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Jagdish Prasad Saini & Ors. vs State of Rajasthan & Ors.

Not available · 2022 INSC 1023Decided 26 Sept 2022
Not available
S. Ravindra Bhat

Background

Eleven teaching and non-teaching employees of a grant-in-aid school in Rajasthan had earlier won a Supreme Court order (2016) directing the State to absorb them into government service after the school stopped receiving aid. Although their arrears of salary were eventually paid following contempt proceedings, the school management and the State disputed liability for their leave encashment and gratuity dues for the years they had worked at the aided institution. When the employees approached the Rajasthan High Court to enforce the 2016 order on this point, the High Court rejected their claim, holding that gratuity and leave encashment were not part of "salary." The employees then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that leave encashment is included within the wide definition of "salary" under the Rajasthan Non-Government Educational Institutions Act, 1989, relying on its own earlier ruling in State of Rajasthan v. Senior Higher Secondary School, Lachhmangarh. It found a 2010 Rules provision requiring employees to claim leave encashment only from their former (aided) employer to be arbitrary and unenforceable, and directed that the State and the school management share this liability in a 70:30 ratio, matching the aid ratio. On gratuity, the Court held that under Rule 82 of the 1993 Rules the liability rests squarely on the school management, not the State, since gratuity was never part of the "approved expenditure" the State reimburses. The High Court's order was set aside, the appeal allowed, and specific timelines set for the State to compute entitlements (4 weeks) and for both respondents to pay the amounts, with 10% interest from the date of entitlement, within 6 weeks.

Lesson Learnt

Employees of government-aided private institutions cannot be made to sign away long-standing dues like leave encashment through service rules that are one-sided; courts will strike down such conditions as unconscionable. Gratuity liability for aided-institution employees rests with the private management, not the government, even though salary itself may be jointly funded.

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

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