Himachal Pradesh High Court
Sd Senior Secondary School Shimla vs State Of Himachal Pradesh And Ors on 7 November, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
2024:HHC:12413
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No. 861 of 2024 with CWP Nos. 854, 857 to 860,
862 to 865, 872 to 874, 3088 to 3091, 3477 to 3479,
3481, 3483, 3901 and 3903 of 2024
Date of Decision: 7.11.2024
_____________________________________________________________________
1. CWP No. 861 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
2. CWP No. 854 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
3. CWP No. 857 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
4. CWP No. 858 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
5. CWP No. 859 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
6. CWP No. 860 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
7. CWP No. 862 of 2024
2024:HHC:12413
-2-
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
8. CWP No. 863 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
9. CWP No. 864 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
10. CWP No. 865 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
11. CWP No. 872 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
12. CWP No. 873 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
13. CWP No. 874 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
14. CWP No. 3088 of 2024
SD Senior Secondary School Shimla
.........Petitioner
2024:HHC:12413
-3-
Versus
State of Himachal Pradesh and Ors.
.......Respondents
15. CWP No.3089 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
16. CWP No.3090 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
17. CWP No. 3091 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
18. CWP No. 3477 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
19. CWP No. 3478 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
20. CWP No. 3479 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
21. CWP No. 3481 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
2024:HHC:12413
-4-
.......Respondents
22. CWP No. 3483 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
23. CWP No. 3901 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
24. CWP No. 3903 of 2024
SD Senior Secondary School Shimla
.........Petitioner
Versus
State of Himachal Pradesh and Ors.
.......Respondents
Coram
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? Yes.
For the Petitioners: Mr. M.L. Sharma and Ms. Meghna Kashava,
Advocates.
For the respondents: Mr. Anup Rattan, Advocate General with Mr.
Rajan Kahol, Mr. Vishal Panwar and Mr. B.C.
Verma, Additional Advocates General with Mr.
Ravi Chauhan and Mr. Arsh Rattan, Deputy
Advocate General, for the State.
Mr. Vishal Singh Thakur, Advocate, for the
private respondents in all the petitions.
___________________________________________________________________________
Sandeep Sharma, J. (Oral)
Since common questions of facts and law are involved in the above captioned cases and the petitioner, who is common in all the cases is aggrieved of the order dated 16.1.2024, passed by the Deputy Labour Commissioner-cum-Appellate Authority (Annexure P-9) under the Payment of Gratuity Act, 1972 ( in short "the Act"), this 2024:HHC:12413 -5- Court after having clubbed all the cases, heard the same together and are now being disposed of vide common judgment.
2. For having bird's eye view, facts which may be relevant for adjudication of the case at hand, are that private respondents, in all the cases, prior to their services being taken over by the State of Himachal Pradesh in the department of Education Himachal Pradesh, were working with the Petitioner-School i.e. SD Senior Secondary School, Gunj Bazaar, Shimla, which though was being managed by Sanatan Dharam Prabhandan Committee, Gunj Bazaar, Shimla, but w.e.f. 1987 to 1993 had been getting lump-sum Grant-in-Aid from State of Himachal Pradesh. Though w.e.f. 1987 to 1993, Grant-in-Aid was paid by the State Government in lump sum, but thereafter, pursuant to judgment passed by the Hon'ble Apex Court in case titled State of Himachal Pradesh v. HP State Recognized and Aided Schools Managing Committees and Ors., 1995 (4) SCC 507, petitioner-school came to be granted 95% Grant-in-Aid, as a result thereof, staff working in the school, at the relevant time, started getting salary at par with the salary being received by their counterparts in the various educational institutions of the State of Himachal Pradesh. Though at one point of time, school management refused to accept the Grant-in-Aid from the State Government and in that regard, litigation was contested by the school management upto Hon'ble Apex Court, whereby Hon'ble Apex Court directed the State 2024:HHC:12413 -6- Government to make the payment for remaining period i.e. from 1993 to 1997 without interest and cost. In the year 2012, services of the employees of 95% Grant-in-Aid schools were decided to be taken over by the State Government (without the assets and liabilities), by placing them lowest in the promotion list, as proposed by the management of petitioner-school, but their pay was protected by the respondent-State as per scheme formulated for taking over the services of the privately managed government aided school. Private respondents, who at one point of time, were the employees of the petitioner-school had become employees of State of Himachal Pradesh and after taking over their services in the year 2012 in the State of Himachal Pradesh, they continued to work in the different schools controlled by the Department of Education of the Himachal Pradesh in various capacities.
3. On 08.10.2012, first application for payment of gratuity was collectively moved by the employees of petitioner-school alongwith several other issues, which was though accepted by the management of petitioner-school, but even then gratuity was not paid. After issuance of notices by the private respondents, private respondents staked their claim for gratuity for the period they had rendered services with the petitioner-school prior to their services being taken over by the Government of Himachal Pradesh in 2012. Since, no heed was paid to the notices issued by the private respondents, they were 2024:HHC:12413 -7- compelled to approach Labour Officer-cum-Controlling Authority, who after having afforded due opportunity of hearing to both the parties, passed order dated 25.7.2022 (Annexure P-5), thereby directing the petitioner herein to make the payment of gratuity to the private respondents within one month from the receipt of the notice under intimation to his office.
4. Being aggrieved and dissatisfied with aforesaid order, petitioner herein filed an appeal before the appellate authority i.e. Labour Officer-cum-Controlling Authority, but since petitioner-School failed to deposit the amount ordered to be deposited by the Controlling Authority as per Section 7 Sub-Clause 7 of the Act, authority refused to entertain the appeal.
5. Being aggrieved and dissatisfied with aforesaid order passed by the appellate authority, petitioner herein approached this Court by way of number of writ petitions. This Court vide order dated 22.8.2023, passed in CWP No. 4754 of 2023 and other connected matters, allowed the petition and set-aside the order dated 20.4.2023, passed by the Appellate Authority and remanded the case back to the aforesaid authority to decide the same afresh, subject to furnishing bank guarantee equivalent to the amount determined by the Controlling Authority alongwith a certificate in terms of Second Proviso to Section 7 Sub-Clause 7 of the Act, which provides that no appeal by an employer shall be admitted unless at the time of preferring the 2024:HHC:12413 -8- appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under Section 4 of or deposit with the appellate authority such amount.
6. Since bank guarantee in terms of the aforesaid order passed by this Court was furnished by the petitioner before the appellate authority, appellate authority proceeded to decide the appeals having been filed by the petitioner on its own merits and ultimately, vide order dated 16.1.2024 (Annexure P-9), afore authority proceeded to dismiss the appeals. In the aforesaid, background, petitioner-School has approached this Court in the instant proceedings, praying therein to set-aside the afore order.
