By:- Haseeb Khan[1]
In the Supreme Court of India
| NAME OF THE CASE | Birla Institute of Technology v. State of Jharkhand |
| CITATION | Civil Appeal No. 2530 of 2012 |
| DATE OF JUDGEMENT | March 7, 2019 |
| APPELLANT | Birla Institute of Technology |
| RESPONDENT | State of Jharkhand |
| BENCH/JUDGE | Justices Abhay Manohar Sapre and Indu Malhotra |
| STATUTES/CONSTITUTION INVOLVED | Payment of Gratuity Act, 1972Employees Provident Funds and Miscellaneous Provisions Act, 1952Amending Act No. 47, 2009 |
| IMPORTANT SECTIONS/ARTICLES | Payment of Gratuity Act, 1972 S. 2(e)Employees Provident Funds and Miscellaneous Provisions Acts, 1952 S. 2(f) |
ABSTRACT
On 07-01-19, the Honorable Supreme Court, placing reliance on the decision of the bench in Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer[2], which was brought to the Court’s notice by the learned counsel appearing on behalf of the appellant, allowed the appeal and set aside the order of the High Court.
However, after the pronouncement of the order in this appeal, it came to the notice of the court that the Parliament had amended the definition of the word “employee” as defined in Section 2(e) of the Payment of Gratuity Act, 1972 by the Amending Act 47 of 2009 with retrospective effect from 03-04-1997, consequent upon the decision of the Court in the case Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer[3].
The Supreme Court took suo moto cognizance of the appeal and passed another order, stating that the judgement dated 07-01-19 shall not be given effect till the matter is reheard once again by the appropriate Bench. Therefore, in the light of the aforementioned order, the matter was listed before this Bench for passing the appropriate order in the disposed off appeal.
INTRODUCTION
Gratuity is a lump sum of money that employers pay their workers as a sign of gratefulness for the services delivered. The gratuity rules are dictated under the Payment of Gratuity Act, 1972. The Act was passed by the Parliament on 21st August 1972 and came into force on 16th September 1972.
All the central and state government departments, defense and domestic governing bodies are covered under this Act. Private associations can come under its horizon subject to fulfilment of certain conditions.
Rules pertaining to eligibility of gratuity are as follows:
- Gratuity is outstanding if an association employs 10 or further individualities.
- Workers have to complete a minimal 5 years of service to be eligible.
- Gratuity can be paid not only upon withdrawal, but also in cases of demise, abdication, termination, etc.
- Computation of gratuity is on the base of last drawn payment and times of service.
- Gratuity can be stopped for committing an offence involving moral turpitude and riotous or unruly conduct or any other act of violence.
- Employers cannot refuse to pay gratuity during insolvency.
The Employees’ Provident Fund Organization (EPFO) is a non-constitutional body that promotes workers to save finances for withdrawal. The association is governed by the Ministry of Labor and Employment, Government of India and was launched in 1951. EPF is the main scheme under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The employee and employer each contribute 12 of the employee’s introductory payment and dearness allowance towards EPF. The Employee Provident Fund( EPF) is a scheme that helps people save up a sufficient corpus for withdrawal.
FACTS OF THE CASE
The factual matrix of the case was that an appeal was directed against the final judgment and order dated 02.04.2008 passed by the High Court of Jharkhand at Ranchi in LPA No.53 of 2007[4] whereby the Division Bench of the High Court dismissed the LPA filed by the appellant herein and confirmed the order dated 12.01.2007 passed by the Single Judge of the High Court in W.P. No.2572 of 2005[5]. The controversy involved in this appeal was a short one. The appellant was a premier technical educational institute of repute in the country, known as “Birla Institute of Technology” (BIT). Respondent No.4 joined the (BIT) as Assistant Professor on 16.09.1971 and superannuated on 30.11.2001 after attaining the age of superannuation. Respondent No.4 then made a representation to the appellant and prayed therein for payment of gratuity amount which, according to respondent, was payable to him by the appellant under the Payment of Gratuity Act, 1972. The appellant, however, declined to pay the amount of gratuity as demanded by him. Respondent No.4, therefore, filed an application before the controlling authority under the Act against the appellant and claimed the amount of gratuity which, according to him, was payable to him under the Act.
