Calcutta High Court (Appellete Side)
St. Thomas High School vs Basabi Chowdhury & Ors on 3 August, 2026
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
APPELLATE SIDE
Present:
The Hon'ble Justice Shampa Dutt (Paul)
WPA 9438 of 2025
St. Thomas High School
Vs
Basabi Chowdhury & Ors.
With
WPA 12300 of 2025
St. Thomas High School
Vs
Minakshey Roy & Ors.
For the Petitioner : Mr. Soumya Majumder, Ld. Sr. Adv.
Mr. S.K. Singh,
Mr. Ravi Kumar Dubey.
For the Respondent No.1 : Mr. Banibrata Roy,
Ms. Ishita Chakraborty.
Judgment reserved on : 13.07.2026
Judgment delivered on : 03.08.2026
2
Shampa Dutt (Paul), J.:
1. The writ application has been preferred challenging the impugned
orders dated 20.07.2023 and 21.02.2025 passed by the Controlling
Authority and the Appellate Authority under the Payment of Gratuity
Act, 1972.
2. The Controlling Authority held that on perusal of oral and written
affirmation made by parties and documentary evidences associated with
the parties, the undersigned holds the decision that the applicant, Smt.
Basabi Chowdhury joined the O.P. company on 20.06.1990 and
rendered continuous service under the O.P. company till 28.02.2020,
which was the date of her superannuation and her last drawn wage was
Rs. 49,939.00 (Basic-Rs. 36452 + D.A-Rs.13 187) per month. Thus the
applicant is entitled to gratuity for rendering 30 years of continuous
service and her entitled amount of gratuity as per Sec 4(2) of the said
Act would be as follows Rs. 49,939/26 x 15 x 30 Rs. 8,64,329.00
(Rupees Eight Lakh Sixty Four Thousand Three Hundred and Twenty
Nine) only.
As the aforesaid amount was not paid within stipulated time after
superannuation on 28.02.2021, the applicant is further entitled to get
simple interest @ 10% upon the said amount W.E.F. 01.04.2021 till the
date of Order i.e. 20.07.2023 as per section 7(3) of the said Act.
3. The Appellate Authority vide its impugned order, during hearing of two
appeals of both the parties i.e. the Appellant school and the Respondent
on giving ample opportunity of being heard, and perusal of records,
3
documents and evidence adduced by both parties and also from
averments of both parties held:-
―Smt. Basabi Chowdhury was an employee of the Appellant St.
Thomas’ High School and served there as Assistant Teacher from
20.06.2090 to 28.02.2021 continuously without any break in
service. So, the reckonable period of service rendered by Smt.
Basabi Chowdhury is 30 years 8 months 8 days i.e. 31 years.
Her last drawn gross salary/ total emoluments were Rs.
58,430.00. The appellant school did not contest these. Now only
one point is to be decided In the instant appeal petition whether
Smt. Basabi Chowdhury is entitled to get gratuity under Section
4(5) of the Payment of Gratuity Act, 1972 or not.‖
4. It is stated that:-
“Section 4(5) of the Payment of Gratuity Act, 1972
states inter alia -“Nothing in this section shall affect the
right of an employee to receive better terms of gratuity
under any award or agreement or contract with the
employer.”
5. Moreover, the division bench of the Supreme Court of India, comprising
of Hon’ble Mr. Justice Uday Umesh Lalit and Hon’ble Mr. Justice Sanjiv
Khanna, vide judgment dated 29th April 2020 in the matter of BCH
electric Limited vs Pradeep Mehra, dealt with applicability of Section
4(5) of the Payment of Gratuity Act, 1972, held that Section 4(5) of the
Act will only apply if there are alternate options for the employee under
the Act and under the terms of the contract with the employee and that
4
the employee is entitled to receive higher available benefit amongst the
two available options.
6. It is further stated by the petitioners that from the above
judgment/observation of the Supreme Court of India, it is clear that
Section 4(5) of the Payment of Gratuity Act, 1972 is applicable to the
petitioners and they are entitled get gratuity as per this Section.
7. During hearing, the appellant school stated that they had discontinued
the scheme with effect from 01.04.2018 but they could not produce
any authenticated document to substantiate their claim. The produced
documents showing that the scheme is still existing. So, the
Management’s statement is not maintainable in this regard.
So, in partial modification of the order of the Learned Controlling
Authority, Smt. Basabi Chowdhury is found eligible to get gratuity
as per the provisions laid down in “St. Thomas’ High School Staff
Welfare Scheme”.
8. The petitioner’s case in short is that it received an application in form N
filed by the Respondent no.1 being dated 14.01.2022, forwarded under
Form “O” dated 26.04.2022, issued by the Controlling Authority, under
the Payment of Gratuity Act, 1972, Howrah. The petitioner duly
submitted its written statement against the same on 14.06.2022, inter
alia, denying all the material allegations levelled against the petitioner.
The Respondent no.1 filed rejoinder on 12.07.2022 against the Written
Statement filed by the petitioner.
9. The parties duly produced witnesses who were duly examined and cross
examined. During the course of its evidence, the petitioner duly
5
produced the minutes of meeting dated 09.09.2017, whereby it was,
inter alia, decided by the Committee of the Society that the Group
Gratuity Scheme with Life Insurance Corporation of India (LICI)
should be discontinued with immediate effect.
10. The petitioner further states that:-
i. It was apparent that the respondent no.1 was never denied
gratuity payable under the Payment of Gratuity Act, 1972;
ii. The respondent no.1 has admitted that the statement made in
paragraph 3 of her affidavit, i.e., “I say that after the acceptance of
my resignation letter dated 17th December 2020 and releasing me
from the duties with effect from 1st March 2021, the Opposite
party remained absolutely silent about the disbursal of the
benefits namely Provident fund amount, Gratuity and Leave
Encashment amount, in my favour” are not true;
iii. Her years of service is 30 years as mentioned in Form – 1;
iv. Respondent no.1 admitted that the school authority did not tell
her that they will not pay gratuity;
v. The respondent no.1 resigned while the pandemic situation was
going on;
vi. The gross salary of the respondent no.1 are composed of basic
salary, DA, Transport allowance, Medical allowance, HRA and ISC
allowance;
vii. The last basic and DA of the applicant comes to Rs.49,939/-;
viii. The respondent no.1 claimed gratuity based on his gross salary
i.e.’ on Rs.58,430/-;
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ix. The respondent no.1 was informed over telephone about the
gratuity payment and the financial crisis of the school.