7. Precisely, the grouse of the petitioner-school, as has been highlighted in the petition and further canvassed by Mr. M.L. Sharma, learned counsel for the petitioner is that learned appellate court below while passing impugned order failed to consider plea of limitation raised by the petitioner as well as liability of State Government towards payment of gratuity to the extent of 95% being government aided school to that extent. Besides above, petitioner has also raised ground that appellate court below also erred in ordering payment of gratuity from the date of joining, whereas order of payment of gratuity ought to have been made applicable from 3.4.1997 prospectively, 2024:HHC:12413 -9- when an amendment was introduced in Parliament, thereby bringing teachers in the ambit of Payment of Gratuity Act under the definition an of 'employee'.
8. Mr. M.L. Sharma, learned counsel for the petitioner- School, while elaborating submissions made by him with regard to limitation strenuously argued that Payment of Gratuity HP Rules 1971 (Annexure P11) (herein after referred to as "the Rules") are applicable to the claim petitions filed by the petitioner. He submitted that as per aforesaid Rules, which have a statutory force, a person who is eligible for payment of gratuity under this Act or any person authorized, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. He submitted that since 7(1) of Rules provides that an employee, who is eligible for payment of gratuity under the Act shall apply, ordinarily within thirty days from the date he/she is entitled for gratuity and in the case at hand, no application within the afore period of thirty days was submitted by the any of the private respondents, claim put forth by the private respondents ought to have been rejected on the ground of limitation itself. He further submitted that bare perusal of claim petitions filed at the behest of private respondents nowhere suggests that cogent and convincing reason was ever adduced qua the inordinate delay in filing the claim petitions and as such, impugned order passed by the appellate 2024:HHC:12413
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authority, which ultimately upheld the order of controlling authority, deserves to be quashed and set-aside on this sole ground only.
9. Mr. Sharma, while inviting attention to Rule 7 (5), which provides that no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within a specified period, submitted that even in that eventuality an application praying therein for condonation of delay is required to be filed and in case, no cogent and convincing reason is assigned, enabling the court to consider such application, delay, if any, in furnishing claim petition cannot be condoned. He further submitted that though Rule 7 (1) specifically provides for limitation of thirty days, but even if it is presumed that in terms of Rule 7 (5), claimant can file claim petition after expiry of thirty days, even then, same is required to be filed within a reasonable time, but definitely not beyond the period of three years as prescribed under Article 137 of the Limitation Act. In support of aforesaid contention, Mr. Sharma placed reliance upon judgments i.e. 1. Sultan Begum v. Prem Chand Jain (1997) 1 SCC 373, 2. Anwar Hasan Khanv. Mohammed Shafi (2001) 8 SCC 540, 3. Fertilizer Corporation of India Limited v. Cormondal Sacks 2024 STPL 5156 (SC),
4. Addl. Spl. Land Acquisition Officer, Bangalore v. Thakoredas, Major & Ors (1997) 11 SCC 412 and ; 5. State of Karnatka v. Laxman (2005) 8 SCC 709.
2024:HHC:12413
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10. While elaborating his submissions qua the second point raised by him with regard to liability of State Government to gratuity, Mr. Sharma, further argued that though there is no dispute that petitioner-School was a State Government aided school getting 95% aid to meet the salary burden of the teachers and other employees of the school, but bare perusal of Section 2 (f) (1), which defines employer, uses the specific expression "belonging to or under the control of", meaning thereby, employees of Government aided schools were to be provided all benefits including the gratuity by the State of Himachal Pradesh not by School, who had been otherwise disbursing 95% Grant-in-Aid as salary to its employees. In support of his aforesaid submissions, Mr. Sharma, placed reliance upon judgment passed by the Chhattisgarh High Court in Ambika Mission Boys Middle School, Ambikapur v. State of Chhattisgarh (2020) 2 SLJ 499, and judgments passed by the Hon'ble Apex Court in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513 and Regional Provident Fund Commissioner v. Sanatan Dharma Girls Secondary School (2007) 1 SCC 268.
11. Lastly, Mr. Sharma, argued that since payment of gratuity act was made applicable to educational institution w.e.f. 3.4.1997, there was no occasion for the controlling authority to order payment of gratuity from the date of their joining, rather private respondents, if any, could have been held entitled for payment of gratuity w.e.f.
2024:HHC:12413
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3.4.1997 when Payment of Gratuity Act was made applicable to the teachers. In support of his aforesaid arguments, he placed reliance upon judgment passed by the Hon'ble Apex Court in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513.
12. While refuting the aforesaid submissions made by the learned counsel for the petitioner, Mr. Arsh Rattan, learned Deputy Advocate General appearing for the State and Mr. Vishal Thakur, learned counsel appearing for the private respondents in all the petitions, vehemently argued that there is no limitation in approaching the controlling authority for claiming payment of gratuity. While referring to Section 7 (2) of the Act, above named counsel argued that employer is obliged to determine the amount of gratuity and give notice in writing to a person to whom the gratuity is payable. If it is so, there is otherwise no requirement, if any, for the private respondents to lodge a complaint, rather same should have been itself allowed by the employer in terms of Section 7(2) of the Act. They also submitted that otherwise also, Payment of Gratuity Act 1972, being a beneficial legislation has to be liberally interpreted. To substantiate their aforesaid submissions, learned counsel for the respondents, placed reliance upon judgment passed by the Hon'ble Apex Court in H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Limited 2003 3 SCC 40 (para-7), wherein it came to be ruled that 2024:HHC:12413
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payment of gratuity is the duty of the employer and as such, claim in that regard cannot be defeated on the ground of limitation.
13. Learned counsel representing the respondents further argued that once it is not in dispute that at the time of their discharge from the private school on account of taking over their services by the government they were entitled to payment of gratuity under the Act coupled with the fact that no assets and liabilities of the private school were transferred, petitioner is estopped from claiming that liability, if any, to pay gratuity under the afore Act is of State Government, rather liability to pay gratuity for the period private respondents had served with the institution squarely lies with the petitioner. They further argued that till the time of taking over the services of private respondents by the government, their principal employer was petitioner herein, who had issued appointment letters in their favour and after receipt of Grant-in-Aid from the school petitioner-school had been paying salaries.
