The Bombay High Court has reaffirmed that an employer cannot escape liability for back wages after an illegal termination merely by alleging the workman failed to mitigate loss. The judgment clarifies that the burden shifts to the employer to prove the employee was gainfully employed during the period of wrongful exclusion - a critical doctrinal shift with wide implications for industrial disputes.
Background & Facts
The Dispute
The petitioner, Sanjay Shivram Chirmure, was employed as a Delivery Boy with Respondent No.1, ICC Worldwide Pvt. Ltd., from 01 February 1998. He rendered continuous, uninterrupted service for over 22 years, earning Rs.17,200 per month inclusive of allowances. The company operated in domestic and international courier services with over 55 permanent employees.
Key Facts
- The petitioner’s last working day was 22 March 2020, immediately before the nationwide COVID-19 lockdown imposed on 23 March 2020.
- Despite Government directives mandating full wage payment during lockdown, the petitioner was not paid any salary from 23 March 2020.
- The company suspended international operations from March 2020 to March 2022 due to flight cancellations and loss of major clients including FedEx, UPS, and DHL.
- The petitioner made repeated oral requests to Respondents No.3 and No.4 to resume duties after lockdown relaxation in July 2020, but was denied access.
- In January 2022, he was orally informed his services were no longer required.
- On 17 February 2022, the petitioner sent a formal letter demanding reinstatement or a termination order; no reply was received.
- The petitioner did not receive a service certificate, termination letter, or any formal notice of discontinuance.
- He remained unemployed throughout the period from March 2020 to December 2023, citing lack of documentation and pandemic-induced job market collapse as barriers to alternative employment.
- On 10 May 2022, he filed a complaint under Section 28 read with Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act).
- The company claimed attendance records showed the petitioner worked beyond March 2020, but these were inconsistent and uncorroborated.
- Two other delivery employees accepted full and final settlement in April 2022; the petitioner refused.
- On 08 January 2024, the petitioner reported for duty for one day, which the respondents cited as proof of ongoing employment.
Procedural History
- 23 March 2020: Nationwide lockdown imposed; petitioner stopped reporting to work.
- 17 February 2022: Petitioner’s formal letter demanding reinstatement or termination order.
- 10 May 2022: Complaint filed before Labour Court under MRTU & PULP Act.
- 18 April 2024: Labour Court held termination illegal and ordered reinstatement with continuity of service, but denied back wages on grounds of failure to mitigate loss.
- 17 March 2025: Industrial Tribunal upheld Labour Court’s order denying back wages.
- 28 March 2026: Writ Petition filed before Bombay High Court under Article 226.
- 30 April 2026: Judgment reserved.
- 7 May 2026: Judgment pronounced.
Relief Sought
The petitioner sought:
- Declaration that his termination was illegal and void
- Reinstatement with continuity of service from 23 March 2020
- Back wages for the period March 2020 to December 2023
- Consequential benefits including gratuity, earned leave encashment, bonus, and retrenchment compensation
- Interest on unpaid amounts
The Parties' Positions
Petitioner: Argued that his exclusion from work was unlawful, that he remained ready and willing to work, and that the employer’s failure to issue service documents crippled his ability to seek alternative employment. He relied on Supreme Court precedents placing the burden on the employer to prove gainful employment.
Respondents: Contended there was no termination - only cessation due to pandemic-related shutdown. They argued the petitioner abandoned service, failed to mitigate loss, and that the complaint was barred by limitation. They relied on attendance records and settlement by other employees.
Relief Sought
The petitioner sought reinstatement with continuity of service and full back wages for the period March 2020 to December 2023, along with all consequential benefits, interest, and costs.
The Legal Issue
The central question was whether, upon a finding of illegal termination, the burden of proving that the workman was gainfully employed during the period of exclusion lies on the employer, and whether the courts below erred in denying back wages solely on the ground of alleged failure to mitigate loss without requiring the employer to discharge this burden.