11. On completion of hearing the Controlling Authority passed its impugned
order. In appeal the Appellate Authority also passed its impugned order
which has been challenged in the present writ application. The
Appellate Authority disposed of two appeals one by the petitioner and
one by the respondent no.1 by the common impugned order.
12. It the case of the petitioner herein that the Appellate Authority granted
relief on basis of a non-existent scheme, which was neither relied
upon by the respondent no.1, nor the gratuity was prayed in terms
thereof.
13. It is further stated that the Appellate Authority adopted a strange
calculation process and made calculation on basis of a scheme, which
is not in existence, and no claim has been made by the respondent
no.1 on the basis of the same.
14. The Appellate Authority enhanced the amount of gratuity by erring in
law and in fact in vaguely observing that the respondent no.1 has
produced document to substantiate that the welfare scheme of the
company is still in existence without even bothering to mention the
alleged document.
15. It is further stated that the respondent authorities under the Act
miserably failed to appreciate that the petitioner institute was not
covered from the date when the Payment of Gratuity Act was enacted
and enforced. Rather the educational institutes were brought under
coverage of the Payment of Gratuity Act in the year 1997 by virtue of the
7
notification dated 03.04.1997 with retrospective operation from 1997,
and as such calculation being made from the year 1990 makes the
entire process bad in law and not tenable in the eye of law.
16. It is further stated that by virtue of the notification dated 03.04.1997,
the employees working in the Educational institute including the
respondent no.1 are entitled to gratuity under the provisions of the
Payment of Gratuity Act 1972 from the date i.e. 03.04.1997.
17. Hence, the prayer for setting aside of the impugned orders.
18. The petitioner has also filed a supplementary affidavit annexing a
copy of the scheme relating to gratuity rules. The petitioner has
also annexed a copy of the resolution that is extract from minutes
of the meeting dated 10th of August, 2007.
19. In the said minutes that, it was resolved as follows:-
―the St. Thomas’ High School, resolved, that a fund called St.
Thomas’ High School employees gratuity fund pursuant to a
group gratuity scheme under a deed of trust and rules made
thereunder a copy whereof authenticated by the chairman was
placed at the meeting held and is hereby approved and that
the following persons in perspective positional hierarchy of St.
Thomas Educational Society and St. Thomas’ High School be
the first Trustees of the aforementioned fund.‖
20. In course of hearing the learned counsels for the parties have filed
affidavits and their respective written notes.
21. The respondent no.1/employee in her affidavit-in-opposition has stated
that she had tendered her resignation letter on 17th December 2020
8
and she continued to serve the period of notice for the subsequent three
months which was by conducting the classes online, but the Plaintiff
had requested her that they wanted to release her from her duties with
effect from 1st March 2021 instead of 17th March 2021, to which she
had agreed and hence she was released from her duties with effect from
1st March 2021. But thereafter the Plaintiff remained absolutely silent
about the disbursement of Gratuity in her favour.
22. The respondent no.1 further states that in terms of Sec 7(2) of Payment
of Gratuity Act 1972 as, it is the duty of the Employer to calculate the
gratuity amount payable to the Employee as and when gratuity becomes
payable and give notice to the Employer and in terms of Section and as
per Sec 7(3) of the said Act, payment has to be made within 30 days
from the date it becomes payable but the petitioner has not shown the
slightest willingness to pay the Gratuity amount to the Deponent.
23. It is further stated that the resolution passed in the purported meeting
dated 09.09.2017 was never communicated to the employees of the
school and even assuming such resolution has been passed, it is
contrary to the Trust deed annexed by the petitioner in the
supplementary affidavit to the instant writ application and the
resolution dated 09.09.2017 cannot be given retrospective effect by the
petitioner.
24. The petitioner made another application for seeking information under
RTI Act, 2005 before the LIC, Kolkata Metropolitan Division Office-1,
CRM Dept., Jeevan Prakash, 16, C.R.Avenue, Kolkata 700 072 and in
their reply the LIC informed vide their Ref. No. KMDO-
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1/CRM/RTI/APPLICATION dated 26.09.2024 that the Master Policy No.
212500 exists till date and no letter and documents regarding
withdrawal of the Gratuity Scheme received by the LICI.
25. The document has been filed before this Court dated 06.04.2025
wherein it appears that the Secretary of the petitioner’s school has
informed the LICI as follows:-
“As per decision in St. Thomas’ Educational Society I
am hereby directed to request you to surrender and or
cancel policy numbher:212500 with immediate effect.
Please e-mail us latest statement indicating current
balance in our account.”
26. It is further stated by the respondent no.1 that the impugned order of
the Appellate Authority is in accordance with law and requires no
interference.
27. The respondent no.1 herein further submits that the Notification no. S-
42013/1/95-SS(II) under Section 1(3)(C ) of the Payment of Gratuity
Act, 1972 was issued and enforced with effect from 3rd April, 1997
without retrospective effect. But subsequently it was amended by the
Appropriate Authority with retrospective effect.
28. The said respondent relied upon the judgement of the Hon’ble Supreme
Court in the case of Independent School’ Federation of India -Vs-
Union of India & another, in Civil Appeal No. 8162 of 2012, on
29.08.2022, wherein the Apex Court upheld the constitutional validity
of the amendment to Section 2(e) of the Payment of Gratuity
(Amendment) Act, 2009 and insertion of Section 13A, upholding the
10
amendment with retrospective effect (from 3rd April, 1997) to make the
benevolent provisions equally applicable to teachers and to bring
equality and give fair treatment to the teachers.
29. In the case of Associated Management of Government Recognized
English Medium School in Karnataka (Regd.) and Ors. -vs- Union of
India & Ors., Hon’ble High Court of Karnataka at Bangaluru in
W.P.No.26263 of 2011 (L-PF), on 13.02.2024, after referring to
Paragraph 19,20,25 and 26 of the Civil Appeal No. 8162 of 2012 in the
case of Independent School’ Federation of India -vs- Union of India
& another (Supra), on 29.08.2022, the Supreme Court held:-
―The constitutional validity of the amendment to Section
2(e) of PG (Amendment) Act, 2009, having been upheld by
the Apex Court with retrospective effect, the petitioner –
management to make payment to the employees/teachers
as is available under the provisions of the Payment of
Gratuity Act, 1972, in accordance with Law, within a
period of four weeks from the date of receipt of this order.”