14. While responding to the another submission raised by the learned counsel representing petitioner with regard to date from which gratuity scheme became applicable to the claimants, learned counsel for the respondents invited attention of this Court to judgment passed by the Hon'ble Apex Court in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513, wherein retrospective applications for amendment Act 2009, came to be upheld. While 2024:HHC:12413
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inviting attention of this Court to afore judgment, learned counsel for the respondent argued that Hon'ble Apex Court having taken note of the amendment, which came into force w.e.f. 3.4.1997, ruled that once category of teachers also came to be included under the definition of employee for the purpose of payment under the Payment of Gratuity Act, rightful claim of such persons, who, before amendment, had been admittedly working as a teacher, cannot be defeated on the ground that since amendment came in force in 2009, it cannot be made applicable retrospectively, rather would only apply to the cases of the teachers, who were appointed after 2009.
15. I have heard learned counsel for the parties and perused the material available on record.
16. Having heard learned counsel for the parties and perused material available on record, this court finds that there is no dispute that private respondents prior to taking over their services by the State had been working with the petitioner-school in various capacities. It is also not in dispute that at the time of taking over of services of the respondents by the State, 95% of the Grant-in-Aid was being received by the management of the petitioner school. It is also not in dispute that in the year 2012, services of the private respondents herein were taken over by the State Government and thereafter, management of the petitioner-school, despite there being offer made by the State of Himachal Pradesh, chose not to be taken over, rather decided to run 2024:HHC:12413
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itself by using its own resources. It is also not in dispute that at the time of taking over of the services of private respondents by the respondent-State, assets and liabilities of the petitioner-school were never taken over by the respondent-State, rather same remained with the school management, who is still running the institution, but of their resources, not with the government aid.
17. Precisely, the question which needs to be decided in the instant proceedings is "whether petitioner-school is under obligation to pay gratuity to the private respondents qua the period they had rendered their services with the petitioner-school prior to their services being taken over by the State Government or not."?
18. Though it came to be vehemently argued by learned counsel for the petitioner that since services of the private respondents were taken over by the State of Himachal Pradesh w.e.f. 2012, liability, if any, to pay gratuity squarely lies with the State of Himachal Pradesh, especially when it is not in dispute that school was being run with 95% aid provided by the State of Himachal Pradesh, however this Court is not persuaded to agree with aforesaid submissions made by the petitioners for the reason that though till the year 2012, petitioner- school was being provided 95% Grant-in-Aid by the State of Himachal Pradesh, but not for payment of gratuity, rather such amount was being provided for giving salary to the employees of the school at par with the salaries received by the teachers in the government schools.
2024:HHC:12413
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19. Mr. Sharma, further argued that by providing 95% Grant- in-Aid, State had virtually become employer within the meaning of 2
(f) of the Act, which reads as under:
2(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop -
(i) belonging to, or under the control of, the Central Government or a State Government, a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive office of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person;"
20. As per aforesaid provision of law, employer, in relation to any establishment, would mean a person, who has control over the establishment. Mr. M.L. Sharma, learned counsel for the petitioner attempted to argue that since by providing 95% aid, control of the school was actually with the State, petitioner school cannot be held liable to pay gratuity, however, such plea of Mr. Sharma, deserves to be rejected outrightly, being totally fallacious. No doubt, in the case at hand, 95% aid was being provided by the respondent-State, but there is nothing to suggest that with the grant of 95% aid, respondent-State had become owner of the school or same was being managed by the 2024:HHC:12413
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respondent-State, rather there is ample material available on record suggestive of the fact that till the year 2012, services of the private respondents were being controlled by the management of the school and not by the respondent-State. Had by virtue of providing 95% aid, respondent State's, intention was to take over the school, parties would have not contested up to Hon'ble Apex Court, rather in the year 2012, number of schools, who were being provided 95% Grant-in-Aid, were taken over by the State of Himachal Pradesh subject to certain terms and conditions. Though opportunity, in the case at hand, was also provided to the petitioner-school herein to give complete control of the school to the respondent-State, but as has been observed herein above, management of the petitioner-school chose to remain independent, but services of the some of the employees including the private respondents were taken over by the respondent-State, in terms of policy framed by the State of Himachal Pradesh for taking over the services of privately management government aided schools. It is also not in dispute that assets and liabilities were never taken over by the State at the time of taking over the services of the private respondents, rather fact is that petitioner-School is being run privately by the management of the school as of today. Had management of the petitioner-school agreed to transfer the school in totality, they would have been right in contending that since entire assets and liabilities stand transferred to the State of Himachal Pradesh, liability, if any, to 2024:HHC:12413
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make the payment, if any, is of the State of Himachal Pradesh, but since in the case at hand, only services of few of the employees including the private respondents were taken over and assets and liabilities remained with the school, aforesaid submission made by the Mr. Sharma with regard to control of the respondent-State, deserves outright rejection.
21. At this stage, it would be apt to take note of judgments pressed into service by Mr. M. L. Sharma, learned counsel for the petitioner in support of his afore contentions. While referring to judgment passed by the High Court of Chhattisgarh in Ambika Mission Boys Middle School, Ambikapur v. State of Chhattisgarh (supra), Mr. M.L. Sharma, vehemently argued that State would be employer within the definition of Payment of Gratuity Act, 1970, of the employees of the government aided educational institutions. If it is so, liability, if any, to pay gratuity, as has been claimed by the private respondents in the case at hand, is entirely of the State of Himachal Pradesh, however having perused aforesaid judgments, this Court finds no application of the same in the facts and circumstances of the case. In the afore case, plea came to be raised by the petitioner-school that since it was being provided 100% aid by the State of Himachal Pradesh, State cannot be permitted to disown the teachers, who were receiving the salary under the grant-in-aid on the pretext that school was not under the control of the State. High Court of Chhattisgarh 2024:HHC:12413
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having taken note of the fact that petitioner-school was being provided 100% aid, proceeded to rule that State would be employer under the definition of the Act of the employees of aided educational institutions. Most importantly, in the aforesaid case, an attempt was made to carve out a distinction between two classes of teachers/employees for payment of gratuity before or after cutoff date i.e. 1.4.2013 received by the institution. While holding afore classification made by the State of Chhattisgarh, High Court of Chhattisgarh ruled that once both the categories are considered to be employee for the purpose of gratuity under the Act, there cannot be unjustified classification so as to deny benefit of gratuity to one set of employees. In the instant case, it is not in dispute that petitioner school never received 100% aid, rather it was in receipt of 95% of Grant-in-Aid and control of the management always remained with the petitioner-school. It is also not in dispute that services of private respondents from one particular date were taken over by the State of Himachal Pradesh, but petitioner school, despite there being offer made by the State of Himachal Pradesh, decided to be managed/run by the management of the petitioner school. Moreover, State of Himachal Pradesh, at no point of time, took responsibility of paying gratuity under the Act to the employees of government aided school, rather liability, if any, came to be taken by the respondent-State qua those employees, whose services were taken over by the State of Himachal Pradesh that too from the date their services were taken over. Since 2024:HHC:12413
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issue, which ultimately came to be decided by the High Court of Chhattisgarh was with regard to unreasonable classification made by the State of Chhattisgarh between two classes of teacher/employees for payment of gratuity before or after the cutoff date and in that case, responsibility was taken by the State of Chhattisgarh to provide benefit of gratuity under the Act to employees of Schools, who were in receipt of 100% Grant-in-aid, no parity, if any, can be claimed by the petitioner-school placing reliance upon the aforesaid judgment, which is not applicable in the present facts and circumstances of the case.
