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IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
1. LPA No.920 of 2012 (O&M)
DATE OF DECISION: October 01, 2012
Arya College Rishi Dayanand Marg, Civil Lines, Ludhiana and another …..Appellants
versus
State of Punjab and others .....Respondents
2. LPA No.1158 of 2012 (O&M) Managing Committee, S.G.G.S. Khalsa College, Mahilpur
(Hoshiarpur) and another
…..Appellants versus
Santokh Singh and others
.....Respondents
3. LPA No.1044 of 2012 (O&M) Kanya Maha Vidalaya, Jalandhar City
…..Appellant versus
State of Punjab and others
.....Respondents
4. LPA No.1043 of 2012 (O&M) Managing Committee, Dev Samaj College for Women, Ferozepur City
and another
…..Appellants versus
State of Punjab and others
.....Respondents
5. LPA No.1318 of 2012 (O&M) J.C. DAV College, Dasuya and another
LPA-920-2012 & connected appeals - 2 -
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…..Appellants versus
Partap Singh and others
.....Respondents
6. LPA No.1317 of 2012 (O&M) D.A.V. College Managing Committee, Chitra Gupta Road, Delhi and
another
…..Appellants versus
Ashok Kapoor and others
.....Respondents
7. LPA No.1010 of 2012 (O&M) Lyallpur Khalsa College, Jalandhar and another
…..Appellants versus
State of Punjab and others
.....Respondents
8. LPA No.1196 of 2012 (O&M) D.A.V. College, Bathinda and another
…..Appellants versus
Rajnish Kumar and others
.....Respondents
9. LPA No.661 of 2012 (O&M) Hindu College, Amritsar and another
…..Appellants versus
State of Punjab and others
.....Respondents
10. LPA No.1210 of 2012 (O&M) Managing Committee GTB National College, Dakha District Ludhiana
and another
LPA-920-2012 & connected appeals - 3 -
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…..Appellants versus
State of Punjab and others
.....Respondents
11. LPA No.1184 of 2012 (O&M) Managing Committee, SD College for Women and another
…..Appellants versus
State of Punjab and others
.....Respondents
12. LPA No.1185 of 2012 (O&M) DM College Managing Committee, Moga and another
…..Appellants versus
State of Punjab and others
.....Respondents
13. LPA No.1204 of 2012 (O&M) PMN College Managing Committee, Rajpura and another
…..Appellants versus
State of Punjab and others
.....Respondents
14. LPA No.1197 of 2012 (O&M) B.B.K. DAV College for Women, Amritsar
…..Appellant versus
Smt. Sudesh Nanda and others
.....Respondents
15. LPA No.1045 of 2012 (O&M) Doaba College Managing Committee, Jalandhar City and another
…..Appellants versus
LPA-920-2012 & connected appeals - 4 -
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State of Punjab and others
.....Respondents
16. LPA No.1198 of 2012 (O&M) D.A.V. College, Amritsar
…..Appellant versus
D.K. Chohan and others
.....Respondents
17. LPA No.1199 of 2012 (O&M) Kharati Ram Mohindru D.A.V. College, Nakodar
…..Appellant versus
Satish Chander and others
.....Respondents
18. LPA No.1200 of 2012 (O&M) Hans Raj Mahila Mahavidhyala, Jalandhar
…..Appellant versus
Smt. Raj Gandhi and others
.....Respondents
19. LPA No.1201 of 2012 (O&M) D.A.V. College, Jalandhar
…..Appellant versus
A.K. Rawal and others
.....Respondents
20. LPA No.1202 of 2012 (O&M) S.L. Bawa D.A.V. College, Batala
…..Appellant versus
Narinder Lal and others
LPA-920-2012 & connected appeals - 5 -
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.....Respondents
21. LPA No.1203 of 2012 (O&M) D.A.V. College Managing Committee, Chitra Gupta Road, New Delhi
…..Appellant versus
Satish Chander and others
.....Respondents
CORAM:- HON'BLE MR.JUSTICE A.K. SIKRI, CHIEF JUSTICE
HON’BLE MR. JUSTICE RAKESH KUMAR JAIN, JUDGE Present: Mr.Rajdeep Singh Cheema, Advocate for the appellants in LPA Nos.1196 to 1203, 1317 and 1318 of 2012, Mr.J.S. Puri, Addl. Advocate General, Punjab Mr.Rajinder Goyal, Advocate for respondent No.3 in LPA-
1044-2012, for respondents No.3 & 5 to 10 in LPA-1045-2012, for respondent No.3 in LPA-1197-2012 and for respondents No.1 to 44 in LPA Nos.1196,1198,1199, 1200, 1201, 1202 and 1203 of 2012
Mr.Puneet Jindal, Advocate for the respondents in LPA
Nos.1010, 1184,1185,1043 and 1204 of 2012 Mr.R.D. Anand, Advocate for respondents in LPA Nos.1317 and 1158 of 2012 Mr.Vipul Jindal, Advocate for respondent No.11 in LPA No.1204 of 2012 Mr.Amrit Paul, Advocate for respondent No.4 in LPA-
1044-2012 and for respondent No.11 in LPA-1045-2012 .. A.K. SIKRI, C.J.:
Delay condoned.
