Karnataka High Court
Associated Managements Of Government vs Union Of India on 13 February, 2024
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NC: 2024:KHC:6207
WP No. 26263 of 2011
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
WRIT PETITION NO.26263 OF 2011 (L-PF)
BETWEEN:
1. ASSOCIATED MANAGEMENTS OF GOVERNMENT
RECOGNISED ENGLISH MEDIUM
SCHOOLS IN KARNATAKA (REGD.)
H.M.T. MAIN ROAD, MATHIKERE,
BANGALORE - 54
REP. BY ITS GENERAL SECRETARY
MR. K.S. KRISHNA IYER.
2. MIRANDA EDUCATION SOCIETY
C.A. 52, 10TH MAIN, HAL,
III STAGE, BANGALORE - 75
REP. BY ITS GENERAL SECRETARY
S.N. KATARKI.
3. COTTONS SPORTS ASSOCIATION
ISSAC NEWTON ENGLISH SCHOOL
Digitally signed
by SHYAMALA COTTONPET CROSS, BINNY MILL ROAD,
OPP. TO VANDHANA HOTEL,
Location: HIGH BANGALORE - 53
COURT OF
KARNATAKA REP. BY ITS SECRETARY
MR. P. PALANI.
4. NEW CAMBRIDGE EDUCATIONAL TRUST
NO.957, 3RD MAIN ROAD,
VIJAYANAGAR, BANGALORE - 40
REP. BY ITS MANAGING TRUSTEE
G. LOUIS MANOHARI.
5. RAJA RAJESHWARI EDUCATION SOCIETY
#5, 6TH CROSS, GOKULA 1ST STAGE,
3RD PHASE, YESHWANTHPUR,
BANGALORE - 22,
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WP No. 26263 of 2011
REP. BY ITS SECRETARY
SREENATH H.S.
6. PALLAVI EDUCATION SOCIETY
NO.26, 1ST CROSS, CHOLURPALYA,
MAGADI ROAD, BANGALORE - 23
REP. BY ITS SECRETARY
P.M. SATHYANARAYANA.
7. MODEL EDUCATION CENTRE
YELAHANKA NEW TOWN
BANGALORE - 106
REP. BY ITS SECRETARY
N. CHANDRASHEKAR.
8. ST ANN'S EDUCATION SOCIETY,
(MANAGEMENT OF ST. ANN'S HIGH SCHOOL)
6TH BLOCK, RAJAJINAGAR,
BANGALORE - 560 010
BY ITS PRESIDENT
MR. BALAKRISHNA.
... PETITIONERS
(BY SRI GOUTHAM A.R., ADVOCATE FOR
SRI MANJU M.S., ADVOCATE)
AND:
1. UNION OF INDIA
THROUGH SECRETARY,
MINISTRY OF LAW & JUSTICE,
GOVERNMENT OF INDIA,
4TH FLOOR, A WING,
SHASTRI BHAWAN, NEW DEHLI.
2. MINISTRY OF LABOUR AND EMPLOYMENT
THROUGH ITS SECRETARY
RAFI MARG, NEW DELHI.
3. REGINA MELVIL
W/O. M.A. STEVEN,
AGED 48 YEARS,
NO.15, "BLESSO" 1ST F MAIN ROAD,
GANGANAGAR, BANGALORE - 560 052.
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WP No. 26263 of 2011
4. THE CONTROLLING AUTHORITY
& ASSISTANT LABOUR COMMISSIONER
BANGALORE DIVISION NO.II,
KARMIKA BHAVANA,
BANNERGHATTA ROAD,
BANGALORE - 560 029.
