Quashed

Josephs High School v. Avita Pinto and 2 Ors.

Bombay HC7 Aug 2014WP/1159/2007

Case brief

AI extract

What is this about?

The High Court quashed orders granting gratuity to a retired teacher, as she was not an employee on the notification date. However, on equitable grounds, the Court directed the petitioner to treat the amount received as ex gratia payment.

What did the court decide?

Impugned orders dated 16 December 2002 and 7 June 2004 quashed; amount retained as ex gratia payment; bank guarantee revoked.

Josephs High School Vs Avita Pinto and 2 Ors. — Pension and Retirement Benefits | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1159 OF 2007

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St. Joseph's High School .. Petitioner Versus Avita Pinto and anr. .. Respondents

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Mr. S.C. Naidu with Mr. T.R. Yadav i/b M/s. C.R. Naidu & Co for the Petitioner.

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None for Respondents, though served.

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CORAM : M. S. SONAK, J. DATE : 7 AUGUST 2014

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P.C.:-

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1] The petitioner which is an educational institution questions the following orders:

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(a) The judgment and order dated 16 December 2002 made by the Controlling Authority under the Payment of Gratuity Act 1972 (said Act), directing the petitioner to pay respondent No.1 an amount of Rs.1 lakh together with 10% interest towards gratuity;

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(b) The judgment and order dated 7 June 2004 made by the Appellate Authority under the said Act, substantially upholding the order dated 16 December 2002, but directing that the payments be made subject to furnish of bank guarantee by respondent No.1.

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2] In the present case, respondent No. 1 was appointed as a school teacher in the primary section of the petitioner institution in the year 1964 and she retired on 1 November 1995 after attaining the age of superannuation. After almost five years from such retirement, respondent No. 1, on 11 January 2000 raised a claim for payment of gratuity before the Controlling Authority. The Authority by its judgment and order dated 16 December 2002 directed the payment of Rs.1 lakh towards gratuity together with interest at the rate of ten percent from the date of application till date of payment. The Appellate Authority, by judgment and order dated 7 June 2004 upheld the order dated 16 December 2002, but under the authority of order made by this Court in respect of Lucy Education Society, permitted respondent No.1 to withdraw the gratuity amount of Rs.1 lakh against furnishing bank guarantee. Accordingly, respondent no.1 is in receipt of the amount of Rs.1 lakh. Although there is no dispute that respondent No.1 had furnished bank guarantee at the stage of receipt of the amount, there is now some dispute as to whether the same is alive. Be that as it may, in the light of the order, which is proposed to be passed, this aspect is not important.

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3] The Central Government, in exercise of powers conferred upon it by clause (c) of sub-section (3) of Section 1 of the said Act, by Notification dated 3 April 1997 specified that educational institutions in which ten or more persons are employed or were employed on any day of preceding twelve months ' as a class of establishment ' to which the said Act shall apply with effect from ' the date of publication of this Notification' .

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4] Prior to the issue of the aforesaid Notification, the Supreme Court in the case of Ahmedabad (P.) Primary Teachers' Association vs. Administrative Officer – 2004 (I) CLR 495 , had held that 'teacher' does not answer the definition of 'employee' within meaning assigned to this term under section 2(e) of the said Act. Thus, a situation arose whereby the said Act with effect from 3 April 1997 was made applicable to educational institutions employing ten or more persons but teachers could avail no benefits under the said Act due to the definition of the term 'employee' under section 2(e) of the said Act as interpreted by the Supreme Court. The legislature, accordingly stepped in with the Payment of Gratuity (Amendment) Act 2009. This amendment was given a limited retrospective effect in that the amended provisions were deemed to have come into force on 3 April 1997.

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5] In terms of the aforesaid Amendment Act, the definition of the term 'employee' under section 2(e), presently reads thus:-

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“ '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.”

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6] In the context of the decision in case of Ahmedabad (P) Primary Teachers' Association (supra) section 13A was introduced in the said Act, which reads thus:

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“13A. Notwithstanding anything contained in any judgment, decree or order of any court, for the period commencing on and from the 3^rd day of April, 1997 and ending on the day on which the Payment of Gratuity (Amendment) Act, 2009, receives the assent of the President, the gratuity shall be payable to an employee in pursuance of the notification of the Government of India in the Ministry of Labour and Employment vide number S.O. 1080, dated the 3^rd day of April, 1997 and the said notification shall be valid and shall be deemed always to have been valid as if the Payment of Gratuity (Amendment) Act, 2009 had been in force

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at all material times and the gratuity shall be payable accordingly:

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Provided that nothing contained in this section shall extend, or be construed to extend, to affect any person with any punishment or penalty whatsoever by reason of the non-payment to him of the gratuity during the period specified in this section which shall become due in pursuance of the said notification .”

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7] As a result, at least from 3 April 1997 there can be no dispute that teachers employed in educational institutions in which ten or more persons are employed or were employed on any day of preceding twelve months, can avail the benefits of the said Act.

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8] Mr. Naidu, learned counsel for the petitioner however submits that the Notification dated 3 April 1997, itself makes it clear that the same shall apply with effect from the date of its publication. By the said date, respondent No. 1, having retired from service, was no longer the employee of the institution. Accordingly, benefits of the said Act ought not to have been extended to respondent No. 1.

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9] There is merit in the submission of Mr. Naidu. Section 1 (3)(c)of the said Act empowers the Central Government by notification to specify establishments or class of establishment,

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in which ten or more employees are employed, or were employed, on any day of the preceding twelve months to be the establishments or class of establishments to which the said Act shall apply. In the present case, Notification dated 3 April 1997came to be issued by the Central Government in exercise of such powers. The Notification however very categorically provides that the said Act shall apply to the specified class of establishments ' with effect from the date of this Notification '. If therefore, as in the present case, respondent No. 1 was not the employee of the petitioner institution on the date of publication of notification dated 3 April 1997, respondent No. 1 cannot insist upon availing the benefits of the said Act. On this limited ground, there is warrant to interfere with the impugned orders.

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10] However, the petitioner in the present case has invoked the extraordinary and equitable writ jurisdiction of this Court. As noted earlier, respondent No. 1 has retired on 1 November 1995 after the discharge of almost three decades of service with the petitioner institution. At this point of time, to require respondent no. 1 to restore the amount of Rs.1 lakh obtained by her almost a decade ago, would be harsh and inequitable. In these circumstances, a proposal was put up to the petitioner institution to suggest some equitable solution.

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11] This Court is pleased to record that the petitioner institution was not found lacking in its contribution towards equity. Mr. Naidu learned counsel for the petitioner institution, on instructions, reported that the petitioner institution would not insist upon any recoveries from respondent no. 1. Instead, true to its name and principles of Christian Charity, the institution will treat such payment as 'ex gratia '.

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12] In view of the aforesaid gracious approach, which this Court commends, there is no difficulty to quash and set aside the impugned orders.

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13] Resultantly, I pass the following order:

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(a) The impugned orders dated 16 December 2002 and 7 June 2004 are hereby quashed and set aside;

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(b) Notwithstanding aforesaid, amount of Rs.1 lakh received by respondent No.1 in pursuance of the impugned orders, shall be retained by respondent No. 1 as and by way of ex gratia payment by the petitioner;

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14] The petition is disposed of in aforesaid terms. No order

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as to costs.

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(M. S. SONAK, J.)