22. Similarly, this Court finds no application of judgment passed by the Hon'ble Apex Court in case Birla Institute of Technology v. State of Jharkhand and Ors (2019) 4 SC 513 and Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School and Ors. (2007) 1 SCC 268, wherein Hon'ble Apex Court while interpreting the expressions "under control of" and "belonging to" held that State cannot disown teacher, who are receiving the salaries under the Act on the ground that that they were not under the control of the State.
23. If the aforesaid judgment is read in entirety, Hon'ble Apex Court while taking note of Section 2 (f) (i) of the Act, wherein "employer" has been defined, proceeded to elaborate the terms "under control of" and "belonging to", but nowhere ruled that State would be under obligation to pay gratuity to the employees/teachers of school, 2024:HHC:12413
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who though are in receipt of 95% grant-in-aid, but yet are controlled and managed by private management, rather in the aforesaid judgments, Hon'ble Apex Court ruled that if the schools are under the control of the government, it can otherwise not escape the liability to pay gratuity in terms of Act being the Central Legislation, however, in the case at hand, as has been discussed herein above, private respondents, prior to taking over their services by the State of Himachal Pradesh though received salary from petitioner-school out of 95% grant-in-aid provided by the State, but fact remains that for all intents and purposes, they continued to be employees of the petitioner institution. Private respondents became employees of State of Himachal Pradesh from the date their services were taken over by the State of Himachal Pradesh that too subject to certain terms and conditions. In afore cases decided by the High Court of Chhattisgarh and Jharkhand, schools were being provided 100% aid by the State of Chhattisgarh and Jharkhand, as a result of thereof, complete control of the institution concerned was with the State of Himachal Pradesh, whereas in the case at hand, situation is totally converse. Petitioner- institution like many other private institutions though kept on receiving 95% grant-in-aid, but for a limited purpose i.e. payment of salary, at no point of time, gave control of the administration and other assets to the State of Himachal Pradesh. Though at one point of time, effort was made by the State Government to take over the school, 2024:HHC:12413
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complete in all respects, but such offer was rejected and only services of State employees, who had opted for taking over their services by the State of Himachal Pradesh were permitted to be taken over by the State of Himachal Pradesh, as a result thereof, private respondents ceased to be employees of petitioner institution from the date their services were taken over by the State of Himachal Pradesh. Most importantly, in the case at hand, petitioner school is being run as of today, by the private management out of its own resources. Submission made by Mr. M.L. Sharma, learned counsel for the petitioner, with regard to liability of the State of Himachal Pradesh to pay gratuity to the private respondents on account of its having provided 95% grant-in-aid, may not only open Pandora box, rather in that eventuality, respondent-State would be liable to pay gratuity to all such employees, who despite there being offer made by the State, chose to work under the private institution fully knowing the consequences of their having decided to continue with the private management.
24. Similarly, this Court having perused Section 7 of the Act in its entirety finds no force in the submission of Mr. Sharma, learned counsel for the petitioner that claim put forth by the private respondents ought to have been rejected by the controlling authority being barred by limitation. It would be apt to take note of Section 7 (1) and 7(2), which read as under:
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"7(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. 7(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount gratuity so determined."
25. If Section 7(1) is read in its entirety, it clearly suggests that any person, who is eligible for payment of gratuity under the Act, shall send a written application for payment of gratuity to the employer, within the time as specified in the Rules, himself or through an authorized agent. Section 7 (2) as reproduced herein above, makes it mandatory for employer to give a notice in writing to a person, who becomes entitled to gratuity so that amount, if any, on account of gratuity is paid to him/her within reasonable time. Though in the case at hand, claims for payment of gratuity appear to have been put forth by the respondents after 7-8 years of their discharge from the petitioner school, but that would not defeat their rightful claim, which otherwise flows from Section 7 of the Act. Though Section 7 (1) provides for making an application within the time as specified in the Rules but if Section 7 (2) is read, it clearly casts duty upon the employer to give notice to its employee as well as controlling authority with regard to gratuity payable to its employee. However in the case at hand, there is nothing to suggest that petitioner, ever gave notice to 2024:HHC:12413
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the private respondents or controlling authority, specifying the amount of gratuity so determined, on account of services rendered by the private respondents before taking over their services by the State of Himachal Pradesh.
26. At this stage it would be pat to take note of Rule 7 (1) of the Gratuity Rules, which read as under:
"7(1). An employee who is eligible for payment of gratuity under the Act, or any person authorized, in writing, to act on his behalf, shall apply, ordinarily within thirty days from the date the gratuity became payable, in Form 'I' to the employer"
27. Rule 7 (5), provides that an application for payment of gratuity filed after the expiry of the periods specified in this rule shall also be entertained by the employer, if the applicant adduces sufficient cause for the delay. Rule 7(5) reads as under:
"7(5)An application for payment of gratuity filed after the expiry of the periods specified in this rule shall also be entertained by the employer, if the applicant adduces sufficient cause for the delay in preferring his claim, and no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period. Any dispute in this regard shall be referred to the controlling authority for his decision."
28. If the aforesaid Rules, which are statutory, are read in conjunction clearly reveals that ordinarily, an application should be filed by the claimant within 30 days from the date gratuity becomes 2024:HHC:12413
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payable, but it also gives him liberty to stake claim after expiry of 30 days, but for that purpose, cogent and convincing reason is required to be adduced.
29. Question which needs to be determined at this stage is 'whether Rule framed under the Act override the statue, which itself casts duty upon the employer to give notice to an employee specifying amount of gratuity so determined.
30. No doubt, Section 7(1) talks about time for filing claim as may be prescribed in rules, but Section 7 (2) dilutes the aforesaid mandate, if any, given in Section 7. Bare reading of Section 2 casts duty upon the employer to give notice to the employee as soon as gratuity becomes payable so that necessary steps, if any, at the behest of the claimant are taken in that regard. Section 7 (2) besides casting liability upon employer to give notice to the employee also makes it mandatory to employer to give notice to the controlling authority specifying therein amount of gratuity, meaning thereby, duty to determine amount of gratuity and thereafter, to notify the same is of employer irrespective of the application. Section 7 (2) specifically states whether an application referred to in sub-section (1) has been made or not, duty is of employer to determine the amount of gratuity and thereafter notice in terms of the of aforesaid is required to be given to the employee and controlling authority.
