# JAGDISH PRASAD SAINI & ORS v. STATE OF RAJASTHAN & ORS

- **Citation:** [2022] 13 S.C.R. 463
- **Court:** Supreme Court of India
- **Decided:** 2022-09-26
- **Case number:** Civil Appeal No. 6953 of 2022
- **Bench:** Uday Umesh Lalit, S. Ravindra Bhatt
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jagdish-prasad-saini-ors-v-state-of-rajasthan-ors-35388
- **Pages:** 21

## Headnote

Rajasthan Voluntary Rural Education Service Rules, 2010 -
rr.5, 10 - Rajasthan Non-Government Educational Institutions
(Recognition Grant-In-Aid and Service Conditions, Etc.) Rules,
1993 - rr.47, 82 - Rajasthan Non-Government Educational
Institutions Act, 1989 - ss. 2, 29 - Appellants were appointed
against sanctioned posts by fourth respondent-school, controlled
by fifth respondent trust (collectively "establishment") -
Establishment discontinued receipt of grant-in-aid from the State -
In the meanwhile, 2010 Rules were brought into force by the State -
Appellants sought absorption with the State in accordance with the
rules, denied - Eventually, Supreme Court set aside the denial of
absorption of the appellants and directed their regularization -
However, their complaint of non-compliance with the respondent's
obligation to pay leave encashment and gratuity for the period they
were in the aided establishment was not gone into, permitted to
agitate grievance before High Court - By impugned judgment High
Court has now held that since arrears of salary had been paid,
nothing more was to be done - On appeal, held: Salary includes
leave encashment - Further, 2010 Rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions - Condition in clause (viii) of r.5 i.e., bar on carry
forward of balance privilege leave and requiring employees to seek
encashment from their previous employer i.e., aided institutions, is
an arbitrary condition which cannot be enforced - Also, in the
present case, the management establishment was recipient of 70%
aid, in the form of grant - Thus, the State cannot shrug its part of
the responsibility to pay the appellants the share of leave encashment
benefits, and hide behind either r.5 (viii) or the undertaking executed
by them - Appellants entitled to privilege leave entitlement benefits,
to be paid by the State and management establishment in the ratio
[2022] S.C.R. 463
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of 70:30, respectively - Management also liable to pay gratuity to
the appellants - Impugned order set aside - Service Law.
Service Law - Leave encashment, if part of salary - Held:
Yes.
Allowing the appeal, the Court
HELD: 1.1 Non-government educational institutions in
Rajasthan are governed by the Rajasthan Non-Government
Educational Institutions Act, 1989 ("Act") and the rules framed.
Section 2 (r) of the Act defines salary as "the aggregate of the
emoluments of an employee including dearness allowance or any
other allowance or relief for the time being payable to him but does
not include compensatory allowance". Section 3 of the Act provides
for recognition of grant-in-aid institutions; Sections 4 to 6 of the
Act provide for the eventuality of refusal of recognition, withdrawal
of aid and the remedies for the institution. Section 7 of the Act
onwards are regulatory provisions requiring audit, recruitment,
orders of termination of teachers, provision of tribunal for
redressal of teachers' grievances regarding dismissal or
termination, etc. Section 29 of the Act is relevant for the present
purposes. The relevant provisions of the 1993 Rules are Rules
47, and, pertinently, 82. Rule 47 deals with privilege leave. [Paras
14-16][472-D-E, G; 473-A, E]
1.2 As far as leave encashment dues are concerned, the
issue is no longer at large. In Senior Higher Secondary School
Lachhmangarh this court held that "salary" under the Act,
includes leave encashment. The reasoning therein is binding,
and conclusive as regards entitlement of the appellants to claim
leave encashment benefits. However, the State had urged that
by virtue of Rule 5 of the 2010 Rules, the employees who were
regularized could not claim these benefits. The 2010 Rules were
framed in exercise of powers under proviso to Article 309 of the
Constitution. Evidently, these rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions. What

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JAGDISH PRASAD SAINI & ORS.
v.
STATE OF RAJASTHAN & ORS.
(Civil Appeal No. 6953 of 2022)
SEPTEMBER 26, 2022
[UDAY UMESH LALIT, CJI AND S. RAVINDRA BHATT, JJ.]
