Featured image for Supreme Court Judgment dated 10-01-2020 in case of petitioner name Nandkishore Shravan Ahirrao vs Kosan Industries (P) Ltd.
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Supreme Court Upholds Reinstatement and Back Wages in Labour Dispute: Nandkishore Shravan Ahirrao v. Kosan Industries

The case of Nandkishore Shravan Ahirrao v. Kosan Industries (P) Ltd. revolves around employment termination, disciplinary proceedings, and the right to reinstatement with back wages. The Supreme Court, in its judgment dated January 10, 2020, addressed key issues regarding unfair dismissal and the powers of the Labour Court in ordering relief for wrongfully dismissed employees.

The ruling is significant in labor law as it clarifies the principles governing reinstatement, back wages, and continuity of service. The case sheds light on how courts assess the proportionality of punishment in employment disputes and what factors influence decisions on back wages.

Background of the Case

The appellant, Nandkishore Shravan Ahirrao, was employed in the Assembly department of Kosan Industries (P) Ltd. On June 26, 1992, he was served with a charge-sheet for allegedly causing disruption of work between 10:50 AM and 12:00 noon on June 17, 1992. A departmental inquiry was conducted, leading to his dismissal from service on November 26, 1997.

The appellant challenged his dismissal under the Industrial Disputes Act, 1947. The Labour Court, in its award dated February 27, 2008, held that the findings in the inquiry were perverse and that the punishment was too harsh. It directed the employer to reinstate the appellant with 25% back wages.

The employer, Kosan Industries, appealed the decision before the Gujarat High Court. A single judge of the High Court, on February 5, 2013, upheld the reinstatement but set aside the award of 25% back wages. Dissatisfied, the appellant filed a Letters Patent Appeal, which the High Court dismissed on procedural grounds, stating it was not maintainable.

The appellant then approached the Supreme Court, challenging the denial of back wages and seeking clarity on the issue of continuity of service.

Arguments by the Petitioner (Nandkishore Shravan Ahirrao)

  • The Labour Court correctly found that the findings of the disciplinary inquiry were perverse and unjust.
  • The High Court erred in concluding that the Labour Court had denied continuity of service.
  • Once reinstatement is granted, continuity of service follows as a legal consequence.
  • The High Court had no justification in interfering with the Labour Court’s decision to award 25% back wages.

Arguments by the Respondent (Kosan Industries (P) Ltd.)

  • The employer did not appear in the Supreme Court proceedings, and the case was decided ex-parte.
  • The company had earlier argued that the dismissal was based on justified disciplinary action.
  • It maintained that the High Court correctly set aside back wages as reinstatement does not automatically warrant monetary compensation.

Supreme Court’s Judgment

The Supreme Court ruled in favor of the appellant, restoring the award of the Labour Court in full. The Court held:

  • The Labour Court’s award of reinstatement necessarily includes continuity of service. The High Court erred in construing the order otherwise.
  • The Labour Court’s direction for 25% back wages was fair and proper, considering that the appellant had been gainfully employed elsewhere for a part of the disputed period.
  • The High Court had no valid reason to interfere with the Labour Court’s award.
  • The employer was directed to compute and pay back wages within three months.

Legal Precedents Cited

  • Hindustan Tin Works Ltd. v. Employees – Held that reinstatement should ordinarily carry full back wages unless special circumstances justify otherwise.
  • Bharat Sanchar Nigam Ltd. v. Bhurumal – Reaffirmed that back wages depend on multiple factors, including gainful employment during the interim period.

Impact of the Judgment

The ruling underscores key principles in labor law:

  • Reinstatement generally carries continuity of service unless explicitly denied.
  • Back wages are discretionary but should not be denied arbitrarily.
  • Judicial interference with labor court awards should be minimal unless there is manifest injustice.

The Supreme Court’s decision in this case strengthens employees’ rights against unfair dismissal while balancing the interests of employers. It sets an important precedent for labor courts to follow in similar disputes.

By allowing the appeal, the Supreme Court ensured that the appellant was fairly compensated for his wrongful dismissal while maintaining his employment rights.


Petitioner Name: Nandkishore Shravan Ahirrao.
Respondent Name: Kosan Industries (P) Ltd..
Judgment By: Justice Dhananjaya Y Chandrachud, Justice Hrishikesh Roy.
Place Of Incident: Gujarat.
Judgment Date: 10-01-2020.

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