Karnataka High Court
Dayananda Sagar Institutions vs Sri Ramaiah M N on 3 June, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF JUNE, 2025
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO.1123 OF 2022 (L-PG)
BETWEEN:
DAYANANDA SAGAR INSTITUTIONS
SHAVIDE MALLESHWARA HILLS,
KUMARASWAMY LAYOUT,
BENGALURU-560 078
REPTD. BY ITS SECRETARY
...PETITIONER
(BY SRI.MURALIDHAR H.M., ADVOCATE)
AND:
1 . SRI. RAMAIAH M.N.
S/O LATE NARASIMHEGOWDA
AGED ABOUT 63 YEARS,
R/AT NO.55, I 'A' MAIN,
DATTATREYA NAGAR,
BANASHANKARI III STAGE,
HOSAKEREHALLI,
BENGALURU - 560 085.
2 . LABOUR OFFICER CUM-
CONTROLLING AUTHORITY
UNDER PAYMENT OF GRATUITY ACT,
BANGALORE SUB DIVISON-2
BANNERGHATTA ROAD,
BANGALORE - 560 029.
3 . ASSISTANT COMMISSIONER
2
CUM-APPELLATE AUTHORITY,
UNDER PAYMENT OF GRATUITY ACT,
BANGALORE DIVISION-2,
BAGALAGUNTE, TUMAKUR ROAD,
BANGALORE-560 073.
...RESPONDENTS
(BY SRI.A.RAJESH, ADVOCATE FOR R1
SMT.RASHMI RAO, HCGP FOR R2 & R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL
FOR THE RECORDS ON THE FILE OF THE SECOND AND THIRD
RESPONDENT PERUSE THE SAME ALLOW THE W.P. QUASH
THE IMPUGNED ORDER PASSED BY THE R-2 DATED:
20.3.2019 VIDE ANNEXURE-A AND ALSO ORDER PASSED BY
THE R-3 VIDE ANNEXURE-B BY ISSUE OF A WRIT IN THE
NATURE OF CERTIORARI CONSEQUENTLY DISMISS THE
APPLICATION FILED BY R-1 CLAIMING GRATUITY AMOUNT
TOGETHER WITH COST.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 04TH APRIL, 2025 AND COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE
FOLLOWING:
CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
CAV ORDER
Petitioner is assailing the order passed by the second
respondent - the Controlling Authority and also the order
passed by the Assistant Commissioner-cum-Appellate
Authority, both orders passed under the Payment of
Gratuity Act, 1972 ('Act, 1972').
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2. The Appellate Authority dismissed the
petitioner's appeal and confirmed the order passed by the
Controlling Authority. In terms of the order dated
20.03.2019, the Controlling Authority directed the
petitioner to pay Rs.1,74,574/- towards gratuity along
with interest @10% per annum from 16.03.2018 till
payment.
3. Learned counsel appearing for the petitioner
taking through the facts of the case would submit that
First respondent/employee was working in a college run
by the petitioner. Said institution is admitted to grant-in-
aid. First respondent was appointed in 1979 to a post
which was admitted to grant-in-aid. After the retirement,
first respondent received all the retirement benefits
including the retirement gratuity, payable to an employee
in an aided institution appointed in an aided post, as per
the applicable Rules.
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4. Learned counsel further submits that the
petitioner institution is also running an unaided evening
college, and in the said college, first respondent was
appointed in 1988 to work as Office Assistant and he was
paid a consolidated salary. All the salary payable to him
for his employment in the evening college has been
settled. However, first respondent, though ineligible to
claim the gratuity for the employment in the unaided
evening college, claimed gratuity in respect of said
employment in the evening college. The Controlling
Authority passed an order directing payment of gratuity
and the Appellate Authority dismissed the appeal on the
ground of limitation.
5. Learned counsel for the petitioner assailing the
aforementioned two orders would contend that first
respondent who was simultaneously employed by the
petitioner, in the day college, and in the evening college
(after the working hours in the day college against the
aided post) is not eligible to claim gratuity in respect of
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the employment in the evening college as first
respondent has received the full retirement benefit from
his regular employment in the aided post.
6. It is urged on behalf of the petitioner that the
employment in the evening college which is unaided,
does not confer the benefit under the Act, 1972 as the
gratuity under the Act, 1972 can be paid to only those
employees whose employment is lawful. It is urged that
the employment secured in 1988, in the evening college
is not lawful as first respondent was already employed in
the day college in an aided post and he could not have
taken second employment in the evening college.
