H.E. Education Society, Barkheda, Bhopal vs The Appellate Authority And Another
on 20/7/2000
ORDER
S.K. Kulshrestha, J.
1. The petitioner-Society has challenged the common order Annexure P-l passed
by the Appellate Authority under the Payment of Gratuity Act, 1972 (hereinafter
referred to as 'the Act'), Bhopal Division, Bhopal in Gratuity Appeal No. 16/99
to 39/99, by which the order dated 19-2-1999 passed under sub-section (4) of
Section 7 of the Act by the Controlling Authority holding that the respondent
No. 2 in each case, being a retired teacher, was entitled to gratuity, has been
affirmed and the appeals filed by the petitioner have been dismissed.
2. The petitioner is a Society registered under the provisions of the M.P.
Societies Registration Act and, inter alia, runs a school in which the
respondent No. 2 was a teacher who retired long back on attaining the age of
superannuation. According to the petitioner, prior to the notification dated
3-4-1997 issued in exercise of the powers conferred by clause (c) of sub-section
(3) of Section 1 of the Act, the educational institutions were outside the
purview of the Act and although the notification even in cases of educational
institutions was prospective in application and did not cover the cases of the
employees who stood retired before the date of the publication thereof, the
respondent No. 2 in W.P. Nos. 2938 of 1999, 3492 of 1999, 3497 of 1999 and 3495
of 1999 who retired on 15-5-1984, 27-10-1989, 30-4-1993 and 31-3-1994, made
applications before the Controlling Authority for payment of gratuity under the
provisions of the Act and the preliminary issues raised by the petitioner about
maintainability of the application was rejected. Thereafter, the Controlling
Authority decided the matter, holding the respondent No. 2 entitled to gratuity
under the provisions of the Act and in appeal the respondent No. 1 has
maintained the order passed by the Controlling Authority. The petitioner has,
therefore, challenged the impugned order on the ground that the applicant before
the Controlling Authority, not being an employee as defined in Section 2(e) of
the Act was not entitled to claim any gratuity under the provisions thereof and
such of the employees who had retired prior to the date of the notification
Annexure P-3 which was prospective, could not have made any claim, even
otherwise, under the provisions of the said Act. The validity of the order has
also been assailed on the ground that till 30-9-1987, the persons drawing wages
above 1600/per month and from 1-10-1987 the employees drawing wages above 2500/-
per month till removal of the ceiling by Act No. 34 of 1994 w.e.f. 24-5-1994,
were not entitled to gratuity under the provisions of the Act and the
petitioners in W.P. Nos. 2938/99, 3492/99, 3497/99 and 3495/99, having retired
prior to the amendment made by Act No. 34/94 and having been in receipt of wages
above the maximum limit laid down, were even otherwise not entitled to seek any
relief under the provisions of the Act. The entitlement of these retired
teachers has also been assailed on the ground o!" limitation.
3. While the learned counsel has made, his submissions on the aforesaid
grounds to challenge the jurisdiction of the authorities under the Act as also
the entitlement of these retired teachers to make any claim for gratuity, Shri
Rajendra Babbar, learned counsel for the respondents retired teachers in the
above cases, has controverted the legal and factual position on the ground that
the definition of "workman" in Section 2(s) of the Industrial Disputes Act and
the "employees" under Section 2(i) of the Minimum Wages Act is not relevant for
construing the meaning of the word 'employee' occurring in Section 2(i) of the
Act in view of the overriding effect given to the Act notwithstanding anything
inconsistent contained in any enactment other than the Gratuity Act. Learned
counsel has also pointed out that where a particular educational institution was
even otherwise an establishment within the meaning of any law in force in
relation to Shops and Establishments Act in a State as contemplated by clause
(b) of sub-section (3) of Section 1 of the Act, the notification Annexure P-3
issued by the Central Government under clause (c) of sub-section (3) of Section
1 applying the provisions of the Act, was of no consequence as the institutions
covered by clause (b) were already subject to the provisions of the Act and it
was not necessary to consider whether the said notification also enabled the
employees who retired prior thereto, to make claim under the provisions of the
Act. Learned counsel has also pointed out that it was the obligation of the
employer to make payment of gratuity to the retired employees without any
initiation in this behalf by the employees concerned and, therefore, even if
there was some delay in their making applications before the Controlling
Authority, as alleged by the petitioner, their legitimate claim which the
petitioner-society was under an obligation to discharge, cannot be defeated on
that ground. It has also been argued by the learned counsel for the respondent-
retired teachers that ceiling limit of wages was only for the purposes of
computation of the amount of gratuity, which under the explanation to Section
2(e) of the Act, as it stood then, was to be made in cases of the employees
drawing higher wages on the basis of the amount of wages specified. Learned
counsel has also prayed that the return filed in W.P. No. 3502 of 1999 and 3507
of 1999 be read in all the cases.