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31. Mr. Sharma, learned counsel for the petitioner while inviting attention of this court to judgment passed by the Hon'ble Apex Court in Sultan Begum v. Prem Chand Jain (1997) 1 SCC 373, vehemently argued that every clause of statute should be construed with reference to the context or other clauses of the act so as far as possible to make a consistent enactment or whole statute or series of statutes relating to the subject matter. He submitted that since Rules, which are applicable in the case at hand, have a statutory force, having been framed in exercise of power conferred under Section 14 and Section 7 of the Act and there is specific provision for making application within thirty days from the date gratuity becomes payable in Form I to the employer, private respondents herein, cannot be permitted to draw advantage, if any, of Section 7 (2) of the Act, which casts duty upon employer to give notice in writing to a person who has become entitled to gratuity but aforesaid provision of law cannot be read in isolation, rather both Sections 7 (1) and 7 (2) are to be read in conjunction. He submitted that since Section 7 (1) clearly talks about making of an application within a time frame as may be prescribed by the rules, submission made by the learned counsel for the respondents cannot be accepted that in terms of Section 7 (2), no application at all is required to be made. Aforesaid submission made by Mr. Sharma deserves outright rejection for two reasons; i.) Rules, if any, framed pursuant to power, if any, given under the parent Act 2024:HHC:12413
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cannot override the statute. No doubt, Section 7 (1) of the Act permits the employer to prescribe timeline for making application, but if Section 7(2) is read in conjunction with Section 7 (1), duty has been cast upon the employer to give notice in writing to a person who becomes entitled to gratuity so that amount on account of gratuity, if any, is paid to him/her within reasonable time.
32. At this stage it would be apt to take note of Rule 7 (5) which provides that no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within a specified period. Aforesaid rule, which admittedly cannot override provision contained under the Parent Act wholly does away with the provisions of Rule 7 (1), which provides that an employee, who is eligible for payment of gratuity under this Act or any person authorized, in writing to act on his behalf, shall apply within 30 days from the date gratuity becomes payable to the employee.
33. True it is that as per cardinal principle of interpretation of statutes, where there is a conflict between two different sections of the same statue or different portion of the same, court has to adopt principle of doctrine of harmonious construction as has been repeatedly held in the judgments pressed into service by the learned counsel for the petitioner. In all the judgments pressed into service by the petitioner, it has been held that provision of one section of the statute cannot be used to defeat the other provision, otherwise court 2024:HHC:12413
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in its effort would find it impossible to effect reconciliation between them. Most importantly in the aforesaid judgments, Hon'ble Apex Court has held that while interpreting such provision of law court should bear in mind that when there are two conflicting provisions in the Act which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both.
34. Mr. Sharma, attempted to argue that interpretation sought to be given by the aforesaid provision contained under Section 7(2) of the Act, if accepted would render one of the provision as dead letter or useless number, which otherwise cannot be said to be harmonious construction. Though this Court finds no quarrel with the aforesaid proposition of law laid down in the judgments pressed into service by learned counsel representing petitioner, but in the case at hand, no provision, if any, ever came to be made in the Parent Act with regard to period of limitation, rather Section 7(1) gave leverage to the employer to provide timeframe within which period, an application, if any, can be made by person claiming gratuity. No doubt, in terms of aforesaid provision of law, Payment of Gratuity Central Rules, 1972, came to be framed by the Government of India, Rule 7 whereof talks about application, if any, by the employee entitled for payment of gratuity within a period of 30 days from the date of gratuity.
35. If aforesaid Rule is read in its entirety, it nowhere talks about specific time of 30 days, rather word "ordinarily" has been used, 2024:HHC:12413
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meaning thereby "ordinarily" or in normal circumstances, application in terms of aforesaid Rule should be filed within 30 days from the date gratuity became payable. Aforesaid Rule otherwise nowhere suggests that in any eventuality, application is to be filed within 30 days. If aforesaid rule is read in conjunction with Rule 7 (5), there appears to be merit in the contention of the learned counsel for the private respondents that an application for payment of gratuity filed after the expiry of period, shall also be entertained by the employer.
36. Though initial part of Rule 7 (5) suggests that application, if any, for release of payment of gratuity under the Act can be received after prescribed period of 30 days, but in that regard, applicant may have to render plausible explanation qua the delay, if any, but if second part of Rule is read, it clearly suggests that no claim for gratuity under the Act shall be invalid merely because the claimant failed to present his application within the specified period, rather any dispute, in that regard, shall be referred to the controlling authority for decision.
37. At the cost of repetition, though this Court is of the view that rules, if any, framed in terms of power of rule making provided in the Act cannot override the provisions contained in the statute, but even if it is presumed that in terms of Rule 7 (1), private respondents herein ought to have filed an application, which they failed in doing so, claim put forth by the private respondents cannot be defeated solely 2024:HHC:12413
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on the ground of late submission of applications as has been provided under Rule 7 (5).
38. Section 7 (2) if read in conjunction with Rule 7 (5), clearly provides that no claim of gratuity can be defeated on the ground of delay and laches, rather duty has been cast upon the employer to determine the amount of gratuity and give notice in writing to a person, to whom gratuity is payable and also controlling authority specifying the amount of gratuity so determined. Once duty under the aforesaid provision of law is cast upon the employer to intimate amount of gratuity payable to employee, employer otherwise cannot be permitted to claim that application in that regard was required to be filed by the person entitled for gratuity under the aforesaid act.
39. At this stage it would be apt to take note of Section 7 (3 A), which clearly provides that if amount of gratuity payable under sub- section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long terms deposits, as that Government may, by notification specify.
40. Though proviso to aforesaid provision of law provides that no such interest shall be payable if the delay in the payment is due to the fault of the employee and employer has obtained permission in 2024:HHC:12413
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writing from the controlling authority for the delayed payment on this ground, however, no material worth credence ever came to be led on record to suggest that steps if any, were ever taken by the employer i.e. petitioner herein to intimate the controlling authority of the amount payable to the respondents on account of gratuity under the Act. There is nothing to suggest that there was default, if any, on the part of the employees and petitioner had obtained permission in writing from the controlling authority for the delayed payment.
