“Learned Counsel relied upon Ranchhodji Chaturji Thakore, 1996 (11) SCC 603 and Jaipal Singh, 2004 (1) SCC 121 to contend that in case the criminal proceedings are initiated at the behest of the employer, and the employee is acquitted, he would be entitled to claim full wages for the period he was kept out of duty during the pendency of the criminal proceedings.
Ms. Madhavi Divan, Learned Additional Solicitor General, contended that the employee is not entitled to back wages.
This Court in Ranchhodji Chaturji Thakore held that the question of payment of back wages would arise only in case of termination of service, pursuant to findings recorded in a departmental enquiry. In the event of the dismissal order being set aside by the Court, the delinquent employee would be entitled to claim back wages as he was unlawfully kept away from duty by the employer. This Court was of the opinion that an employee against whom criminal proceedings are initiated would stand on a different footing in comparison to an employee facing a departmental inquiry. The employee involved in a crime has disabled himself from rendering his services on account of his incarceration in jail. Subsequent acquittal by an Appellate Court would not entitle him to claim back wages.
The decision of Ranchhodji Chaturji Thakore to refuse back wages to an employee was followed by this Court in Jaipal Singh. However, this Court was of the opinion that if the prosecution is launched at the behest of the department and the employee is acquitted, different considerations may arise. Learned Counsel endeavored to distinguish the prosecution launched by the police for involvement of an employee in a criminal case and the criminal proceedings initiated at the behest of the employer. The observation made in Jaipal Singh has to be understood in a manner in which the department would become liable for back wages in the event of a finding that the initiation of the criminal proceedings was mala fide or with vexatious intent. In all other cases, we do not see any difference between initiation of the criminal proceedings by the department vis-a-vis a criminal case lodged by the police. For example, if an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a Criminal Court, unless it is found that the prosecution is malicious.”
– Hon’ble Justice L. Nageswara Rao, Raj Narain v. Union of India, [Civil Appeal No. 3339 of 2019].