{"id":273297,"date":"2022-09-09T09:00:38","date_gmt":"2022-09-09T03:30:38","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=273297"},"modified":"2022-09-09T09:00:38","modified_gmt":"2022-09-09T03:30:38","slug":"gratuity-payment-for-private-school-teachers-supreme-court-upholds-constitutional-validity-payment-gratuity-amendment-act-2019-legal-news-legal-updates","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/09\/09\/gratuity-payment-for-private-school-teachers-supreme-court-upholds-constitutional-validity-payment-gratuity-amendment-act-2019-legal-news-legal-updates\/","title":{"rendered":"Supreme Court holds private school teachers entitled to gratuity; upholds Constitutional validity of Payment of Gratuity (Amendment) Act, 2009"},"content":{"rendered":"

Supreme Court: <\/strong>While upholding the Constitutional validity of the Payment of Gratuity (Amendment) Act, 2009, the Division Bench of Sanjiv Khanna<\/strong>* 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.<\/p>\n

Noticeably, the aforesaid Amendment Act was introduced to extend the benefit of gratuity to the teachers by including them in the definition of \u201cemployee\u201d, who were earlier deprived of it. The Court said,<\/p>\n

\n

\u201cPrivate 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.\u201d<\/strong><\/p>\n<\/blockquote>\n

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.<\/p>\n

Government Notification No. S-42013\/1\/95-SS.(II)<\/strong><\/span><\/h4>\n

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.<\/p>\n

Decision in Ahmedabad Private Primary Teachers\u2019 Association\u2019s <\/em>case, <\/strong><\/span>(2004) 1 SCC 755<\/a><\/h4>\n

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 \u201cemployee\u201d as defined in Section 2(e) of the Act. The Supreme Court in Ahmedabad Private Primary Teachers\u2019 Association v. Administrative Officer<\/em>, (2004) 1 SCC 755<\/a>, held that teachers who impart education to students are not \u201cemployee\u201d 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.<\/p>\n

Thus, the teachers were denied the benefit of gratuity, but other employees of the private schools, were entitled to the benefit of gratuity.<\/p>\n

Payment of Gratuity (Amendment) Act, 2009 <\/strong><\/span><\/h4>\n

Referring the judgment in Ahmedabad Private Primary Teachers\u2019 Association (supra) in the object and reasons for Amendment, the Government introduced the Payment of Gratuity (Amendment) Act, 2009 to cover the definition of \u201cemployee\u201d 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.<\/p>\n

Analysis and Findings<\/strong><\/span><\/h4>\n

Whether the government empowered overrule judicial decisions by introducing Statutory Amendments? <\/strong><\/span><\/h4>\n

The petitioners contended that the legislation vide the Amendment Act 2009 overrules the judicial decision in Ahmedabad Private Primary Teachers\u2019 Association<\/em> (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 \u201cemployee\u201d 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).<\/p>\n

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,<\/p>\n

\n

\u201cOverruling 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.\u201d<\/strong><\/p>\n<\/blockquote>\n

Noting that the decision in Ahmedabad Private Primary Teachers\u2019 Association<\/em> (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.<\/strong><\/p>\n

Whether the Amendment financially confiscatory? <\/strong><\/span><\/h4>\n

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.\u00a0 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.<\/p>\n

Relying on T.M.A. Pai Foundation v. State of Karnataka,<\/em> (2002) 8 SCC 481<\/a>, 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.<\/p>\n

Finding the aforesaid argument unapt and parsimonious, the Court clarified the decision in T.M.A. Pai Foundation<\/em> (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.<\/em><\/p>\n

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 \u2018just and permissible school fee\u2019. <\/strong>The Court added,<\/p>\n

\n

\u201cWe 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.\u201d <\/strong><\/p>\n<\/blockquote>\n

Applicability: Retrospective v. Retroactive <\/strong><\/span><\/h4>\n

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.<\/strong><\/p>\n

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. <\/strong><\/p>\n

Whether the Amendment violative of Fundamental Rights?<\/strong><\/span><\/h4>\n

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.<\/p>\n

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.<\/strong><\/p>\n

Whether the Amendment violated other enactments?<\/strong><\/span><\/h4>\n

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.<\/p>\n

Verdict <\/strong><\/span><\/h4>\n

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.<\/p>\n

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<\/em>, (SLP (C) No. 2235 of 2020) or in any other case. The appeals and the petition were dismissed.<\/p>\n

[Independent Schools’ Federation of India (Regd.) v. Union of India, 2022 SCC OnLine SC 1113<\/a>, decided on 29-08-2022]<\/p>\n

\n

*Judgment by: Justice Sanjiv Khanna<\/strong><\/h4>\n
\n

Kamini Sharma, Editorial Assistant has put this report together<\/strong><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"

