Shashwati Chowdhury
Published on: August 30, 2022 at 10:13 IST
The Payment of Gratuity Act, 1972, was amended to extend the benefit of gratuity to teachers, and the Supreme Court has upheld this amendment.
The court dismissed appeals and writ petitions challenging the constitutional validity of the amendment to Section 2(e) and the insertion of Section 13A to the Payment of Gratuity Act, with retrospective effect from 3rd April, 1997 (see the Payment of Gratuity (Amendment) Act, 200).
The amendment with retrospective effect corrects the injustice and discrimination suffered by the teachers as a result of a legislative mistake.
The court further noted that because it is one of the minimal terms of employment, paying a gratuity cannot be classified as a windfall or a bounty paid by private schools.
In Ahmedabad Private Primary Teachers’ Association v. Administrative Officer and Others, (2004) 1 SCC 755, the Supreme Court held that the teachers who impart education to students were not “employees” as they do not perform any kind of skilled, unskilled, semi-skilled, manual, supervisory, managerial, administrative, technical, or clerical work. This decision was made in light of the definition of employee in Section 2(e) of the Gratuity Act.
The petitioners and appellants made the following two contentions:
(a) The Amendment Act of 2009 violates the theory of separation of powers and overrules the court’s ruling in Ahmedabad Private Primary Teachers’ Association (previous).
(b) The retrospective amendments violate the constitution because they are unreasonable, excessive, and harsh.
The Bench rejected the first argument, pointing out that the prior ruling in Ahmedabad Private Primary Teachers’ Association (supra) had construed Section 2(e) of the PAG Act as it was written at the time.
Regarding the second ground, the bench noted that the amended Section 2(e) and newly added Section 13A were given retroactive effect by the legislature through the Amendment Act, 2009, with effect as of April 3, 1997, which is also the date on which the government issued its notification pursuant to Section 1(3)(c), making the PAG Act applicable to educational institutions with ten or more employees.
The court further held that the power to amend , including the power to do so retrospectively, is a constitutional power vested in the legislature and is not limited to just one type of law, notably tax statutes. The appeals/writ petition was dismissed.