Rajasthan Voluntary Rural Education Service Rules, 2010 -
rr.5, 10 - Rajasthan Non-Government Educational Institutions
(Recognition Grant-In-Aid and Service Conditions, Etc.) Rules,
1993 - rr.47, 82 - Rajasthan Non-Government Educational
Institutions Act, 1989 - ss. 2, 29 - Appellants were appointed
against sanctioned posts by fourth respondent-school, controlled
by fifth respondent trust (collectively "establishment") -
Establishment discontinued receipt of grant-in-aid from the State -
In the meanwhile, 2010 Rules were brought into force by the State -
Appellants sought absorption with the State in accordance with the
rules, denied - Eventually, Supreme Court set aside the denial of
absorption of the appellants and directed their regularization -
However, their complaint of non-compliance with the respondent's
obligation to pay leave encashment and gratuity for the period they
were in the aided establishment was not gone into, permitted to
agitate grievance before High Court - By impugned judgment High
Court has now held that since arrears of salary had been paid,
nothing more was to be done - On appeal, held: Salary includes
leave encashment - Further, 2010 Rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions - Condition in clause (viii) of r.5 i.e., bar on carry
forward of balance privilege leave and requiring employees to seek
encashment from their previous employer i.e., aided institutions, is
an arbitrary condition which cannot be enforced - Also, in the
present case, the management establishment was recipient of 70%
aid, in the form of grant - Thus, the State cannot shrug its part of
the responsibility to pay the appellants the share of leave encashment
benefits, and hide behind either r.5 (viii) or the undertaking executed
by them - Appellants entitled to privilege leave entitlement benefits,
to be paid by the State and management establishment in the ratio
[2022] S.C.R. 463
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of 70:30, respectively - Management also liable to pay gratuity to
the appellants - Impugned order set aside - Service Law.
Service Law - Leave encashment, if part of salary - Held:
Yes.
Allowing the appeal, the Court
HELD: 1.1 Non-government educational institutions in
Rajasthan are governed by the Rajasthan Non-Government
Educational Institutions Act, 1989 ("Act") and the rules framed.
Section 2 (r) of the Act defines salary as "the aggregate of the
emoluments of an employee including dearness allowance or any
other allowance or relief for the time being payable to him but does
not include compensatory allowance". Section 3 of the Act provides
for recognition of grant-in-aid institutions; Sections 4 to 6 of the
Act provide for the eventuality of refusal of recognition, withdrawal
of aid and the remedies for the institution. Section 7 of the Act
onwards are regulatory provisions requiring audit, recruitment,
orders of termination of teachers, provision of tribunal for
redressal of teachers' grievances regarding dismissal or
termination, etc. Section 29 of the Act is relevant for the present
purposes. The relevant provisions of the 1993 Rules are Rules
47, and, pertinently, 82. Rule 47 deals with privilege leave. [Paras
14-16][472-D-E, G; 473-A, E]
1.2 As far as leave encashment dues are concerned, the
issue is no longer at large. In Senior Higher Secondary School
Lachhmangarh this court held that "salary" under the Act,
includes leave encashment. The reasoning therein is binding,
and conclusive as regards entitlement of the appellants to claim
leave encashment benefits. However, the State had urged that
by virtue of Rule 5 of the 2010 Rules, the employees who were
regularized could not claim these benefits. The 2010 Rules were
framed in exercise of powers under proviso to Article 309 of the
Constitution. Evidently, these rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions. What is relevant for the purposes of this case is that
by Rule 5(viii), carry forward of existing privilege leave is denied;
likewise, the period of service in aided institutions is not to be
reckoned for the purpose of gratuity under Rule 5(ix). Every
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employee had to furnish an undertaking in the prescribed form
to accept the terms and conditions. Ordinarily no public employer
can be faulted in imposing pre-conditions before it recruits an
employee. However, such conditions cannot be arbitrary, or so
onerous as to be unconscionable. In the opinion of this court, the
condition in clause (viii) of Rule 5 i.e., carry forward of balance
privilege leave, is barred and requiring employees to seek
encashment from their previous employer, i.e., aided institutions,
is an arbitrary and unconscionable condition, which cannot be
enforced. [Paras 18-20][475-B, 476-H; 477-A; 478-F-H; 479-A]
State of Rajasthan and Anr. v. Senior Higher Secondary
School, Lachhmangarh (2005) 10 SCC 346 - relied
on.
1.3 In the scheme of the 1993 Rules, the assessment of,
and determination of the extent of, aid to be granted to any
institution, is provided by Rule 13. What forms part of the
approved expenditure that would be the content of aid, is provided
by Rule 14. In the present case, the management establishment
was recipient of 70% aid, in the form of grant. In these
circumstances, the State cannot shrug its responsibility to
shoulder its part of the responsibility to pay the appellants the
share of leave encashment benefits, and hide behind either Rule
5 (viii) or the undertaking executed by them. The appellants are
held entitled to privilege leave entitlement benefits. Such benefit
shall be calculated from the date they entered the service of the
establishment till the date of their absorption, by the State, in
2016. The State shall pay the benefits due to the extent of 70%,
and the balance 30% shall be payable by the management
establishment. On the issue of gratuity, again, the question of
liability has been conclusively settled. Although the management
relied on a Chhattisgarh High Court decision Ambika Mission
Boys Model School, this court is of the opinion that it cannot be
construed as an authority, because the court in that case analysed
the provisions of the Payment of Gratuity Act, 1972, as amended
in 2009. However, in the present case, the scheme of the 1993
Rules, which contained the conditions of grant, categorically cast
the liability to pay gratuity on the employer, i.e., the aided
establishment, i.e., the fourth, fifth and sixth respondents in this
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS.
