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Birla Institute of Technology v. The State of Jharkhand & Ors.

Civil Appeal · 2019 INSC 326Decided 7 Mar 2019
Civil Appeal No. 2530 of 2012
Justice Abhay Manohar Sapre · Justice Indu Malhotra

Background

A retired Assistant Professor of Birla Institute of Technology (BIT) sought gratuity under the Payment of Gratuity Act, 1972 after superannuating in 2001; BIT refused, and the statutory authorities and the Jharkhand High Court (Single Judge and Division Bench) all ruled in the teacher's favour. BIT's appeal reached the Supreme Court. Unusually, the Court had first allowed BIT's appeal on 07.01.2019 relying on an older ruling (Ahmadabad Pvt. Primary Teachers Association) that teachers were not "employees" under the Act, but then discovered on its own that Parliament had retrospectively amended the Act's definition of "employee" in 2009 (effective from 1997) specifically to bring teachers within its scope: a fact not placed before the Bench at the first hearing.

Decision Breakdown

The Court recalled its own earlier order of 07.01.2019 after finding an "error apparent on the face of the record," since the 2009 retrospective amendment had a direct bearing on the outcome and was never brought to its notice. Re-hearing the restored appeal on merits, the Court held that the 2009 amendment to Section 2(e) of the Payment of Gratuity Act brought teachers within the definition of "employee" retrospectively from 03.04.1997, which meant the earlier Ahmadabad Pvt. Primary Teachers Association ruling no longer helped BIT. The pendency of a separate constitutional challenge to the amending Act did not affect the teacher's rights unless and until the amendment was actually struck down. The appeal was accordingly dismissed, with costs of Rs. 25,000 payable by BIT to the teacher.

Lesson Learnt

Even a final Supreme Court order can be recalled and revisited if a party's counsel fails to bring a directly relevant statutory amendment to the Court's notice, and since 2009, teachers are legally "employees" entitled to gratuity under the Payment of Gratuity Act, with that entitlement running retrospectively from April 1997.

Official source (sci.gov.in)View Judgment (PDF)

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