30. Finally the respondent no.1 submits that the St. Thomas High School
Staff Welfare Scheme which was formulated in the year 1993 is in force
till date. The document annexed by the petitioner is a Trust Deed drawn
up in the year 2007, when admittedly the notification dated 3-4-1997
had been published and the document has been drawn up keeping in
mind the said notification but no where in the Scheme or the
Agreement, it is mentioned that the calculation of gratuity will be made
with effect from 3-4-1997 and the rule followed by the petitioner in
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disbursing Gratuity to other Employees in the past should be applicable
in the case of the Deponent and there is no scope for the petitioner to
discriminate between the members of the Scheme.
31. The petitioner in the affidavit-in-reply to the said affidavit-in-opposition
has reiterated their case as stated in the writ application.
32. The petitioner’s further case in the affidavit-in-reply is that the authority
concerned failed to appreciate that the petitioner institute was not
covered from the date when the Payment of Gratuity Act was enacted
and enforced rather the educational institutes were brought under
coverage of the Payment of Gratuity Act in the year 1997 by virtue of the
notification dated 03.04.1997 without any retrospective operation, and
as such calculation being made from the year 1990 makes the entire
process bad in law and not tenable in the eye of law.
33. It is that by virtue of the notification dated 03.04.1997, the employees
working in the Educational institute including the respondent no.1 are
entitled to gratuity under the provisions of the Payment of Gratuity Act,
1972 from the date i.e. 03.04.1997, without having any retrospective
operation of the notification, so question of calculation from 1990
cannot and/or does not arise at all.
34. The petitioner on affidavit has denied that the resolution passed in the
meeting dated 09.09.2017 was never communicated to the employees of
the school. It is stated that the said resolution was duly put up on the
notice board of the school for information of all.
35. It is further stated that the LIC authorities, in respect of query as to the
current status of Master Policy being no. 212500, replied that the
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current status of policy is “Paid Up”. A paid-up policy refers to a
situation in which the policy holder no longer pays further premiums
but retains certain reduced coverage or benefits. Thus, it is evident that
the said policy is not continued and/or renewed by the petitioner
school, as opposed to the claims made by the respondent no.1.
36. The petitioner denies that the respondent’s gratuity has not been
calculated.
37. It is further stated that the petitioner was brought under coverage of the
Act in the year 1997 by virtue of the notification dated 03.04.1997
without any retrospective effect, and as such the calculations being
made from 1990 is bad, illegal and unlawful. The amendment brought
in the Act was misinterpreted and the applicability of the Act was
imposed upon the petitioner from 1990 in a stereotype and mechanical
manner.
38. It is the case of the petitioner that the respondent no.1 having refused to
receive gratuity as per the Act is not entitled to get gratuity on and from
01.04.2021.
39. On filing written notes it is argued on behalf of the petitioner that the
petitioner is a School i.e., an Educational Institution and as such was
out of the purview of Payment of Gratuity Act till 01.04.1997.
Educational establishments as a class were brought under the coverage
of the Act from that day.
40. It is submitted that the respondent no. 1 joined the service on
20.06.1990 and resigned from the post on 07.12.2020, but was released
by the petitioner on 01.03.2021. On release, the respondent no.1 she
13
was offered gratuity in terms of the Act but she refused to accept the
same claiming higher amount.
41. The petitioner initially had a scheme in the name of “St. Thomas High
School Staff Welfare Scheme” for payment of higher amount of gratuity,
which was made effective from 01.11.2007. The said scheme
prescribed for payment of 20 days salary for each completed year of
service subject to maximum of 24 months salary.
42. The aforesaid scheme had been withdrawn by the petitioner by a
resolution dated 09.09.2017, w.e.f. 01.04.2018.
The reason for such withdrawal was financial stringency by
reason of larger number of employees (teachers) coming within the fold
of coverage under the Act of 1972; and thus increasing the gratuity
liability of the establishments.
43. The Controlling Authority vide order dated 20.07.2023 disposed of the
matter by directing the petitioner to make payment of gratuity for 30
years, amounting to Rs. 8,64,329/- plus simple interest @10%.
44. Both petitioner as well as respondent no. I preferred statutory appeal
before the Appellate Authority. (Pg.76-114 of WPA). The School preferred
appeal on the ground that the period of service prior to 01.04.97 ought
not to be counted for the purpose of considering the length of service of
the employee.
The appeal preferred by the employee was on the ground that the
scheme of the school (which had been withdrawn) ought to be applied.
45. The Appellate Authority vide order dated 21.02.2025 modified the order
of the Controlling Authority by keeping the period of applicability of Act
14
from the date of appointment of the respondent no.1 as well as
computing the gratuity in terms of the non existing scheme, thereby
enhancing the rate of wage and calculating the same on basis of 20 days
wages instead of 15 days wages.
46. It is stated that the service imparted prior to 03.04.1997 may be taken
into consideration for the purpose of determining the qualifying service/
period of the employees under the Act only. The same cannot be
construed to their entitlement of gratuity from the date of their
appointment prior to 03.04.1997.
Reliance is placed on (2024) 14 SCC 667 (Para 24)
Independent Schools Federation of India-Vs-Union of India and
Another.
47. The appellate authority failed to appreciate that on the date of
superannuation of the employee, the scheme of the school had
ceased to exist, and a dead scheme could not have seen as revived by
the Appellate Authority.
48. The petitioner also relies upon the judgement of the Supreme Court in
the case of Independent Schools’ Federation of India (supra).
Paragraphs 11, 18, 19 and 24 are quoted below:-
“11. On 26-11-2007, the Payment of Gratuity
(Amendment) Bill, 2007, was introduced in
Parliament seeking to amend the definition of the
word “employee” and thereby rectify the error or
lacuna identified by this Court in Ahmedabad Pvt.