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case. Furthermore, Rajasthan Welfare Society is an authority, in
that it considered the effect of the 1993 Rules, and held that it is
the management of the aided institution which has to bear the
liability towards payment of gratuity. Neither has Rule 82 changed,
nor has any other material been brought to the notice of the court,
to say that the management, i.e., respondent nos. 3-7 are absolved
of their liability to pay gratuity, upon termination of their
relationship with the appellants as their employers. Rule 82 is a
condition of grant, which meant that the management
establishment was conscious and aware of its liability when it
applied and was granted aid, under the 1993 Rules. Therefore, it
cannot escape its liability on that score. [Paras 21, 22][479-C-G;
480-A-B; 482-G]
1.4 With respect to leave encashment, the State and the
respondent nos. 3 to 7 are liable to pay the appellants, in the
ratio of 70:30 respectively. The respondent nos. 3 to 7 shall also
calculate and pay the amount of gratuity, to the appellants (on the
basis of their initial date of entry in the school, till the date of
order of absorption, by the respondent State), within six weeks
from today. Since both sets of respondents contested their liability
and denied them to the appellants, the amounts payable to the
appellants shall also carry interest, at the rate of 10% from the
date(s) of their entitlement, till the date of payment. The impugned
order is set aside. [Para 23][482-H; 483-A-C]
Rajasthan Welfare Society v. State of Rajasthan (2005)
5 SCC 275 : [2005] 3 SCR 387; Regional Provident
Fund Commissioner v. Sanatan Dharam Girls
Secondary School & Ors. (2007) 1 SCC 268 : [2006] 7
Suppl. SCR 849; Pani Ram v. Union of India & Ors.
2021 SCC OnLine SC 1277; Central Inland Water
Transport Corporation Limited & Anr. v. Brojo Nath
Ganguly & Anr. (1986) 3 SCC 156 : [1986] 2 SCR 278
- referred to.
Ambika Mission Boys Model School v. State of
Chattisgarh, (2020) 2 CLR 177 - distinguished.
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Case Law Reference
[2005] 3 SCR 387
referred to
Para 10
[2006] 7 Suppl. SCR 849
referred to
Para 13
[1986] 2 SCR 278
referred to
Para 20
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6953
of 2022.
From the Judgment and Order dated 26.04.2019 of the High Court
of Judicature for Rajasthan at Jaipur Bench, Jaipur in S.B. Writ
Miscellaneous Application No. 357 of 2017.
Deepak Nargolkar, Sr. Adv., Syed Ahmed Saud, Daanish Ahmed
Syed, Mohd. Parvez Dabas, Uzmi Jameel Husain, Aqib Baig, Mohd.
Shahib, M/s. Shakil Ahmad Syed, Advs. for the Appellants.
Dr. Manish Singhvi, C.U. Singh, Sr. Advs., D. K. Devesh, Upendra
Pratap Singh, Harsh Singh Rawat, Abhinav S. Raghuvanshi, Suprabh
Kumar Roshan, Ms. Snehal U. Kanzarkar, Ms. Sneha Jankiraman, Moha
Paranjpe, M/s. Khaitan & Co., Advs. for the Respondents.
The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. Special leave granted. With consent of counsel for the parties,
the appeal was heard finally. The appeal is directed against a judgment
and order of the Rajasthan High Court, Jaipur Bench,1 dismissing the
appellant's application, seeking enforcement of this court's previous
judgment.2
2. The appellants were appointed against sanctioned posts by the
fourth respondent (a senior secondary school, established and controlled
by the fifth respondent trust, hereafter referred to collectively as the
"establishment") in 1993. They continued to work uninterruptedly in that
establishment on a regular basis. The establishment was recipient of
grant-in-aid from the State of Rajasthan (hereafter, "State"). By a
unilateral resolution dated 5th November 2008, the managing committee
of the establishment decided to discontinue receipt of grant-in-aid from
the State with effect from 1st April 2008. Accordingly, the State by an
1 Dated 26th April 2019 in SBWMA No. 357/2017
2 Order dated 19th July 2016 in Civil Appeal No 6601-6603 of 2016
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
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order dated 28th December 2012 ceased to grant aid with effect from 1st
March 2012.
