Explore the detailed legal analysis conducted by the court regarding gratuity and leave encashment for employees of aided educational institutions. The court’s examination of rules, regulations, and precedents sheds light on the complexities of entitlements for these employees. Stay informed on how the court’s decisions impact the rights and liabilities of parties involved.
Facts
- The managing committee of the establishment decided to discontinue receipt of grant-in-aid from the State with effect from 1 April 2008.
- The establishment moved an application seeking directions from the court in September 2016.
- Contempt proceedings were filed by the appellants in Civil Appeal Nos. 6601-6603 of 2016.
- The High Court disposed of the writ petitions refusing to direct the State to absorb the employees.
- The State government was directed to consider the absorption of the eleven aided teachers and pass orders within one month.
- The State ceased to grant aid with effect from 1 March 2012.
- Rajasthan Voluntary Rural Education Service Rules, 2010 were framed by the State for the security and absorption of employees working in aided institutions.
- The appellants sought absorption with the State as per the rules.
- The school management was directed to make payments to the aided teachers in instalments and submit salary calculation statements.
- The appellants moved the High Court contending payment dues of ₹57.68 lakhs to the employees and ₹36.20 lakhs for privilege leave salary.
- The review of the orders was sought but rejected in November 2013.
- The High Court set aside the denial of absorption of the appellants.
- Gratuity and leave encashment were not considered as part of ‘salary’ under Rule 10 of the 2010 Rules or the 1993 Rules.
- Eleven teachers were receiving aid from the state government and were entitled to absorption applying the 2010 Rules from the date they came into effect.
- The High Court rejected the applications of the appellants as they had already received their salary.
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Arguments
- Management establishment admitted liability for payment of leave encashment and gratuity.
- Chart produced by establishment specified gratuity and leave encashment amounts for all 11 employees.
- Employees could seek leave encashment only from private institutions as per Rule 5(viii).
- Establishment could not deny liabilities as per the application filed in court.
- One appellant was already paid gratuity and leave encashment by the establishment.
- Argument made that ‘salary’ includes both gratuity and leave encashment.
- Rule 5(viii) denied carry forward of privileged leave.
- Employees entitled to leave encashment and gratuity from private institutions as per 2010 Rules.
- Gratuity for employees of aided educational institutions under Payment of Gratuity Act, 1972.
- Court held that gratuity was not a recurring grant and State was not liable.
- Employees had executed an undertaking accepting all terms and conditions of service prescribed by 2010 Rules.
- The Payment of Gratuity Act, 1972, was amended with retrospective effect from April 3, 1997, changing the definition of ’employee’ under Section 2(e).
- A solitary instance of one individual receiving gratuity does not create a general liability without corresponding legal obligation.
- The order explicitly stated that leave encashment and gratuity are not considered part of ‘salary’.
- Privileged leave cannot be considered part of ‘salary’ under the Rajasthan Non-Governmental Educational Institutions Act, 1989.
- Aid must be provided by the State Government for the disbursement of privileged leave as per the Senior Higher Secondary School Lachhmangarh case.
- The State Government is primarily responsible for disbursing gratuity to employees of aided institutions as seen in the Ambika Mission Boys Model School case.
- The Chhattisgarh High Court decision in Ambika Mission Boys Model School v. State of Chhattisgarh emphasized the State’s liability for gratuity payments for employees of aided institutions.
- The Chhattisgarh High Court and the previous judgment of the Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School & Ors highlighted that although aided institutions are not owned by the Central or State Government, they are under State control in various aspects.
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Analysis
- Rules were framed for absorption of employees from non-government aided institutions.
- Gratuity is not a part of recurring grants as per the Act and Rules.
- Existing privilege leave carry forward is denied as per Rule 5(viii).
- Aided institutions’ service period is not considered for gratuity under Rule 5(ix).
- Communication stating no provision for gratuity in approved expenditures cannot be deemed illegal.
- Rule 14 specifies approved expenditure categories, excluding gratuity.