Primary Teachers’ Assn. [Ahmedabad Pvt. Primary
Teachers’ Assn. v. Ahmedabad Municipal Corpn., (2004) 1
SCC 755 : 2004 SCC (L&S) 306] The Object and Reasons,
as stated and obvious, were to extend the benefit of
15gratuity to teachers of private educational institutions. The
Bill was referred to the Standing Committee on 10-12-
2007. After due deliberations and in-depth consideration,
the Standing Committee deemed it appropriate to suggest
changes vide the 26th Standing Committee Report. The
report, on the aspect of grant of gratuity to teachers with
effect from 3-4-1997 states:
―36. … The Committee feel that implementing the law from
the year 2004 will cause irreparable loss to a large
number of teachers of the country, particularly to those
who have already retired. The Committee, therefore, called
upon the Government to make the law applicable with
retrospective effect i.e. from the date of notification in
the year 1997. This will provide the needed succour as
well as justice to all those affected persons who were
denied their rightful benefits due to some technical
flaw/legal lacuna in the definition of the term ―employee‖
as contained in Section 2(e) of the Payment of Gratuity Act,
1972.‖
18. The second ground is again devoid of any merit and
substance. The legislature, vide the Amendment Act,
2009, has given retrospective effect to the amended
provision of Section 2(e) and the newly inserted Section
13-A with effect from 3-4-1997, which is also the date of
the notification issued by the Government under Section
1(3)(c), making the PAG Act applicable to the educational
institutions with ten or more employees. The amendment
enforces and gives effect to what was intended by the
notification, but could not be achieved on account of the
technical and legal defect. The lacuna, a distortion in the
language that had the unwitting effect of leaving out
teachers, has been rectified so as to achieve the object
and purpose behind the issuance of the notification,
making the PAG Act applicable to all educational
institutions. The argument of the educational institutions
that they have been taken by surprise is incorrect and
unacceptable as the legislation had cured the inadvertent
defect in a statute, as pointed out by this Court, through
legislative repair. Private schools, when they claim a
vested right arising from the reason of defect, should not
succeed, for acceptance would be at the expense of
teachers who were denied and deprived of the intended
16benefit. Marginal inconvenience in the form of financial
outgo or difficulty is of little weight, when curing of an
inadvertent defect is made retrospectively in greater public
interest, which consideration will overrule the interest of
one or some institutions. [ See para 69 in Ujagar Prints
(2) v. Union of India, (1989) 3 SCC 488 : (1989) 179 ITR
317 : (1989) 74 STC 401.] We find little merit in this
argument also for the reason, that the observations of this
Court in Ahmedabad Pvt. Primary Teachers’
Assn. [Ahmedabad Pvt. Primary Teachers’
Assn. v. Ahmedabad Municipal Corpn., (2004) 1 SCC 755 :
2004 SCC (L&S) 306] in para 26 were sufficient to indicate
that a legislation should intervene to grant the benefit of
gratuity to teachers. The contention that the private
schools were sure to succeed as to deny the teachers the
benefit of Notification No. S-42013/1/95-SS.(II) dated 3-4-
1997, is questionable and farfetched to be accepted. The
challenge was contested and had remained pending
before the High Courts and then this Court. The private
schools had relied on some judgments of this Court, but
these judgments have interpreted the word ―employee‖
under other enactments. The law is subject to uncertainty
ex-ante when two or more views are possible, but there
may be certainty ex-post litigation in view of the law of
precedents, which reduces uncertainty.
19. A secondary argument on behalf of the private
educational institutions that they would be liable to pay
gratuity for a period of service prior to 3-4-1997, and,
therefore, the amendments are unconscionable and
tyrannous, is equally fallacious for several reasons. A
somewhat similar controversy had arisen in Goodyear
(India) Ltd. v. K.G. Devessar [Goodyear (India) Ltd. v. K.G.
Devessar, (1985) 4 SCC 45 : 1985 SCC (L&S) 936] ,
wherein the employee was in service from 24-1-1961 to
31-12-1974. On 16-9-1972, the date when the PAG Act
came into effect, he was drawing a salary of more than Rs
1000 per month and hence, in terms of the then definition
of the word ―employee‖ under the PAG Act, which
excluded those drawing salary of more than Rs 1000 per
month, as per the employer management, the employee
was not entitled to gratuity. Rejecting the contention, this
Court held that the gratuity is payable to an employee as
17per the mandate of Section 4 [ ―4. Payment of
gratuity.–(1) Gratuity shall be payable to an employee
on the termination of his employment after he has
rendered continuous service for not less than five years–
(a) on his superannuation, or(b) on his retirement or
resignation, or(c) on his death or disablement due to
accident or disease:Provided that the completion of
continuous service of five years shall not be necessary
where the termination of the employment of any employee
is due to death or disablement:Provided further that in the
case of death of the employee, gratuity payable to him
shall be paid to his nominee or, if no nomination has been
made, to his heirs, and where any such nominees or heirs
is a minor, the share of such minor, shall be deposited
with the controlling authority who shall invest the same
for the benefit of such minor in such bank or other
financial institution, as may be prescribed, until such
minor attains majority.Explanation.–For the purposes of
this section, disablement means such disablement as
incapacitates an employee for the work which he was
capable of performing before the accident or disease
resulting in such disablement.(2) For every completed year
of service or part thereof in excess of six months, the
employer shall pay gratuity to an employee at the rate of
fifteen days’ wages based on the rate of wages last
drawn by the employee concerned:Provided that in the
case of a piece-rated employee, daily wages shall be
computed on the average of the total wages received by
him for a period of three months immediately preceding
the termination of his employment, and, for this purpose,
the wages paid for any overtime work shall not be taken
into account:Provided further that in the case of an
employee who is employed in a seasonal establishment
and who is not so employed throughout the year, the
employer shall pay the gratuity at the rate of seven days’
wages for each season.Explanation.–In the case of a
monthly rated employee, the fifteen days’ wages shall be
calculated by dividing the monthly rate of wages last
drawn by him by twenty-six and multiplying the quotient
by fifteen.(3) The amount of gratuity payable to an
employee shall not exceed such amount as may be
notified by the Central Government from time to time.(4)
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For the purpose of computing the gratuity payable to an
employee who is employed, after his disablement, on
reduced wages, his wages for the period preceding his
disablement shall be taken to be the wages received by
him during that period, and his wages for the period
subsequent to his disablement shall be taken to be the
wages as so reduced.(5) Nothing in this section shall affect
the right of an employee to receive better terms of gratuity
under any award or agreement or contract with the
employer.(6) Notwithstanding anything contained in sub-
section (1),–(a) the gratuity of an employee, whose
services have been terminated for any act, wilful omission
or negligence causing any damage or loss to, or
destruction of, property belonging to the employer, shall be
forfeited to the extent of the damage or loss so caused;(b)
the gratuity payable to an employee may be wholly or
partially forfeited–(i) if the services of such employee
have been terminated for his riotous or disorderly conduct
or any other act of violence on his part, or(ii) if the services
of such employee have been terminated for any act which
constitutes an offence involving moral turpitude, provided
that such offence is committed by him in the course of his
employment.‖(7) ***] of the PAG Act, after he has rendered
continuous service for not less than 5 years on his
superannuation, retirement or resignation or on his death
or disablement due to accident or disease, when such
event has occurred post the enforcement of the PAG Act.
