Supreme Court clarifies State’s responsibility for retiral benefits in aided institutions: Nutan Bharti Gram Vidyapith vs. Government of Gujarat (2024) INSC 935 (02 December 2024)

Date of the Judgment: 02 December 2024
Citation: (2024) INSC 935
Judges: J.K. Maheshwari, J. and Rajesh Bindal, J.

Who is responsible for paying the retirement benefits of employees in grant-in-aid institutions? The Supreme Court of India recently addressed this question, clarifying the obligations of the State Government versus the aided institutions. This judgment settles a dispute regarding the liability for retiral dues of a lecturer in an aided college, emphasizing the State’s responsibility as per the governing scheme. The bench comprised Justices J.K. Maheshwari and Rajesh Bindal, with the opinion authored by Justice Rajesh Bindal.

Case Background

The case revolves around a lecturer, Respondent No. 2, who was employed by Nutan Bharti Gram Vidyapith, the Appellant, a private college receiving grants-in-aid from the State Government of Gujarat. The lecturer was dismissed from service on 06.06.1994 due to alleged misconduct. Subsequently, the lecturer’s dismissal was challenged, leading to a series of legal proceedings and appeals. Ultimately, the appellate authority ordered the reinstatement of the lecturer, who had by then reached superannuation. The core issue was who would bear the financial responsibility for his retiral benefits: the college or the State Government.

Timeline

Course of Proceedings

The lecturer’s dismissal was initially upheld by the Joint Director of Higher Education. However, the High Court intervened, directing a fresh hearing, which ultimately resulted in the lecturer’s reinstatement. The High Court initially ordered the college to pay 75% back wages and full retiral benefits, with both the college and the State being responsible for the retiral dues. This order was later modified in a review petition, holding the college solely liable for the retiral benefits. This modification led to the college filing the present appeal before the Supreme Court.

Legal Framework

The primary legal framework in this case is the “Pension Scheme for the teaching/non-teaching staff in the Gram Vidyapeeth, Government of Gujarat, Education Department, Resolution Number GUS/1089-5369/B Sachivalaya, Gandhinagar dated 13.07.1990.” Paragraph 11 of this scheme outlines the procedure for processing pension papers and states that:

“The pension papers of the members of the staff entitled to pension, gratuity, etc. under the scheme should be prepared in case of Gram Vidyapeeth staff by the Principal of the Gram Vidyapeeth on the basis of service record maintained by the Gram Vidyapeeth concerned… The Director of Higher Education should sanction the pension, gratuity, etc. and forward the pension completed to the Director of Pension and Provisions Fund. The pension, gratuity, etc. so sanctioned will be payable from the Government Treasurers.”

This scheme establishes that the State Government is responsible for the payment of pension and gratuity to employees of aided institutions.

Arguments

Appellant (College)’s Arguments:

• The college argued that as per Paragraph 11 of the Pension Scheme, the liability to pay pension rests with the State Government. The High Court’s direction to the college to pay retiral dues was not in accordance with the scheme.

• The college contended that it should not be burdened with the retiral benefits of the lecturer, especially since the scheme clearly states that the State is liable for such payments.

Respondent (State Government)’s Arguments:

• The State argued that the college’s conduct in continuously litigating the matter, despite the appellate authority ordering reinstatement, should be considered. The State claimed that the college’s actions led to a delay, and therefore, the State should not be burdened with the pension liability.

• The State relied on the judgment in Educational Society, Tumsar and Others vs. State of Maharashtra and Others [(2016) 3 SCC 512; 2016 SCC Online SC 93], arguing that the college’s conduct warranted shifting the liability to them.

Respondent No. 2 (Lecturer)’s Arguments:

• The lecturer supported the college’s argument, stating that the State is responsible for the retiral dues as per the applicable laws for grant-in-aid institutions.

• The lecturer argued that the State cannot evade its liability.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a dedicated section. However, the core issue before the court was:

1. Whether the High Court was correct in holding the college liable for the retiral benefits of the lecturer, given the provisions of the applicable Pension Scheme which states that the State Government is responsible for such payments.

Treatment of the Issue by the Court

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

Authorities

Cases Relied Upon by the Court:

• Educational Society, Tumsar and Others vs. State of Maharashtra and Others [(2016) 3 SCC 512; 2016 SCC Online SC 93] – Supreme Court of India.

  This case was cited by the State, but the Supreme Court distinguished it from the present case. In Educational Society, Tumsar, the educational institution’s action was found to be without jurisdiction. However, in the present case, the appellate authority found the charges against the lecturer to be trivial and not warranting dismissal. The Court held that the facts of the present case were different from the facts in Educational Society, Tumsar and hence the ratio was not applicable.

Legal Provisions Considered by the Court:

• Paragraph 11 of the “Pension Scheme for the teaching/non-teaching staff in the Gram Vidyapeeth, Government of Gujarat, Education Department, Resolution Number GUS/1089-5369/B Sachivalaya, Gandhinagar dated 13.07.1990.”

  This provision outlines the procedure for processing pension papers and states that the State Government is responsible for the payment of pension and gratuity to employees of aided institutions.

