2019 (4) TMI 316 - SC - Indian Laws

Supreme Court upholds gratuity entitlement for teachers under amended law, dismisses appeal.

BIRLA INSTITUTE OF TECHNOLOGY Versus THE STATE OF JHARKHAND AND ORS.

The Supreme Court dismissed the appeal, affirming the respondent's entitlement to gratuity under the amended definition of 'employee' in the Payment of ... Rectification of mistake/recall of order - mistake apparent on the face of record - Held that:- The apparent error is that it was not brought to our notice that the Parliament, consequent upon the decision of this Court in Ahmadabad Pvt. Primary Teachers Association [2004 (1) TMI 639 - SUPREME COURT], had amended the definition of “employee” as defined in Section 2(e) of the Payment of Gratuity Act by amending Act No. 47 of 2009 with retrospective effect from 03.04.1997. This amendment, in our opinion, had a direct bearing over the issue involved in this appeal - we recall our order dated 07.01.2019 passed in this appeal. As a consequence, the appeal (Civil Appeal No. 2530 of 2012) is restored to its original number for its disposal on merits in accordance with law. Payment of gratuity amount to teacher - teacher comes within the scope of employee or not - whether the Courts below were justified in holding that respondent No.4 was entitled to claim gratuity amount from the appellant (employer) under the Act? - Held that:- The issue in question was subject matter of the decision rendered in the case of Ahmadabad Pvt. Primary Teachers Association. This Court had examined the question in the light of the definition of the word “employee” defined in Section 2(e) of the Act as it stood then - The decision rendered in Ahmadabad Pvt. Primary Teachers Association, therefore, led the Parliament to amend the definition of 'employee” as defined in Section 2 (e) of the Payment of Gratuity Act by amending Act No. 47 of 2009 on 31.12.2009 with retrospective effect from 03.04.1997 - It is clear from the statement of Objects and Reasons of the Payment of Gratuity (Amendment) Bill, 2009 introduced in the Lok Sabha on 24.02.2009. In the light of the amendment made in the definition of the word “employee” as defined in Section 2(e) of the Act by Amending Act No. 47 of 2009 with retrospective effect from 03.04.1997, the benefit of the Payment of Gratuity Act was also extended to the teachers from 03.04.1997 - the teachers were brought within the purview of “employee” as defined in Section 2(e) of the Payment of Gratuity Act by Amending Act No. 47 of 2009 with retrospective effect from 03.04.1997. The effect of the amendment made in the Payment of Gratuity Act vide Amending Act No. 47 of 2009 on 31.12.2009 was twofold. First, the law laid down by this Court in the case of Ahmadabad Pvt. Primary Teachers Association was no longer applicable against the teachers, as if not rendered, and Second, the teachers were held entitled to claim the amount of gratuity under the Payment of Gratuity Act from their employer with effect from 03.04.1997 - in the light of the amendment made in the Payment of Gratuity Act as detailed above, reliance placed by the learned counsel appearing for the appellant (employer) on the decision of Ahmedabad Pvt. Primary Teachers Association is wholly misplaced and does not help the appellant in any manner. It has lost its binding effect. Petition dismissed with costs quantified at ₹ 25,000/payable by the appellant to respondent No.4(teacher). Issues Involved:1. Whether the respondent was entitled to claim gratuity under the Payment of Gratuity Act, 1972.2. The impact of the retrospective amendment to the definition of 'employee' in Section 2(e) of the Payment of Gratuity Act, 1972.3. The validity of the initial judgment dated 07.01.2019 in light of the retrospective amendment.Detailed Analysis:1. Entitlement to Gratuity under the Payment of Gratuity Act, 1972:The core issue was whether the respondent, who served as an Assistant Professor, was entitled to gratuity under the Payment of Gratuity Act, 1972. Initially, the appellant institution denied the gratuity claim, leading the respondent to approach the controlling authority under the Act. The controlling authority and subsequent appellate authorities, including the High Court, ruled in favor of the respondent, directing the appellant to pay the gratuity with interest. The appellant challenged these decisions, culminating in the present appeal.2. Impact of the Retrospective Amendment to the Definition of 'Employee':The Supreme Court initially set aside the High Court's order based on the precedent set in Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Others (2004) 1 SCC 755. However, it was later brought to the Court's attention that the Parliament had amended the definition of 'employee' in Section 2(e) of the Payment of Gratuity Act, 1972, through Amending Act No. 47 of 2009, with retrospective effect from 03.04.1997. This amendment was not considered in the initial judgment. The amendment expanded the definition of 'employee' to include teachers, thereby entitling them to gratuity benefits under the Act.3. Validity of the Initial Judgment Dated 07.01.2019:Upon realizing the oversight, the Supreme Court suo motu revisited the appeal and stayed the initial judgment dated 07.01.2019. The Court acknowledged the error apparent on the face of the record, as the retrospective amendment had a direct bearing on the case. Consequently, the order dated 07.01.2019 was recalled, and the appeal was restored for disposal on merits. After rehearing the parties, the Court concluded that the retrospective amendment rendered the precedent set in Ahmadabad Pvt. Primary Teachers Association inapplicable. The amendment ensured that teachers, including the respondent, were entitled to claim gratuity from their employers with effect from 03.04.1997.Conclusion:The Supreme Court dismissed the appeal, affirming the respondent's entitlement to gratuity under the amended definition of 'employee' in the Payment of Gratuity Act, 1972. The Court emphasized that the retrospective amendment nullified the earlier precedent and extended gratuity benefits to teachers. The appellant was ordered to pay costs of Rs. 25,000 to the respondent. The pending challenge to the constitutional validity of the amendment did not affect the respondent's right to gratuity.