The Court rejected the submission on behalf of the
employer, management that an employee is entitled to
gratuity only when, both on the date when the PAG Act
came into force, and on the date when the employee
retired, he/she was drawing wages not exceeding Rs
1000 per month. The Court observed that to approve the
submission of the employer, management would render a
whole class of workers, who were during the course of
their employment drawing salary less than Rs 1000 per
month but on the eve of their retirement were getting
wages of Rs 1000 per month, without the benefit of
gratuity. This could not have been the intention of
Parliament. The reasonable way to construe Section 4 in
the light of Section 2(e) of the PAG Act would be to hold
that when the employees’ services are terminated for any
19
reason mentioned in Section 4 after coming into force of
the PAG Act, the employee would be entitled to the
payment of gratuity if he has rendered continuous service
for not less than 5 years and for that period during which
he satisfied the definition of ―employee‖ under Section
2(e). It does not matter whether that period comes before
the commencement of the PAG Act. Once that condition is
satisfied, the next and only question would be regarding
the amount of gratuity payable.
24. The provisions of the PAG Act, even post the
retrospective amendments, will apply only to those
teachers who were in service as on 3-4-1997, and at
the time of termination have rendered service of not
less than 5 years. The period of 5 years may be
partly before 3-4-1997, as the date on which the
person was employed does not determine the
applicability of the PAG Act. The date of termination
of service, in the form of superannuation,
retirement, or resignation, or death or disablement
due to accident or disease, should be post the
enforcement date, which in the present case is 3-4-
1997. The entire length of service, including the
service period prior to 3-4-1997, is to be counted for
the purpose of computing the entitlement condition
of 5 years of service. This is the correct effect of the
ratio and decision in Goodyear [Goodyear (India)
Ltd. v. K.G. Devessar, (1985) 4 SCC 45 : 1985 SCC
(L&S) 936] and the decisions explaining retroactive
effect of a statute. This legal position would be
equally true and correct when the PAG Act was first
enforced with effect from 16-9-1972, and when
Notification No. S-42013/1/95-SS.(II) under Section
1(3)(c) of the PAG Act was issued and enforced with
effect from 3-4-1997. It would be the position in case
of all notifications issued under Section 1(3)(c) of the
PAG Act, unless a contrary intention is expressed,
which is not the situation in the present case and
thus need not be examined.”
20
49. In her written notes the respondent no.1 has argued on the points as
stated in the affidavit-in-opposition. The respondent no.1 has relied
upon the following judgments:-
i) Beed District Central Co-operative……Vs. State of
Maharashtra & Ors., AIRONLINE 2006 SC 238, on 29th
September, 2006 (Paragraphs 4 and 5).
ii) Bch Electric Limited Vs. Pradeep Mehra, on 29th April, 2020.
The said judgment has been relied upon by the Appellate
Authority (Paragraphs 23, 24 & 25).
50. Finally the learned counsel for the State and the respondent herein have
all relied upon the judgement in the case of Independent Schools’
Federation of India (supra).
51. The petitioner has further relied upon the following judgments:-
(i) The Workmen of M/s. Firestone Tyre & Rubber Co. of
India (Pvt.) Lt. Vs. The Management & Ors., (1973) 1
SCC 813, (Paragraphs 55 and 63)
(ii) Property Company Private Limited Vs. Rohinten Daddy
Mazda, (2026) 4 SCC 1, (Paragraphs 145 & 147).
52. From the materials on record, it appears that the petitioner school’s
staff welfare scheme came into effect on 01.11.2007 by way of a deed of
trust dated 20.11.2007.
53. The said scheme was withdrawn by a resolution dated 09.09.2017 of
the petitioner’s educational society, made effective 01.04.2018.
54. In between by way of an amendment to Section 2(e) of the Payment of
Gratuity (Amendment) Act, 2009 and insertion of Section 13A, the
21
payment of gratuity act was made applicable with effect from 3rd April,
1997 to the teachers of educational institution.
55. Section III, under “benefits” in the trust deed, a member was entitled
to:-
―Upon retirement of a member on or after Normal
Retirement date or upon death whilst in service after
Normal Retirement Date or upon retirement owing to ill-
health or incapacitation, the benefits payable will be equal
to twenty days salary for each completed year of service
subject to a maximum of 24 months’ salary or such higher
amount to be prescribed from time to time through
amendment in the payment of Gratuity act, 1972.‖
56. The respondent Basabi Chowdhury joined the institution on 20.06.1990
and was released from duties on 1st March, 2021.
57. The respondent in WPA 12300 of 2025, Minakshey Roy joined the
institution on 15.06.1987 and retired on 30.06.2020.
58. The Controlling Authority vide an order dated 20.07.2023 disposed of
the matter by directing the petitioner to make payment of gratuity for 30
years, amounting to Rs. 8,64,329/- plus simple interest @10%.
59. The Appellate Authority vide order dated 21.02.2025 modified the order
of the Controlling Authority by keeping the period of applicability of Act
from the date of appointment of the respondent no.1 as well as
computing the gratuity in terms of the non existing scheme, thereby
enhancing the rate of wage and calculating the same on basis of 20 days
wages instead of 15 days wages (Pg. 128 to 130 of WPA).
22
60. The petitioner states that the service imparted prior to 03.04.1997 may
be taken into consideration for the purpose of determining the qualifying
service / period of the employees under the Act only. The same cannot
be construed to their entitlement of gratuity from the date of their
appointment even before 03.04.1997.
