Honourable Acquittal Does Not Automatically Entitle Dismissed Employee to Back Wages, Rules Chhattisgarh HC Division Bench

A Division Bench led by Chief Justice Ramesh Sinha held that dismissal founded on a valid conviction is not automatically undone by subsequent acquittal, rejecting a claim for full back wages under Fundamental Rule 54.

The High Court of Chhattisgarh at Bilaspur, in a judgment delivered on 11 May 2026, dismissed a writ appeal filed by Ram Prasad Nayak, a former employee of the Chhattisgarh State Power Distribution Company Limited, who had sought full back wages after being acquitted on merits in a corruption case. The Division Bench, comprising Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal, held that where dismissal from service was founded on a valid and subsisting conviction by a competent criminal court, a subsequent acquittal in appeal does not automatically obliterate the legal consequences that had already ensued. The principle of “no work no pay” was held to apply squarely, and the claim under Fundamental Rule 54 was rejected.

The Employee's Service History and Criminal Proceedings

Ram Prasad Nayak was appointed in the Electricity Board on 1 June 1977 as Assistant Grade-1 (Civil). He was promoted to the post of Supervisor (Civil) in 1995 and was posted in the office of the Executive Engineer (Civil), M.P. State Electricity Board, Raipur.

An FIR bearing Crime No. 02/2004 was registered against him under Sections 7, 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988, on the basis of a complaint allegedly made by one Manshukh Lal. Following the filing of a charge-sheet, Nayak was placed under suspension by order dated 12 October 2007.

The Special Judge (Prevention of Corruption Act), Raipur, convicted him by judgment dated 11 December 2012. Nayak preferred Criminal Appeal No. 1153 of 2012 before the High Court. While that appeal was pending, he attained the age of superannuation on 31 August 2018.

The High Court, by judgment dated 8 May 2020 in Criminal Appeal No. 1153 of 2012, set aside the conviction and acquitted him on merits. The appellate court specifically recorded that there was nothing on record to show that Nayak had demanded illegal gratification, that no demand was established, and that the factual matrix regarding demand or acceptance was not proved.

Post-Acquittal Order and the Denial of Back Wages

After acquittal, Nayak submitted representations claiming consequential service benefits. Respondent No. 2 passed an order dated 5 February 2021 withdrawing the earlier order of dismissal dated 1 April 2013 and notionally reinstating him. However, for the period from 1 April 2013 to 31 August 2018, actual back wages and monetary benefits were denied, even though continuity of service for certain limited purposes was recognised.

Nayak challenged this order in WP(S) No. 1473 of 2021 before a Single Judge. His case was that the dismissal was a direct consequence of conviction alone, that the conviction had been obliterated on merits, and that the matter was therefore governed by Fundamental Rule 54, which mandates determination of pay and allowances for the intervening period upon reinstatement. He also argued that even if full pay were not granted, complete denial without following the procedure under the rule was impermissible.

The Single Judge dismissed the writ petition by judgment dated 15 April 2025, principally holding that Fundamental Rule 54-B would not apply and relying on decisions that, according to the appellant, did not deal with Rule 54 at all.

The Review Petition and Its Dismissal

Nayak initially preferred Writ Appeal No. 418 of 2025, which was permitted to be withdrawn by the Division Bench on 30 June 2025, with liberty to approach the Single Judge by way of review. He then filed Review Petition No. 191 of 2025, specifically pointing out that his claim was governed by Fundamental Rule 54, that the acquittal was honourable and on merits, that no departmental enquiry had ever been initiated, and that the order dated 5 February 2021 had been passed without the hearing contemplated by the proviso and procedure under Rule 54.

The review petition was dismissed by order dated 26 February 2026. The Single Judge held that no error apparent was made out, and that even if Rule 54 were to apply, the appellant would still not be entitled to relief because the rule does not specifically mention criminal cases. The Single Judge further held that subsequent acquittal does not retrospectively wipe out the legal consequences of conviction for the purpose of back wages, and that entitlement to back wages would arise only where disciplinary proceedings had been initiated and found to be unsustainable.