3. In the meanwhile, the State had framed and brought into force
the Rajasthan Voluntary Rural Education Service Rules, 2010 (hereafter,
"2010 Rules") with the objective of providing security to the employees
working in aided institutions, and to absorb them in the State's service.
The appellants sought their absorption with the State in accordance with
the rules, by unavailingly representing in this regard. Finally, they were
driven to file writ petitions before the High Court. The State had, pursuant
to the rules framed by it, absorbed other employees and teachers from
aided institutions, but denied this benefit to the appellants.
4. The appellants writ petitions were clubbed with several other
petitions and disposed of by the High Court, refusing to direct the State
to absorb these employees. The employees, including the appellants,
unsuccessfully sought review of those orders; which was rejected on
29th November 2013. The appellants thereafter approached this court
by petitions for special leave to appeal questioning the orders of the
High Court.
5. By its final order of 19th of July 2016, this court set aside the
denial of absorption of the appellants. The court directed as follows:
"..We are therefore convinced that the said eleven teachers
having been in the service of the school management in the
aided posts and were in receipt of such aid from the state
government, right from the date of their entry into service till
the aid came to be discontinued in 2008, only at the instance
of the school management, which has now been restored
pursuant to the orders of this court, the state government can
be directed to pass necessary orders for their absorption
applying the 2010 rules as from the date such rules came into
effect. We therefore set aside the orders denying such
absorption and remit the matter back to the respondent number
one-state government to consider the claim of the eleven aided
teachers for their absorption as from the date when the 2010
rules came into effect and such orders shall be passed within
one month from the date of receipt of a copy of this order.
After passing such orders of absorption, it is needless to state
that whatever salary that fell due and payable to the said
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eleven teachers for the past period i.e. from 23.3.2008 shall
be restored in the manner such aid is to be granted prior to
the coming into force of the 2010 rules. In other words, such
aid is to be sanctioned to an extent of 70% and 30% to be
borne by the school management, such calculation shall be
made, and the extent to which aid is to be sanctioned shall be
granted up to the date by which the order of absorption is
passed on thereafter the full salary payable for an absorbed
teacher in the state service shall also be calculated and
sanctioned by respondent No 1/ state government.
On such orders being passed, we also direct the school
management to take necessary steps for praying the 30% of
their liability from March 2008 up to date of the absorption
of the eleven teachers, as per the orders to be passed by the
state government.
We permit the school management to make such payment of
30% to the eleven teachers in easy instalments by negotiating
with the concerned teachers in order to ensure that sudden
huge financial liability is not cast on the school management
so that the running of the school for the benefit of the school
going children in that location."
******
We also direct the school management to submit a statement
of calculation as regards the salary which was actually
disbursed to the aided teachers as well as non-aided teachers
from the month of April, 2008. The school management shall
separately prepare a statement of calculation as regards the
salary paid to the aided teachers and forward it to the state
government with proof of payment in order to enable the State
government to comply with our directions with regard to the
payment of salary payable up to the date of absorption. As
far as revision in the payment of salary is to be granted, the
same shall also be prepared and appropriate order be passed
by the state government. Such payment shall also be effected
positively by the school management."
6. After this order, in September 2016, the establishment moved
an application seeking directions from this court. The application
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
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contended that the establishment had to pay the 11 aided employees,
(i.e., the appellants) to the tune of ` 57.68 lakhs, and privilege leave
salary to the tune of 36.20 lakhs. The application also produced a chart
of calculation of gratuity and leave encashment. This application was
not allowed. Contemporaneously, the appellants also filed contempt
proceedings, i.e., C.P. No (Civil) 640 - 642/ 2017, in the disposed of
Civil Appeal Nos. 6601-6603 of 2016. This court by order of 6th March
2017, allowed the appellants to withdraw the contempt petitions, with
liberty to move the High Court for enforcement of orders of this court.
In these circumstances, the appellants moved the High Court contending
that the orders of this court had not been properly complied with, to the
extent that they had not been paid privilege leave encashment and gratuity
amounts.
7. The High Court by the impugned order rejected the applications
preferred before it on the ground that since the salary required to be
disbursed had in fact been paid to the appellant employees, there was no
cause to pursue the matter further. The High Court was of the opinion
that neither gratuity nor leave encashment was covered by the expression
"salary", even under Rule 10 of the 2010 Rules or under the Rajasthan
Non-Government Educational Institutions (Recognition Grant-In-Aid and
Service Conditions, Etc.) Rules, 1993 (hereafter, "1993 Rules").
8. The aggrieved appellants have therefore approached this court.
It was contended on their behalf by Mr Deepak Nargokar, learned senior
counsel, that the expression "salary" included both components, i.e.,
gratuity, as well as leave encashment. It was pointed out that one of the
original appellants who approached this court, was in fact paid gratuity
as well as leave encashment by the respondent establishment. It was
also argued that under Rule 5 of the 2010 Rules, employees were entitled
to leave encashment and gratuity benefits from private institutions.