61. The appellate authorities order is challenged on the ground that on the
date of superannuation of the employee, the scheme of the school had
ceased to exist, and a dead scheme could not have seen revived by the
Appellate Authority. Law is well settled that a decision has to be taken
on the basis of the law existing as on the date decision.
62. The petitioner relies upon the judgment in:-
(i) The Supreme Court in Independent Schools’ Federation of
India (supra), held:-
“24. The provisions of the PAG Act, even post the
retrospective amendments, will apply only to those
teachers who were in service as on 3-4-1997, and at
the time of termination have rendered service of not
less than 5 years. The period of 5 years may be
partly before 3-4-1997, as the date on which the
person was employed does not determine the
applicability of the PAG Act. The date of termination
of service, in the form of superannuation,
retirement, or resignation, or death or disablement
due to accident or disease, should be post the
enforcement date, which in the present case is 3-4-
1997. The entire length of service, including the
service period prior to 3-4-1997, is to be counted for
the purpose of computing the entitlement condition
of 5 years of service. This is the correct effect of the
ratio and decision in Goodyear [Goodyear (India)
Ltd. v. K.G. Devessar, (1985) 4 SCC 45 : 1985 SCC
(L&S) 936] and the decisions explaining retroactive
effect of a statute. This legal position would be
23equally true and correct when the PAG Act was first
enforced with effect from 16-9-1972, and when
Notification No. S-42013/1/95-SS.(II) under Section
1(3)(c) of the PAG Act was issued and enforced with
effect from 3-4-1997. It would be the position in case
of all notifications issued under Section 1(3)(c) of the
PAG Act, unless a contrary intention is expressed,
which is not the situation in the present case and
thus need not be examined.”
(ii) In The Workmen of M/s. Firestone Tyre & Rubber Co. of India
(Pvt.) Ltd. Vs The Management and Ors. (Supra), the Supreme
Court held:-
“55. Miss Indra Jai Singh, learned Counsel for the
appellant workmen, in Civil Appeal No. 1461 of 1972,
advanced the main arguments in this regard. Mr
Deshmukh appearing for the workmen in the other
appeals, adopted her arguments. According to the learned
Counsel, Section 11-A applies not only to references,
which are made on or after December 15, 1971, but also
to all references already made and which were pending
adjudication on that date. It is pointed out that Section 11-
A has been incorporated in Chapter IV of the Act dealing
with procedure, powers and duties of authorities.
According to them, Section 11-A deals with matters of
procedure. Applying the well known canon of
interpretation, procedural laws apply to pending
proceedings also. No right, much less any vested right, of
the employers has been taken away or affected by Section
11-A. Considerable stress has been laid on the use of the
expressions ―has been referred‖ occur in Section 11-A, as
conclusively indicating the applicability of the section even
to disputes already referred. It was stressed that even
assuming that an employer has a right to adduce evidence
for the first time before the Tribunal, that right enures to
him only after the Tribunal had adjudicated upon the
validity of the domestic enquiry. It cannot be characterised
even as a right, much less a vested right, because it is
contingent or dependent upon the Tribunal’s adjudication
on the domestic enquiry. The Tribunal, when it
24adjudicates a dispute on or after December 15, 1971, has
to exercise the powers conferred on it by Section 11-A,
even though the dispute may have been referred prior to
that date. Hence it is clear that the section applies even to
all proceedings pending adjudication on December 15,
1971.
63. It must be stated at this stage that procedural law has
always been held to operate even retrospectively, as no
party has a vested right in procedure. In our opinion, the
principle stated in In re: Athlumney Ex
parte Wilson [(1898) 2 QB 547] are more apposite to the
case on hand. The question arose regarding the
construction to be placed upon Section 23 of the
Bankruptcy Act, 1890. The said section was as follows:
―Where a debt has been proved upon a debtor’s estate
under the principal Act, and such debt includes interest, or
any pecuniary consideration in lieu of interest, such
interest or consideration shall, for the purposes of
dividend, be calculated at a rate not exceeding five per
centum per annum, without prejudice to the right of a
creditor to receive out of the estate any higher rate of
interest to which he may be entitled after all the debts
proved in the estate have been paid in full.‖‖
(iii) In Property Company Private Limited vs Rohinten Daddy
Mazda (Supra), the Supreme Court held:-
―145. Moreover, one another significant aspect in B.K.
Educational Services [B.K. Educational Services (P)
Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633 :
(2018) 5 SCC (Civ) 528 : (2019) 212 Comp Cas 1] was
that, as on 1-6-2016, NCLT was already empowered
under Section 433 of the 2013 Act to apply the provisions
of the 1963 Act. This power of NCLT was said to apply
even when NCLT decided applications under Sections 7
and 9 of the IBC, 2016, respectively. The same is evident
from the observation in B.K. Educational Services [B.K.
Educational Services (P) Ltd. v. Parag Gupta & Associates,
(2019) 11 SCC 633 : (2018) 5 SCC (Civ) 528 : (2019) 212
Comp Cas 1] that : (SCC p. 649, para 21)
25―21. Given the fact that the ―procedure‖ that would apply
to NCLT would be the procedure contained inter alia in the
Limitation Act, it is clear that NCLT would have to decide
applications made to it under the Code in the same
manner as it exercises its other jurisdiction under the
Companies Act.‖
147. This issue may be viewed at from one another angle.
It is no more res integra that limitation being a procedural
law, a change in law in that regard applies
retrospectively. However, this general principle has certain
exceptions : (a) the new law of limitation providing for a
longer period cannot revive a dead remedy; and (b) the
new law of limitation cannot suddenly extinguish a vested
right of action by providing for a shorter period of
limitation.‖
63. The respondents rely upon:-
a) Beed District Central Co-operative……Vs. State of
Maharashtra & Ors.(Supra), the Court held:-
―………….Applying the `Golden Rule of Interpretation of
Statute’, to us it appears that the question should be
considered from the point of view of the nature of the
scheme as also the fact that the parties agreed to the
terms thereof. When better terms are offered, a
workman takes it as a part of the package. He
may volunteer therefor, he may not. Sub-Section (5)
of Section 4 of the 1972 Act provides for a right in
favour of the workman. Such a right may be exercised
by the workman concerned. He need not necessarily do
it. It is the right of individual workman and not
all the workmen. When the expression “terms” has
been used, ordinarily it must mean “all the terms of
the contract”. While interpreting even a beneficent
statute, like, Payment of Gratuity Act, we are of the
opinion that either contract has to be given effect to or
the statute. The provisions of the Act envisage for
one scheme. It could not be segregated. Sub-
Section (5) of Section 4 of the 1972 Act does not
contemplate that the workman would be at liberty
to opt for better terms of the contract, while
keeping the option open in respect of a part of the
statute. While-reserving his right to opt for the
26beneficent provisions of the statute or the agreement,
he has to opt for either of them and not the best of
the terms of the statute as well as those of the
contract. He cannot have both. If such an
interpretation is given, the spirit of the Act shall be lost.