41. Section 7 (3) of the Act casts duty upon the employer to pay the amount gratuity within 30 days from the date it becomes payable to the persons to whom the gratuity is payable and as such, rightful claim of the private respondents cannot be permitted to be defeated on the ground of delay and laches. For the discussion made herein above, this Court finds no application of the judgments (Sultana Begum vs. Prem Chand Jain, Fertilizer Corporation of India and ors. vs. M/S Coromandal Sacks Private Limited and Anwar Hasan Khan vs. Mohammad Shafi and ors.) pressed into service by Sh. M.L. Sharma, learned counsel representing petitioner, wherein, Hon'ble Apex while defining the essence of rule of harmonious construction, proceeded to rule that rule in conflict, if any, should be interpreted in such a manner that effect is given to both.
42. If the aforementioned finding returned by the Hon'ble Apex Court is applied to the case at hand, it is evident that while Section 2024:HHC:12413
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7(1) of the Act grants the employer the liberty to frame rules, specifying a time limit for submitting an application for payment of gratuity, Rule 7(2) imposes a clear obligation on the employer to issue a notice to the employee as well as to the controlling authority regarding amount due, if any, under the Act.
43. If the aforesaid provisions are read in conjunction with Rule 7 (5), this Court would be inclined to give interpretation to the aforesaid provision in a way where no claim, if any, for gratuity can be rejected on the ground of limitation, rather duty always shall remain cast upon the employer to apprise its employee as well as controlling authority with regard to amount, if any, payable under the Act. In the case at hand, there is nothing to suggest that notice, either to private respondents or to controlling authority was ever given by the petitioner thereby notifying the amount of gratuity payable by the petitioner, rather its consistent stand has been that it is not liable to pay gratuity and liability, if any, to pay gratuity is of the State as it was providing 95% grant-in-aid.
44. Next question which needs to be answered in the instant proceedings is qua the date from which the gratuity scheme became applicable for the employees of the petitioner-institution.
45. Mr. M.L. Sharma, learned counsel for the petitioner- School argued that Payment of Gratuity Act, 1972 was made applicable to educational institution w.e.f. 3.4.1997 and as such, 2024:HHC:12413
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private respondents otherwise could have been made entitled to gratuity, if any, from the afore date, but definitely, not from the date of joining as has been ordered by the controlling authority. While referring to the claim petitions made by some of the employees, Mr. Sharma, further argued that once private respondents themselves claimed gratuity w.e.f. 3.4.1997, there was otherwise no occasion for the controlling authority to allow such prayer with effect from the date of their joining.
46. While referring to the judgment passed by the Hon'ble Apex Court in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513, Mr. M.L. Sharma, learned counsel for the petitioner argued that though in the aforesaid judgment, respective application of amendment No. 47 of 2009 was upheld, but it nowhere came to be ruled that persons retired prior to the afore date are also entitled to be given gratuity from the date of their joining. He further submitted that even after amendment Act, 2009, private respondents herein would be entitled to gratuity w.e.f. 3.4.1997 till their services were taken over by the respondent-State because prior to afore date, category of teachers was not in the purview of the Payment of Gratuity Act. He further submitted that mere upholding of judgment passed by the High Court of Jharkhand would not mean that private respondents herein can claim parity with the persons, who were before Division Bench of Jharkhand, especially when while 2024:HHC:12413
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rendering judgment in the year 2019, Hon'ble Apex Court, nowhere deliberated upon the issue with regard to applicability of the Act qua the employees/teachers, who stood retired prior to 3.4.1997.
47. While ascertaining the correctness of afore submissions made by the learned counsel for the petitioner, it would be apt to take note of relevant paras of judgment passed by the Division Bench of Jharkhand High Court in Birla Institute of Technology Versus State of Jharkhand & Ors. 2008 SCC OnLine Jhar 91, which ultimately came to be upheld by the Hon'ble Apex Court. Relevant paras of the afore judgment read as under:
"15. Let us now come to the Second Point, i.e., with regard to question as to whether respondent No. 4 is covered under the notification dated 03-04-1997 issued by the Central Government, especially when he has not completed 5 years of continuous service.
(a) This point also has been considered by both the Controlling Authority and the Appellate Authority as well as by the learned single Judge in detail.
(b) It is contended by the learned counsel for the appellant that the provisions of the Payment of Gratuity Act has been extended to educational institutions by notification dated 03-04-1997 and it is only applicable to non-teaching staff of institute and this will not definitely cover respondent No. 4, who has not completed 5 years of continuous service.
(c) This contention, as correctly pointed out by the learned single Judge, has no force. It is true that the Payment of Gratuity Act, 1972 has been implemented in the institute 2024:HHC:12413
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of the appellant through the notification of the Government of India dated 3-4-1997 having formulated a separate Act for the educational institutions, the Government of India has implemented it with effect from 03-04-1997. It means such workman of the educational institution who has superannuated before 03-04-1997 are not entitled to gratuity, but the workman superannuated on or after 03-04-1997 shall be entitled to gratuity. The reckoning of the service period for the purpose of eligibility of gratuity is made under Section 4 of the Payment of Gratuity Act, 1972, which contains the provisions of reckoning the total service of the workman. Admittedly, the total service of the respondent No. 4 is 30 years and on that reason, both the Controlling Authority as well as the Appellate Authority has correctly rejected the contention.
(d) While dealing with this point, the learned single Judge would reject the said contention on the basis of the observations made by the Supreme Court in (1995) 5 SCC 642 : (AIR 1996 SC 580). In the said judgment, the Supreme Court considered the commencement of the period for continuous ser vice and observed as under:--
"The starting point of the said period is from the date an employee gets employment, which in the nature of things would vary from employee to employee. It is nowhere envisaged in the scheme from the above provisions that the continuous service of the employee would be computed in a chain from calendar year to calendar year. Completed year of service would plainly mean continuous service for one year reckonable from the date of joining employment".
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(e) As indicated above, the Act became applicable to the employees of educational institution with effect from 03- 04-1997. At that time, petitioner was in service and he retired only in 2001. As such, his entire period of service has to be reckoned for the purpose of payment of gratuity.
(f) Therefore, the second ground also has to fail.
16. The next question is as to whether the judgment reported in (2004) 1 SCC 755 is applicable in the present facts and circumstances of the case.
