Supreme Court Clarifies Applicability of Section 18 of Rajasthan Non-Government Educational Institutions Act in Cases of Post Abolition: Khetri Vikas Samiti vs. Director College Education (2019)

Case Background

The Khetri Vikas Samiti, a society running several educational institutions, including Vinodini P.G. College, a non-governmental educational institution, faced financial difficulties. The college had engaged several employees on a purely temporary basis, including a Lab Assistant/Lab Boy (private respondent in the lead case) on April 1, 1999, along with a Sweeper, Mechanic, and Waterman.

On July 20, 2003, the Managing Committee of the Samiti, due to heavy financial losses, unanimously resolved to abolish the posts of Lab Assistant/Lab Boy, Sweeper, Waterman, and Mechanic. The institution decided to pay six months’ salary to these employees, which would be deposited into their bank accounts. Consequently, on July 29, 2003, the employees were removed from their posts.

Timeline:

Course of Proceedings

Aggrieved by the termination order dated July 29, 2003, the private respondent filed an appeal before the Non-Government Educational Tribunal, Jaipur, under Section 19 of the Rajasthan Non-Government Educational Institutions Act, 1989. The employees argued that their termination was illegal because the management had not obtained prior approval from the Director of Education, as required by Section 18 of the Act. The management contended that Section 18 did not apply since the termination resulted from the abolition of posts, not disciplinary action.

The Tribunal, on December 7, 2004, set aside the removal orders and directed the reinstatement of the employees, holding that prior approval was mandatory under Section 18. The Khetri Vikas Samiti then filed writ petitions before the High Court of Judicature at Rajasthan, which were dismissed by a Single Judge on July 18, 2005. The Single Judge also did not consider the communication dated January 25, 2005, from the Commissioner, College Education, Rajasthan, clarifying that no government approval was needed for removing employees of non-aided posts, because it was not part of the record before the Tribunal.

The Division Bench of the High Court dismissed the appeals and confirmed the Single Judge’s decision on December 15, 2016. The Management then appealed to the Supreme Court.

Legal Framework

The case revolves around the interpretation of Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, and Rule 39 of the Rajasthan Non-Government Educational Institutions (Recognition, Grant-In-Aid and Service Conditions etc.) Rules, 1993.

Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, titled “Removal, dismissal or reduction in rank of employees,” states:

“Subject to any rules that may be made in this behalf, no employee of a recognised institution shall be removed, dismissed or reduced in rank unless he has been given by the management a reasonable opportunity of being heard against the action proposed to be taken. Provided that no final order in this regard shall be passed unless prior approval of the Director of Education or an officer authorised by him in this behalf has been obtained.”

The section further includes provisos that exempt certain cases from the requirement of prior approval, such as dismissal due to criminal conviction or when it is impractical to give an opportunity to show cause, with the Director’s consent.

Rule 39 of the Rajasthan Non-Government Educational Institutions (Recognition, Grant-In-Aid and Service Conditions etc.) Rules, 1993, titled “Removal or Dismissal from Service,” outlines the procedure for removing or dismissing an employee. It specifies that temporary employees may be terminated with one month’s notice or salary in lieu thereof. For other employees, it details the process of preliminary inquiry, charge sheet, detailed inquiry, and the requirement of obtaining the Director of Education’s approval.

Arguments

The appellant, Khetri Vikas Samiti (Management), argued that the High Court erred in confirming the order of the Tribunal directing reinstatement of the employees. The main arguments of the Management were:

• Abolition of Posts: Since the termination of the employees was a result of the abolition of posts due to financial losses, Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, should not be applicable. The Management contended that Section 18 applies to cases of disciplinary action, not post abolition.
• Reliance on precedent: The Management cited the case of Shri Maheshwari Senior Higher Secondary School v. Bhikha Ram Sharma (1996) 8 SCC 22, where the Supreme Court held that in cases of termination due to post abolition, conducting an inquiry under the rules is not necessary.
• Non-aided Posts: The posts held by the employees were not aided by the government, and their appointments were not approved by the Education Department. Therefore, the requirement for prior approval from the Director of Education should not apply.
• State Government Stand: The Management highlighted the communication from the Commissioner, College Education, Rajasthan, dated January 25, 2005, which clarified that no government approval was needed for removing employees of non-aided posts.
• Financial Condition: The High Court incorrectly held that the financial condition of the institution did not warrant the abolition of posts. The Management argued that the entire financial position, not just the grants and fees received, should have been considered.

The respondents, the employees, argued that:

• Applicability of Section 18: Since the result of the abolition of posts was the removal of employees from service, Section 18 of the Act would be applicable, mandating prior approval from the Director of Education.
• Validity of Abolition: The Tribunal and the High Court had correctly held that the abolition of posts was bad in law. Therefore, the question of prior approval was secondary.
• Concurrent Findings: There were concurrent findings of all the lower courts on the applicability of Section 18, which should not be interfered with by the Supreme Court.

