Case BriefsSupreme Court

Supreme Court: While upholding the Constitutional validity of the Payment of Gratuity (Amendment) Act, 2009, the Division Bench of Sanjiv Khanna* and Bela M. Trivedi, JJ., held that the Amendment seeks to bring equality and give fair treatment to the teachers. It can hardly be categorised as an arbitrary and high-handed exercise.

Noticeably, the aforesaid Amendment Act was introduced to extend the benefit of gratuity to the teachers by including them in the definition of “employee”, who were earlier deprived of it. The Court said,

“Private schools, when they claim a vested right arising from the reason of defect, should not succeed, for acceptance would be at the expense of teachers who were denied and deprived of the intended benefit.”

The common question before the Bench was regarding constitutional validity of the amendment to Section 2(e) and insertion of Section 13A to the Payment of Gratuity Act, 1972 (the Act), with retrospective effect from 03-04-1997 vide the Payment of Gratuity (Amendment) Act, 2009.

Government Notification No. S-42013/1/95-SS.(II)

The Act requires payment of gratuity to an employee after he has rendered continuous service for not less than 5 years, on his superannuation, retirement or resignation or on his death or disablement due to accident or disease. Noticeably, by the Notification No. S-42013/1/95-SS.(II) issued by the Ministry of Labour and Employment, Government of India on 03-04-1997, the provisions of the Act have been made applicable to the educational institutions with ten or more employees.

Decision in Ahmedabad Private Primary Teachers’ Association’s case, (2004) 1 SCC 755

Therefore, the private schools being educational institutions, in which ten or more persons are employed, became liable to pay gratuity to their employees as per the provisions of the Act. However, some private schools raised a dispute claiming that the teachers in educational institutions or schools are not “employee” as defined in Section 2(e) of the Act. The Supreme Court in Ahmedabad Private Primary Teachers’ Association v. Administrative Officer, (2004) 1 SCC 755, held that teachers who impart education to students are not “employee” under Section 2(e) of the Act as they do not perform any kind of skilled, unskilled, semi-skilled, manual, supervisory, managerial, administrative, technical or clerical work.

Thus, the teachers were denied the benefit of gratuity, but other employees of the private schools, were entitled to the benefit of gratuity.

Payment of Gratuity (Amendment) Act, 2009

Referring the judgment in Ahmedabad Private Primary Teachers’ Association (supra) in the object and reasons for Amendment, the Government introduced the Payment of Gratuity (Amendment) Act, 2009 to cover the definition of “employee” to all kinds of employees. The Amendment Act inserted a new Section 13A and also Clause (e) to Section 2 of the Act with retrospective effect from 03-04-1997 to confer, with retrospective effect, benefit of gratuity to the teachers who have rendered continuous service for not less than 5 years.

Analysis and Findings

Whether the government empowered overrule judicial decisions by introducing Statutory Amendments?

The petitioners contended that the legislation vide the Amendment Act 2009 overrules the judicial decision in Ahmedabad Private Primary Teachers’ Association (supra) and violates the doctrine of separation of powers. Rejecting the aforesaid argument, the Court observed that the legislation in question rather rectifies the infirmities and defects pointed out by the Court in the aforesaid decision, and the amended clause (e) to Section 2, defining the word “employee” and the newly inserted Section 13A with retrospective effect, effectuate and catalyse the object and purpose of the Notification No. S-42013/1/95-SS.(II).

The Court opined that though a court decision cannot be overruled by the legislature, the legislature can amend the language of the provision that was the subject matter of the court decision, and such an amendment does not overrule the court decision. The Court said,

“Overruling assumes a decision based on the same law. Where the law, as in the present case, has been amended, and the defects have been removed or cured, the law changes, and therefore, the earlier interpretation is no longer applicable and becomes irrelevant.”

Noting that the decision in Ahmedabad Private Primary Teachers’ Association (supra) even acknowledged and prompted the legislature to enact a legislation granting the benefit of gratuity to teachers, who had been excluded because of the legal flaw, the Court held that the amendment enforces and gives effect to what was intended by the notification, but could not be achieved on account of the technical and legal defect. The lacuna, a distortion in the language that had the unwitting effect of leaving out teachers, has been rectified so as to achieve the object and purpose behind the issuance of the notification, making the Act applicable to all educational institutions.

Whether the Amendment financially confiscatory?