7. Learned counsel for the petitioner would urge
that under the Karnataka Civil Services (Conduct) Rules,
1966 government servant is prohibited from taking any
other employment as such second employment is void ab
initio. Referring to the Karnataka Private Educational
Institutions (Discipline and Control) Act, 1975 it is urged
that the employee in a private educational institution was
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governed by the said Act. The aforementioned Act of
1975 was repealed in 1995 after the Karnataka Education
Act, 1983 ('Act, 1983') came into force in the year 1995.
8. Under the Act, 1983, the Educational
Institutions (Terms and Conditions of Service of
Employees in Private Educational Institutions) Rules,
1997 was framed and it was given effect to on
25.06.1998. The said Rules governed the employees like
first respondent. It is urged that under Rule 24 of Rules
1997, first respondent was not supposed to take up
private employment while being in service in an aided
institution.
9. Referring to The Karnataka Pre-University
Education (Academic, Registration, Administration and
Grant-in-aid etc.,) Rules, 2006 it is urged that the
employee who is appointed against a post admitted to
Grant-in-aid should not engage in private trade or
employment and as such the second employment is not
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lawful and as a consequence first respondent is not
eligible to claim gratuity.
10. It is urged by the learned counsel for the
petitioner that first respondent does not fit into the
definition of "Employee" defined in Section 2(e) of the
Act, 1972. It is submitted that under the said definition
only a lawfully employed person can be considered as an
employee falling under the definition of 'employee' under
Section 2(e) of the Act, 1972 and not the employee
whose employment is contrary to law.
11. It is also urged that the definition of "Wages"
in the said Act, 1972 does not cover the payment made
to first respondent whose employment is illegal and
"wages" defined in the Act, 1972 would only mean
"wages" paid to the employee whose appointment is
lawful.
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12. Learned counsel for the petitioner would rely on
the judgment of the Delhi High Court in MALVINDER
KAUR VS DIRECTOR OF EDUCATION (2024 SCC Online).
13. Learned counsel appearing for first respondent
on the other hand would contend that first respondent did
receive the consolidated salary and it is a "wage" under
Section 2(s) of Act, 1972. It is also urged that first
respondent does fit in the definition of "Employee" as
defined in Section 2(e) of Act, 1972 and all the
requirements under Section 4 of the Act, 1972 have been
met by first respondent as such the impugned orders are
justified.
14. Learned counsel for first respondent submits
that Act, 1972 does not bar the second employment and
the terms of second employment do not exclude payment
of gratuity and even if it is so, such exclusion is contrary
to law and such exclusion if any should yield to the law.
It is also urged that the petitioner itself has offered
second employment and having employed first
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respondent in 1988, in the evening college, and having
extracted the work till his retirement on 30.07.2016, the
petitioner cannot raise a contention that second
employment is illegal. It is also submitted that
contention relating to validity of second employment is
not raised before the Controlling Authority and the
Appellate Authority and for the first time such contention
cannot be raised.
15. Learned counsel for the petitioner by way of
reply would contend that the contentions raised relating
to validity of appointment is a pure question of law and
can be raised at any stage of the proceeding.
16. Learned counsel for the petitioner in the
alternative would also urge that the Sub-Section 5 of
Section 4 of the Act, 1947 prohibits the respondent from
claiming gratuity.
17. This Court has considered the contentions
raised at the bar and perused the records.
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18. Admittedly, first respondent was an employee
in a post which is admitted to Grant-in-aid and all
retirement benefits are paid to him in respect of the said
employment.
19. The second employment was during the
subsistence of first employment. Admittedly, the timings
of both employments did not overlap with each other.
The second employment is also under the same
employer/petitioner. In other words, the second
employment is with the approval of the employer. The
petitioner has paid a consolidated salary to first
respondent.
20. First thing that requires consideration is
whether the first respondent's second employment, in
1988, in the evening college run by the petitioner is
invalid.
21. The Karnataka Civil Services (Conduct) Rules,
1966 (Rules, 1966) came into force on 10.05.1966. It
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applies to all State Government employees except those
excluded under Rule 3 of Rules, 1966.
22. Rule 16 of the Rules, 1966 prohibits private
trade, business or employment except with the previous
sanction of the Government. From the plain reading of
Rule 16, it is apparent that the Government servant
cannot take any other employment without the previous
sanction of the Government. However, it is relevant to
note that Rules, 1966, applies only to the "Government
Servant" which expression is defined in Rule 2(b) of the
Rules 1966, as a "civil service or post in connection with
the affairs of the State of Karnataka".
