Supreme Court Rejects State's Argument That It Has No Liability To Pay Retiral Benefits To Employee Of Aided Institution Whose Dismissal Was Set Aside

In a recent case, the Supreme Court rejected the Gujarat Government's argument that it has no liability to pay the Retiral Benefits to the employee of an aided educational institution whose dismissal was set aside. The Court ruled that the payment of the pensionary and retiral benefits to the employee of an aided private educational institution rests with the State Government, not the educational institution.The bench comprising Justice JK Maheshwari and Justice Rajesh Bindal heard the appeal filed by the Nutan Bharti Gram Vidyapeeth, an aided private educational institution situated in Gujarat against the High Court's decision directing the appellant, along with the State, to pay the retiral benefits to the respondent no.2-employee. The respondent-employee was initially dismissed from the teaching service but subsequently was directed to be reinstated with payment retiral benefits after his superannuation. The appellant-college argued that under the applicable Pension Scheme of the Gujarat Government, the State Government was responsible for paying the retiral dues, not the college. It referred to Paragraph 11 of the Scheme that outlined the procedure for sanctioning pensions and places the burden of payment of retiral benefits on the State. "The Director of Higher Education should sanction the pension, gratuity, etc. and forward the pension completed to the Director of Pension and Provisions Fund. The pension, gratuity, etc. so sanctioned will be payable from the Government Treasurers.", the pension scheme states.Opposing the appellant's stand, the respondent no.1-State argued that the appellant should bear the responsibility for paying the retiral dues, as it was the appellant's prolonged litigation that delayed the settlement of the matter and caused the respondent to retire before the dispute was resolved. In support, reliance was placed on the case of Educational Society, Tumsar and Others vs. State of Maharashtra and Others (2016). Also, the Respondent-employee supported the arguments made by the appellant. Upon hearing the parties, the Court set aside the High Court's order directing the appellant to pay the retiral benefits to the respondent-employee. The Court said that “there is no exception provided in the Scheme to enable the State to deny payment of retiral benefits to an employee of the Grant-in-Aid Institution under certain circumstances and shift the burden on the institution.” “It is not a matter of dispute that the appellant is an institution entitled to Grant-in-Aid and the employees thereof are entitled to pensionary benefits in terms of the aforesaid Scheme. The only argument raised by the learned counsel for the State is regarding conduct of the appellant in fighting litigation after the State had directed reinstatement of the respondent no.2 and finally settling the matter before the High Court. In our opinion, the same cannot be fatal for the appellant and burden it with the retiral benefits of respondent no.2 whereas the Scheme provides for otherwise.”, Justice Bindal in the judgment observed.The Court distinguished the State's reliance on Educational Society's case with the facts of the present case stating that the action of the appellant dismissing the respondent-employee was within its jurisdiction as that was not the case in Educational Society's case. “The appellant, keeping in view the discipline in the institution, thought it appropriate to challenge the same. In such circumstances, it cannot be opined that it's conduct was such that it should be burdened with the retiral benefits of delinquent employee. It is not the opinion of the appellate authority or any Court that the action taken by the appellant against the respondent no.2 was without jurisdiction as was the case in Educational Society, Tumsar and Others (supra).”, the Court said. Accordingly, the appeal was allowed. Consequently, respondent no.1-State was directed to pay the retiral dues to the respondent no.2-employee.Appearance:For Petitioner(s) Mr. Nikhil Goel, Sr. Adv. Mrs. Taruna Singh Gohil, AOR Mr. Alapati Sahithya Krishna, Adv. Ms. Hetvi Patel, Adv. Ms. Navin Goel, Adv. Ms. Siddhi Gupta, Adv. For Respondent(s) Ms. Swati Ghildiyal, AOR Ms. Devyani Bhatt, Adv. Mr. Bhashkar Tanna, Sr. Adv. Ms. Dharita Malkan, Adv. Mr. Alok Kumar, Adv. Mr. Dhruva Kumar, Adv. Ms. Khushboo Aakash Sheth, AOR Case Title: NUTAN BHARTI GRAM VIDYAPITH VERSUS GOVERNMENT OF GUJARAT AND ANR.Citaion : 2024 LiveLaw (SC) 954Click here to read/download the judgment

Supreme Court Rejects State's Argument That It Has No Liability To Pay Retiral Benefits To Employee Of Aided Institution Whose Dismissal Was Set Aside

Yash Mittal

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