The private educational institutions also assailed the Amendment on the ground that they would be liable to pay gratuity for a period of service prior to 03-04-1997, and, therefore, the amendments are unconscionable and tyrannous, equally fallacious and financially confiscatory.  The Court, calling the aforesaid argument fallacious, observed that the argument, predicated on past liability, deserved to be rejected as there are upper-cap limits on payment of gratuity; i.e., the payment towards gratuity cannot exceed the specified amount, even if the employee would be entitled to higher amount in view of the years of the service rendered to the employer.

Relying on T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481, some schools argued that charging of capitation fee or profiteering by educational institutions is impermissible and they do not have capacity and ability to pay gratuity to the teachers.

Finding the aforesaid argument unapt and parsimonious, the Court clarified the decision in T.M.A. Pai Foundation (supra) by holding that the judgment does not state that the teachers should not be paid gratuity; in fact, the judgment holds that the educational institutions are entitled to reasonable surplus to meet the cost of expansion and augmentation of the facilities and this does not amount to profiteering.

The Court noted that though it is possible that in some States there are fee fixation laws which will have to be complied with, but compliance with these laws does not mean that the teachers should be deprived and denied gratuity, which they were/are entitled to receive as other employees of an educational institution. The Court said that regulation of fee is to ensure that there is no commercialisation and profiteering, and the effect is not to prohibit a school from fixing and collecting ‘just and permissible school fee’. The Court added,

“We would not accept any attempt to circumscribe and limit the power vested with the sovereign legislature, thereby putting fetters when such fetters are not prescribed by the Constitution. When and which cases to exercise the power has to be left to the legislature.”

Applicability: Retrospective v. Retroactive

The Court, while holding that the Amendment retroactive, observed that the provisions of the Act, even post the retrospective amendments, will apply only to those teachers who were in service as on 03-04-1997, and at the time of termination have rendered service of not less than 5 years. The Court said that the period of 5 years may be partly before 03-04-1997, as the date on which the person was employed does not determine the applicability of the PAG Act.

However, the date of termination of service, should be post the enforcement date. The entire length of service, including the service period prior to 03-04-1997, is to be counted for the purpose of computing the entitlement condition of 5 years of service.

Whether the Amendment violative of Fundamental Rights?

The schools had claimed violation of Articles 14, 19(1)(g), 21 and 300-A of the Constitution. Holding that the Constitutional provisions are not violated, the Court said that to deny gratuity benefits to the teachers upon enforcement of the notification No. S-42013/1/95-SS.(II) was itself an anomaly which mandated correction.

The Court observed that the teachers were discriminated to be denied benefit of gratuity, a terminal benefit, which was payable to other employees of the private schools/educational institutions, including those engaged in administrative and managerial work. The amendment with retrospective effect remedies the injustice and discrimination suffered by the teachers on account of a legislative mistake.

Whether the Amendment violated other enactments?

The last contention raised by the private schools and writ petitioners was predicated on the enactment of the Repealing and Amending Act 2016, by virtue of which the Amendment Act 2009 was repealed. Once again, rejecting such contention, the Court opined that the argument overlooked Section 6A of the General Clauses Act, 1897 and Section 4 of the Repealing and Amendment Act, which states that the repeal shall not affect any of the enactment in which the repealed enactment has been applied, incorporated or referred to. It also states that the Repealing Act shall not affect the validity, invalidity, effect or consequences of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred etc.

Verdict

In the light of aforesaid, the Court upheld the validity of the Amendment Act and directed that the private schools would make payment to the employees/teachers along with the interest in accordance with the provisions of the Act within a period of 6 weeks and in case of default, the employees/teachers may move the appropriate forum to enforce payment in accordance with the provisions of the Act.

Hence, the Court vacated the partial stay on the Amendment Act in the order dated 31-01-2020 passed in Saint Xaviers High School v. Jayashree Shamal Ghosh, (SLP (C) No. 2235 of 2020) or in any other case. The appeals and the petition were dismissed.

[Independent Schools’ Federation of India (Regd.) v. Union of India, 2022 SCC OnLine SC 1113, decided on 29-08-2022]


*Judgment by: Justice Sanjiv Khanna


Kamini Sharma, Editorial Assistant has put this report together

Case BriefsSupreme Court

Supreme Court: In a major win for Private Schools in the State of Rajasthan, the bench of AM Khanwilkar and Dinesh Maheshwari, JJ has directed the School Managements to collect fees for the academic year 2019-2020 as well as 2020-2021 from the students, equivalent to fees amount notified for the academic year 2019- 2020, in six monthly installments commencing from 5th March, 2021 and ending on 5th August, 2021.