Arguments Presented
For the Petitioner
The petitioner’s counsel relied on Maharashtra SRTC v. Mahadeo Krishna Naik (2025) 4 SCC 321, Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324, and Surendra Kumar Verma v. Labour Commr. (1980) 4 SCC 443. It was submitted that:
- Once termination is found illegal, back wages are the norm, not the exception.
- The workman’s assertion of non-employment raises a presumption that is binding unless rebutted by cogent evidence from the employer.
- The petitioner, as an unskilled delivery worker with 22 years of service, had no realistic prospect of alternative employment during the pandemic.
- The failure to issue a service certificate or termination letter was a deliberate impediment to mitigation.
- The single day’s attendance in January 2024 could not erase 45 months of wrongful exclusion.
For the Respondent
The respondents argued:
- No formal termination occurred; no charge-sheet, inquiry, or show-cause notice was issued.
- The petitioner remained absent from work from March 2020 to January 2022, allegedly awaiting vaccination.
- Other employees accepted full and final settlement, indicating mutual separation.
- The company suffered severe financial loss due to pandemic, justifying non-payment.
- The petitioner failed to prove unemployment or make efforts to secure alternative employment.
- The complaint was filed beyond limitation.
The Court's Analysis
The Court undertook a comprehensive review of the Supreme Court’s jurisprudence on back wages, beginning with Hindustan Tin Works and culminating in Maharashtra SRTC v. Mahadeo Krishna Naik. It held that the principle is settled: illegal termination entitles the workman to back wages unless the employer proves the employee was gainfully employed during the period.
"The burden of proof lies upon the employer to plead and prove, by cogent evidence, that the employee was gainfully employed and earning wages."
The Court rejected the Labour Court’s and Industrial Tribunal’s reasoning that the petitioner’s failure to secure alternative employment justified denial of back wages. It emphasized that the nature of the petitioner’s work - as an unskilled delivery boy - severely limited his employability outside the courier sector. The pandemic further decimated job opportunities for such workers.
The Court noted that the petitioner’s letter dated 17 February 2022 demonstrated his readiness to resume work. The employer’s silence in response was treated as an implicit refusal. The Court held that demanding documentary proof of unemployment from a low-skilled worker during a national crisis was unreasonable.
"Denial of back wages in such circumstances would amount to penalising the workman for no fault attributable to him and would benefit the employer."
The Court dismissed the respondents’ reliance on attendance records as insufficient and inconsistent. The single day’s attendance in January 2024 was held to be irrelevant to the period of exclusion from March 2020 to December 2023. The Court also rejected the argument that settlements by other employees bound the petitioner.
The Court further held that financial hardship of the employer, however severe, cannot override statutory obligations under labour law. The absence of disciplinary proceedings did not negate the fact that the petitioner was effectively excluded from work.
The Verdict
The petitioner succeeded in part. The Court quashed the orders dated 18 April 2024 and 17 March 2025 to the extent they denied back wages. It declared the petitioner entitled to back wages for the period from March 2020 to December 2023, along with all consequential service benefits. The respondents were directed to compute and pay the amount within twelve weeks from the date of judgment. In the event of delay, the amount shall carry interest at 6 percent per annum from the date it became due until realization. No costs were awarded.
What This Means For Similar Cases
Burden of Proof Shifts to the Employer
- Practitioners must now argue that once illegal termination is established, the employer bears the burden to prove gainful employment.
- Mere assertions of non-employment or failure to mitigate are insufficient without documentary or testimonial evidence.
- Courts must reject speculative findings about alternative employment prospects without evidence.
Pandemic as a Material Factor in Mitigation Analysis
- The COVID-19 lockdown period must be treated as a contextually significant factor in assessing mitigation.
- Unskilled workers in informal sectors cannot be expected to secure employment during nationwide economic disruption.
- Absence of service certificates or termination letters must be treated as employer-caused impediments to mitigation.
Oral Termination and Silence Are Legally Significant
- Oral communication of termination, if supported by conduct, can constitute unlawful termination even without formal notice.
- Employer silence in response to a formal demand for reinstatement or termination letter may be construed as constructive refusal.
- Attendance records showing sporadic return after prolonged absence do not negate a finding of wrongful exclusion.