Even in Shin Satellite (supra), this Court stated :
“The proper test for deciding validity or otherwise of an
agreement or order is “substantial severability” and not
“textual divisibility”. It is the duty of the court to sever
and separate trivial or technical parts by retaining the
main or substantial part and by giving effect to the atter
if it is legal, lawful and otherwise enforceable. In such
cases, the court must consider the question whether the
parties could have agreed on the valid terms of the
agreement had they known that the other terms were
invalid or unlawful. If the answer to the said question is
in the affirmative, the doctrine of severability would
apply and the valid terms of the agreement could be
enforced, ignoring invalid terms. To hold otherwise
would be “to expose the covenanter to the almost
inevitable risk of litigation which in nine cases out of ten
he is very ill-able to afford, should he venture to act
upon his own opinion as to how far the restraint upon
him would be held by the court to be reasonable, while
it may give the covenantee the full benefit of
unreasonable provisions if the covenanter is unable to
face litigation.”
It is significant that in the event the amount of gratuity
is calculated at the rate of 26 days’ salary for every
completed year of service, vis-a-vis, 15 days5 salary
therefor, the tenure of an employee similarly situate will
vary. Whereas in the former case an employee may
receive the entire amount of gratuity while working for a
lesser period, in the latter case an employee drawing
the same salary will have to work for a longer period.
We are, therefore, of the opinion that the workman
cannot opt for both the terms. Such a construction
would defeat the purpose for which Sub-Section (5)
of Section 4 has been enacted…………..‖
b) In Bch Electric Limited Vs. Pradeep Mehra (Supra), the
Supreme Court held:-
27
“23. In Beed District Central Cooperative Bank
Ltd. 4, the gratuity scheme provided by the employer
had better rate for computing gratuity but the ceiling
limit was lower; whereas the entitlement under the
provisions of the Act was at a lesser rate but the ceiling
prescribed by the Act was higher than what was
provided by the employer. This Court laid down that
an employee must take complete package as
offered by the employer or that which is available
under the Act and he could not have synthesis or
combination of some of the terms under the
scheme provided by the employer while retaining
the other terms offered by the Act. That was a
situation where two alternatives were available to
the employee. The High Court in the present case,
however, distinguished said decision on the ground that
the Scheme of the appellant ―itself provided for the rates
as per Section 4(2) of the Act but without upper limit
under Section 4(3) of the Act‖. In our view, the High
Court failed to consider the effect and impact of Rule
6(b) of the scheme. The Single Judge did refer to said
Rule 6(b) but found that the Rule was so broadly
drafted that it could not be construed to contemplate the
ceiling limit under Section 4(3) of the Act. In our view,
the true import of Rule 6(b) which gets further
emphasized by Civil Appeal No.2379 of 2020 (arising
out of SLP (C) NO.5269 of 2019) BCH Electric Limited
Vs. Pradeep Mehra stipulation in the Appendix to the
Scheme was lost sight of by the authorities under the
Act and by the High Court. If an employee is covered by
the provisions of the Act, according to said Rule 6(b), the
amount of gratuity has to be calculated in accordance
with the provisions of the Act. The Appendix to the
Scheme reiterates the same principle. Thus, in case of
such an employee the gratuity has to be calculated in
accordance with the provisions of the Act and while so
calculating, not only the basic principle available
in Section 4(2) as to how the gratuity is to be calculated
must be applied but also the ceiling which is part
of Section 4(3) must also apply. The rates and the
modalities of calculations of gratuity as available under
the Scheme of the Rules are to apply only to those
employees who are not covered by the provisions of the
Act.‖
28
c) In Jagat Taran Education Society vs State of U.P. and Ors.,
in Writ C No. 35662, 35624, 36878 of 2022, decided on 17
February, 2023, the Allahabad High Court held:-
“8. The Controlling Authority vide his impugned
order held that the teachers were ”employees’ as
defined under Section 2(e) of the Act, 1972 and
that the gratuity payable to the teachers had to
be computed on their entire length of service, i.e.,
their service from the date of their initial
appointment till the date of their retirement
which included the extended period of service.
………………………”
Admittedly the amendment of 2009, made the act
applicable to teachers from 1997. As such prior to 1997, the
teachers were not covered under the Act and as such could
not paid gratuity as per the Act prior to 1997. The help of the
now non-existent scheme cannot be taken into
consideration, for the period prior to 1997 as in view of Beed
District (Supra) and Bch Electric (Supra), gratuity benefit
could only be taken under any one of the provisions, being
either the/a scheme or the PGA Act. In this case, the scheme
having been withdrawn, only the PGA Act will apply.
d) The judgment in Independent Schools’ Federation of India
(Supra) is also relied upon by the respondents, to the extent that
the Apex Court upheld the constitutional validity of the
amendment to
Section 2(e) of the PGA Act 2009 (Amendment Act) and also to the
extent of Section 13A, upholding the amendment with
29
retrospective effect to make the benevolent provisions equally
applicable to teachers and to bring equality and give fair
treatment to the teachers.
e) The Jabalpur Bench of Madhya Pradesh in Shri Umesh Kumar
Rahangdale & Ors. Vs M.P. State Cooperative Bank Ltd. &
Ors., in Writ Petition No. 3459 of 2021, decided on 19th
February, 2024, the Court held:-
―4. Reliance is placed on the judgment of Hon’ble
Supreme Court in the case of Punjab State
Cooperative Agricultural Development Bank
Limited Vs. Registrar, Cooperative Societies and
others, Civil Appeals Nos.297-98 of 2022 (Arising
out of SLP(C) No.1940-1941 of 2020 reported in
(2022) 4 SCC 363 wherein the ratio of the
judgment is culled out in para-47, Hon’ble
Supreme Court has held that “the exposition of
the legal principles culled out is that an
amendment having retrospective operation which
has the effect of taking away the benefit already
available to the employee under the existing rule
indeed would divest the employee from his vested
or accrued rights and that being so, it would be
held to be violative of the rights guaranteed
under Articles 14 and 16 of the Constitution.”
