Disposed

Associated Managements of Government v. Union of India

Karnataka HC13 Feb 2024WP/26263/2011

Case brief

AI extract

What is this about?

School managements challenged the retrospective Payment of Gratuity (Amendment) Act, 2009 and sought quashing of gratuity proceedings against them. Following the Supreme Court's decision upholding the amendment's validity in Independent Schools' Federation of India, the writ petition was disposed of directing payment to teachers within four weeks.

What the court decided

AI extract

Associated Managements of Government Vs Union of… — Education and Admissions | Karnataka HC (2024)

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1 - NC: 2024:KHC:6207 WP No. 26263 of 2011

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 13^TH DAY OF FEBRUARY, 2024

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BEFORE

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THE HON'BLE MRS JUSTICE K.S. HEMALEKHA

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WRIT PETITION NO.26263 OF 2011 (L-PF)

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BETWEEN:

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ASSOCIATED MANAGEMENTS OF GOVERNMENT

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RECOGNISED ENGLISH MEDIUM

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SCHOOLS IN KARNATAKA (REGD.) H.M.T. MAIN ROAD, MATHIKERE,

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BANGALORE – 54

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REP. BY ITS GENERAL SECRETARY

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MR. K.S. KRISHNA IYER.

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MIRANDA EDUCATION SOCIETY C.A. 52, 10^TH MAIN, HAL,

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III STAGE, BANGALORE – 75

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REP. BY ITS GENERAL SECRETARY

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S.N. KATARKI.

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Digitally signed by SHYAMALA Location: HIGH COURT OF KARNATAKA

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COTTONS SPORTS ASSOCIATION ISSAC NEWTON ENGLISH SCHOOL

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COTTONPET CROSS, BINNY MILL ROAD,

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OPP. TO VANDHANA HOTEL,

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BANGALORE – 53

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REP. BY ITS SECRETARY MR. P. PALANI.

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NEW CAMBRIDGE EDUCATIONAL TRUST NO.957, 3^RD MAIN ROAD,

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VIJAYANAGAR, BANGALORE – 40 REP. BY ITS MANAGING TRUSTEE G. LOUIS MANOHARI.

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RAJA RAJESHWARI EDUCATION SOCIETY #5, 6^TH CROSS, GOKULA 1^ST STAGE,

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3^RD PHASE, YESHWANTHPUR,

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BANGALORE – 22,

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2 - NC: 2024:KHC:6207 WP No. 26263 of 2011

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REP. BY ITS SECRETARY

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SREENATH H.S.

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PALLAVI EDUCATION SOCIETY NO.26, 1^ST CROSS, CHOLURPALYA, MAGADI ROAD, BANGALORE – 23 REP. BY ITS SECRETARY P.M. SATHYANARAYANA.

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MODEL EDUCATION CENTRE YELAHANKA NEW TOWN BANGALORE – 106 REP. BY ITS SECRETARY

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N. CHANDRASHEKAR.

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ST ANN’S EDUCATION SOCIETY, (MANAGEMENT OF ST. ANN’S HIGH SCHOOL) 6^TH BLOCK, RAJAJINAGAR, BANGALORE – 560 010 BY ITS PRESIDENT

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MR. BALAKRISHNA.

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... PETITIONERS

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(BY SRI GOUTHAM A.R., ADVOCATE FOR SRI MANJU M.S., ADVOCATE)

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AND:

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UNION OF INDIA THROUGH SECRETARY, MINISTRY OF LAW & JUSTICE, GOVERNMENT OF INDIA, 4^TH FLOOR, A WING, SHASTRI BHAWAN, NEW DEHLI.

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MINISTRY OF LABOUR AND EMPLOYMENT THROUGH ITS SECRETARY

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RAFI MARG, NEW DELHI.

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REGINA MELVIL

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W/O. M.A. STEVEN, AGED 48 YEARS, NO.15, “BLESSO” 1^ST F MAIN ROAD, GANGANAGAR, BANGALORE – 560 052.

