The Hon'ble Supreme Court recently reversed its own judgment dated 07.01.2019 in the matter of Birla Institute Technology vs. the State of Jharkhand & Ors. as per which teachers were denied the benefit of gratuity for not being covered under the definition of "employee" under Section 2 (e) of the Payment of Gratuity Act, 1972 ("the Act"). The Division Bench consisting of Hon'ble Justice Abhay Manohar Sapre and Hon'ble Justice Indu Malhotra suo moto took up the appeal and clarified that pursuant to the Amending Act No. 47 of 2009 which has retrospective effect from 03.04.1997, teachers are "employees" as per the amended definition and are entitled to the benefit of gratuity under the Act.
The appellant was a premier technical educational institute known as Birla Institute of Technology (BIT). The Respondent No. 4 was an assistant professor who had joined the Institute in 1971. In 2001 the professor attained the age of superannuation and made a representation to the institute praying for payment of gratuity. The Institute however declined the request, pursuant to which the respondent professor filed an application before the controlling authority. The controlling authority allowed the application and directed the appellant institute to pay a sum of Rs. 3, 38, 796/- with 10% interest as gratuity to the Respondent No. 4.
Aggrieved by the said direction, BIT filed an appeal before the appellant authority which was dismissed. Consequently, BIT filed a writ before the High Court of Jharkhand which was dismissed yet again by the Single Judge who upheld the order of the authorities. The appellant then filed a Letters Patent Appeal before the Division Bench of the High Court which was again dismissed, which led the Institute to file the present appeal by way of special leave before the Apex Court. The short question for consideration was whether the Respondent no. 4/Assistant Professor was entitled to claim gratuity amount from BIT under the Act. The Hon'ble Court placed reliance on the case of Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Others (2004) 1 SCC 755 as per which teachers did not find place in the definition of "employee" under the 1997 Act which read as follows-
"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..."
The Apex Court had observed that trained or untrained teachers are not "skilled", "semi-skilled", "unskilled", "manual", "supervisory", "technical" or "clerical" employees. The court while interpreting the said definition held that if the Act intended to cover in the definition of employee all kind of employees, it would have used a wide language as contained in the Employees Provident Fund Act, 1952. The court then concluded that although teachers are engaged in a noble profession of educating our young generation, they should not be given any gratuity benefit.
In the present case, the Apex Court pronounced its judgment dated 07.01.2019 denying the benefit of gratuity to teachers based on the judgment in the case of Ahmadabad Pvt. Primary Teachers. However, the apparent error that was not brought to the notice of the court was that pursuant to the decision of the Apex Court in Ahmadabad Pvt. Primary Teachers Association in 2004, the Parliament had amended the definition of "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 amended definition read as follows-
"2(e) '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."
While BIT urged that the constitutional validity of the Amending Act No. 47 of 2009 is under challenge in a writ petition which is pending before this court, but the Bench held that pendency of such a writ petition does not affect the constitutionality of the Amending Act till the court declares the said statute to be ultra vires.
The Hon'ble Court also took note of the Statement of Objects and Reasons of the Payment of Gratuity (Amendment) Bill, 2009 to understand the intent behind amending the definition of "employee" under the Act and held that the benefit of the Payment of Gratuity Act was extended to teachers from 03.04.1997.
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