5. In this backdrop, Hon’ble Supreme Court has
held that amendment will be prospective and not
retrospective.
13. Petitioners had opted for continuation of their
payment of gratuity as per the Service Rules and
now by the impugned order (Annexure-P/9),
that benefit which had already accrued in favour
of the petitioners is sought to be withdrawn. Law
in this behalf is crystal clear as laid down in the
case of Chairman, Railway Board and others Vs.
C.R. Rangadhamaiah and others (supra), (1997) 6
SCC 623 and Bank of Baroda and another Vs. G.
Palani and others, (2023) 5 SCC 612 wherein it is
held that “once the benefit has accrued, it cannot
be withdrawn retrospectively”.‖
30
f) The Punjab State Cooperative Agricultural Development
Bank Ltd. Vs The Registrar, Cooperative Societies & Ors., in
Civil Appeal No(s). 297-298 of 2022, (arising out of SLP (Civil)
No(s). 1940-1941 of 2020), decided on January 11, 2022, the
Supreme Court held:-
“47. The exposition of the legal principles culled out is
that an amendment having retrospective operation
which has the effect of taking away the benefit
already available to the employee under the existing
rule indeed would divest the employee from his vested
or accrued rights and that being so, it would be held to
be violative of the rights guaranteed under Articles
14 and 16 of the Constitution.
50. For the sake of illustration, if a person while
entering into service, has a legitimate expectation that
as per the then existing scheme of rules, he may be
considered for promotion after certain years of
qualifying service or with the age of retirement which
is being prescribed under the scheme of rules but at a
later stage, if there is any amendment made either in
the scheme of promotion or the age of superannuation,
it may alter other conditions of service such scheme of
rules operates in futuro. But at the same time, if the
employee who had already been promoted or fixed in
a particular pay scale, if that is being taken away by
the impugned scheme of rules retrospectively, that
certainly will take away the vested/accrued right of
the incumbent which may not be permissible and may
be violative of Article 14 and 16 of the Constitution.
55. In our view, nonavailability of financial resources
would not be a defence available to the appellant
Bank in taking away the vested rights accrued to the
employees that too when it is for their socioeconomic
security. It is an assurance that in their old age, their
periodical payment towards pension shall remain
assured. The pension which is being paid to them is
not a bounty and it is for the appellant to divert the
resources from where the funds can be made available
to fulfil the rights of the employees in protecting the
vested rights accrued in their favour.‖
64. Thus in the present case:-
31
(i) The “St Thomas High School Staff Welfare Scheme” was made
effective from 01.11.2007.
(ii) It was withdrawn w.e.f. 01.04.2018.
(iii) The PGA Act became applicable to the teachers from 03.04.1997
by way of amendment of the Act of 2009.
65. Thus in view of the observation in Beed District Central Co-
operative……Vs. State of Maharashtra & Ors.(Supra), the
respondents are entitled to only one of the options being under the PGA
Act, as it cannot be segregated, more so when admittedly the (trust)
scheme provided by the school was no more in existent on the respective
dates, the respondents retired.
66. Herein two alternatives were not available to the employee, as the
school scheme, however more beneficial, was no more in existence
when the respondents retired, when only the PGA was applicable to
them, since 1997. Thus the question of option, in the present, does not
arise.
67. In Independent Schools’ Federation of India (supra), the Court
held:-
“24. The provisions of the PAG Act, even post the
retrospective amendments, will apply only to those
teachers who were in service as on 3-4-1997, and at the
time of termination have rendered service of not less than
5 years. The period of 5 years may be partly before 3-
4-1997, as the date on which the person was
employed does not determine the applicability of the
PAG Act. The date of termination of service, in the form of
superannuation, retirement, or resignation, or death or
disablement due to accident or disease, should be post
32the enforcement date, which in the present case is 3-
4-1997. The entire length of service, including the service
period prior to 3-4-1997, is to be counted for the purpose
of computing the entitlement condition of 5 years of
service. This is the correct effect of the ratio and decision
in Goodyear [Goodyear (India) Ltd. v. K.G. Devessar,
(1985) 4 SCC 45 : 1985 SCC (L&S) 936] and the decisions
explaining retroactive effect of a statute. This legal position
would be equally true and correct when the PAG Act was
first enforced with effect from 16-9-1972, and when
Notification No. S-42013/1/95-SS.(II) under Section 1(3)(c)
of the PAG Act was issued and enforced with effect from
3-4-1997. It would be the position in case of all
notifications issued under Section 1(3)(c) of the PAG Act,
unless a contrary intention is expressed, which is not the
situation in the present case and thus need not be
examined.‖
68. The said judgment is very clear that any period prior to 1997, can be
counted only for computing the entitlement condition and nothing else.
69. Thus considering the view of the Supreme Court in Independent
Schools’ Federation of India (Supra), Beed District Central Co-
operative……Vs. State of Maharashtra & Ors.(Supra) and Bch
Electric Limited Vs. Pradeep Mehra (Supra), the judgment of Madhya
Pradesh High Court in Shri Umesh Kumar Rahangdale & Ors.
(Supra) with all humility does not apply in the present case.
70. Accordingly the respondents:-
(a) Basabi Chowdhury is entitled to gratuity from 3rd April, 1997 to 1st
March, 2021.
(b) Minakshey Roy is entitled to gratuity from 3rd April, 1997 to
30.06.2020 along with interest @ 6% till payment, as per the provisions
of Payment of Gratuity Act, 1972 and it’s amendments dated 2009.
33
71. The impugned orders dated 20.07.2023 and 01.04.2024 and 21.02.2025
and 21.03.2025 passed by the controlling authority and the appellate
authority respectively are modified accordingly.
72. WPA 9438 of 2025 with WPA 12300 of 2025 are disposed of.
73. Applications, if any, connected thereto stand disposed of consequently.
74. Interim order, if any, stands vacated.
75. Photostat certified copy of this Judgment, if applied for, be given to the
parties on priority basis upon compliance of all formalities.
(Shampa Dutt (Paul), J.)