Having regard to the commonality of facts as well as
legal issues raised in these appeals, they are taken up together and,
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after hearing the learned counsel for the parties, we proceed to
dispose of the same in the following manner.
All the appellants in these appeals are various colleges
and educational institutions (hereinafter referred to as “the non-
Government colleges”) which are privately-managed but affiliated to
the Panjab University. They are aided educational institutions
receiving grant-in-aid from the State Government under the Grant-
in-Aid Scheme. As per that Scheme, aid to the extent of 90% is
provided by the State which includes payment of salary i.e. pay and
allowances except the House Rent Allowance. In terms of Para 12.3
of the Panjab University Calendar, Chapter-VIII (E) (Volume-I), 10%
of this pay and allowances is to be shared by the non-Government
colleges.
Private respondents in all these appeals are the teachers
except few non-teaching staff. They had joined their services with
the non-Government colleges during the period 1972 to 1976. They
have all since retired from service on their retirement. These
teachers/staff had received an amount of Rs.3.5 lakhs each as
gratuity as per the then existing pay scales.
The State of Punjab implemented the revision of the Fifth
Punjab Pay Commission regarding pension and other retiral benefits
for those employees who had retired on or after 1.1.2006. Circular
in this behalf was issued on 17.8.2009 giving effect from 1.1.2006.
As a consequence, pay scales of teachers and equivalent cadres
were revised by the State Government of all employees working in
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the university and colleges with effect from 1.1.2006 vide
notification dated 2.9.2009.
It is not in dispute that these teachers/staff, who had
since retired, also became entitled for the benefit provided under
Circular dated 17.8.2009 read with notification dated 2.9.2009. For
according this benefit to these retired teachers/staff, the Panjab
University had sent communication to all the Principals of these non-
Government colleges, inter alia, mentioning that the maximum limit
of retirement-cum-death gratuity had been increased from `3.5
lakhs to `10 Lakhs which was made applicable from 1.1.2006.
Since these private respondents were not given benefit
of the aforesaid regulations and notification, they approached this
Court. Spate of writ petitions came to be filed by these persons.
Apart from seeking payment of enhanced gratuity from `3.5 lakhs to
`10 Lakhs, they also claimed leave encashment and arrears of pay
which, according to them, had become payable on the revision of
pay scales.
It is not in dispute that so far as these teaching and non-
teaching staff members are concerned, they are entitled to these
benefits. Therefore, insofar as relief claimed by the private
respondents in those writ petitions was concerned, there was hardly
any contest by the appellants-non-Government colleges, which are
supposed to contribute 10% of the salary and other allowances
except House Rent Allowance. The controversy, however, took a
curious turn, - Pehle Aap, Pehle Aap (you first). Whereas, the plea of
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non-Government colleges was that it is the State of Punjab which
should pay its share of grant-in-aid to enable these colleges to give
the aforesaid benefits to the private respondents, plea of the State
of Punjab was that in the first instance it was the obligation of these
non-Government colleges, to pay to their staff and thereafter claim it
from the State as that could be claimed only in the event of ‘deficit’.
The learned Single Judge weighed its scales in favour of
the State of Punjab giving direction to the appellant-colleges to
make the payment at the first instance and only then become
entitled for reimbursement of the amount paid to the employees.
For taking this stance, reference is made to the judgment of the
Apex Court in Shri Anandi Mukta Sadguru Shree Muktajee
Vandasjiswami Suvarna Jayanti Mahotsav Samarak Trust v.