By order dated 07.09.2002, the controlling authority (Respondent No.3) allowed the application filed by Respondent No.4 and directed the appellant to pay a sum of Rs.3,38,796/ along with interest at the rate of 10% p.a. towards the gratuity to respondent No.4. The appellant felt aggrieved and filed appeal before the appellate authority under the Act. By order dated 15.04.2005, the appellate authority dismissed the appeal. The appellant then carried the matter to the High Court in a writ petition. The High Court (Single Judge) by order dated 12.01.2007 dismissed the writ petition and upheld the orders of the authorities passed under the Act. The appellant then filed a Letters Patent Appeal before the Division Bench against the order passed by the Single Judge. The LPA was also dismissed by the impugned order which gave rise to filing of the present appeal by way of special leave by the appellant (BIT) in the Supreme Court.
ISSUES RAISED BEFORE THE COURT
- Whether the respondent no. 4 was eligible for receiving gratuity by the appellant (BIT)?
- Whether the definition of an “employee” under the Payment of Gratuity Act, 1972, involve teachers?
ARGUMENTS FROM THE APPELLANT SIDE
- Mr. Shambo Nandy, learned counsel for the appellant argued that the respondent no. 4 was not rightfully eligible to receive the gratuity under the Payment of Gratuity Act, 1972.
- Learned counsel for the appellant urged that the constitutional validity of Amending Act No. 47 of 2009 is under challenge in this Court in a writ petition, which is pending.
ARGUMENTS FROM THE RESPONDENT SIDE
Mr. Anil Kumar Jha, learned counsel for respondents 13 and Mr. Sunil Roy, learned counsel for respondent no. 4, argued that his client should receive the gratuity for his service as he had rightfully attained the age of superannuation.
RELATED PROVISIONS
Payment of Gratuity Act, 1972
“Section 2. Definitions.—
In this Act, unless the context otherwise requires,—[6]
(e) “employee” means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, 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.”
Employees Provident Funds and Miscellaneous Provisions Act, 1952
“Section 2. Definitions.—
In this Act, unless the context otherwise requires,—[7]
(f) “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets, his wages directly or indirectly from the employer, and includes any person,—
- Employed by or through a contractor in or in connection with the work of the establishment;
- Engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; “exempted employee” means an employee to whom a Scheme or the Insurance Scheme, as the case may be, would, but for the exemption granted under section 17, have applied;
“exempted establishment” means an establishment in respect of which an exemption has been granted under section 17 from the operation of all or any of the provisions of any Scheme 8[or the Insurance Scheme, as the case may be, whether such exemption has been granted to the establishment as such or to any person or class of persons employed therein.”
JUDGEMENT
The issue in question was the subject matter of the decision rendered in the case of Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer. The Honorable 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 definition reads as:
“2(e). ‘employee’ means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, 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.”
The Supreme Court cited a paragraph from the case of Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer, which reads as:
“In construing the abovementioned three words which are used in association with each other, the rule of construction noscitur a sociis may be applied. The meaning of each of these words is to be understood by the company it keeps. It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them. The actual order of these three words in juxtaposition indicates that meaning of one takes color from the other. The rule is explained differently: “that meaning of doubtful words may be ascertained by reference to the meaning of words associated with it.”
The word “unskilled” is opposite of the word “skilled” and the word “semiskilled” seems to describe a person who falls between the two categories i.e. he is not fully skilled and also is not completely unskilled but has some amount of skill for the work for which he is employed. The word “unskilled” cannot, therefore, be understood dissociated from the word “skilled” and “semiskilled” to read and construe it to include in it all categories of employees irrespective of the nature of employment. If the legislature intended to cover all categories of employees for extending benefit of gratuity under the Act, specific mention of categories of employment in the definition clause was not necessary at all. Any construction of definition clause which renders it superfluous or otiose has to be avoided.
