Summary
The Supreme Court refused reinstatement of two employees of unaided Mayo College but increased their compensation for unlawful termination to all-inclusive sums of Rs 25 lakhs and Rs 18 lakhs. The management had failed to obtain the written consent required by Section 18’s second proviso. Given the contractual relationship, loss of confidence and absence of industrial adjudication, damages rather than reinstatement or full future salary were appropriate.
Issues
- Whether the statutory defect in termination required reinstatement of employees of the private unaided college.
- How damages should be assessed, including the relevance of industrial-law back-wage principles and future salary.
Provisions considered
- Section 18, particularly second proviso clause (iii), Rajasthan Non-Government Educational Institutions Act, 1989Although the first proviso had been read down for unaided institutions, a unanimous termination in the institution’s interest still required six months’ notice or pay and written Director of Education consent under clause (iii). Absence of that consent was a legal default attracting compensation here. (¶¶ 8–9, 18, 27)
Held
- The management’s unanimous decision and payment of six months’ salary did not cure failure to obtain the Director’s written consent under the second proviso. The first proviso’s inapplicability to unaided institutions did not displace that separate requirement. (¶¶ 8–9, 18)
- In the circumstances, the parties’ relationship was contractual and the employees’ conduct disclosed loss of confidence. No Industrial Disputes Act reference had been adjudicated. The appropriate remedy was damages, and reinstatement was refused; industrial-law reinstatement and back-wage principles could not be imported automatically. (¶¶ 16–22, 27–29)
- Compensation had to be adequate, subject to mitigation and the relevant aggravating and mitigating circumstances, without becoming a windfall. No clear evidence of alternative employment emerged, nor had the employees filed an affidavit denying gainful employment. Their continued occupation of institutional housing was also relevant. (¶ 28–31)
- The calculation should reflect actual pay and allowances for the relevant years rather than remain frozen at the last salary. The Court adopted eight years’ actual emoluments with provident fund and retiral dues, less occupation and utility charges, and fixed all-inclusive compensation at Rs 25 lakhs for Kailash Singh and Rs 18 lakhs for Jeffry Jobard. The Rs 5 lakhs each already paid was adjustable. (¶ 32–35)
- Further future salary was refused. The institution was required to pay the balance within two months, and the employees to vacate the premises within one month after payment. The parties were to bear their own costs. (¶ 36–39)
Result
Appeals allowed to enhance compensation: Rs 25 lakhs to Kailash Singh and Rs 18 lakhs to Jeffry Jobard, all-inclusive and less Rs 5 lakhs each already paid. Balance payable in two months; premises to be vacated within one month thereafter. No reinstatement or costs.