Authorities Table

Judgment

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

How each authority was viewed by the Court?

• The Court distinguished Educational Society, Tumsar and Others vs. State of Maharashtra and Others [(2016) 3 SCC 512; 2016 SCC Online SC 93], stating that the facts of the case were different and hence the ratio of the case was not applicable.
• The Court relied on Paragraph 11 of the Pension Scheme, which clearly stated that the liability to pay pension lies with the State Government.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the explicit provisions of the Pension Scheme, which clearly stated that the State Government is responsible for the payment of pension and gratuity to employees of aided institutions. The Court also considered the fact that the appellate authority had found the charges against the lecturer to be trivial and not warranting dismissal. While the State argued that the college’s conduct in prolonging the litigation should shift the burden of retiral benefits to them, the Court did not find this argument persuasive. The Court emphasized that there was no exception in the scheme to deny payment of retiral benefits by the State in such circumstances. The Court also distinguished the case from Educational Society, Tumsar, where the educational institution’s action was found to be without jurisdiction, which was not the case here.

Logical Reasoning

The Court’s reasoning was straightforward. It began by examining the Pension Scheme, which clearly stated that the State Government was responsible for the payment of retiral benefits. The Court then considered the State’s argument that the college’s conduct in prolonging the litigation should shift the burden to them. However, the Court found that the college’s conduct was not egregious enough to warrant such a shift. The Court distinguished the case from Educational Society, Tumsar, where the educational institution’s action was found to be without jurisdiction. The Court emphasized that there was no exception in the scheme to deny payment of retiral benefits by the State in such circumstances. The Court concluded that the State was liable for the retiral benefits.

The Court stated: “There is no exception provided in the Scheme to enable the State to deny payment of retiral benefits to an employee of the Grant-in-Aid Institution under certain circumstances and shift the burden on the institution.”

The Court also noted: “It is not the opinion of the appellate authority or any Court that the action taken by the appellant against the respondent no.2 was without jurisdiction as was the case in Educational Society, Tumsar and Others (supra).”

The Court further observed: “The appellant, keeping in view the discipline in the institution, thought it appropriate to challenge the same. In such circumstances, it cannot be opined that its conduct was such that it should be burdened with the retiral benefits of delinquent employee.”

Key Takeaways

• The State Government is primarily responsible for the payment of retiral benefits to employees of grant-in-aid institutions as per the applicable Pension Scheme.

• The conduct of the aided institution in litigating the matter does not automatically shift the liability for retiral benefits to the institution, unless there is an explicit provision in the scheme or the institution’s action was without jurisdiction.

• The Supreme Court emphasized the importance of adhering to the specific provisions of the applicable schemes and regulations.

Directions

The Supreme Court set aside the High Court’s order dated 21.04.2023, which held the college liable for retiral dues. The Court modified the order dated 26.07.2022, directing that the State Government shall be liable to pay retiral dues to the lecturer (Respondent No. 2).

Development of Law

The ratio decidendi of this case is that the State Government is primarily liable for the payment of retiral benefits to employees of grant-in-aid institutions, as per the applicable schemes. This judgment reinforces the principle that the State cannot evade its responsibility by citing the conduct of the aided institution, unless there is an explicit provision in the scheme or the institution’s action was without jurisdiction. There is no change in the previous position of law but the court has clarified the position of law in cases where the State tries to shift its liability to the aided institution.

Conclusion

The Supreme Court’s judgment in Nutan Bharti Gram Vidyapith vs. Government of Gujarat clarifies that the State Government is primarily responsible for paying retiral benefits to employees of grant-in-aid institutions, as per the governing pension schemes. The Court emphasized that the State cannot shift this liability to the aided institution unless there are specific provisions in the scheme or the institution’s actions were without jurisdiction. This decision ensures that employees of aided institutions receive their rightful retiral benefits from the State, as intended by the scheme.

Category

• Grant-in-Aid Institutions
  • Retiral Benefits
  • Pension Scheme
• Government of Gujarat
  • State Liability
• Pension Scheme for the teaching/non-teaching staff in the Gram Vidyapeeth, Government of Gujarat, Education Department, Resolution Number GUS/1089-5369/B Sachivalaya, Gandhinagar dated 13.07.1990
  • Paragraph 11 of the Pension Scheme

FAQ

Q: What is a grant-in-aid institution?
A: A grant-in-aid institution is an educational or other institution that receives financial assistance from the government.

Q: Who is responsible for paying the pension of employees in grant-in-aid institutions?
A: According to the Supreme Court’s judgment, the State Government is primarily responsible for paying the pension and retiral benefits of employees in grant-in-aid institutions, as per the applicable pension schemes.

Q: Can the State Government shift the liability to the institution?
A: The State Government cannot shift the liability to the institution unless there is an explicit provision in the scheme or the institution’s action was without jurisdiction.

Q: What was the main issue in this case?
A: The main issue was whether the college or the State Government was liable for the retiral benefits of a lecturer in an aided institution.

Q: What did the Supreme Court decide?
A: The Supreme Court decided that the State Government is liable for the retiral benefits, as per the applicable pension scheme.