V. R. Rudani and others, AIR 1989 SC 1607, in which case, the
Supreme Court adopted similar approach in the following manner:-
“9. Having heard the counsel for both parties, we are left with an impression that the appellants are really trying to side-track the issue and needlessly delaying the legitimate payments due to the respondents. The question whether the State is liable to recompense the appellants in respect of the amount payable to the respondents was not considered by the High Court and indeed could not have been examined since the State was not a party to the proceedings. However, by the persuasive powers of the counsel in this Court, the State has been impleaded as a party in these appeals. Perhaps, this court wanted to find out the reaction of the State on the appellants' assertion for reimbursement. We heard counsel for the State. He disputes the appellants' claim. In fact, he challenges the claim on a number of grounds. He says that the State is under no obligation to pay the appellants as against the sum due to the
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respondents. We do not think that we need rule today on this controversy. It is indeed wholly outside the scope of these appeals. We are only concerned with the liability of the management of the college towards the employees. Under the relationship of master and servant, the management is primarily responsible to pay salary and other benefits to the employees. The management cannot say that unless and until the State compensates, it will not make full payment to the staff. We cannot accept such a contention.”
Aggrieved by the aforesaid direction of the learned Single
Judge directing these appellants to make the payment at the first
instance, they have filed these intra-court appeals. Submissions
before us remain same which were before the learned Single Judge.
As per these appellants, all these non-Government colleges are
charitable in nature, which are non-profit making organisations and,
therefore, it is not possible for them to meet such huge financial
obligations which have arisen because of the revision in pay scales
on the implementation of 5th Punjab Pay Commission report. It was
also highlighted that they had made repeated requests to the State
for releasing for its pie/share of the salary and all allowances except
House Rent Allowance and there was no reason for the State to
defer the same till payment is made by these appellants to the
private respondents.
Mr.Puri, learned Additional Advocate General appearing
on behalf of the State of Punjab, on the other hand, submitted that
the Grant-in-Aid Scheme does not automatically entitle these non-
Government colleges to get 90% from the State. It is a scheme of
reimbursement only and is applicable in case of deficit.
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Learned counsel appearing for the private respondents, on the
other hand, submitted that due to this infight between the non-
Government colleges and the State, the retired teachers and other
staff members were the sufferer, who are not getting their legitimate
dues. A fervent plea was, therefore, made to ensure that their leave
encashment, gratuity and arrears of pay, etc. are paid to them
without any further delay.
Before we deal with the respective contentions, it would
be necessary to take note of some decisions of this Court rendered
on earlier occasions, covering this very aspect, inasmuch as, it is not
the virgin territory we are treading. The directions contained in the
orders given earlier will enlighten the path and lead us to
appropriate decision which is required to be taken.
Such a situation had arisen even when the
recommendations of earlier pay commissions were implemented. A
Division Bench of this Court decided the issue in Hindu College
Governing Council and another vs. N.D. Malhotra and
another, 1993(1) RSJ 757.
“Since there is no dispute regarding the admissibility of benefit of Contributory Provident Fund which is to be calculated at the rate of 10% of the salary which has been termed to include pay and all allowances except the house rent allowance in terms of para 12.3 of the Panjab University Calendar Chapter VIII(E) Vol.1, the Court is of the opinion that the writ petition deserves to succeed. The Court is also of the opinion that respondent No.4 could not have withheld such a benefit from the petitioners on the ground of paucity of funds. It therefore directs respondent No.4 to release the amount due to the petitioners by calculating it in
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accordance with terms of Rule 12.3 para 2 forthwith and release these benefits to the petitioners within a period of two months from today. The respondent-State of Punjab shall reimburse this amount after such a payment has been made within a period of three months from the time when a claim for such a reimbursement is lodged with them. There shall be no deviation in making such payments by the respondents whether it is in the shape of payment to the petitioners in the first instance by respondent No.4 or in the shape of reimbursement by respondents No.1 to 4. The amount shall be released to the petitioners alongwith interest at the rate of 9% from the date when it became due. The other benefits such as leave encashment and gratuity which were released to the petitioners belatedly shall also carry interest at the rate of 9% p.a from the date when they were due till the date when the payment was made. The liability to pay the same would be of respondent No.4.”