... RESPONDENTS
(BY SRI THIMMANNA BHAT, CGC FOR R-1;
SMT. M.B. SUJATHA, ADVOCATE FOR R-2;
SRI K.E. PRADEEP, ADVOCATE FOR R-3;
SMT. RASHMI PATEL, HCGP FOR R-4)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, PRAYING TO DECLARE SUB-SECTION 2
OF SECTION 1 OF THE PAYMENT OF GRATUITY (AMENDMENT)
ACT, 2009, AS UNCONSTITUTIONAL FOR GIVING RETROSPECTIVE
EFFECT TO THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2009
COPY AS PER ANNEXURE-J; DECLARE SECTION 13-A NEWLY
INSERTED BY SECTION 3 OF THE PAYMENT OF GRATUITY
(AMENDMENT) ACT, 2009 IN THE PAYMENT OF GRATUITY ACT,
1972 AS UNCONSTITUTIONAL FOR ARBITRARILY VALIDATING
THE NOTIFICATION DATED 03.04.1997 WITH RETROSPECTIVE
EFFECT W.E.F. 03.04.1997 AND FOR UNDOING THE JUDGMENTS
PASSED BY ANY COURT OF LAW DURING THIS PERIOD COPY AS
PER ANNEXURE-J; QUASH THE ENTIRE PROCEEDING BEFORE THE
4TH RESPONDENT DATED 01.06.2011 PURSUANT TO THE
APPLICATION FILED BY THE 3RD RESPONDENT COPY PRODUCED
AT ANNEXURE-K.
THIS WRIT PETITION COMING ON FOR FINAL HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:
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WP No. 26263 of 2011
ORDER
The petitioners in this petition are seeking for the
following prayers:
"(a) Declaring sub-section (2) of Section 1 of the
Payment of Gratuity (Amendment) Act, 2009, as
unconstitutional for giving retrospective effect to the
Payment of Gratuity (Amendment) Act, 2009
(Annexure J);
(b) Declaring Section 13-A newly inserted by
section 3 of the Payment of Gratuity (Amendment)
Act, 2009 in the Payment of Gratuity Act, 1972, as
unconstitutional for arbitrarily validating the
Notification dated 3.4.1997 with retrospective effect
w.e.f. 3.4.1997 and for undoing the judgments
passed by any court of law during this period
(Annexure J) and
(c) Quashing the entire proceedings pending
before the 4th respondent in SaKaaBe-2/PGA/CR-
14/2011-12, dated 01/06/11 pursuant to the
application filed by the 3rd respondent (Annexure-
K)."
2. Learned counsel for the respondents would
submit that the present writ petition is squarely covered
by the decision of the Apex Court in the case of
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Independent Schools' Federation of India (Regd.)
vs. Union of India & another1.
3. The said aspect is not disputed by the petitioner
counsel.
4. The Apex Court upheld the constitutional
validity of the amendment to Section 2(e) of the Payment
of Gratuity (Amendment) Act, 2009 and insertion of
Section 13A, upholding the amendment with retrospective
effect to make the benevolent provisions equally
applicable to teachers and to bring equality and give fair
treatment to the teachers. The Apex Court, at paragraph
Nos.19, 20, 25 and 26, held as under:
"19. The provisions of the PAG Act, even post the
retrospective amendments, will apply only to those
teachers who were in service as on 3rd April 1997,
and at the time of termination have rendered
service of not less than 5 years. The period of 5
years may be partly before 3rd April 1997, as the
date on which the person was employed does not
2022 LiveLaw (SC) 719
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determine the applicability of the PAG Act. The date
of termination of service, in the form of
superannuation, retirement, or resignation, or
death or disablement due to accident or disease,
should be post the enforcement date, which in the
present case is 3rd April 1997. The entire length of
service, including the service period prior to 3rd
April 1997, is to be counted for the purpose of
computing the entitlement condition of 5 years of
service. This is the correct effect of the ratio and
decision in Management of Goodyear India
Limited. (supra) and the decisions explaining
retroactive effect of a statute. This legal position
would be equally true and correct when the PAG
Act was first enforced with effect from 16th
September 1972, and when Notification No.S-
42013/1/95-SS.(II) under Section 1(3)(c) of the
PAG Act was issued and enforced with effect from
3rd April, 1997. It would be the position in case of
all notifications issued under Section 1(3)(c) of the
PAG Act, unless a contrary intention is expressed,
which is not the situation in the present case and
thus need not be examined.