23. The petitioner is a private entity. One of the
institutions run by the petitioner is admitted to Grant-in-
aid. Merely because first respondent was an employee of
an aided institution, it does not mean that such employee
is to be treated as a Government Servant. Admittedly,
first respondent was not appointed by the Government.
Government has merely accorded the permission for the
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appointment against the aided post. The Appointing
Authority is the petitioner. Thus, the Rules 1966 cannot
have any application to the case on hand.
24. Respondent No.1 was appointed in the evening
college in the year 1988. In the year 1988, the
petitioner/institution was governed by the Karnataka
Private Educational Institutions (Disciplinary and Control)
Act, 1975 and the Rules, 1978 made there under.
25. The Karnataka Education Act, 1983 (Act, 1983)
came into effect in the year 1995. The said Act, 1983
repealed the Karnataka Private Educational Institutions
(Discipline and Control) Act, 1975.
26. Under the Act, 1983, the Educational
Institutions (Terms and Conditions of Service of
employees in private educational institutions) Rules ,1997
('Rules, 1997') was framed and it came into effect on
25.06.1998. Thus, after 1998 the terms and conditions
of service of employees in private educational institutions
were governed under the said Rules, 1997. Prior, to that
13
such institutions were governed under the Rules, 1978
framed under the Act, 1975.
27. The Act, 1975 or the Rules, 1978 did not
prohibit employee in an aided institution from taking up
any private employment. However, such prohibition was
introduced for the first time in the year 1997 under Rule
24 of Rules, 1997. The relevant portion of the said Rule
reads as under:
24. Private trade or employment.-(1) No
employee shall, except with the previous
sanction of the Management engage directly or
indirectly in any trade or business or negotiate for
or undertake any other employment:
Provided that an employee may, without
such sanction, undertake honorary work of a
classical or charitable nature or occasional work of
a literary, artistic or scientific character, subject to
the following
Xxxxxx
(Emphasis applied)
28. Under the said Rule 24 of Rules, 1997, the
employee in aided institution cannot take up a private
14
employment without the sanction of the employer. Rule
24 does not impose a total prohibition for second
employment. However, what is required is, for second
employment, the employee has to obtain the permission
from the employer of the aided post.
29. In the instant case, the petitioner is the
employer of first respondent in an aided institution. First
respondent is also employed by the petitioner in an
unaided evening college. Thus, the employment of first
respondent, in the evening college which is an unaided
institution is with the consent of the petitioner. Under
the circumstances, this Court is of the view that second
employment of first respondent in the year 1988 in the
unaided institution (evening college run by the petitioner)
was permissible and was not against any provision of law.
30. In the year 2006, the Karnataka Pre-University
Education (Academic, Registration, Administration and
Grant-in-aid etc.) Rules, 2006 were framed and it came
15
into effect on 07.07.2007. Rule 25(3)(k) of the said
Rules reads as under:
25. Code of conduct for employees of
aided and unaided Pre-University Colleges:
(1) xxxx
(2) xxxx
(2) The following shall constitute
misconduct-
(a) to (j) xxxxxxxxx
(k) engaging in any private trade or
employment;
31. Under the said Rule 25(3)(k), the employee in
an aided institution is prohibited from taking up another
employment or indulging in any other trade or business.
Rule 24(3)(k) is a departure from the earlier Rule which
provides for another employment with the consent of the
employer. Rule 25(3)(k) would also reveal that in case
the employee engages himself in any trade or business or
takes up any other employment, the same amounts to
misconduct. Thus, it can be safely concluded that second
employment by first respondent under the petitioner is
misconduct under the Rules, 2006 which came into effect
16
on 07.07.2007. In view of Rules, 2006, petitioner was
not legally entitled to employ respondent No.1 as his
employee in the evening college with effect from
07.07.2007 and first respondent was not eligible to
continue as an employee of the petitioner in the evening
college from the said date. However, petitioner and first
respondent did not take any steps to discontinue the
employment post 07.07.2007. Thus, this Court is of the
view that first respondent's employment in the
petitioner's evening college was invalid with effect from
07.07.2007.
32. Next question is whether the Act, 1971 applies
to the petitioner and first respondent?
The definition of "employee" under Section 2(e)
of the Act, 1972 reads as under:-
"2. Definitions.- In this Act, unless the context
otherwise requires, -
xxx
xxx
xxx
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(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]."
The definition of "wages" under Section 2(s)
of Act of 1972 reads as under:-
"2. Definitions.- In this Act, unless the context
otherwise requires, -
xxx
xxx
xxx
(s) "wages" means all emoluments which are earned
by an employee while on duty or on leave in
accordance with the terms and conditions of his
employment and which are paid or are payable to him
in cash and includes dearness allowance but does not
include any bonus, commission, house rent allowance,
overtime wages and any other allowance."