- Gratuity is not included in the four categories of grant under Rule 9.
- Section 16 and Section 29 aim to maintain parity in pay and allowances between aided and government institutions.
- Rule 82 mandates payment of gratuity as per the Gratuity Act.
- Gratuity cannot be included in approved expenditure under Rule 9.
- Gratuity does not fall under maintenance category for grant-in-aid.
- Employees of aided institutions have the right to gratuity.
- Regularization was directed by court order in the case at hand.
- Entitlement to leave salary is crucial for maintaining parity with government employees.
- Approved expenditure is determined by Rules and relevant instructions.
- Section 29’s broad definition of ‘salary’ includes leave encashment benefits.
- Rule 5 of the 2010 Rules affected benefits for regularized employees.
- Section 16 and Section 29 encompass conditions of service and pay allowances respectively.
- Leave encashment entitlement falls under Section 29 and State’s rules under Section 16.
- Efforts to improve service conditions in aided institutions to match government standards are ongoing.
- The liability for gratuity was settled conclusively.
- Issues of regularization and entitlements for employees have been resolved.
- Gratuity not being considered as an emolument or part of ‘actual salary’.
- Non-recurring payments like gratuity do not fall under the definition of salary.
- Unconscionable conditions for entitlements are impermissible.
- Accounting principles were the focus in a case related to the Payment of Bonus Act.
- Compensatory allowance is defined as an allowance granted for personal expenditure in special circumstances while on duty.
- Section 3 of the Act deals with the recognition of grant-in-aid institutions.
- Sections 4 to 6 cover situations like refusal of recognition, withdrawal of aid, and remedies for the institution.
- Regulatory provisions from Section 7 onwards include audit, recruitment, termination of teachers, and tribunal for redressal of grievances.
- Section 29 focuses on pay and allowances of employees in aided institutions, ensuring they are not lower than those in government institutions.
- Salary of employees of recognized institutions must be paid within a specified timeframe as per the Act.
- The salary should not have deductions except those authorized by rules or other laws.
- Rule 47 pertains to privilege leave for employees.
- The Act defines salary as emoluments excluding compensatory allowances.
- Rule 82 mandates Gratuity for employees and arrangement for Group Insurance under LIC schemes for aided educational institutions.
- Primary education is considered a fundamental right based on the decision in Unni Krishnan v. State of Andhra Pradesh
- State Governments grant aid to educational institutions to improve education
- Teachers of aided private schools should be treated at par with teachers of Government institutions
- An undertaking in a prescribed form is required from every employee to accept the terms and conditions
- The Chhattisgarh High Court decision in Ambika Mission Boys Model School is not considered an authority in this case
- Service conditions of teachers deserve improvement according to the court
- Appellants are entitled to claim leave encashment benefits based on established reasoning
- Rule 82 remains unchanged, holding the management liable for gratuity payment upon termination of the employer-employee relationship.
- No new evidence has been presented to suggest the management is absolved of this liability.
- Rule 82, a condition of grant, signifies the management’s awareness of their gratuity payment responsibility when aid was granted under the 1993 Rules.
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Decision
- The State must determine the extent of entitlement for each appellant within four weeks.
- The management establishment must communicate the amount payable to the appellants within six weeks.
- If aided Non-Government Educational Institutions make representations, the State will consider gratuity amounts in computing grant-in-aid.
- Gratuity payments should not be delayed pending representations.
- No costs will be awarded.
- Aid will be sanctioned at 70%, with the school management bearing 30%.
- Full salary for absorbed teachers in state service must be calculated and sanctioned.
- Gratuity amount must be calculated and paid to appellants within six weeks.
- Leave encashment liability is at a ratio of 70:30 between the State and the management.
- Interest at 10% will be added to amounts payable to appellants from their entitlement dates to the date of payment.
- The appeal is allowed based on the above directions.
Case Title: JAGDISH PRASAD SAINI Vs. THE STATE OF RAJASTHAN (2022 INSC 1023)
Case Number: C.A. No.-006953-006953 / 2022