(a) This point has been dealt with by the learned single Judge in detail. It is true as pointed out by the learned counsel for the appellant that the Apex Court in (2004) 1 SCC 755 held that a teacher employed in a School is not an employee within the meaning of Section 2 (e) of the Act. Let us refer to the relevant observations made by the Supreme Court:--
24. The contention advanced that teachers should be treated as included in the expression "unskilled" or "skilled" cannot, therefore, be accepted. The teachers might have been imparted training for teaching or there may be cases where teachers who are employed in primary schools are untrained. A trained teacher is not described in the industrial field or service jurisprudence as a "skilled employee". Such adjective generally is used for an employee doing manual or technical work. Similarly, the words "semi-skilled"
and "unskilled" are not understood in educational establishments as describing nature of job of untrained teachers. We do not attach much importance to the arguments advanced on the question as to whether "skilled", "semiskilled" and "unskilled" qualify the words "manual", supervisory", 2024:HHC:12413
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technical", or "clerical" or the above words qualify the word "work". Even if all the words are read disjunctively or in any other manner, trained or untrained teachers do not plainly answer any of the descriptions of the nature of various employments given in the definition clause. Trained or untrained teachers are not "skilled", "semi-skilled", "unskilled", "manual", "supervisory", "technical" or "clerical"
employees. They are also not employed in
"managerial" or "administrative" capacity.
Occasionally, even if they do some administrative work as part of their duty with teaching, since their main job is imparting education, they cannot be held employed in "managerial" or "administrative"
capacity. The teachers are clearly not intended to be covered by the definition of "employee".
(b) The reading of the entire judgment including the said paragraph would clearly show that the judgment was rendered in the case of primary school teachers and it cannot be expected that they should be possessed of expert knowledge. In that context, the Apex Court held that the teachers in the primary school do not fail within the definition of employee under the Act.
(c) The Supreme Court was not considering the case of an employee who was doing technical work which has been clearly specified in Section 2 (e) of the Act to bring an employee within the ambit of Section 2 (e) of the Act. As indicated in the above paragraphs, the duties entrusted to the skilled and technical person like respondent No. 4 is entirely different from the teacher working in the primary school.
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(d) Similarly, the learned single Judge has also given the reason as to why this point has to be rejected in the following observation:--
"Based upon above observations, it is contended that teachers have not been held to be "employee" within the meaning of Section 2 (e) of the Act and thus benefit of gratuity is not available to respondent No.
4. It is relevant to notice that the judgment was rendered in the case of Primary School Teachers and they cannot be said to be possessed of any expert knowledge of teaching or any technical or any skilled knowledge. It is under these circumstances, Apex Court held that the teachers do not fall within the definition of "employee" under the Act. Though respondent No. 4 is a teacher in the petitioner-
Institution but he is possessed of a degree in Mechanical Engineering and in course of his employment he not only teaches the students but also performs other functions like imparting technical knowledge even based on material testing in a laboratory. By and large, the nature of job of the petitioner as a teacher in engineering faculty cannot be considered to be teaching job simpliciter. Such a job, though academic, is also technical in nature. In my humble opinion, above judgment will not apply in the present case.
(e) This observation by the learned single Judge to reject this point, in our view, is perfectly justified.
48. In the afore case before the High Court of Jharkhand, petitioner therein though was engaged by the employer concerned in the year 1971, but admittedly, he retired in the year 2001. Since with 2024:HHC:12413
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the promulgation of the Amendment Act No. 47 of 2009, category of teacher was also brought under the purview of the Payment of Gratuity Act with retrospective effect from 03.04.1997, Division Bench of Jharkhand High Court held that since at the time of his retirement, petitioner in that case had become eligible for gratuity in terms of the Act, his services rendered prior to afore date are also required to be taken into consideration while computing period for calculation of gratuity. It is not in dispute that aforesaid view taken by the Division Bench of Jharkhand ultimately came to be upheld by the Hon'ble Apex Court in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513. At this stage, it may be apt to take note of the fact that prior to filing the judgment in the year 2019, as detailed herein above, Hon'ble Supreme Court had earlier dealt with the issue in Ahmadabad Private Primary Teachers' Association v. Administrative Officer, 2004 (1) SCC 755, wherein plea, which was accepted by the Hon'ble Division Bench of the Jharkhand High court was negated by the Hon'ble Supreme Court by holding that teachers are not in the ambit of payment of Gratuity Act. Though in the case before the Hon'ble Apex Court, one notification was produced suggestive of the fact that category of teachers was included in the definition of employee in terms of the Act, but since no amendment was carried in the Act, afore notification was not taken into consideration by the Hon'ble Apex Court, as a result thereof, claim put 2024:HHC:12413
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forth by the teachers claiming themselves entitled to payment of gratuity under the Act was negated, however, subsequently, in judgment passed in Birla Institute of Technology v. State of Jharkhand and Ors. (2019) 4 SCC 513, Hon'ble Apex Court ruled that law laid down by it in Ahmadabad Private Primary Teachers' Association v. Administrative Officer, 2004 (1) SCC 755 was no longer applicable against the petitioner and secondly, teachers were entitled to claim gratuity. Relevant paras of the judgment passed in Birla Institute of Technology v. State of Jharkhand read as under:
"22. The definition of "employee" as defined under Section 2(e) was accordingly amended with effect from 03.04.1997 retrospectively vide Payment of the Gratuity (Amendment) Act, 2009 (No. 47 of 2009) published on 31.12.2009. The amended definition reads as under:
"(e) "employee" means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity."
23. In the light of the amendment made in the definition of the word "employee" as defined in Section 2(e) of the Act by Amending Act No. 47 of 2009 with retrospective effect from 03.04.1997, the benefit of the Payment of Gratuity Act was also extended to the teachers from 03.04.1997. In other words, the 2024:HHC:12413
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teachers were brought within the purview of "employee" as defined in Section 2(e) of the Payment of Gratuity Act by Amending Act No. 47 of 2009 with retrospective effect from 03.04.1997.
24.The effect of the amendment made in the Payment of Gratuity Act vide Amending Act No. 47 of 2009 on 31.12.2009 was two-fold. First, the law laid down by this Court in the case of Ahmadabad Pvt. Primary Teachers Association (supra) was no longer applicable against the teachers, as if not rendered, and Second, the teachers were held entitled to claim the amount of gratuity under the Payment of Gratuity Act from their employer with effect from 03.04.1997.
25. In our considered opinion, in the light of the amendment made in the Payment of Gratuity Act as detailed above, reliance placed by the learned counsel appearing for the appellant (employer) on the decision of Ahmedabad Pvt. Primary Teachers Association(supra) is wholly misplaced and does not help the appellant in any manner. It has lost its binding effect.
26. Learned counsel for the appellant then urged that the constitutional validity of Amending Act No. 47 of 2009 is under challenge in this Court in a writ petition, which is pending. 33. Be that as it may, in our view, pendency of any writ petition by itself does not affect the constitutionality of the Amending Act, and nor does it affect the right of respondent No.4 (teacher) in any manner in claiming gratuity amount from the appellant(employer) under the Act.