33. The definition of "Employee" in the Act, 1972
is sufficiently wide. It covers various kinds of
employments and establishments and excludes Central
and State Government employees and other employees
18
who are governed by any other Act or Rules relating to
payment of gratuity.
34. It is not the case of the petitioner that first
respondent is a Central Government employee or is
governed by any other Act or Rules governing payment of
gratuity. Thus, first respondent can be termed as an
employee coming under the definition of employee under
the Act, 1972.
35. Admittedly, first respondent was paid a salary
which is termed as a consolidated salary by the employer.
Such payment is not excluded from the definition of
wages or in other words, the definition of "wages" in
Section 2(s) of Act, 1972 certainly covers the salary
which is termed as a consolidated salary by the employer.
36. The Act, 1972 is enacted to provide Gratuity to
the employees engaged in establishments named in the
Act, 1972. There is no dispute that the petitioner is an
establishment which is covered under the Act, 1972.
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37. Now the Court has to consider whether other
requirements for payment of gratuity are met. Relevant
portion of Section 4 of the Act, 1972, which provides for
pre-requisite conditions to claim gratuity is extracted
below.
"4. Payment of gratuity.- (1) Gratuity
shall be payable to an employee on the termination
of his employment after he has rendered continuous
service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or
disease:
Provided that the completion of continuous
service of five years shall not be necessary where
the termination of the employment of any employee
is due to death or disablement:
xxxx
xxxx.
(2) For every completed year of service or part
thereof in excess of six months, the employer shall
pay gratuity to an employee at the rate of fifteen
days' wages based on the rate of wages last drawn
by the employee concerned:
xxx.
(3) The amount of gratuity payable to an
employee shall not exceed [such amount as may be
notified by the Central Government from time to
time].
xxx.
(5) Nothing in this section shall affect the right
of an employee to receive better terms of gratuity
under any award or agreement or contract with the
employer.
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(6) xxxx"
38. The conditions required to claim gratuity under
Section 4 are:
(a) That the person claiming gratuity must be an
employee.
(b) Employee must have served not less than 5
years.
(c) Employee must have either attained
superannuation or must have retired or
resigned, or must have died or must have
incurred disablement due to accidental
disease.
39. First respondent does fit in the definition of
employee. Other minimum qualifications prescribed under
Section 4 of Act, 1972 are met.
40. Learned Counsel for the petitioner referring to
Sub-Section 5 of Section 4 of Act, 1972 submits that
employee has opted for retirement benefits under the
21
post he held in aided institution and because of
application of Sub-Section 5 of Section 4, employee
cannot make a claim for payment of gratuity under
second employment.
41. On a reading of Sub-Section 5 of Section 4, it
is noticed that it provides an option to receive better
terms of gratuity under any award or agreement or
contract with the employer. Said provision does not bar
payment of gratuity from second employment if the
employee is otherwise eligible. Sub-Section 5 of Section
4 applies in a situation where the employee has given an
option to choose between the Gratuity under the Act,
1972 or Gratuity in terms of an agreement or contract
with the employer. Here, there is no agreement or
contract with the employer to waive the gratuity in
respect of second employment.
42. Sub-Section (5) enables the employee to chose
between two different kinds of gratuity (either as per the
Act, 1972 or as per the award, contract or settlement)
22
and does not compel the employee to chose gratuity
under one employment and forgo the same under
another employment under the same employer.
43. Under these circumstances, this Court is of the
view that the payment of Gratuity cannot be denied to
first respondent on the premise that first respondent has
already received benefit of gratuity under one
employment.
44. However, as already noticed that there was a
bar to take up the second employment during the
subsistence of first employment with effect from
07.07.2007. It is indeed true that the Act, 1972 does not
specifically prohibit the payment of gratuity in a parallel
second employment. However, what is required to be
noticed is first respondent's second employment in the
evening college was not permitted under law as he was
employed in an aided institution in an aided post which
came with a restriction, (Under Rules, 2006) that the
employee shall not engage in any private trade or
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employment. Thus, petitioner could not have employed
first respondent as an employee in the evening college
and first respondent could not have continued as an
employee in the evening college, run by the petitioner,
post 07.07.2007, when he was already employed in an
aided institution against an aided post.