4. In view of the rival submissions made as noted above, the first question
that arises for consideration is whether the retired teachers of a school arc
covered within the meaning assigned to the word 'employee' by Section 2(i) of
the Act as in case they are held to be not, it would not be necessary to
consider whether the school run by the petitioner society was establishment to
which the provisions of the Act applied even before the notification Annexure
P-3 was issued under the provisions of clause (c) of sub-section (3) of Section
1, whether they were otherwise entitled to make a claim despite being in receipt
of wages exceeding the ceiling limits prescribed till removal of the limits by
Act No. 34 of 1994 w.e.f. 24-5-1994 and whether they had divested themselves of
the benefit by not approaching the authority within the time prescribed under
the Payment of Gratuity (M.P.) Rules, 1973. 5. There is no dispute that under
Section 4 of the Act, gratuity is payable to an employee on the termination of
his employment after he has rendered continuous service for not less than five
years on happening of one of the contingencies prescribed in clauses (a) to (c)
of Section 4 and even without completion of five years service in cases covered
by the proviso thereto. The main contest between the parties is that while the
learned counsel for the petitioner contends that in view of the definition of
'employee' contained in Section 2(e) of the Act, a teacher is not 'employee',
the learned counsel for the respondents retired teachers has contended that in
view of the fact that the Act is a benevolent legislation, the definition of
'employee' is to be construed liberally and on its own language without any
reference to definition of workman in Section 2(s) of the I.D. Act and
'employees' in Section 2(i) of the Minimum Wages Act claimed by the petitioner
to be in pari materia. In relation to the definition of workman contained in
Section 2 (s) of the I.D. Act and whether teachers could be said to be workmen,
the matter came up for consideration before the Supreme Court in A. Sundarambal
Vs. Govt. of Goa, Daman and Diu [1988 (4) SCC 42]. In the said case the
petitioner who was a teacher in a school had challenged the order of termination
of service by the respondent in an Industrial Dispute before the Conciliation
Officer under the Industrial Disputes Act in which on failure of the
conciliation being reported to the Government, the Government declined to make
reference on the ground that the petitioner was not workman as defined in the
Act. After referring to the definition of workman in Section 2(s) of the I.D.
Act, it was observed that in order to be 'workman' a person should be person
employed in any Industry for hire or reward, engaged in skilled or unskilled
manual, supervisory, technical or clerical work and he should not be a person
falling under the four categories specifically excluded. It was held that the
teachers employed by the education institutions whether the said institutions
are imparting primary, secondary, graduate or post-graduate education cannot be
called as 'workman' within the meaning of Section 2(s) of the I.D. Act as
imparting of education which is the main function of the teachers cannot be
considered as skilled or unskilled manual work or supervisory work or technical
work or clerical work as the same is in the nature of a mission or a noble
vocation. The relevant extract in Paragraph 10 of the report reads as under:--
"10.....
The question for consideration is whether even after the inclusion of the
above two classes of employees in the definition of the expression 'workman' in
the Act a teacher in a school can be called a workman. We are of the view that
the teachers employed by educational institutions whether the said institutions
are imparting education cannot be called as 'workmen' within the meaning of
Section 2(s) of the Act. Imparting of education which is the main function of
teachers cannot be considered as skilled or unskilled manual work or supervisory
work or technical work or clerical work. Imparting of education is in the nature
of mission or a noble vocation. A teacher educates children, he moulds their
character, builds up their personality and makes them fit to become responsible
citizens. Children grow under the care of teachers. The clerical work, if any
they may do, is only incidental to their principal work of teaching. We agree
with the reasons given by the High Court for taking the view that teachers
cannot be treated as 'workmen' as defined under the Act. It is not possible to
accept the suggestion that having regard to the object of the Act, all employees
in an industry except those falling under the four exceptions (i) to (iv) in
Section 2(s) of the Act should be treated as workmen. The acceptance of this
argument will render the words 'to do any skilled or unskilled manual,
supervisory, technical or clerical work' meaningless. A liberal construction as
suggested would have been possible only in the absence of these words. The
decision in May and Baker (India) Ltd. Vs. Workmen, precludes us from taking
such a view. We, therefore, hold that the High Court was right in holding that
the appellant was not a 'workman' though the school was an industry in view of
the definition of 'workman' as it now stands."