20. The schools have claimed violation of Articles
14, 19(1)(g), 21 and 300-A of the Constitution of
India which, in our opinion, are not violated as, to
deny gratuity benefits to the teachers upon
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enforcement of the notification No.S-42013/1/95-
SS.(II) dated 3rd April 1997 was itself an anomaly
which mandated correction. The effect of the
decision in Ahmedabad Private Primary
Teachers' Association (supra) was that although
private educational institutions were covered under
the PAG Act, gratuity benefits could not be
extended to teachers in view of the legal flaw in the
definition, consequent to which they were not
treated as employees. The teachers were
discriminated to be denied benefit of gratuity, a
terminal benefit, which was payable to other
employees of the private schools/educational
institutions, including those engaged in
administrative and managerial work. The
amendment with retrospective effect remedies the
injustice and discrimination suffered by the
teachers on account of a legislative mistake, which
was understood after the pronouncement of the
judgment in Ahmedabad Private Primary
Teachers' Association (supra). The amendment
was necessary to ensure that something which was
due and payable to the teachers is not denied to
them due to a defect in the statute. Payment of
gratuity cannot be categorized as a windfall or a
bounty payable by the private schools as it is one
of the minimal conditions of service. In this
background, the argument of the private schools
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that they do not have capacity and ability to pay
gratuity to the teachers is unapt and parsimonious.
All establishments are bound to follow the law,
including the PAG Act. As observed earlier, the
private schools were certainly aware of the intent
of the Government that the educational institutions,
as an establishment, would be covered and must
pay gratuity upon issue of notification No.S-
rd
42013/1/95-SS.(II) dated 3 April 1997. Some
schools have raised an argument relying upon
decision of this Court in T.M.A. Pai Foundation
and Others v. State of Karnataka and Others,
which observes that as a matter of principle,
charging of capitation fee or profiteering by
educational institutions is impermissible. However,
the judgment does not state that the teachers
should not be paid gratuity. In fact, the judgment
holds that the educational institutions are entitled
to reasonable surplus to meet the cost of expansion
and augmentation of the facilities and this does not
amount to profiteering. It is possible that in some
States there are fee fixation laws which will have to
be complied with. But compliance with these laws
does not mean that the teachers should be
deprived and denied gratuity, which they were/are
entitled to receive as other employees of an
educational institution. Regulation of fee is to
ensure that there is no commercialisation and
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profiteering, and the effect is not to prohibit a
school from fixing and collecting "just and
permissible school fee", as has been held by this
Court in Indian School, Jodhpur and Another v.
State of Rajasthan and Others.
x x x
25. In most cases, the prayer for stay, as in Civil
Appeal No. 8162 of 2012, was not accepted, albeit
in some cases, stay has been granted for payment
of gratuity for the period prior to 3rd April 1997. As
explained above and applying the principle of
retroactivity and as also following the judgment of
this Court in Management of Goodyear India
Limited. (supra), this argument raised on behalf of
the private schools should fail and is rejected. The
partial stay order dated 31st January 2020 passed
in SLP (C) No.2235 of 2020, titled Saint Xaviers
High School v. Jayashree Shamal Ghosh, or in
any other case, is vacated.
26. For the reasons mentioned above, the
aforesaid appeals, transfer case and the writ
petitions are dismissed. The stay orders, as stated
above, are vacated. The private schools would
make payment to the employees/teachers along
with the interest in accordance with the provisions
of the PAG Act within a period of 6 weeks from
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today and in case of default, the
employees/teachers may move the appropriate
forum to enforce payment in accordance with the
provisions of the PAG Act. In the facts of the case,
there will be no orders as to costs."
5. The constitutional validity of the amendment to
Section 2(e) of PG (Amendment) Act, 2009, having been
upheld by the Apex Court with retrospective effect, the
petitioner-management to make payment to the
employees/teachers as is available under the provisions of
the Payment of Gratuity Act, 1972, in accordance with law,
within a period of four weeks from the date of receipt
of this order. Accordingly, the writ petition stands
disposed of.
Sd/-
JUDGE
S*
