The Bombay High Court has clarified that reinstatement following an unlawful termination under the MEPS Act does not automatically entitle an employee to full backwages. The judgment underscores the burden on the employee to prove non-gainful employment and imposes a proportionate remedy where the employer fails to comply with a reinstatement order.
Background & Facts
The Dispute
The dispute arose from the termination of service of Smt. Hemlata Eknath Pise, the Headmistress of Swami Vivekanand High School, Waddhamna, Nagpur, a private school managed by Shubham Bahu-Uddeshiya Sanstha, a public trust registered under the Maharashtra Public Trusts Act, 1950. The termination was initiated by a faction of the Management, allegedly due to her alleged insubordination and alignment with her husband, Shri Eknath Tukaram Pise, who was in conflict with the petitioner faction over control of the trust.
Key Facts
- The respondent/employee was appointed as Assistant Teacher on an unspecified date and later promoted to Headmistress.
- The school is governed by the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977 (MEPS Act) and the MEPS Rules, 1981.
- Disciplinary proceedings were initiated against the respondent on grounds of misconduct, including taking sides with her husband’s faction during an internal trust dispute.
- The inquiry proceedings were abruptly closed on 01.08.2017 while cross-examination of the Management’s witness was still ongoing.
- The respondent was not afforded an opportunity to lead evidence in her defense.
- The School Tribunal, Nagpur, in STN Appeal No.38 of 2017, quashed the termination order on 08.08.2019 and directed reinstatement with full backwages.
- The Management challenged this order before the Bombay High Court in WP No.5899 of 2019, which was initially allowed on 05.09.2024 on the narrow ground of procedural irregularity in initiating the inquiry.
- The respondent filed a review application (Misc. Civil Application No.838 of 2024), dismissed on 25.09.2024.
- The Supreme Court, by judgment dated 11.02.2026, set aside both the High Court’s orders and remanded the matter for fresh consideration.
- The respondent retired on superannuation on 30.11.2024.
- The Management never reinstated the respondent despite the Tribunal’s order.
- The respondent filed an affidavit dated 18.04.2026 before the High Court asserting she was not gainfully employed after termination.
- The Management countered that she conducted private tuition classes.
Procedural History
- 01.08.2017: Disciplinary inquiry closed abruptly during cross-examination.
- 08.08.2019: School Tribunal, Nagpur, passed order quashing termination and directing reinstatement with full backwages (STN Appeal No.38 of 2017).
- 05.09.2024: Bombay High Court allowed WP No.5899/2019, quashing the Tribunal’s order on procedural grounds.
- 25.09.2024: Review petition dismissed by the High Court.
- 11.02.2026: Supreme Court set aside both High Court orders and remanded the matter for fresh adjudication.
- 21.04.2026: Respondent filed affidavit of non-gainful employment before the High Court.
- 08.06.2026: Judgment delivered by the Bombay High Court.
The Parties' Positions
Management: Argued that the inquiry was initiated lawfully by the authorized Secretary of the trust; that the closure of inquiry was justified due to irrelevant questions; that the Tribunal erred in granting full backwages without proof of non-gainful employment; and that the respondent’s conduct undermined lawful authority.
Employee: Contended that the inquiry violated Rule 37(2)(d) of the MEPS Rules by denying cross-examination and opportunity to lead evidence; that the termination was vitiated by breach of natural justice; and that the Management’s failure to reinstate her after the Tribunal’s order warranted full backwages.
Relief Sought
The respondent sought: (1) confirmation of reinstatement with continuity of service; (2) full backwages from date of termination (28.08.2017) until superannuation (30.11.2024); and (3) ancillary benefits. The Management sought dismissal of the Tribunal’s order and denial of backwages.
The Legal Issue
The central question was whether an employee, whose termination is quashed for violation of statutory procedure and natural justice under the MEPS Act, is entitled to full backwages in the absence of a sworn statement or affidavit proving non-gainful employment before the Tribunal, and whether the employer’s failure to reinstate after a valid order justifies a partial award of backwages.