45. Though first respondent technically fulfils the
requirement of Section 4 of the Act, 1972, what is
required to be seen is under law, he was not supposed to
hold a second employment post 07.07.2007. By
continuing in the second employment, first respondent
effectively blocked another eligible person who could
have been employed by the petitioner and petitioner also
effectively blocked employment of another person by
continuing first respondent in the evening college run by
the petitioner. The resultant effect is a person who is
otherwise eligible to occupy the post in which first
respondent was employed in the evening college was
prevented from occupying the said post. This being the
24
position, this Court is of the view that first respondent
cannot claim gratuity in respect of second employment
from 07.07.2007 onwards as Rule 25 of Rules, 2006
clearly prohibited such second employment.
46. Respondent No.1 cannot be permitted to take
advantage of his own illegal act of continuing in the
second employment in the institution run by the
petitioner.
47. Learned counsel for first respondent referring
to Section 14 of the Act, 1972 would submit that the
provisions of the Act, 1972 will have overriding effect
over all other law inconsistent with the provisions of the
Act, 1972 and urged that even, if second parallel
employment is prohibited under any other law, the
payment of gratuity for second employment cannot be
denied. Though, the Act, 1972 has an overriding effect
over other enactments to the extent of inconsistency,
what is required to be seen is Act, 1972 does not deal
with second parallel employment. The Act, 1972 is silent
25
on the said aspect. It does not mean that second parallel
employment is recognised or permitted under the Act,
1972. Thus, the prohibition contained in Rules, 2006
relating to second parallel employment cannot be
construed as a provision which is inconsistent with the
provisions of the Act, 1972. Thus, the prohibition relating
to second parallel employment in Rules, 2006 cannot be
construed as a provision inconsistent with the provisions
of the Act, 1972. Hence, first respondent cannot take
shelter under Section 14 of Act, 1972 to claim gratuity
from second parallel employment which was not
permitted under Rules, 2006.
48. However, as already noticed, prior to
07.07.2007 there was no absolute prohibition to take up
second employment. Rule 24 of Rules, 1997 prohibited
second employment without the consent of the employer.
As already noticed, the same employer of first respondent
in the day college appointed first respondent in the
evening college as well. Said appointment amounts to
26
employer's approval for second employment, of first
respondent who was already employed in an aided post.
49. This being the position, the employment of
first respondent from 01.08.1988 till 07.07.2007 is valid
and not in contravention of any law. However,
continuation of employment post 07.07.2007 is not a
valid employment and by continuing in such employment,
petitioner and first respondent have effectively blocked
the eligible person from occupying the post in the
evening college.
50. Learned counsel for the petitioner relying on
the judgment of the Delhi High Court in MALVINDER
KAUR supra would urge that the second employment
being void ab initio and contrary to the provision of law,
first respondent is not entitled to claim gratuity.
51. This Court has referred to the aforementioned
judgment. In the said case, it is noticed that the person
who was not otherwise eligible for employment, secured
27
employment by suppressing material fact and on the
basis of concocted records. Under such circumstances,
Delhi High Court took a view that if a person has secured
employment which he was not otherwise qualified to,
then such employment is void ab initio and such an
employee is not entitled to any monetary benefit.
52. In the instant case, the petitioner is not in a
position to establish that on 01.08.1988 when first
respondent was employed in the evening college, he did
not possess necessary qualification to be employed. As
already noticed, as on 01.08.1988, there was no
prohibition for second employment and for the first time,
a condition was imposed in the year 1997 prohibiting
second employment without permission of the employer.
In the year 2007 i.e. with effect from 07.07.2007, the
second employment is termed as misconduct. For the
aforementioned reasons, the ratio laid down in the
decision of MALVINDER KAUR supra does not apply to
the present case.
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53. For the reasons assigned, this Court is of the
view that petitioner is liable to pay gratuity to first
respondent from 01.08.1988 till 06.07.2007. Respondent
No.1 is not entitled to claim gratuity from 07.07.2007 till
his retirement on 31.07.2016 from the second
employment.
54. Hence, the following:
ORDER
i. Writ Petition is allowed-in-part.
ii. The order dated 20.03.2019 marked at Annexure
- A passed by the Controlling Authority and the
order dated 23.11.2021 marked at Annexure - B
passed by the Appellate Authority are set-aside in
part.
iii. Respondent No.1 is entitled to gratuity from
01.08.1988 till 06.07.2007.
iv. Respondent No.1 is also entitled to 10% interest
on the amount 30 days after the date of
retirement till the date of payment.
v. Respondent No.1 is not entitled to gratuity from
07.07.2007 till the date of retirement i.e.
31.07.2016.
Sd/-
(ANANT RAMANATH HEGDE)
JUDGE
BRN/CHS/GVP
...