The State of Rajasthan supported the Management’s argument, reiterating that the posts were not aided and did not require government approval for removal of employees.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether, in the case of removal due to the abolition of posts, particularly when the employees were working on a temporary basis, the posts were not approved/sanctioned, their appointments were not approved by the Education Department, and the posts were not aided, Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, would be applicable.
2. Whether the learned Tribunal and the learned Single Judge were justified in holding the abolition of posts bad in law.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed Shri Maheshwari Senior Higher Secondary School v. Bhikha Ram Sharma (1996) 8 SCC 22, holding that in cases of termination due to post abolition, conducting an inquiry is not required.
• The Supreme Court interpreted Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, as applicable to disciplinary actions and not to cases of post abolition.
• The Supreme Court interpreted Rule 39 of the Rajasthan Non-Government Educational Institutions (Recognition, Grant-In-Aid and Service Conditions etc.) Rules, 1993, as applicable to disciplinary actions and not to cases of post abolition.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the employees were terminated due to the abolition of posts, which was a result of the institution’s financial difficulties. The Court emphasized that Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, is intended for disciplinary actions and not for situations where posts are abolished due to financial constraints. The Court also took into consideration that the posts were temporary, non-aided, and their appointments were not approved by the Education Department.

The Court’s reasoning was a combination of factual considerations (such as the financial condition of the institution and the temporary nature of the employees’ posts) and legal interpretations (such as the scope of Section 18).

Logical Reasoning

The Court considered the alternative interpretation that Section 18 might apply to all terminations, regardless of the reason. However, the Court rejected this interpretation, emphasizing that Section 18 is specifically designed for disciplinary actions and not for situations where posts are abolished due to financial difficulties.

The decision was reached by considering the specific wording of Section 18, the context of the case, and the precedent set in Shri Maheshwari Senior Higher Secondary School v. Bhikha Ram Sharma. The Court also considered the State Government’s stand that no prior approval was needed for removing employees of non-aided posts.

The Court’s decision is summarized in the following quotes:

“On a fair reading of Section 18 of the Act and Rule 39 of the 1993 Rules, we are of the opinion that Section 18 of the Act and Rule 39 would not be applicable in case of removal of an employee due to the abolition of posts, more particularly when the post to which the employee is working was not aided and that his appointment was not approved by the Education Department.”

“Therefore, the learned Tribunal, learned Single Judge and learned Division Bench of the High Court have materially erred in applying Section 18 of the Act and in holding the removal of the concerned employees which as such was due to the abolition of the posts was hit by Section 18 of the Act.”

“Therefore, in absence of challenge to the decision of the Managing Committee to abolish the posts in question, it was not open for the Tribunal and/or the High Court to hold that abolition of posts was bad in law.”

The Court did not have any minority opinion. Both judges agreed on the reasoning and the final decision.

The Supreme Court’s decision implies that non-government educational institutions have the right to abolish posts due to financial constraints without needing prior approval from the Director of Education, provided that the posts are not aided and the appointments are not approved by the Education Department. This decision could impact future cases involving similar issues.

The judgment clarifies that Section 18 of the Act is not a blanket provision applicable to all forms of termination, but rather to disciplinary actions. This interpretation provides clarity for educational institutions and their employees.

Key Takeaways

• Non-government educational institutions can abolish posts due to financial constraints without prior approval from the Director of Education if the posts are not aided and the appointments are not approved by the Education Department.
• Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, applies to disciplinary actions, not to cases of post abolition.
• Rule 39 of the Rajasthan Non-Government Educational Institutions (Recognition, Grant-In-Aid and Service Conditions etc.) Rules, 1993, applies to disciplinary actions, not to cases of post abolition.
• The decision in Shri Maheshwari Senior Higher Secondary School v. Bhikha Ram Sharma continues to be a valid precedent for cases involving post abolition.
• Lower courts should not interfere with the management’s decision to abolish posts unless it is proven to be arbitrary or mala fide.

This judgment clarifies the legal position regarding the termination of employees in non-government educational institutions due to post abolition. It could lead to fewer legal challenges in similar cases, providing more autonomy to the management of such institutions. However, it also highlights the need for institutions to ensure that the decision to abolish posts is based on genuine financial constraints and is not a pretext for arbitrary termination of employees.

Directions

The Supreme Court allowed the appeals and quashed the judgments of the Division Bench of the High Court, the Single Judge of the High Court, and the Tribunal, which had directed the appellant to reinstate the private respondents.

Development of Law

The ratio decidendi of this case is that Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, does not apply to cases of termination of employees due to the abolition of posts, especially when those posts are temporary, non-aided, and their appointments are not approved by the Education Department. The judgment reinforces the principle established in Shri Maheshwari Senior Higher Secondary School v. Bhikha Ram Sharma that no inquiry is needed in cases of post abolition. This decision clarifies the scope and applicability of Section 18 and provides guidance for future cases.

Conclusion

In summary, the Supreme Court allowed the appeals, setting aside the High Court’s decision and clarifying that Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989, does not apply to cases of post abolition due to financial reasons, especially for temporary, non-aided posts. This judgment provides clarity on the rights of employees and the powers of management in non-government educational institutions in Rajasthan.