6. The question once again came up before the Supreme Court with reference to
the definition of 'employee' under Section 2(i) of the Minimum Wages Act, 1948,
in Haryana Unrecognised Schools' Association Vs. State of Haryana [(1996) 4 SCC
225] in relation to the inclusion of the employment in private coaching classes,
schools including secondary schools, and technical institutions in Part I of the
Schedule appended to the Minimum Wages Act by the Government of Haryana in
exercise of the power conferred under Section 27 of the Minimum Wages Act. It
was observed that a combined reading of Sections 3, 2(i) and 27 of the Minimum
Wages Act, 1948 and the Statement of Objects and Reasons of the legislation
makes it explicitly clear that the State Government can add to either part of
the Schedule any employment where persons are employed for hire or reward to do
any work skilled or unskilled, manual or clerical. If the persons employed do
not do the work of any skilled or unskilled or of a manual or clerical nature
then it would not be possible for the State Government to include such an
employment in the Schedule in exercise of power under Section 27 of the Act. It
was observed that since the teachers of an educational institution are not
employed to do any skilled or unskilled or manual or clerical work, they could
not be held to be as 'employee' under Section 2(i) of the Minimum Wages Act and,
therefore, it was beyond the competence of the State Government to bring them
under the purview of the Act by adding the employment in educational
institutions in the Schedule. Reference was also made to the decision in A
Sundarambal (supra). The observations contained in Paragraph 10 of the report
read thus :
"10. A combined reading of the aforesaid provisions as well as the object
of the legislation as indicated earlier makes it explicitly clear that the State
Government can add to either part of the Schedule any employment where persons
are employed for hire or reward to do any work skilled or unskilled, manual or
clerical. If the persons employed do not do the work of any skilled or unskilled
or of a manual or clerical nature then it would not be possible for the State
Government to include such an employment in the Schedule in exercise of power
under Section 27 of the Act. Since the teachers of an educational institution
are not employed to do any skilled or unskilled or manual or clerical work and
therefore could not be held to be an employee under Section 2(i) of the Act, it
is beyond the competence of the State Government to bring them under the purview
of the Act by adding the employment in educational institution in the Scheduled
in exercise of power under Section 27 of the Act. This Court while examining the
question whether the teachers employed in a school are workmen under the
Industrial Disputes Act had observed in A. Sundarambal Vs. Govt. of Goa, Daman
and Diu (SCC p. 48, para 10).
"We are of the view that the teachers employed by education institutions
whether the said institutions are imparting primary, secondary, graduate or
postgraduate education cannot be called as 'workmen' within the meaning of
Section 2(s) of the Act. Imparting of education which is the main function of
teachers cannot be considered as skilled or unskilled manual work or supervisory
work or technical work or clerical work. Imparting of education is in the nature
of a mission or a noble vocation. A teacher educates, children, he moulds their
character, builds up their personality and makes them fit to become responsible
citizens. Children grow under the care of teachers. The clerical work, if any
they may do, is only incidental to their principal work of teaching."
7. Learned counsel for the respondents has, however, placed heavy reliance on
a Division Bench decision of Hon'ble Bombay High Court in P.D. Raodeo Vs.
