Sanchayita Lahkar

The High Court of Madhya Pradesh Single Bench of Justice Vivek Jain has dismissed petitions filed by the State Government, upholding the legality of the gratuity awarded to retired teachers previously employed under the Panchayat system. The Court concluded that there existed no jurisdictional error in the Controlling Authority's decision granting gratuity under the Payment of Gratuity Act, 1972. Stating continuity of service and applicability of the Act, the Court directed the State to comply with the gratuity payment order within a stipulated timeframe. The judicial intervention came in response to the State's refusal to recognize the claim for gratuity on the grounds that the respondent had not completed five years in the direct service of the State following absorption under the 2018 rules. Rejecting these arguments, the Court clarified that prior service rendered as Shiksha Karmi and Adhyapak must be counted for the purpose of gratuity entitlement, and the exclusion provisions under the Civil Services Pension Rules do not negate applicability of the 1972 Act. The Court further criticized the State's contradictory stance and stressed the duty of the government to act as a model employer, not a "thrifty and miser businessman."

The writ petitions (W.P. No. 31272/2024 and W.P. No. 31281/2024) were filed by the State of Madhya Pradesh and its officers challenging the order dated 03.09.2024 passed by the Controlling Authority under the Payment of Gratuity Act, 1972. The Controlling Authority had allowed the claim of Respondent No. 1 in each petition, awarding gratuity of Rs. 6,92,289/- and interest of Rs. 3,12,478/-, totalling Rs. 10,04,767/-, with future interest till actual payment.

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The State contended that it was not liable to pay gratuity since the respondents were not covered under the definitions of "employee" and "employer" under Sections 2(e) and 2(f) of the Payment of Gratuity Act, 1972. It was argued that the Act does not apply to employees of the Central or State Government who are governed by other gratuity rules. Accordingly, the petitioners asserted that the impugned order lacked jurisdiction.

The State further submitted that Respondent No. 1 was appointed under the M.P. Panchayat Shiksha Karmi (Recruitment and Conditions of Service) Rules, 1997. Subsequently, the recruitment framework was modified via Rules of 2001 and then 2005, whereby teachers were appointed as Samvida Shala Shikshak Grade I, II, and III in Panchayats and urban local bodies. In 2008, these teachers were absorbed into an Adhyapak Cadre through separate rules for Panchayat and urban local body employees. Later, the M.P. School Education Service (Teaching Cadre) Conditions and Recruitment Rules, 2018, permitted these Adhyapaks to migrate into State Government service.

Respondent No. 1 exercised the option to migrate under Rule 18(2) of the 2018 Rules and retired on 31.01.2020. The State asserted that since he served less than five years in the State service post-absorption, Rule 44 of the M.P. Civil Services Pension Rules, 1976 disqualified him from claiming gratuity.

In response, the counsel for the respondent argued that the Controlling Authority correctly computed gratuity from the initial date of service as Shiksha Karmi, later Adhyapak, up to retirement. It was submitted that the respondent became a regular employee under Jila Panchayat upon absorption and that the State never sought exemption under the Payment of Gratuity Act, 1972.

Reliance was placed on the Division Bench judgment in W.A. No. 2358/2024 (Indore), where similarly situated Shiksha Karmis absorbed in urban local bodies were granted gratuity and pension benefits by counting their entire tenure. The State attempted to distinguish the present case by pointing out that the respondents were initially appointed in Panchayats, not urban bodies.

"It is evident from the perusal of definition of employee that the term employee does not include a person who holds a post under Central Govt. or State Govt. and is governed by any other Act or any other Rules providing for payment of Gratuity. Therefore, the persons holding a post under the State Govt. would be exempt from the term employee only if they are governed by any other Act or Rules providing for payment of Gratuity."

"It is seen that as per Rule 2(g) of Pension Rules, 1976, Govt. servants appointed on or after 01.01.2005 to the services and posts in connection with the affairs of the State... are not covered in the said Rules."

"The State Govt. is blowing hot and cold at the same time and wants to deny the benefit of gratuity by placing reliance on Rules which, if accepted, would create a right to an employee to claim pension from the State Govt."

"The Supreme Court held that under Payment of Gratuity Act, pension and gratuity must be taken to be two different concepts and law which do not at any point of time come together."

"The concept [of gratuity] is older than the Act of 1972... the benefits under the Act of 1972 are the bare minimum provisions of Gratuity that are part of mandatory service conditions of the employees."

"The contention of the State that since these are the employees of Jila Panchayat, they cannot seek gratuity from Jila Panchayat and since they spent less than 5 years in State Government, they cannot seek gratuity from the State Government. It is a very strange argument... expected to lay down examples of other employers rather than to act a thrifty and miser businessman."

"There is nothing in Rule 18(2) to deny the benefit of gratuity... the employees would continue to be covered under Gratuity Act, 1972 as well as the Provident Funds Scheme as applicable to regular employees of Jila Panchayat."

The High Court concluded that the respondent was entitled to gratuity in terms of the Payment of Gratuity Act, 1972. Accordingly, the impugned order passed by the Controlling Authority was upheld.

"Consequently, holding the respondent No.1 entitled to gratuity in terms of payment of Gratuity Act, 1972, no error is found in the impugned order Annexure P/1 passed by the Controlling Authority. The petition being devoid of merits stands dismissed."

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The Court further directed timely compliance:

"Let the order of controlling authority be complied with within a period of one month from the date of production of copy of this order, failing which the respondent employee shall be entitled to initiate such proceedings as are permissible under law to get the said order and this order complied."

Clarifying the rights of the respondent in relation to Provident Fund benefits, the Court stated:

"It is clarified that by this order, the right of the respondent No.1 to claim the benefit of contributory provident fund at par with whatever scheme is applicable to regular employees of panchayat from the date of initial appointment... shall not be affected in any manner and shall remain intact. This also be done within a period of two months from the date of production of copy of this order."

With these directions, the petitions were dismissed.

Advocates Representing the Parties:

For the Petitioners: Shri Ravindra Dixit – Government Advocate for the petitioners – State of Madhya Pradesh and Others

For the Respondents: Shri Suryabhan Singh Solanki and Ms. Sakshi Basnet - Advocates for the respondents

Case Title: The State of Madhya Pradesh and Others v. Shivnath Singh Kushwah and Others

Case Number: W.P. No. 31272/2024 & W.P. No. 31281/2024

Bench: Justice Vivek Jain

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