[Emphasis added]
On the basis of the law laid down by the Supreme Court in Shri
Anandi Mukta’s case (supra), the Court held that gratuity cannot be
denied to the retiring teachers by the privately managed
Government aided schools on the plea that no aid has been
extended to them towards their liability on this count. The Court
also came to the conclusion that insofar as liability of payment of
gratuity by privately managed Government aided schools to their
teachers and employees is concerned, under the relevant university
calendar and ordinances, it was that of these colleges. The Court had
negated the contention that Government had the obligation to give
90% aid also towards meeting their liability for payment of gratuity
to their employees, holding that gratuity was not a part of salary
and, as per the Scheme of Grant-in-Aid, salary alone was payable.
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In the present context itself, the issue came up before a
learned Single Judge of this Court in Civil Writ Petition No.8774 of
2004 and Civil Writ Petition No.76 of 2006. Learned single Judge of
this Court passed a common judgment dated 06.07.2010 in those
cases. It was not disputed that the Contributory Provident Fund at
the rate of 10 per cent of the salary was to be on the entire salary
and not only on the basic pay. The only argument of the educational
institutions in the said cases was that the payment should have been
made by the State Government in the first instance and thereafter
the employees could be reimbursed by the management. The State
of Punjab had made a statement that there was no difficulty in
making the payment against the aforesaid benefit, but it is the
college which was required to make the payment in the first instance
and it could seek reimbursement thereof subsequently from the
State Government. It is this aspect which was determined by the
learned single Judge directing the college to make the payment, in
the first instance, relying upon the judgment of the Supreme Court
in Shri Anandi Mukta’s case (supra).
LPA No.792 of 2011 was preferred in Civil Writ Petition
No.76 of 2006 before a Division Bench of this Court by the college
titled as Arya College Management Committee and another vs. T.D.
Kohli and others (which was one of the appellants before us). In
another Civil Writ Petition, LPA No.519 of 2011, was preferred by
Anglo Sanskrit High School, Khanna Trust and Management Society.
This LPA was decided by a Division Bench vide detailed judgment
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dated 05.04.2011, which governed LPA No.792 of 2011, as well. In
LPA No.519 of 2011, the Division Bench of this Court affirmed the
order of the learned single Judge directing the college to make the
payment before recovering it from the State Government. The
Division Bench also held that leave encashment was part of “salary”
and, therefore, it was the liability of State to give grant-in-aid of that
component as well to the non-Government colleges. This order has
been challenged by the State of Punjab by filing different Special
Leave Petitions (SLPs) in the Supreme Court. In these SLPs, leave
has been granted and the Hon’ble Apex Court has passed stay order
dated 16.3.2012 to the effect that “In the meantime, the contempt
proceedings taken by the respondent No.1, shall remain stayed”
The position that emerges before us, in respect of the
claims preferred by the private respondents, is as follows:-
i) As far as gratuity is concerned, as per the Division Bench
judgment of this Court in Hindu College Governing
Council (supra), liability is that of these non-
Government colleges because of the reason that gratuity
is not a part of salary and, therefore, is not reimbursable
under the Grant-in-Aid Scheme. The learned counsel for
these appellants had argued that the legal provisions qua
payment of gratuity had undergone a change and it had
become obligation of the State to make contribution qua
this as well. However, that is not the controversy before
us. It is an inter se dispute between the non-
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Government colleges and the State of Punjab. These
appeals arise out of the writ petitions filed by the
teachers/staff claiming enhanced dues of gratuity which
have become payable on enhancing the limit of gratuity
from Rs.3.5 lakhs to Rs.10 lakhs. Insofar as these
private respondents are concerned, there is no quarrel
that this gratuity is payable. Prima-facie, as per the
judgment of Division Bench in the case of Hindu
College Governing Council (supra), the liability is of
these appellants. Therefore, insofar as arrears on
account of gratuity payable to these private respondents
are concerned, it has to be paid by the appellants. We,
thus, direct the appellants to pay the amount of
enhanced gratuity to the private respondents and uphold
the order of the learned Single Judge on this aspect.
ii) As far as leave encashment is concerned, again amount
is payable to the private respondents on this account.
Whether it is a part of salary or not is an issue which
now is in the lap of the Apex Court. Though this Court
has held it to be a part of salary of which grant-in-aid is
payable by the State Government, that direction has
virtually been stayed by the Apex Court, by staying the
contempt proceedings. This dispute between the non-
Government colleges and the State Government cannot
be allowed as a shield for denying the payment to the
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private respondents, which is admittedly, due to them.
