Kerala High Court provides Full Wages to Dismissed Bank Employee

The Kerala High Court, in a recent judgment, upheld the Arbitration Court’s order directing the Arpookara Service Co-operative Bank Ltd. to pay full back wages to a former employee, T.M. George. The Division Bench, comprising Justices Anil K. Narendran and Muralee Krishna S., dismissed the Bank’s appeal, emphasizing that the burden of proving gainful employment during suspension lies with the employer.

Background of the Case

T.M. George, who served as Secretary of the Arpookara Service Co-operative Bank, was suspended in October 1998 following allegations of financial mismanagement. An internal inquiry found him guilty of seven out of nine charges, leading to his dismissal. George appealed the decision to the Bank’s Board of Directors, but his plea was rejected.

In 2003, an Administrator reinstated George. However, when the Board regained control, they reinitiated disciplinary proceedings against him.

Arbitration Court Ruling

Aggrieved by the Bank’s actions, George approached the Kerala Co-operative Arbitration Court. In 2017, the Arbitration Court ruled that George’s suspension and dismissal were illegal and awarded him full back wages for the suspension period. The Kerala Co-operative Arbitration Tribunal later upheld this decision.

Legal Battle Reaches High Court

The Bank challenged the Arbitration Court’s decision in a writ petition before the Kerala High Court, which was dismissed. Subsequently, the Bank filed the present appeal, arguing that George was guilty of misconduct and had been gainfully employed during his suspension.

Representing the Bank, Advocate Athul Shaji contended that awarding full back wages was inappropriate, as George had allegedly been employed elsewhere during the suspension. However, George’s counsel, Advocate P. Sivaraj, argued that the dismissal was based on false allegations. He cited legal precedents, including Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, to support the claim that illegally terminated employees are entitled to full back wages unless the employer can prove otherwise.

High Court’s Observations

The High Court referred to the landmark judgment in Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd., which held that employees whose termination is found illegal should be granted full back wages unless the employer provides evidence of gainful employment during the period of dismissal.

The court noted that the Bank had failed to substantiate its claim that George was employed during his suspension. George had submitted an affidavit denying any employment during this period, and the Bank did not provide any material evidence to counter his claim.

Final Verdict

The court ruled that the burden of proof lies with the employer to demonstrate that a dismissed employee was gainfully employed during their suspension. In the absence of such evidence, the employee is entitled to full back wages.

Consequently, the High Court dismissed the Bank’s appeal and upheld the Arbitration Court’s order, granting George full back wages. This decision reinforces the principle that employers must provide substantial evidence to deny compensation to employees in cases of illegal termination.