume that they were at least 18 years old when they were engaged in service. If that be so, they would attain the age of 60 years in 2013 and 2015, respectively.”
The Court reasoned that allowing wages beyond their retirement period (i.e., post-2015) was legally unsound. The employees were not entitled to wages beyond their service tenure.
Labour Commissioner’s Order Invalid
The Supreme Court found that the Deputy Labour Commissioner erred in directing payment for the period from 2015 to 2018, as the employees were already deemed retired by then.
“The Deputy Labour Commissioner, Devi Patan Division, Gonda, erred in directing payment of salary to the respondents for the period 01.01.2015 to 31.05.2018. This erroneous order ought not to have been confirmed by the High Court.”
Final Judgment
The Supreme Court ruled in favor of UPPCL and set aside the orders of both the High Court and the Deputy Labour Commissioner. It held:
“The appeal is accordingly allowed. In consequence, the impugned judgment and order dated 20.02.2023 passed by the High Court of Judicature at Allahabad, Lucknow Bench, in Writ C. No. 14303 of 2021, and the order dated 07.12.1995 passed by the Deputy Labour Commissioner, Devi Patan Division, Gonda, in Case No. 6(H)(1) R.C. Case No. 01 of 2014, are set aside.”
Key Takeaways from the Judgment
- Back Wages Cannot Extend Beyond Retirement Age: Employees who were wrongfully terminated cannot claim wages beyond their retirement age.
- Judicial Scrutiny in Labour Cases: The ruling emphasizes the need for courts to assess an employee’s service tenure before granting wage-related relief.
- Limited Scope of Section 6H(1) of the Industrial Disputes Act: The provision cannot be used to grant benefits beyond what is legally due.
- High Court’s Limited Jurisdiction: The ruling reminds that High Courts must not blindly affirm erroneous administrative orders without legal scrutiny.
Conclusion
The Supreme Court’s judgment in U.P. Power Corporation Ltd. & Anr. v. Satya Ram & Anr. sets an important precedent in labor law disputes. It underscores that back wages cannot be awarded beyond the retirement age of an employee, and judicial scrutiny is necessary before approving monetary benefits. The decision not only protects state instrumentalities from undue financial liabilities but also ensures fairness in labor dispute resolutions.
Petitioner Name: U.P. Power Corporation Ltd. & Anr..Respondent Name: Satya Ram & Anr..Judgment By: Justice Sanjay Kumar, Justice Augustine George Masih.Place Of Incident: Gonda, Uttar Pradesh.Judgment Date: 05-03-2025.
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