9. The learned senior counsel next relied upon the averments made
in the application by the management establishment, especially para 13(6),
filed in this court3. It was submitted that the management establishment
clearly admitted to its liability for payment of leave encashment dues
and gratuity. In these circumstances, the establishment could not deny
those liabilities. He also relied upon the chart produced by the
establishment management which specifically set out the gratuity and
3 In Civil Appeal Nos 6601-6603 of 2016
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leave encashment amounts which all the 11 employees were entitled to,
according to it. He also relied upon the judgment of this court in State of
Rajasthan and Anr. v. Senior Higher Secondary School,
Lachhmangarh4 where the court declared that leave encashment had,
"to be read and understood with the definition of the word salary".
10. Learned senior counsel for the State, Dr. Manish Singhvi argued
that in terms of Rule 5 (xi) of the 2010 Rules, every employee had
executed an undertaking that she or he accepted all terms and conditions
of service prescribed by the 2010 Rules. Furthermore, the concept of
'carry forward of balance of privileged leave' too was denied by Rule
5(viii) of the 2010 Rules. It was submitted that in terms of Rule 5(viii),
the employees could seek payment of leave encashment of balance of
privileged leave only from the private institutions. The State, therefore,
could not be fastened with the liability on that score. So far as the question
of gratuity liability was concerned, Dr. Singhvi relied upon the judgment
in Rajasthan Welfare Society v. State of Rajasthan5 and submitted
that by virtue of Rule 82 of the 1993 Rules, the employees of aided
educational institutions were entitled to gratuity under the Payment of
Gratuity Act, 1972. Yet, in terms of Rule 14 of the 1993 Rules, gratuity
was not an approved expenditure. As a consequence, this court held in
no uncertain terms that gratuity was not part of the recurring grant and
that the State was not liable in that regard.
11. Mr. C.U. Singh, learned senior counsel appearing for the
establishment, submitted that the order of this court was explicit in its
terms and that leave encashment and gratuity could not be said to form
part of "salary". It was further submitted that the example provided by
the appellants, i.e., that one amongst them (Mr S.S. Shekhawat,
respondent no.8) was paid gratuity is a solitary instance which per se
could not cast liability without any corresponding obligation in law.
12. It was further submitted that privileged leave cannot be included
within the term salary which under the Rajasthan Non-Governmental
Educational Institutions Act, 1989 (Section 2(r)) means "aggregate of
the emoluments of an employee". Learned counsel relied upon the
judgment of this court in Senior Higher Secondary School
Lachhmangarh (supra) and submitted that corresponding aid, therefore,
4 State of Rajasthan and Anr. v. Senior Higher Secondary School, Lachhmangarh, 2005
(10) SCC 346
5 Rajasthan Welfare Society v. State of Rajasthan, 2005 (5) SCC 275
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS. [S. RAVINDRA BHAT, J.]
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has to be disbursed by the State Government, to enable the payment of
privileged leave.
13. So far as the gratuity was concerned, learned counsel relied
upon a decision of the Chhattisgarh High Court in Ambika Mission
Boys Model School v. State of Chhattisgarh6 and urged that the State
was primarily liable to disburse the gratuity of employees of aided
institutions. It was also submitted that the Chhattisgarh High Court had
relied upon the previous judgment of this court in Regional Provident
Fund Commissioner v. Sanatan Dharam Girls Secondary School &
Ors7, to hold that although aided institutions did not "belong" to the
Central or the State Government yet they were under the "control" of
the State under various ways. The judgment had further noted that the
Payment of Gratuity Act, 1972 had amended the definition of "employee"
under Section 2(e) with retrospective effect from 3rd April 1997.
Analysis and Conclusions
14. Non-government educational institutions in Rajasthan are
governed by the Rajasthan Non-Government Educational Institutions
Act, 1989 (hereafter "Act") and the rules framed. Section 2 (r) of the
Act defines salary as "the aggregate of the emoluments of an employee
including dearness allowance or any other allowance or relief for
the time being payable to him but does not include compensatory
allowance". Compensatory allowance, by Section 2 (d) means:
"(d) "compensatory allowance" means an allowance granted
to meet personal expenditure necessitated by the special
circumstances in which duty is performed and shall include a
travelling allowance but shall not include a sumptuary
allowance nor the grant of a free passage to or from any
place outside India".