The contention advanced that teachers should be treated as included in the expression “unskilled” or “skilled” cannot, therefore, be accepted. The teachers might have been imparted training for teaching or there may be cases where teachers who are employed in primary schools are untrained. A trained teacher is not described in the industrial field or service jurisprudence as a “skilled employee”. Such adjective generally is used for an employee doing manual or technical work. Similarly, the words “semiskilled” and “unskilled” are not understood in educational establishments as describing nature of job of untrained teachers. Even if all the words are read disjunctively or in any other manner, trained or untrained teachers do not plainly answer any of the descriptions of the nature of various employments given in the definition clause. Trained or untrained teachers are not “skilled”, “semiskilled”, “unskilled”, “manual”, “supervisory”, “technical” or “clerical” employees. They are also not employed in “managerial” or “administrative” capacity. Occasionally, even if they do some administrative work as part of their duty with teaching, since their main job is imparting education, they cannot be held employed in “managerial” or “administrative” capacity. The teachers are clearly not intended to be covered by the definition of “employee.”
The legislature was alive to various kinds of definitions of the word “employee” contained in various previous labor enactments when the Act was passed in 1972. If it intended to cover in the definition of “employee” all kinds of employees, it could have as well used such wide language as is contained in Section 2(f) of the Employees’ Provident Funds Act, 1952 which defines “employee” to mean “any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment”. Nonuse of such wide language in the definition of “employee” in Section 2(e) of the Act of 1972 leads to the conclusion that teachers are clearly not covered in the definition.
The conclusion should not be misunderstood that teachers although engaged in a very noble profession of educating our young generation should not be given any gratuity benefit. There are already separate statutes, rules and regulations granting gratuity benefits to teachers in educational institutions which are more or less beneficial than the gratuity benefits provided under the Act in separate states. It is for the legislature to take cognizance of situation of such teachers in various establishments where gratuity benefits are not available and think of a separate legislation for them in this regard. That is the subject matter solely of the legislature to consider and decide.
The definition of “employee” as defined under Section 2(e) was accordingly amended with effect from 03.04.1997 retrospectively vide Payment of the Gratuity (Amendment) Act, 2009 (No. 47 of 2009) published on 31.12.2009. The amended definition reads as under:
“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.”
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.
In other words, 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.
In the light of the amendment made in the Payment of Gratuity Act, reliance placed by the learned counsel appearing for the appellant (employer) on the decision of Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer is wholly misplaced and does not help the appellant in any manner. It has lost its binding effect.
Contrary to the argument of the learned counsel for the appellant, pendency of any writ petition by itself does not affect the constitutionality of the Amending Act, and nor does it affect the right of respondent No.4 (teacher) in any manner in claiming gratuity amount from the appellant(employer) under the Act.
It is only when the Court declares a Statute as being ultra vires the provisions of the Constitution then the question may arise to consider its effect on the rights of the parties and that would always depend upon the declaration rendered by the Court and the directions given in that case. In the light of the foregoing discussion, no merit was found in this appeal, and it was dismissed with costs quantified at Rs.25,000/- payable by the appellant to respondent No.4(teacher).
CONCLUSION
The landmark judgement in this case made it so that teachers and other employees who are employed in educational institutions come under the ambit of the definition of “employee” as stated in the Payment of Gratuity Act, 1972 by Amending Act No. 47 of 2009. The Parliament, in view of the observations made in the case of Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer[8] deemed it proper to amend the definition clause of the Act to broaden its ambit and scope.
This landmark case thus clarifies the position in law that amended definition of “employee” is extended to teachers employed in all educational institutions and the said entitlement will be retrospectively effective from 03.04.1997.
[1] Author is a 2nd semester student of Amity Law School, Lucknow.
[2] Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer, Civil Appeal No. 6369 of 2001.
[3] Id.
[4] Birla Institute of Technology v. State of Jharkhand, 2008 SCC Online Jhar 91: (2008) 2 AIR Jhar R 547.
[5] Birla Institute of Technology v. State of Jharkhand, 2007 SCC Online Jhar 9: (2007) 1 AIR Jhar R 691.
[6] Payment of Gratuity Act, 1972, S. 2(e), No. 39, Acts of Parliament, 1972(India).
[7] Employees Provident Funds and Miscellaneous Provisions Act, 1952, S. 2(f), No. 19, Acts of Parliament, 1952(India).
[8] Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer, Civil Appeal No. 6369 of 2001.