Case Note & Summary
The Supreme Court of India dealt with an appeal by Birla Institute of Technology (BIT) against the State of Jharkhand and others, concerning the entitlement of a retired teacher to gratuity under the Payment of Gratuity Act, 1972. The respondent No.4, an Assistant Professor who served from 16.09.1971 to 30.11.2001, claimed gratuity after superannuation. The appellant institute denied the claim, leading to proceedings before the controlling authority under the Act, which allowed the claim and directed payment of Rs.3,38,796 with interest. The appellate authority and the High Court (Single Judge and Division Bench) upheld this order. The appellant then appealed to the Supreme Court. Initially, on 07.01.2019, the Court allowed the appeal relying on Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer (2004) 1 SCC 755, which held that teachers are not 'employees' under the unamended Section 2(e) of the Act. However, the Court later discovered that Parliament had amended the definition of 'employee' by Act No. 47 of 2009 with retrospective effect from 03.04.1997, specifically to include teachers. This amendment was not brought to the Court's notice earlier. The Court suo motu recalled its order dated 07.01.2019, finding an error apparent on the face of the record. Upon rehearing, the Court examined the amended definition and held that by virtue of the retrospective amendment, teachers are covered under the Act. The Court dismissed the appeal, affirming the orders of the authorities below and the High Court, thereby upholding the teacher's entitlement to gratuity.
Headnote
A) Payment of Gratuity Act - Definition of Employee - Section 2(e) - Teachers - Prior to 2009 amendment, the definition of 'employee' under Section 2(e) of the Payment of Gratuity Act, 1972, covered persons employed to do skilled, semiskilled, unskilled, manual, supervisory, technical or clerical work. The Supreme Court in Ahmedabad Pvt. Primary Teachers Association v. Administrative Officer (2004) 1 SCC 755 held that teachers do not fall within any of these categories and are not 'employees' under the Act. The Court applied the rule of noscitur a sociis to interpret the words in the definition. (Paras 23-24) B) Payment of Gratuity Act - Retrospective Amendment - Section 2(e) - Amending Act No. 47 of 2009 - Consequent upon the decision in Ahmedabad Pvt. Primary Teachers Association, Parliament amended the definition of 'employee' in Section 2(e) with retrospective effect from 03.04.1997 to include teachers. The Supreme Court recalled its earlier order dated 07.01.2019 which had allowed the appeal based on the unamended definition, as the amendment had a direct bearing on the issue and was not brought to the Court's notice. (Paras 2-10) C) Payment of Gratuity Act - Gratuity Claim by Teacher - Applicability of Amended Definition - The appellant institute employed respondent No.4 as Assistant Professor from 16.09.1971 to 30.11.2001. The controlling authority and appellate authority held respondent No.4 entitled to gratuity under the Act. The High Court upheld those orders. The Supreme Court, after recalling its earlier order, dismissed the appeal, holding that by virtue of the retrospective amendment, teachers are covered under the definition of 'employee' and are entitled to gratuity. (Paras 14-20, 22-25)
Issue of Consideration
Whether a teacher employed in an educational institute is an 'employee' under Section 2(e) of the Payment of Gratuity Act, 1972, as it stood prior to the 2009 amendment.
Final Decision
The Supreme Court recalled its earlier order dated 07.01.2019 and dismissed the appeal, affirming the orders of the controlling authority, appellate authority, and High Court. The Court held that by virtue of the retrospective amendment to Section 2(e) of the Payment of Gratuity Act, 1972, teachers are covered under the definition of 'employee' and are entitled to gratuity. The appellant institute was directed to pay the gratuity amount as determined by the controlling authority.
Law Points
- Payment of Gratuity Act
- 1972
- Section 2(e) definition of employee
- retrospective amendment
- noscitur a sociis
- teachers not covered under unamended definition
