Introduction
The Karnataka High Court has directed Jet Airways (which is under liquidation) to pay Rs.13,00,000 as back wages, plus accrued interest, to an employee who was illegally dismissed. The concerned position was outlined in the case of M/S Jet Airways (India) Pvt Ltd v. Sri Prashant Rao. [M/S Jet Airways (India) Pvt Ltd v. Sri Prashant Rao, 2025]
Background
The Respondent, Sri Prashant Rao, was appointed as a Customer Service Assistant in 1999 with M/s. Jet Airways (India) Pvt. Ltd. (Petitioner). He was charged with disciplinary action and subsequently dismissed from service in 2008. The respondent challenged the dismissal order before the Central Government Administrative Tribunal-Cum- Labour Court in 2009. The tribunal held that the disciplinary proceedings were conducted in violation of the principles of natural justice, and the alleged misconduct committed by the respondent was not proved. Thus, the dismissal was illegal. Following this, the Tribunal directed reinstatement along with 50 percent of back wages.
The impugned tribunal award is in contention in this writ petition filed by the petitioner.
Key Points
On Petitioner’s grounds- After the tribunal award, Jet Airways is under liquidation. Following the case of State Bank of India and others Vs. Consortium of Murari Lal Jalan and Florian Fritsch and Another, the Official Liquidator, has taken over its assets. Due to this development, the relief of reinstatement cannot be granted as the company is no longer carrying on any business. [State Bank of India and others Vs. Consortium of Murari Lal Jalan and Florian Fritsch and Another, 2025 (4) SCC 354].
They also argued that the deposited amount of Rs 13,00,000 cannot be released in favour of the respondent, as he was aware of the liquidation proceedings. He should have claimed under the liquidation proceedings, which he failed to do. The petitioner invoked Regulation 12 (2)(c) of the Liquidation Regulations read with Section 38 of the IBC, 2016, to highlight that if a stakeholder does not submit a claim during the liquidation process, then such a claim shall be deemed to be admitted as part of the assets of the petitioner and is therefore part of the liquidation assets. It also highlighted that once the moratorium on enforcement commences on the commencement of the CIRP, then a decree cannot be enforced. Under the IBC, a decree holder is merely a creditor. [Siti Networks Limited Vs. Rajiv Suri 2024 SCC ONLINE BOM 3550].
On the tribunal’s award- The court noted that the Tribunal has considered all evidence and submissions to conclude that the charges against the respondent were not proved. It held that the proceedings violated principles of natural justice. It found that the award was well-reasoned. The court held that the judicial review under Article 226 is limited and, using that, it upheld the impugned award.
Relief to the respondent- The court held that the award was passed in 2017 and therefore the respondent’s claim got crystallised in 2017 itself for payment of 50 percent of the back wages, and those wages were already deposited. The court invoked the principle of “actus curiae neminem gravabit,” which translates to “an act of the Court shall prejudice none,” and held that a party whose writ petition is dismissed cannot take advantage of its own wrong. The court exercised Article 226 to ensure that the damage suffered by the respondent (due to the interim order) is mitigated once the writ petition is dismissed. [Amarjeet Singh and others Vs. Devi Ratan and others 2010(1) SCC 417]
Recent developments
In the present case, the High Court ordered the release of Rs 13,00,000 plus accumulated interest to Prashant Rao. It also noted that reinstatement is not feasible as the company has ceased its operations due to insolvency proceedings. This judgment strikes a balance between the insolvency law and labour rights.
Conclusion
The Karnataka High Court’s judgment lays down the position that once an employee’s entitlement is adjudicated upon in a valid tribunal award, that right becomes crystallised. Since the right gets crystallised, any subsequent liquidation process would not dismiss those rights. It also highlights that interim orders merge into a final order, and that is why a litigant cannot benefit from an interim order if the final judgment is in favour of the opponent.
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WRITTEN BY: FARZEEN ZAMAN
