Teachers are Entitled to Payment of Gratuity- Supreme Court Recalls it’s Earlier Judgment

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March 08, 2019

The Two-Judge Bench of the Supreme Court comprising of Justice Abhay Mohan Sapre and Justice Indu Malhotra on January 07, 2019 had held that teachers are not entitled to payment of Gratuity under the Payment of Gratuity Act, 1972.

Read Teacher not Employee- Not Entitled to Payment of Gratuity- Supreme Court

Thereafter, the Court on January 9 stayed it’s judgment in view of subsequent developments and now on March 7, 2019, the Supreme Court has recalled its order of January 07 to hold that teachers are employee and entitled to payment of Gratuity.

Also read SC Stays it’s Verdict Holding Teachers not Entitled to Gratuity u/Payment of Gratuity Act

Case name: Birla Institute of Technology v. The State of Jharkhand & ors.

The Supreme Court in it’s order of January 07 had majorly relied on verdict of the Supreme Court in the case of Ahmadabad Pvt. Primary Teachers Association vs. Administrative Officer and Otherswherein the question arose for consideration was whether “Teacher” could be regarded as an “employee” under Section 2(e) of the Payment of Gratuity Act and, if so, whether he/she is entitled to claim gratuity amount from his employer in accordance with the provisions of the Act. The Bench in the case held that a teacher is not an employee within the meaning of the expression “employee” as defined under Section 2(e) of the Act and hence he/she is not entitled to claim any gratuity amount from his employer under the Act.

The Supreme Court while recalling the Judgment noted that during the course of hearing of the appeal it was not brought to the notice of the Bench that the judgment of this Court in Ahmedabad Pvt. Primary Teachers Association vs. Administrative Officer & Ors. on which the reliance was placed for allowing the appeal necessitated the Parliament to amend the definition of “employee” under Section 2(e) of the Payment of Gratuity Act by Amending Act of 2009 with retrospective effect from 03.04.1997. In other words, though the definition was amended in 2009, yet the same was given retrospective effect from 03.04.1997 so as to bring the amended definition on Statute Book from 03.04.1997.

Here it would be relevant to mention that the Amendment of 2009, amended the definition of “employee” under Section 2(e) of the Payment of Gratuity Act vide which “educational institutions” were brought within the purview of the Act.

In view of the aforesaid observation, the Supreme Court has now recalled it’s judgment dated 07.01.2019. The Apex Court thus has held that in light of the amendment made in the definition of the word “employee” as defined in Section (e) of the Act by Amending Act of 2009, the benefit of the Payment of Gratuity Act was also extended to the teachers from 03.04.1997. Thus, resultantly 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.

The Supreme Court’s judgment can be accessed here.