15. Section 3 of the Act provides for recognition of grant-in-aid
institutions; Sections 4 to 6 of the Act provide for the eventuality of
refusal of recognition, withdrawal of aid and the remedies for the
institution. Section 7 of the Act onwards are regulatory provisions
requiring audit, recruitment, orders of termination of teachers, provision
of tribunal for redressal of teachers' grievances regarding dismissal or
6 Ambika Mission Boys Model School v. State of Chattisgarh, (2020) 2 CLR 177
7 Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School
& Ors, 2007 (1) SCC 268
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termination, etc. Section 29 of the Act, which is relevant for the present
purposes, states as follows:
"29. Pay and allowances of employees.- (1) The scales of
pay and allowances except compensatory allowances with
respect to all the employees of an aided institution shall not
be less than those prescribed for the staff belonging to similar
categories in Government institutions.
(2) Notwithstanding any contract to the contrary, the salary
of an employee of a recognised institution, for any period
after commencement of this Act, shall be paid to him by the
management before the expiry of the fifteenth day or such
earlier day, as the State Government may, by general or
special order appoint, of the month next following the month
in respect of which or part of which it is payable:
Provided that if at any time the State Government deems it fit,
it may prescribe a different procedure for payment or salary
and allowances.
(3) The salary shall be paid without deductions of any kind
except those authorised by the rules made under this Act or
by any other law for time being in force."
16. The relevant provisions of the 1993 Rules are Rules 47, and,
pertinently, 82. Rule 47 deals with privilege leave.8 Rule 82 is as follows:
8 47. Privilege Leave.- (1) Non-Teaching Staff - Members of the non-teaching
staff whether temporary or permanent, shall be entitled to privilege leave of
30 days in a calendar year. Fifteen days privilege leave shall be credited to
the leave account of the employee on 1st January and the remaining fifteen
days on 1st of July, each year subject to the total accumulation upto a maximum
of 300 days.
(2) Teaching staff -
(a)
Privilege leave is not admissible to the members of teaching staff,
whether temporary or permanent, in respect of duty performed in
any calendar year, in which they avail themselves of the full
vacation, except to the extent indicated under clause (b) of this
sub-rule;
(b)
The teaching staff in schools and colleges shall be entitled to fifteen
days/privilege leave in a calendar year. The leave account shall
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS. [S. RAVINDRA BHAT, J.]
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"82. Gratuity and Insurance.- (1) The employees of the Aided
educational institutions shall be entitled to Gratuity as
admissible under Payment of Gratuity Act, 1972 as amended.
from time to time.
(2) The managing committee shall arrange for Group
Insurance of its employees under the respective scheme of
Life Insurance Corporation of India."
17. In the present case, the appellants had to fight for their
entitlements. The State initially refused them the benefit of regularization.
Their petitions for relief were unsuccessful. Ultimately, this court, by its
order, dated 19th July 2016, directed their regularization. The court even
initiated suo motu contempt proceedings, after which the appellants were
paid their salaries and arrears according to the recommendations of the
Pay Commission. However, the appellants' complaint of non-compliance
with the respondent's obligation to pay leave encashment and gratuity
be credited with fifteen days privilege leave immediately after expiry
of every calendar year, the unavailaed portion of the so credited
privilege leave shall be qualified for carry forward to the next year
upto a maximum of 300 days.
(c)
The teaching staff appointed during a calendar year shall be
allowed privilege leave @ 1 1/4 days for each completed month of
his service immediately after the expiry of that calendar year subject
to the condition laid down in clause (b) above in proportion of
8:7 respectively;
(d)
The privilege leave admissible to such an employee in respect of
any calendar year in which he is prevented from availing himself
of the full vacation shall be in such proportion of 15 days as the
number of days of vacation not taken bears to the full vacation. If
in any calendar year the employee does not avail the full vacation,
fifteen days privilege leave will be admissible to him at the end of
the vacation in respect of that calendar year.
(e)
Vacation may be taken in combination with or in continuation of
any kind of leave under these rules provided that the total duration
of vacation and privilege leave taken in combination or in
continuation of other leave, shall not exceed the amount of
privilege leave due and admissible to an employee at a time under
sub-rule (1) above.
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for the period they were in the aided establishment was not gone into.
They were permitted to agitate that grievance before the High Court.
Upon their doing so, the High Court, by its impugned order, gave short
shrift to their argument, holding that since arrears of salary had been
paid, nothing more was needed to be done.
18. As far as leave encashment dues are concerned, the issue is
no longer at large. In Senior Higher Secondary School Lachhmangarh
(supra) this court held that "salary" under the Act, includes leave
encashment. The relevant observations are extracted below:
"19. The contention urged is that Section 16 refers to various
conditions of service including pay whereas Section 29(1)
refers only to 'scales of pay and allowances' and not the
'conditions of service'. Learned Counsel submits that by
implication, Section 29 excludes the benefit of leave
encashment. We are unable to accept the above contention.