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NC: 2024:KHC:6207 WP No. 26263 of 2011

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THE CONTROLLING AUTHORITY & ASSISTANT LABOUR COMMISSIONER

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BANGALORE DIVISION NO.II, KARMIKA BHAVANA, BANNERGHATTA ROAD, BANGALORE – 560 029.

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... RESPONDENTS

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(BY SRI THIMMANNA BHAT, CGC FOR R-1; SMT. M.B. SUJATHA, ADVOCATE FOR R-2; SRI K.E. PRADEEP, ADVOCATE FOR R-3; SMT. RASHMI PATEL, HCGP FOR R-4)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE SUB-SECTION 2 OF SECTION 1 OF THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2009, AS UNCONSTITUTIONAL FOR GIVING RETROSPECTIVE EFFECT TO THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2009 COPY AS PER ANNEXURE-J; DECLARE SECTION 13-A NEWLY INSERTED BY SECTION 3 OF THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2009 IN THE PAYMENT OF GRATUITY ACT, 1972 AS UNCONSTITUTIONAL FOR ARBITRARILY VALIDATING THE NOTIFICATION DATED 03.04.1997 WITH RETROSPECTIVE EFFECT W.E.F. 03.04.1997 AND FOR UNDOING THE JUDGMENTS PASSED BY ANY COURT OF LAW DURING THIS PERIOD COPY AS PER ANNEXURE-J; QUASH THE ENTIRE PROCEEDING BEFORE THE 4^TH RESPONDENT DATED 01.06.2011 PURSUANT TO THE APPLICATION FILED BY THE 3^RD RESPONDENT COPY PRODUCED AT ANNEXURE-K.

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THIS WRIT PETITION COMING ON FOR FINAL HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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NC: 2024:KHC:6207 WP No. 26263 of 2011

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ORDER

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The petitioners in this petition are seeking for the following prayers:

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“(a) Declaring sub-section (2) of Section 1 of the Payment of Gratuity (Amendment) Act, 2009, as unconstitutional for giving retrospective effect to the Payment of Gratuity (Amendment) Act, 2009 (Annexure J);

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(b) Declaring Section 13-A newly inserted by section 3 of the Payment of Gratuity (Amendment) Act, 2009 in the Payment of Gratuity Act, 1972, as unconstitutional for arbitrarily validating the Notification dated 3.4.1997 with retrospective effect w.e.f. 3.4.1997 and for undoing the judgments passed by any court of law during this period (Annexure J) and

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(c) Quashing the entire proceedings pending before the 4th respondent in SaKaaBe-2/PGA/CR14/2011-12, dated 01/06/11 pursuant to the application filed by the 3^rd respondent (AnnexureK).”

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Learned counsel for the respondents would

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submit that the present writ petition is squarely covered by the decision of the Apex Court in the case of

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NC: 2024:KHC:6207 WP No. 26263 of 2011

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Independent Schools’ Federation of India (Regd.)

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vs. Union of India & another¹ .

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The said aspect is not disputed by the petitioner

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counsel.

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The Apex Court upheld the constitutional validity of the amendment to Section 2(e) of the Payment of Gratuity (Amendment) Act, 2009 and insertion of Section 13A, upholding the amendment with retrospective effect to make the benevolent provisions equally applicable to teachers and to bring equality and give fair treatment to the teachers. The Apex Court, at paragraph Nos.19, 20, 25 and 26, held as under:

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“19. The provisions of the PAG Act, even post the retrospective amendments, will apply only to those teachers who were in service as on 3^rd April 1997, and at the time of termination have rendered service of not less than 5 years. The period of 5 years may be partly before 3^rd April 1997, as the date on which the person was employed does not

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1 2022 LiveLaw (SC) 719

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6 - NC: 2024:KHC:6207 WP No. 26263 of 2011