Principal S. T. Phelomine's Convent High School [1997 (1) L.L.N. 608] and
contended that the meaning of 'employee' contained in Section 2(e) of the Act
having already been construed to include teachers within the expression on the
plain language of the definition contained in Section 2(e), the decision relied
on by the learned counsel for the petitioner-society with regard to the
definition of 'workman' under the I.D. Act and of 'employee' under the Minimum
Wages Act could not be of any help to the petitioner. The case before the Bombay
High Court primarily hinged on the dispute whether the school, respondent in
that case, was an establishment to which the Act was applicable and after
referring to Section 1(3)(b) of the Act, it was observed that the definition of
'employee' was wide enough to include a teacher indulging in teaching activities
in an educational institution which was clearly covered within the definition of
establishment under the Bombay Shops and Establishments Act, 1948. It was
observed that the decision in A. Sundarambal (supra) did not deal with the
position of a teacher qua educational establishment. The observations contained
in Paragraph 11 read as under :--
"11. Shri Bukhari next submitted that the definition of "employee" would
not include a teacher of an educational institute. It was his submission that
the types of activities covered by the said definition of "employee" were
identical to such activities covered within the definition of "workman" given in
Section 2(s) of the Industrial Disputes Act. He relied on several decisions. He
relied on the decision of a Division Bench of this Court (Goa Bench) in the
matter of A. Sundarambal Vs. Government of Goa, Daman and Diu and others,
reported in 1983 (2) LLN 759, wherein it was inter alia held that a teacher was
not a "workman" as defined in Section 2(s) of the Industrial Disputes Act as a
person employed in an industry must be employed in one or the other of the four
capacities mentioned in the definition, to be covered by the definition of
"workman" given in Section 2(s) of the Industrial Disputes Act and that the work
of a teacher did not fall under any of those four capacities. The said decision
was confirmed by the Supreme Court in 1988 (2) LLN 608. From the perusal of the
above decisions, it is apparent that none of these decisions deal with the
position of a teacher qua an educational establishment. The decisions cited by
Shri Bukhari are in respect of a "workman" in relation to an industry."
8. Reference has also been made to the decision of Hon'ble Rajasthan High
Court in Ramgopal Vs. Mehesh Shikshan Sansthan [1996 (2) LLN 678] in support of
contention that teachers are employees entitled to gratuity under the Act. In
the said case, the claim of retired teacher had been negatived on the ground
that although the school was an establishment, since it was not an establishment
under the Rajasthan Shops and Establishments Act, 1958, the provisions of the
Payment of Gratuity Act were not applicable. The question whether teachers were
employees within the meaning of Section 2(e) of the Act, was not before the
Court for consideration and the decision thus does not deal with that question.
9. Before considering whether the decisions on the definition of 'workman' in
the Industrial Disputes Act and 'employee' in the Minimum Wages Act have any
bearing on construction of the word 'employee' within the meaning of Section
2(e) of the Act, it is necessary to refer to the definition of 'workman' and
'employee' in each of these Acts. Section 2(s) of the Industrial Disputes Act
defines 'workman' as under :--
"2 (s) "Workman" means any person (including an apprentice) employed in any
industry to do any manual, unskilled, skilled, technical, operational, clerical
or supervisory work for hire or reward, whether the terms of employment be
express or implied, and for the purposes of any proceedings under this Act in
relation to an industrial dispute, includes any such person who has been
dismissed, discharged or retrenched in connection with, or as a consequence of,
that dispute, or whose dismissal, discharge or retrenchment has led to that
dispute, but does not include any such person-
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army
Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other
employee of a person; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding
one thousand six hundred rupees per mensem or exercises, either by the nature of
the duties attached to the office or by reason of the powers vested in him,
functions mainly of a managerial nature."
The interpretation of the word 'employee' in Section 2(i) of the Minimum
Wages Act is as under:--
"2 (i) "employee" means any person who is employed for hire or reward to do
any work, skilled or unskilled, manual or clerical, in a scheduled employment in
respect of which minimum rates of wages have been fixed; and includes an out-
worker to whom any articles or materials are given out by another person to be
made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or
otherwise processed for sate for the purposes of the trade or business of that
other person where the process is to be carried out either in the home of the
out-worker or in some other premises not being premises under the control and
management of that other person; and also includes an employee declared to be an
employee by the appropriate Government; but does not include any member of the
Armed Forces of the Union."
Payment of Gratuity Act defines 'employee' under Section 2(e) as follows:--
"2 (e) "employee" means any person (other than an apprentice) employed on
wages, in any establishment, factory, mine, oilfield, plantation, railway
company or shop, to do any skilled, semi-skilled 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 rules providing for payment of gratuity."