Noticing that the hearing in the matter is likely to take some more time, the Court passed ‘interim directions which will address the concerns of all parties in some measure’.

In the order that came as a big blow to the parents as most of the classes in the year 2020 have been conducted online due to the outbreak of COVID-19 pandemic, the Court, in order to balance the interest of the Schools and the parents, further passed the following interim directions:

  1. The Management shall not debar any student from attending either online classes or physical classes on account of non-payment of fees, arrears/outstanding fees including the installments, referred to above, and shall not withhold the results of the examinations of any student on that account.
  2. Where the parents have difficulty in remitting the fee in terms of this interim order, it will be open to those parents to approach the school concerned by an individual representation and the management of the school will consider such representation on a case-to-case basis sympathetically.
  3. The above arrangement will not affect collection of fees for the academic year 2021-2022, which would be payable by the students as and when it becomes due and payable, and as notified by the management/school.
  4. In respect of the ensuing Board examinations for classes X and XII (to be conducted in 2021) the school management shall not withhold the name of any student/candidate on the ground of non-payment of the fee/arrears, if any, on obtaining undertaking of the concerned parent/student.

The Court, however, clarified that the above arrangements would be subject to the outcome of the matters pending before the Court including the final directions to be given to the parties and without prejudice to the rights and contentions of the parties in these proceedings.

The Court also directed the State of Rajasthan to ensure that all government outstanding dues towards unit cost payable to respective unaided schools are settled within one month from the today and, in any case, before 31st March, 2021.

The matter will now be taken up for hearing on February 15, 2021.

[Gandhi Sewa Sadan Rajsamand v. State of Rajasthan, 2021 SCC OnLine SC 70, order dated 08.02.2021]

Himachal Pradesh High Court
Case BriefsHigh Courts

Himachal Pradesh High Court: A Division Bench of Tarlok Singh Chauhan and Jyotsna Rewal Dua JJ. disposed off the writ petition in light of settled law regarding the scope of regulation of schools by the Government.

The facts of the case are that a government notification dated 27-05-2020 was issued regarding the collection of school fee in the wake of COVID-19 which included mainly to only charge tuition fee on a monthly basis, payment of which is optional, no fine chargeable and no restriction on attending online classes on delay of fee payment along with timely payment of salaries to teachers without any pay cuts. Aggrieved by the said notification registered association of 45 private schools have preferred the instant petition to quash the said notification being unreasonable and oppressive.

Counsel for the petitioners R. K. Gautam and Radhika Gautam, relying on the Supreme Court decision in  T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481 and P.A. Inamdar v. State of Maharashtra, (2005) 6 SCC 537 submitted that any action of the State Government seeking to regulate or control admissions including interference in the fee structure of private unaided educational institutes will constitute a serious encroachment on the right and autonomy and liable to be struck down.

Counsel for the respondents Ashok Sharma, Ranjan Sharma, Vinod Thakur and Seema Sharma submitted that the notification in question has only deferred the collection of some fees and charges usually levied by the schools, while permitting them to collect only the tuition fee during the lockdown period and hence the State Government has not encroached on any right by private schools.

The Court on hearing the submissions of both sides held that while directing the private schools to neither stop payment of monthly salary nor reduce the existing total emoluments being paid to their teaching and non-teaching staff but at the same time permitting the schools to collect only the tuition fee, that too on monthly basis without authorizing them to compulsorily realize even this tuition fee is an unreasonable restriction. It was further observed that the impugned notifications were issued by the State Government practically in a state of emergency therefore perhaps principles of natural justice were not complied before their issuance. Hence in light of the observations and authoritative pronouncements stated above, the Court directed the State Government to revisit and reexamine the notification.

The Court also directed that in case of exceptional financial hardship reported by any parent, the school authority concerned must examine the situation within a week on compassionate grounds and ensure proper attendance of teaching & non-teaching staff and impart quality online education to the students.

In view of the above, impugned notification is quashed and petition disposed off.[Independent Schools Association v. State of Himachal Pradesh,  2020 SCC OnLine HP 1267, decided on 24-08-2020]


*Arunima Bose, Editorial Assistant has put this story together

COVID 19Hot Off The PressNews

In a letter written to all Heads/Managers of private unaided recognised schools, Binay Bhushan, Director of Education, NCT of Delhi, reminded them that in accordance with provisions of Delhi School Education Act and Rules, 1973, they are under direct control of Charitable Society/Trusts. Being Charitable Societies/Trusts, they are supposed to indulge in charity, especially when they are engaged in the noble field of providing education to the society ? without indulging in profiteering. Accordingly, they are also supposed to extend their maxim support (to those parents who are in financial distress at this time and unable to pay the school fee) by providing learning material online to all students without any discrimination and hindrance and also by not charging any increased tuition fee or any other fee by creating any new head.        