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determine the applicability of the PAG Act. The date of termination of service, in the form of superannuation, retirement, or resignation, or death or disablement due to accident or disease, should be post the enforcement date, which in the present case is 3^rd April 1997. The entire length of service, including the service period prior to 3^rd April 1997, is to be counted for the purpose of computing the entitlement condition of 5 years of service. This is the correct effect of the ratio and decision in Management of Goodyear India Limited. (supra) and the decisions explaining retroactive effect of a statute. This legal position would be equally true and correct when the PAG Act was first enforced with effect from 16^th September 1972, and when Notification No.S42013/1/95-SS.(II) under Section 1(3)(c) of the PAG Act was issued and enforced with effect from 3^rd April, 1997. It would be the position in case of all notifications issued under Section 1(3)(c) of the PAG Act, unless a contrary intention is expressed, which is not the situation in the present case and thus need not be examined.

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20. The schools have claimed violation of Articles 14, 19(1)(g), 21 and 300-A of the Constitution of India which, in our opinion, are not violated as, to deny gratuity benefits to the teachers upon

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enforcement of the notification No.S-42013/1/95SS.(II) dated 3^rd April 1997 was itself an anomaly which mandated correction. The effect of the decision in Ahmedabad Private Primary Teachers’ Association (supra) was that although private educational institutions were covered under the PAG Act, gratuity benefits could not be extended to teachers in view of the legal flaw in the definition, consequent to which they were not treated as employees. 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, which was understood after the pronouncement of the judgment in Ahmedabad Private Primary Teachers’ Association (supra). The amendment was necessary to ensure that something which was due and payable to the teachers is not denied to them due to a defect in the statute. Payment of gratuity cannot be categorized as a windfall or a bounty payable by the private schools as it is one of the minimal conditions of service. In this background, the argument of the private schools

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that they do not have capacity and ability to pay gratuity to the teachers is unapt and parsimonious. All establishments are bound to follow the law, including the PAG Act. As observed earlier, the private schools were certainly aware of the intent of the Government that the educational institutions, as an establishment, would be covered and must pay gratuity upon issue of notification No.S42013/1/95-SS.(II) dated 3^rd April 1997. Some schools have raised an argument relying upon decision of this Court in T.M.A. Pai Foundation and Others v. State of Karnataka and Others, which observes that as a matter of principle, charging of capitation fee or profiteering by educational institutions is impermissible. However, 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. 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. Regulation of fee is to ensure that there is no commercialisation and

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profiteering, and the effect is not to prohibit a school from fixing and collecting “just and permissible school fee”, as has been held by this Court in Indian School, Jodhpur and Another v.

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State of Rajasthan and Others.

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25. In most cases, the prayer for stay, as in Civil Appeal No. 8162 of 2012, was not accepted, albeit in some cases, stay has been granted for payment of gratuity for the period prior to 3^rd April 1997. As explained above and applying the principle of retroactivity and as also following the judgment of this Court in Management of Goodyear India Limited . (supra), this argument raised on behalf of the private schools should fail and is rejected. The partial stay order dated 31^st January 2020 passed in SLP (C) No.2235 of 2020, titled Saint Xaviers High School v. Jayashree Shamal Ghosh, or in any other case, is vacated.

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26. For the reasons mentioned above, the aforesaid appeals, transfer case and the writ petitions are dismissed. The stay orders, as stated above, are vacated. The private schools would make payment to the employees/teachers along with the interest in accordance with the provisions of the PAG Act within a period of 6 weeks from

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today and in case of default, the employees/teachers may move the appropriate forum to enforce payment in accordance with the provisions of the PAG Act. In the facts of the case, there will be no orders as to costs.”

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The constitutional validity of the amendment to

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Section 2(e) of PG (Amendment) Act, 2009, having been upheld by the Apex Court with retrospective effect, the petitioner-management to make payment to the employees/teachers as is available under the provisions of the Payment of Gratuity Act, 1972, in accordance with law, within a period of four weeks from the date of receipt of this order . Accordingly, the writ petition stands disposed of.

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Sd/JUDGE

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Associated Managements of Government v. Union of India

Case brief

What is this about?

What the court decided

Associated Managements of Government v. Union of India

Case brief

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