20. Section 16 confers a rule-making power on the State
Government to regulate recruitment and conditions of service
including conditions relating to qualifications, pay, gratuity,
insurance, age of retirement, entitlement of leave, conduct
and discipline etc. of employees of aided institutions. Section
16 has to be read and worked harmoniously with Section 29
which directs maintenance of parity in the scales of pay and
allowances between employees of aided institutions and
Government institutions.
21. As we have held above the expression pay and allowances
in Section 29 read with wider definition of the word 'salary'
in Section 2(r) of the Act has a very vide connotation. We
have come to the conclusion that the expression includes
benefit of leave encashment which is nothing but salary for
the unavailed leave to the credit of the employee.
22. Section 16 confers rule-making power on the State
Government to regulate 'Conditions of service' of employees
of aided institutions. The Section specifically confers power
to frame rules regarding entitlement of leave. If leave salary
is of kind a salary within the wide definition of 'salary' under
Section 2(r), the rules to regulate conditions of service of
employees of aided institutions, must be so framed as to
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS. [S. RAVINDRA BHAT, J.]
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maintain parity in conditions of service in that regard with
employees in Government institutions. That is the mandate of
Section 29 of the Act. The contention, therefore, advanced
that subject-matter of entitlement of leave encashment is
covered by Section 16 of the State but is beyond the purview
of Section 29 of the Act, is fallacious and has to be rejected.
23. While construing the provision under consideration, it is
to be borne in mind that interpretation of a welfare legislation
should be to promote education. The service conditions of
the employees of the aided institutions are sought to be
improved and brought at par with those in Government
educational institutions to maintain educational standards. It
has also to be borne in mind that our Constitution makers
have placed the field of education at a higher pedestal and
granted it a special status. Various provisions of the
Constitution deal with the aspect of advancement of
education. The primary education has been held to be a
fundamental right in the decision of this Court in Unni
Krishnan, J.P. and Ors. v. State of Andhra Pradesh 1993 (1)
SCC 645 and this aspect still holds the field despite the
decision having been overruled on some other aspects in
T.M.A. Pai Foundation and Ors. v. State of Karnataka and
Ors. 2002 (8) SCC. To improve education, various State
Governments grant aid to educational institutions and, by
and large, teachers of aided private schools deserve to be
treated at par with teachers of Government institutions to the
extent possible. The provisions of these Acts deserve to be
liberally interpreted in favour of the teaching class except
where statute may compel otherwise. A statute of no other
State has been brought to our notice where similar benefit
has been denied to the teachers of the aided institutions to
improve education. The service conditions of the teachers also
deserve to be improved."
19. This court is of the opinion that the aforementioned reasoning
is binding, and conclusive as regards entitlement of the appellants to
claim leave encashment benefits. However, the State had urged that by
virtue of Rule 5 of the 2010 Rules, the employees who were regularized
could not claim these benefits. The 2010 Rules were framed in exercise
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of powers under proviso to Article 309 of the Constitution. Rule 5, to the
extent it is relevant, states as follows:
"5. Terms and condition for appointment of employees in
Government Service.-The regularly appointed existing
employees in the No.- Government Aided Educational
Institutions who are working against sanctioned aided post
on the date of commencement of these rules shall be appointed
under the Rajasthan Voluntary Rural Education Service on
the following terms and conditions, namely :-
(i) The employee should possess the requisite educational and
professional qualification for the respective posts as per the
relevant service rules applicable to the Government servant
of similar cadre.
(ii) The posts on which the employees shall be appointed in
the Government shall constitute a separate dying cadre for
each category of employees.
(iii) The appointed employees shall be posted only in the
colleges/ schools, as the case may be, in the rural areas on
the equivalent posts specified in column number 2 of the
Schedule. However, in case there is no such equivalent post
in the government, they shall be appointed on other posts
carrying the same pay scale of aided posts:
***************
 **************
(vi) The salary of all the appointed employees shall be fixed
on the basis of the salary as drawn at the time of appointment
as per the Sixth Pay Commission with effect from the date
they join in the government under these rules. Those who are
drawing salary in Rajasthan Civil Services (Revised Pay
Scale) Rules, 1998, Rajasthan Civil Services (Revised Pay
Scales) for Government College Teachers including Librarian
and PTI Rules, 1999 and Rajasthan Civil Services Revised
Pay Scales for Government Polytechnic College Teachers,
Librarians and Physical Training Instructors Rules, 2001 shall
be allowed benefit of Rajasthan Civil Services (Revised Pay)
Rules, 2008, Rajasthan Civil Services (Revised Pay Scales)
for Government College teachers including Librarian and PTI
Rules, 2009 and Rajasthan Civil Services (Revised Pay Scales)
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS. [S. RAVINDRA BHAT, J.]