27. It is only when the Court declares a Statute as being ultra vires the provisions of the Constitution then the question may arise to consider its effect on the rights of the parties and that would always depend upon the declaration rendered by the Court and the directions given in that case. Such is not the case here as of now.
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28. In the light of the foregoing discussion, we find no merit in this appeal, which fails and is hereby dismissed with costs quantified at Rs.25,000/- payable by the appellant to respondent No.4(teacher)."
49. If the aforesaid judgment is read in its entirety, it came to be rule by Hon'ble Apex Court that once a teacher has been brought in the definition of employee as defined under Section 2 (e) of the Act by amending Act No. 47 of 2009 with retrospective effect from 3.4.1997, the benefit of the Act is required to be extended to the teachers from 3.4.1997.
50. Though, at this stage, Mr. M.L. Sharma, learned counsel for the petitioner vehemently argued that even in terms of aforesaid judgment passed by the Hon'ble Apex Court, teacher or category of teacher is eligible to be granted benefit of gratuity w.e.f. 3.4.1997, but this Court is not persuaded to agree with aforesaid submission of Mr. Sharma, for the reason that in a case before Hon'ble Apex Court, issue was not with regard to applicability of Amendment Act qua the teachers, who admittedly stood retired prior to 3.4.1997, rather in that case, judgment passed by the Division Bench of Jharkhand, upholding the claim of the petitioner, who was appointed as teacher in the 1971 but had retired after 2007 was upheld. By upholding judgment passed by the Division Bench in the aforesaid judgment, Hon'ble Apex Court virtually ruled that since on 3.4.1997, category of teacher had become eligible for payment of gratuity under the Act, teachers 2024:HHC:12413
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working on that day, shall be eligible for payment of gratuity under the Act and period for computing minimum service would be counted taking note of service rendered prior to such date i.e. 3.4.1997.
51. There is another aspect of the matter that minimum service required for claiming the payment of gratuity is five years in terms of Section 4 Clause 1, which reads as under:
"4. Payment of gratuity.-(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c)on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:
[Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] [ Substituted by Act 22 of 1987, Section 4 (w.e.f. 1.2.1991).] Explanation .-For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement."
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52. As per aforesaid provision, gratuity shall be payable to an employee on the termination of his employment after his having rendered continuous service for not less than five years. In case argument advanced by Mr. Sharma, is accepted that private respondents herein became eligible for payment of gratuity after 3.4.1997, they would never become eligible for gratuity for the reason that person claiming gratuity must have rendered at least five years of service.
53. By way of parliamentary amendment brought in the year 2009, with retrospective effect from 03.04.1997, "teachers" have been specifically included within the ambit of the word employee as defined under section 2 of the Payment of Gratuity Act, 1972. Upon the said amendment being introduced in the Act, the Hon'ble Supreme Court of India in Birla Institute of Technology vs State of Jharkhand2019 4 SCC 513, upheld the claim of Gratuity of the private respondent involved in the aforesaid case.
54. At the same time, the Hon'ble Supreme Court of India also observed in para 24, "The effect of amendment made in the Payment of Gratuity Act vide the amending act, 47 of 2009on 31.12.2009 was twofold. First, the law laid down by this Court in Ahmedabad Private Primary Teachers Association(2004 1 SCC 755) was no longer applicable against the teachers, as if not rendered, and second, the teachers were held entitled to claim the amount of gratuity 2024:HHC:12413
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under the payment of Gratuity act, from their employer with effect from 03.04.1997".
55. In the aforesaid case, the private respondent, whose claim for gratuity was upheld by the Hon'ble Supreme Court, had rendered the services as a teacher at the Institute from 16.09.1971 to 30.11.2001. The claim of Gratuity, raised by the private respondent therein, was allowed by the Controlling Authority, (i.e., the First Authority), thereafter, sequentially upheld by the Appellate Authority, the Hon'ble Single Bench of the Jharkhand High Court, and the Hon'ble Division Bench. Ultimately, the appeal against these decisions was dismissed by the Hon'ble Supreme Court of India in the Birla Institute case (supra). Therefore, the entire services rendered by the private respondent concerned in the said litigation i.e., w.e.f. 1971 to 2001, were counted in order to compute the claim of gratuity, which was ultimately affirmed by the Hon'ble Supreme Court.
56. Furthermore, the Act itself stipulates by way of Section 4 (1) that in order to be eligible for gratuity, a person must have rendered at least 5 years of service and in case, the services are to be counted w.e.f. 03.04.1997 then the private respondent concerned before Apex Court would never have been eligible to seek gratuity in the first place because from 03.04.1997 to 30.11.2001 (date of retirement), the period of 5 years is not completed and thus the person does not becomes entitled for gratuity, however, the Hon'ble Supreme Court after discussing the facts of the case in para 12 of Birla Institute 2024:HHC:12413
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(Supra), upheld the claim of Gratuity, thereby necessarily implying that the services rendered before the date of 03.04.1997 would be counted for computing the claim of gratuity.
57. Otherwise also, if the services rendered by an employee prior to 03.04.1997, are excluded, any person retiring after that date but before completing the statutorily prescribed of five years of service would be rendered ineligible to claim gratuity. For instance, employees retiring on 04.04.1997, 05.04.1997 or 30.04.1997, and so forth would remain ineligible to claim gratuity, despite their total service exceeding five years. Therefore, such an interpretation would cause grave injustice to employees who have dedicated their entire careers as teachers, effectively denying them gratuity merely because they retired after 03.04.1997, but before completing five years counted from that date.
58. Furthermore, the effect of the amendment is not that a person becomes a teacher only after 03.04.1997, rather a person who has been a teacher prior to such date, also becomes entitled to claim gratuity provided he fulfills the requirement of rendering 5 years of service as a teacher. A teacher retiring prior to 03.04.1997, say on 02.04.1997, would not be entitled to claim gratuity because gratuity becomes payable only upon superannuation and since on the superannuation of such a person, teachers were not included within the definition of employee, a teacher who had superannuated prior to 2024:HHC:12413
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03.07.1997 could not claim gratuity. However, a teacher retiring on or after 03.04.1997 would be entitled to claim gratuity because upon the superannuation of such a person, category of 'teacher' stood included within the definition of employee under the Act.
59. Consequently, in view of the detailed discussion made herein above as well as law taken into consideration, this Court finds no illegality and infirmity in the impugned order passed by the appellate authority, which appears to be based upon proper appreciation of facts and law and as such, same is upheld. Accordingly, present petitions fail and dismissed being devoid of merit. All pending applications also stand disposed of.
November 7, 2024 (Sandeep Sharma), manjit Judge