Nayak then filed the present writ appeal under Section 2(1) of the Chhattisgarh High Court (Appeal to Division Bench) Act, 2006, challenging both the order dated 15 April 2025 in the writ petition and the order dated 26 February 2026 in the review petition.

Arguments Before the Division Bench

Counsel for Nayak, Ms. Surya Kawalkar Dangi, pressed several grounds. She argued that Fundamental Rule 54 expressly applies when a government servant who has been dismissed “is reinstated as a result of appeal or review or would have been so reinstated but for his retirement on superannuation” — a contingency that squarely covered Nayak. She submitted that the rule mandates that in case of full exoneration, the period of absence shall be treated as a period spent on duty for all purposes, necessarily including salary and allowances.

She relied on coordinate Bench decisions of the Chhattisgarh High Court in Shankar Lal Soni v. State of Chhattisgarh, 2021 SCC OnLine Chh 2722, and Santosh Kumar Patnayak v. State of Chhattisgarh, 2024 SCC OnLine Chh 1296, which had consistently held that upon honourable acquittal an employee is entitled to full back wages under Fundamental Rule 54 and the employer has no discretion for the period from dismissal to reinstatement.

She also relied on the Supreme Court's judgment in Jaipur Vidyut Vitran Nigam Limited v. Nathu Ram, (2010) 1 SCC 428, which she submitted had categorically held that the principle in Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board, (1996) 11 SCC 603, is not applicable to cases where no disciplinary proceeding was initiated and the termination was a direct consequence of conviction in a criminal case.

She further argued that the order dated 5 February 2021 was passed without affording Nayak a reasonable opportunity of hearing as required under Fundamental Rule 54, relying on the Supreme Court's decision in M. Gopalakrishna Naidu v. State of M.P., 1967 SCC OnLine SC 88. She also pointed out that Nayak had not even been paid pension for the period from 1 September 2018 to 8 May 2020.

The State and the power distribution company supported the impugned orders, submitting that Fundamental Rule 54-B would not apply because Nayak had not been placed under suspension but had been dismissed from service following conviction by the trial court.

How the Division Bench Reasoned

The Division Bench, in a judgment authored by Chief Justice Ramesh Sinha, declined to accept the appellant's principal contention.

The Bench held that on the date the dismissal order was passed, it was founded upon a valid and subsisting judgment of conviction rendered by a court of competent jurisdiction. Merely because the appellant was subsequently acquitted in appeal, that would not automatically obliterate the legal consequences which had already ensued on account of the conviction. The court described the legal position as “no longer res integra.”

The Bench placed reliance on Ranchhodji Chaturji Thakore (supra), where the Supreme Court had held that where an employee was dismissed on account of conviction in a criminal case, subsequent acquittal would not entitle such employee to claim back wages as a matter of right, since the employee could not render service during the relevant period owing to his own involvement in the criminal prosecution. The same view was reiterated in Union of India v. Jaipal Singh, (2004) 1 SCC 121, where the Supreme Court held that acquittal in a criminal case does not automatically confer entitlement to salary for the period during which the employee remained out of service pursuant to dismissal based on conviction.

The Bench held that the Single Judge had rightly taken note of these binding precedents and correctly held that Fundamental Rule 54-B would not apply, as the appellant was not reinstated upon revocation of suspension but had been dismissed consequent upon conviction.

On the argument that the acquittal was on merits and therefore amounted to full exoneration, the Bench held that even assuming this to be so, the acquittal by itself would not create an indefeasible right to claim salary for the period during which the appellant had admittedly not discharged any duty. The relationship of employer and employee had remained severed during the relevant period on account of a valid dismissal order founded upon conviction. The principle of “no work no pay” was held to apply squarely.

The Bench found the judgments relied upon by the appellant to be distinguishable on facts and held that they did not advance his case in view of the authoritative pronouncements of the Supreme Court referred to in the judgment.

Outcome

The Division Bench found no illegality, perversity, or infirmity in the orders passed by the Single Judge warranting interference in exercise of appellate jurisdiction. Writ Appeal No. 358 of 2026 was dismissed as devoid of merit. No order as to costs was made.