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for Government Polytechnic College Teachers, Librarians and
Physical Training Instructors Rules, 2010 respectively with
effect from the date they join in the Government after
appointment under these rules.
(vii) No arrears on any account whatsoever, (including arrears
of salary, selection scale, Assured Career Progression or
Career Advancement Scheme) shall be paid by the State
Government for the period prior to the date of their joining
in the Government after appointment under these rules.
(viii) Carry forward of the balance of Privilege Leave shall
not be allowed. Employees shall be free to get payment of
encashment of balance of P. L. from the respective grant-inaid educational institutions.
******************
******************
(x) The period of service in the aided institutions shall not be
counted for payment of gratuity, The employees shall be free
to obtain payment of gratuity from the respective grant in aid
educational institution.
(xi) Each employee shall be required to execute an
undertaking, in Form - II, that he/she voluntarily accepts all
the terms and conditions of service prescribed under these
rules and agrees to serve in the government educational
institutions situated in the rural areas till attaining the age of
superannuation in the service of Government."
20. Evidently, these rules were framed to enable the absorption of
employees and teachers of non-government aided institutions. What is
relevant for the purposes of this case is that by Rule 5(viii), carry forward
of existing privilege leave is denied; likewise, the period of service in
aided institutions is not to be reckoned for the purpose of gratuity under
Rule 5(ix). Every employee had to furnish an undertaking in the prescribed
form to accept the terms and conditions. Ordinarily no public employer
can be faulted in imposing pre-conditions before it recruits an employee.
However, such conditions cannot be arbitrary, or so onerous as to be
unconscionable. In the opinion of this court, the condition in clause (viii)
of Rule 5 i.e., carry forward of balance privilege leave, is barred and
requiring employees to seek encashment from their previous employer,
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i.e., aided institutions, is an arbitrary and unconscionable condition, which
cannot be enforced. Speaking that such conditions are enforceable, this
court, recently, in Pani Ram vs. Union of India & Ors.9 after quoting
the observations in Central Inland Water Transport Corporation
Limited & Anr. V Brojo Nath Ganguly & Anr10 held as follows:
23. "....Right to Equality guaranteed Under Article 14 of the
Constitution of India would also apply to a man who has no
choice or rather no meaningful choice, but to give his assent
to a contract or to sign on the dotted line in a prescribed or
standard form or to accept a set of Rules as part of the
contract, however unfair, unreasonable and unconscionable
a Clause in that contract or form or Rules may be."
21. This court had categorically ruled, in Senior Higher Secondary
School (supra) that leave encashment is part of salary. In the scheme
of the 1993 Rules, the assessment of, and determination of the extent of,
aid to be granted to any institution, is provided by Rule 13. What forms
part of the approved expenditure that would be the content of aid, is
provided by Rule 14. In the present case, the management establishment
was recipient of 70% aid, in the form of grant. In these circumstances,
the State cannot shrug its responsibility to shoulder its part of the
responsibility to pay the appellants the share of leave encashment benefits,
and hide behind either Rule 5 (viii) or the undertaking executed by them.
The appellants are held entitled to privilege leave entitlement benefits.
Such benefit shall be calculated from the date they entered the service
of the establishment till the date of their absorption, by the State, in 2016.
The State shall pay the benefits due to the extent of 70%, and the balance
30% shall be payable by the management establishment.
22. On the issue of gratuity, again, the question of liability has
been conclusively settled. Although the management relied on a
Chhattisgarh High Court decision Ambika Mission Boys Model School
(supra), this court is of the opinion that it cannot be construed as an
authority, because the court in that case analysed the provisions of the
Payment of Gratuity Act, 1972, as amended in 2009. However, in the
present case, the scheme of the 1993 Rules, which contained the
conditions of grant, categorically cast the liability to pay gratuity on the
9 Pani Ram vs. Union of India & Ors, 2021 SCC OnLine SC 1277
10 Central Inland Water Transport Corporation Limited & Anr. V Brojo Nath Ganguly
& Anr (1986) 3 SCC 156
JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN
& ORS. [S. RAVINDRA BHAT, J.]
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employer, i.e., the aided establishment, i.e., the fourth, fifth and sixth
respondents in this case. Furthermore, Rajasthan Welfare Society
(supra) is an authority, in that it considered the effect of the 1993 Rules,
and held that it is the management of the aided institution which has to
bear the liability towards payment of gratuity:
"7. Rule 10 provides for general conditions governing grantin-aid. It inter alia, provides that every institution which
applies for grant-in-aid shall be deemed to have accepted its
obligation to comply with the conditions laid therein, one of
it being that the Management shall appoint teachers and other
staff and shall follow the conditions of service, as laid down
in the Rules. Rule 11 deals with the procedure for grant-inaid.