Arguments Presented
For the Appellant/Petitioner
The Management argued that the initial inquiry was properly initiated by the authorized Secretary of the trust. It contended that the closure of inquiry was justified because the questions posed during cross-examination were irrelevant and aimed at challenging the legitimacy of the Management faction. It further argued that the Tribunal erred in awarding full backwages without any evidence from the employee regarding non-gainful employment. Reliance was placed on Saindranath S/o Jagannath Jawanjal v. Pratibha Shikshan Sanstha to argue that appellate courts may permit additional evidence under Order XLI Rule 27 CPC, but only if the essential conditions are met - which were not satisfied here. The Management also asserted that the employee’s filing of a joining report with her husband’s faction, not the lawful Management, demonstrated bad faith and negated any claim to backwages.
For the Respondent/State
The employee contended that the inquiry was procedurally invalid under Rule 37(2)(d) of the MEPS Rules, which mandates opportunity for cross-examination and to lead evidence. She argued that the abrupt closure of proceedings was a clear violation of natural justice. She relied on the Tribunal’s finding that the termination was unlawful and submitted that the Management’s failure to reinstate her despite the order and the Education Officer’s directive constituted a continuing violation. She filed an affidavit before the High Court asserting she was not gainfully employed, and argued that this should be considered for backwages from the date of the Tribunal’s order.
The Court's Analysis
The Court first affirmed that the inquiry proceedings were vitiated by non-compliance with Rule 37(2)(d) of the MEPS Rules. The inquiry was closed while cross-examination was ongoing, and the employee was denied the opportunity to lead evidence in her defense. The Court held that this was not merely a procedural lapse but a fundamental breach of statutory and constitutional principles of natural justice.
"The inquiry could not have been closed in the manner in which it was conducted. Apart from non-compliance with statutory provisions, the action of the Management is also in utter disregard to principles of natural justice."
The Court rejected the Management’s argument that Order XLI Rule 27 CPC could be invoked to permit additional evidence. It clarified that such relief is available only where evidence was unavailable despite due diligence, or where the appellate court requires it to pronounce judgment. Here, the failure to complete the inquiry was attributable to the Management’s own conduct, not any oversight by the employee.
On the issue of backwages, the Court examined the settled principle that the burden of proving non-gainful employment lies initially on the employee. The Court noted that the respondent had filed no such statement or affidavit before the Tribunal. The affidavit filed before the High Court on 18.04.2026 was held to be belated and could not override the procedural default. However, the Court recognized that the Management had willfully failed to implement the Tribunal’s reinstatement order despite the Education Officer’s directive.
"The respondent/employee should have been reinstated in service. Although the appellant furnished joining report to her husband, it cannot be denied that the faction of the Management which had issued order of termination was aware about the judgment delivered by the learned Tribunal."
The Court concluded that while full backwages were not warranted due to the absence of proof before the Tribunal, the Management’s persistent non-compliance with the reinstatement order justified a partial award. The Court balanced equity and legal principle by awarding 40% backwages from the date of the Tribunal’s order (08.08.2019) until the date of superannuation (30.11.2024).
The Verdict
The petition was partly allowed. The judgment and order dated 08.08.2019 of the School Tribunal, Nagpur, was modified: the direction for full backwages was quashed and substituted with a direction to pay 40% backwages from 08.08.2019 to 30.11.2024. The order of reinstatement with continuity of service and ancillary benefits was upheld. The Management was directed to implement the reinstatement order forthwith and pay the 40% backwages within 8 weeks.
What This Means For Similar Cases
Burden of Proof for Backwages Rests on the Employee
- Practitioners must ensure that employees file affidavits or statements in appeals before tribunals affirming non-gainful employment; failure to do so precludes full backwages even if termination is unlawful.
- The burden shifts to the employer only after the employee makes a prima facie showing; silence before the tribunal cannot be cured by belated affidavits before higher courts.
Non-Compliance with Reinstatement Orders Triggers Proportionate Relief
- Employers who ignore tribunal orders for reinstatement risk being held liable for partial backwages from the date of the order, even if the employee failed to prove non-gainful employment earlier.
- The Court’s 40% award signals that judicial remedies must account for employer misconduct, even when employee procedural lapses exist.
Statutory Compliance in School Employee Disputes Is Non-Negotiable
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MEPS Rules, particularly Rule 37(2), are mandatory; deviations, even if minor, invalidate disciplinary proceedings.
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Inquiry committees must complete proceedings before closing them; abrupt termination of hearings without allowing defense evidence is a fatal flaw.
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Always document compliance with tribunal orders in writing and obtain acknowledgments.
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Never assume that a tribunal’s order is self-executing; follow up with written notices and escalate to regulatory authorities (e.g., Education Officer) if ignored.