Whether it comes from the pocket of the appellants or
from the coffers of the State Government is not their
concern. Having regard to the dicta of Shri Anandi
Murti’s case (supra), we are of the opinion that the
appellants should meet this liability as well by making
payment to the private respondents without any further
ado, inasmuch as, the private respondents were the
employees of these appellant-colleges and, therefore,
having regard to the relation of master and servant
between them, the appellants cannot shy away from
their primary responsibility to pay this amount. It would,
however, be open to these non-Government colleges to
claim reimbursement from the State of Punjab in case
Division Bench judgment of this Court dated 5.4.2011 in
LPA No.519 of 2011 [Anglo Sanskrit High School Khanna
Trust and Management Society (Regd.), Khanna and Anr.
Vs. State of Punjab and others] is ultimately upheld by
the Supreme Court.
iii) Insofar as arrears of pay and allowances are concerned,
90% of these arrears are payable by the State
Government. To that extent, this liability could not be
denied by the State Government. It is not in dispute
that the amount payable under this head is very
substantial. The appellants are not supposed to run
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educational institutions with profit motives as education
is treated as a benevolent activity/noble profession and
not commerce or industry. (See Modern School v.
Union of India and others, (2004) 5 Supreme Court
Cases 583). No doubt, it is the primary obligation of the
appellants to make this payment to their teachers and
staff and State Government is supposed to reimburse the
same, as held by the Division Bench of this Hon’ble Court
on earlier occasions. In K.C. Sharma vs. State of
Punjab, (CWP No.3583 of 2007), following directions
dated 17.12.2010 were given by this Court:-
“(iii) The issue of revised pay has been dealt with in Suram Singh and Sadhu Singh (supra) and while in Suram Singh, (supra), a direction was issued that arrears of revision of pay scales will be given on receipt of grant from the State Government, in Sadhu Singh, (supra), it was directed that the State Government should release the grant. From the scheme of grant-in-aid, Annexure D3, it is clear that for pay and allowances, grant-in-aid has to be paid. From Annexure D4, circular of the Central Government dated 27.7.1998, the Central Government has provided financial assistance to the State Government who revised pay scales to the extent of 80% of the additional expenditure involved and the State Government were to meet the remaining 20% expenditure. The State of Punjab vide notification dated 24.3.1999, Annexure D5 revised the pay scales of Privately Affiliated Colleges in the State of Punjab at par with the Government Colleges w.e.f. 1.1.1996.
From the above, it is clear that liability to give arrears w.e.f. 1.1.1996 is of the State of Punjab and 95% aid has to be given by the State Government.
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Accordingly, we direct that leave encashment benefit be given by Respondent No.2-management of the College, irrespective of aid from the State, while arrears of pay be given by Respondent No.3-College within one month from the date of receipt of the aid from the State in that regard. The State of Punjab is directed to release benefits for the arrears within three months from today.”
It is also trite law that financial crunch of the State Government
cannot be a ground to deny the payments as held in CWP
No.10097 of 2000 titled as Sadhu Singh and 129 others vs.
State of Punjab and others, decided on August 07, 2002.
In this conspectus and having regard to the totality of
circumstances, we feel that ends of justice would be met by
prescribing the following modalities/procedure for payments qua
arrears of salary:-
(A) Within fifteen days from today, the appellants shall make
the calculations of the arrears of salary payable to the
private respondents and ascertain the share of the State
Government. Details of these calculations shall be
forwarded by the appellants to the State Government.
(B) The State Government shall examine veracity of those
calculations and ascertain its share as per Grant-in-Aid
Scheme and release it by making payment to the
educational institutions within two months from the
receipt of calculations from the appellants.
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(C) Within ten days of the receipt of grant-in-aid from the
State of Punjab, the amount under this head shall be
released to the private respondents.
It is made clear that this period is prescribed for making
the payment on account of arrears of pay. Insofar as payment of
gratuity and ‘leave encashment’ is concerned, that shall be paid by
the appellants to the private respondents within one month from
today.
Subject to the aforesaid modifications, order of the
learned Single Judge is upheld and appeals are disposed of on the
aforesaid terms.
No costs.
( A.K. SIKRI ) CHIEF JUSTICE
October 01, 2012 (RAKESH KUMAR JAIN) pc JUDGE