\u201cWhen the legislature acts within its power to usher in a valid law and rectify a legal error, even after a court ruling, the legislature exercises its constitutional power to enact the law and does not overrule an earlier court decision.\u201d<\/p>\n","protected":false},"author":67011,"featured_media":273298,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[47575,8731,2666,3268,9081,51563,20771,43241,32757,51564,51404,2659,5941,5363,3358,51565],"class_list":["post-273297","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-47575","tag-constitutional-validity","tag-employees","tag-Fundamental_Rights","tag-gratuity","tag-payment-of-gratuity-amendment-act-2009","tag-payment-of-gratuity-act","tag-power-of-state","tag-private-schools","tag-profiteering","tag-retroactive","tag-retrospective","tag-service-law","tag-supreme-court","tag-teachers","tag-teaching-institutions"],"yoast_head":"\nSupreme Court holds private school teachers entitled to gratuity; 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Teachers can now claim gratuity under Payment of Gratuity Act","author":"Prachi Bhardwaj","date":"March 9, 2019","format":false,"excerpt":"Supreme Court: The Bench of Abhay Manohar Sapre and Indu Malhotra, JJ has held that pendency of any writ petition by itself does not affect the constitutionality of a Statute. It said: \u201cIt is only when the Court declares a Statute as being ultra vires the provisions of the Constitution\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":148351,"url":"https:\/\/www.scconline.com\/blog\/post\/2017\/08\/08\/financial-burden-is-not-a-reason-sufficient-to-invalidate-the-retrospective-operation-of-payment-of-gratuity-amendment-act-2009\/","url_meta":{"origin":273297,"position":1},"title":"Financial burden is not a reason sufficient to invalidate the retrospective operation of Payment of Gratuity (Amendment) Act, 2009","author":"Saba","date":"August 8, 2017","format":false,"excerpt":"Karnataka High Court: While passing the order in a writ petition under Articles 226 and 227 of the Constitution challenging the retrospective operation of the Payment of Gratuity (Amendment) Act, 2009, a Single Judge Bench comprising of Ashok B. Hinchigeri, J. held that the newly substituted Section \u00a02(e) and the\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":252746,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/08\/16\/payment-of-gratuity\/","url_meta":{"origin":273297,"position":2},"title":"Payment of Gratuity Act | Whether 2010 amendment in Gratuity Act contemplating Rs 10 lakhs as amount of gratuity would have retrospective effect?","author":"Bhumika Indulia","date":"August 16, 2021","format":false,"excerpt":"Supreme Court: The Division Bench of Hemant Gupta and A.S. Bopanna, JJ., addressed whether the 2010 amendment of Payment of Gratuity Act 1972 is retrospective. In the instant matter, Jharkhand High Court\u2019s decision has been challenged whereby the claim of the appellants to declare the applicability of Payment of Gratuity\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":237602,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/10\/16\/guj-hc-respondent-entitled-to-gratuity-under-s-2e-of-payment-of-gratuity-amendment-act-2009-court-dismisses-appeal-while-reproducing-the-observations-of-the-single-judge\/","url_meta":{"origin":273297,"position":3},"title":"Guj HC | Respondent entitled to gratuity under S. 2(e) of Payment of Gratuity (Amendment) Act, 2009; Court dismisses appeal while reproducing observations of Single Judge","author":"Editor","date":"October 16, 2020","format":false,"excerpt":"Gujarat High Court: The Division Bench of Vikram Nath, CJ and Ashutosh J. Shastri, J., dismissed a Letters Patent Appeal which was filed aggrieved by the judgment and order passed in Special Civil Application. According to the petitioner-appellant, respondent 1, was a relative of one of the trustees and after\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/12\/1200px-Gujarat-High-Court-1.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/12\/1200px-Gujarat-High-Court-1.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/12\/1200px-Gujarat-High-Court-1.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/12\/1200px-Gujarat-High-Court-1.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2018\/12\/1200px-Gujarat-High-Court-1.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":294279,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/06\/09\/determination-of-gratuity-from-date-termination-of-employment-kerala-high-court\/","url_meta":{"origin":273297,"position":4},"title":"Gratuity determined as per date of termination of employment, not the date of sanction or actual disbursement: Kerala High Court","author":"Ridhi","date":"June 9, 2023","format":false,"excerpt":"Kerala High Court suggested the petitioner to choose between Payment of Gratuity Act, 1972 and Kerala State Housing Board Employees' (Pension and other Retirement Benefits) Regulations, 1990 for claim of gratuity or DCRG, since he cannot have gratuity under one with the ceiling limit payable under another Act.","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"kerala high court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/kerala-high-court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/kerala-high-court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/kerala-high-court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/kerala-high-court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":346223,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/04\/21\/employers-obligation-for-payment-of-gratuity-within-30-days-not-contingent-on-employees-written-application-post-exit-mp-hc-scc-times\/","url_meta":{"origin":273297,"position":5},"title":"Employer\u2019s obligation to pay gratuity within 30 days not contingent on employee\u2019s written application post-exit: MP High Court","author":"Ritu","date":"April 21, 2025","format":false,"excerpt":"\u201cAmounts of retiral dues, including gratuity, are not bounties. 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The retiral dues are also recognized as property under the Article 300-A of the Constitution.\u201d","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Madhya Pradesh High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Madhya-Pradesh-High-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Madhya-Pradesh-High-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Madhya-Pradesh-High-Court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/Madhya-Pradesh-High-Court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/273297","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67011"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=273297"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/273297\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/273298"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=273297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=273297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=273297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}