The Director of Education has written a letter to all Heads/Managers of private unaided recognised schools and gave them various directions regarding charging of and/or increase in fee from students, access to online education facilities for students, as well as payment of salary to teaching and non-teaching staff.

The letter stated that it has been noticed that some private unaided schools have been violating the provisions of Delhi School Education Act and Rules, 1973 and other guidelines issued by Department of Education, as also the provisions of Disaster Management Act, 2005 and Delhi Epidemic Diseases, COVID-19 Regulations, 2020 under the Epidemic Diseases Act, 1897 for prevention and containment o fCOVID-19 presently in force.

It was noticed that some schools have increased the fee in academic session 2020-2021; some schools are charging fee under new heads; some schools are indulging in malpractices while making available online courses/material; some schools are not paying salary to teaching and non-teaching staff.

In view of the above, the Director of Education directed all Heads/Managers of private unaided recognised schools as follows:

(i) No fee, except Tuition fee, shall be charged from the parents, till further orders.

(ii) Heads of schools shall not demand and collect the Tuition fee from the parents/students on quarterly basis. The fee shall be collected on monthly basis only.

(iii) Not to increase any fee in the academic session 2020-2021 till further directions irrespective of the fact whether or not the school is running on private land or the land allotted by DDA/other Government land owning agencies.

(iv) Schools running on the land allotted by DDA/other Government land owning agencies with the condition to seek approval of Director (Education) before any fee increase, shall collect the Tuition fee on the basis of last fee structure approved by Director (Education) or as per fee statement filed by them under Section 17(3) of DSEAR, 1973 during academic session 2015-2016.

(v) Shall ensure to provide thee access of online education/material/classes to all students, without any discrimination, by providing them ID and password immediately to get them online education facility.

(vi) Heads of schools shall, in no case, deny ID and password to those students/parents for getting online access of education facilities/classes/materials, etc., to those students who are unable to pay the school fee due to financial crises arising out of closure of business activities in the ongoing lockdown condition.

(vii) Managing Committee of the schools/Heads of the schools shall not put extra financial burden by creating any new head of fee.

(viii) Shall neither stop payment of monthly salary nor reduce the existing total emolument to the teaching and non-teaching staff of their schools in the name of non-availability of funds and arrange the funds in case of any shortfalls from the Society/Trust running the school.

It was also made clear that failure to comply with the above directions shall incite action under Delhi School Education Act and Rules, 1973 and Penal Code, 1860 as also punishment of imprisonment and/or fine under Section 51(b) of the Disaster Management Act, 2005.


Directorate of Education

Govt. of NCT of Delhi

[F.No. PS/DE/2020/54]

[Order dt. 17-04-2020]

Patna High Court
Case BriefsHigh Courts

Patna High Court: A Division Bench comprising of Mukesh R. Shah CJ and Ashutosh Kumar, J. junked a Public Interest Litigation seeking direction for a change in school timings and a ‘no homework till class 8th’ policy, holding the issues raised in the petition to be too vague and general.

The present petition was filed praying for a writ of mandamus commanding the respondent to make provision for setting the timing of private schools from 10 a.m. to 4 p.m. and a direction to private/public schools to roll back the practice of giving home works at least till VIII standard. The case of the petitioner was that as the timing of private schools is from 7:30 a.m. to 8:00 a.m., the children have to get up early in the morning and, therefore the sleep of young students was being disturbed and it was ultimately affecting their health. Further, the petitioner avers that homework given to students was affecting their childhood. She relied on the report of World Health Organization titled ‘WHO Technical Meeting on Sleep and Health’ to support her contentions.

The respondent opposed the petition submitting that Rules of Affiliation had been framed keeping in mind the physical-cum-mental and emotional interests of children so that they get adequate rest, sleep and leisure in between their studies.

The Court held that petitioner was not entitled to any relief as prayed in the petition as her allegations and averments were too vague and general. It was opined that affiliation was granted to schools as per rules and there were certain guidelines which were required to be followed by every institution. Further, as far as school timings were concerned, it was for the concerned schools to fix their own timings.

In view of the above, the petition was dismissed.[Anju Mishra v. Union of India,2018 SCC OnLine Pat 2125, decided on 10-09-2018]