10. The key words to be examined to find out similarity between the
definition of 'workman' appearing in the above cases are that in the definition
of 'workman' under the I.D. Act, a workman means a person employed in any
industry to do any manual, unskilled, skilled, technical, operational, clerical
or supervisory work for hire or reward, the word 'employee' under the Minimum
Wages Act means a person who is employed for hire or reward to do any work
skilled or unskilled, manual or clerical while an employee within the meaning of
Section 2(e) of the Payment of Gratuity Act means any person employed on wages
to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or
clerical work. Their Lordship in A. Sundarambal (supra) have clearly held that
imparting of education which is the main function of a teacher, cannot be
considered as skilled or unskilled, manual work or supervisory work or technical
work or clerical work. In Haryana Unrecognised Schools' Association Vs. State of
Haryana (supra), while interpreting the expression 'employee', as contained in
Section 2(i) of the Minimum Wages Act, it has been reiterated that since the
teachers of an education institution are not employed to do any skilled or
unskilled or manual or clerical work, they should not be held to be employee
under Section 2(i) of the Act. The meaning assigned to the word 'employee',
insofar as the nature of work is concerned, is in no way different from the
meaning assigned to the work done by a workman or an employee under the
foregoing enactments as under the Payment of Gratuity Act also, reference is to
skilled, semi- skilled or unskilled, manual, supervisory, technical or clerical
work. It has already been held in Haryana Unrecognised Schools' Association
(supra) that the work performed by teacher is not skilled or unskilled, manual
work or supervisory work or clerical work as imparting of education is in the
nature of a mission or a noble vocation and a teacher educates children, he
moulds their character, builds up their personality and makes them fit to become
responsible citizens. The clerical work done, if any, is only incidental to
their principal work of teaching. In view of above clear interpretation with
regard to the nature of the work performed by teachers and there being no
material distinction between the definition of 'employee' in Section 2(e) of the
Payment of Gratuity Act and the definition of 'workman' in Section 2(s) of the
Industrial Disputes Act and 'employee' in Section 2(i) of the Minimum Wages Act,
with great respect, the view expressed by Hon'ble Bombay High Court in P.D.
Raodeov (supra) does not appear to be correct. Even in view of the observations
in the said case that such educational institutions are establishments covered
by the provisions of Bombay Shops and Establishments Act, 1948 when read
apposite Section 1(3)(b) of the Payment of Gratuity Act, the teachers not being
'employee' within the meaning assigned by Section 2(e) of the Act, would not
become entitled to claim gratuity under the provisions of the Act. It has also
to be noted that such educational institutions have also employees who are not
teachers and exclusion of the applicability of the Act in case of teachers being
manifest, there is no occasion to consider the position of the teachers qua such
establishments. The question, if at all, may arise only in relation to the
claims of the employees of such institutions other then teachers.
11. Learned counsel for the petitioner has also brought to my notice the
judgment of a learned Single Judge of the Patna High Court in Ved Prakash Pathak
Nirala Vs. State of Bihar [1999 (82) FLR 506], in which the learned Judge has,
after referring to the decisions in A. Sundarambal and Haryana Unrecognised
Schools' Association (supra) held that teachers cannot come within the purview
of an 'employee' under Section 2(e) of the Act.
12. At this stage, another argument of the learned counsel for the respondent
retired teachers also deserves to be considered. Learned counsel has pointed out
that while issuing notification Annexure P-3 under the provisions of Section
1(3)(c) of the Payment of Gratuity Act and making the Act applicable to the
educational institutions, no corresponding change has been introduced in the
definition of 'employee' contained in Section 2(e) of the Act which shows that
teachers were always understood to have been covered by the provisions of the
Act. As observed above, educational institutions also employ persons other than
teacher. Section 4 of the Act requires payment of gratuity to an 'employee' and
unless a person is 'employee' as per the definition contained in Section 2(e),
he can have no claim for gratuity under the provisions of Section 4 of the Act.
The teacher not being such an employee, the respondent retired teachers were not
entitled to claim gratuity under the provisions of the Act. In this view of the
matter, it is not necessary to consider the other contentions raised by the
learned counsel that the notification in any case would not apply
retrospectively and being in receipt of wages above the ceiling limit, they were
not even otherwise entitled to claim any gratuity under the Act.
13. In the result, all these petitions are allowed. The orders passed by the
Controlling Authority directing payment of gratuity to the respondent retired
teachers as also the order passed in appeal by the Appellate Authority are
quashed. However, since the respondent-teachers arc old retired persons and may
have already utilised the amounts received by them, to obviate hardship to them,
it is directed that the petitioner shall not be entitled to recover the amounts
paid to them in pursuance of the impugned orders. There shall be no order as to
costs.
14. Writ Petitions allowed.
