SC declared teachers not eligible for gratuities under the 1972 Act

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The Supreme Court ruled in favour of the appellant Institute and declared that the teacher could not be considered as an employee under Section 2(e) of the Payment of Gratuity Act, 1972 and hence he cannot claim gratuity payments from his employer as per the provisions of the said Act.

Facts of the case

In this case the appellant Institute, Birla Institute of Technology (BIT), Jharkhand was aggrieved by the decision of the High Court of Jharkhand at Ranchi and approached Supreme Court with an appeal against the lower court’s 02/04/08 verdict. Respondent No.4 in this case had worked as Assistant Professor in BIT. After retirement, he claimed gratuity payments from the appellant Institute which was denied to him by BIT. He then filed a complaint under controlling authority for the grant of his payment which he believed was payable to him by the appellant under the Payment of Gratuity Act, 1972. The appeal was accepted and the Respondent No.4 was allowed the said payment.

Aggrieved by this decision the appellant Institute went to court but lost the appeal. The appellant Institute then moved to High Court where a Single Judge again dismissed the appeal. Subsequently, the appellant Institute filed a Letters Patent Appeal (LPA) before the Division Bench of the High Court against the order passed by the Single Judge which was also dismissed. Being frustrated by the whole situation the appellant Institute then filed a special leave petition in the Apex Court against the lower court’s decision in the LPA.

Court ruling

The case was heard by Two-Judge Bench of the top court, Honourable Justices A. M. Sapre and Indu Malhotra and the judgment was delivered on Monday, January 7, 2019. After hearing the arguments of both the sides the Apex Court relied on a previous judgment in the case of Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Others (2004) 1 SCC 755 and ruled in favour of the appellant Institute.

The top court pointed out that in the Ahmadabad Pvt. Primary Teachers Association (supra), Justice D. M. Dharmadhikari discussed at length on the same point of contention and “held that a teacher is not an employee within the meaning of the expression “employee” as defined under Section 2(e) of the Act and hence he/she is not entitled to claim any gratuity amount from his employer under the Act.” The Court quoted the previous verdict stating –

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.

If the legislature intended to cover all categories of employees for extending benefit of gratuity under the Act, specific mention of categories of employment in the definition clause was not necessary at all. The legislature was alive to various kinds of definitions of the word employee contained in various previous labour enactments when the Act was passed in 1972. If it intended to cover in the definition of employee all kinds of employees, it could have as well used such wide language as is contained in Section 2(f) of the Employees Provident Funds Act, 1952. Non−use of such wide language in the definition of employee in Section 2(e) of the Act of 1972 reinforces our conclusion that teachers are clearly not covered in the definition.

In their concurrent verdict the Apex Court held “the aforementioned principle of law” and decided that “respondent No.4, who was also a teacher and worked with the appellant as such, was not eligible to claim gratuity amount from the appellant (BIT) under the Act. The Court did not make any distinction between the teachers inter se and nor made any distinction as to in which type of educational institute the teacher is working for determining his entitlement to claim the gratuity under the Act.”

The Court also reiterated that “the High Court was, therefore, not justified in making a distinction between the teachers working in the primary schools and the teachers working in other educational institutions. We cannot, therefore, concur with the view taken by the High Court. As a result, the appeal succeeds and the impugned order is set aside.”

Impact of the judgment

The verdict pointed out that there should not be any misconception that the Court is against teachers receiving any gratuity benefits. The Supreme Court also categorically emphasised “it is for the legislature to take cognizance of situation of such teachers in various establishments where gratuity benefits are not available and think of a separate legislation for them in this regard. That is the subject−matter solely of the legislature to consider and decide.” This judgment brought home the fact that there are extensive lacunae in various areas of the Payment of Gratuity Act, 1972 and it needs to be modernised with respect to current situations so that such problems do not come up in the future. The teaching profession is one of the noblest professions where teachers are entrusted to carve the future generations through meticulous guidance and support. The shining light of knowledge in our path that firmly roots our dreams in the hard concrete of reality and ingrained in us the value system that stood us in good stead throughout our lives; the contribution of our teachers in shaping our life goals and helping us to realise our true potential is beyond simple platitudes and affirmation of their services. The Court also recognised this fact and urged the legislative authorities to take up this cause of changing legislations or making new laws so as to be able to give teachers their dues in the form of both awards and monetary rewards.

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