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IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH

1. LPA No.920 of 2012 (O&M)

DATE OF DECISION: October 01, 2012

Arya College Rishi Dayanand Marg, Civil Lines, Ludhiana and another …..Appellants

versus

State of Punjab and others .....Respondents

2. LPA No.1158 of 2012 (O&M) Managing Committee, S.G.G.S. Khalsa College, Mahilpur

(Hoshiarpur) and another

…..Appellants versus

Santokh Singh and others

.....Respondents

3. LPA No.1044 of 2012 (O&M) Kanya Maha Vidalaya, Jalandhar City

…..Appellant versus

State of Punjab and others

.....Respondents

4. LPA No.1043 of 2012 (O&M) Managing Committee, Dev Samaj College for Women, Ferozepur City

and another



.....Respondents

5. LPA No.1318 of 2012 (O&M) J.C. DAV College, Dasuya and another

LPA-920-2012 & connected appeals - 2 -

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Partap Singh and others

.....Respondents

6. LPA No.1317 of 2012 (O&M) D.A.V. College Managing Committee, Chitra Gupta Road, Delhi and

another


Ashok Kapoor and others

.....Respondents

7. LPA No.1010 of 2012 (O&M) Lyallpur Khalsa College, Jalandhar and another



.....Respondents

8. LPA No.1196 of 2012 (O&M) D.A.V. College, Bathinda and another


Rajnish Kumar and others

.....Respondents

9. LPA No.661 of 2012 (O&M) Hindu College, Amritsar and another



.....Respondents

10. LPA No.1210 of 2012 (O&M) Managing Committee GTB National College, Dakha District Ludhiana

and another


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.....Respondents

11. LPA No.1184 of 2012 (O&M) Managing Committee, SD College for Women and another



.....Respondents

12. LPA No.1185 of 2012 (O&M) DM College Managing Committee, Moga and another



.....Respondents

13. LPA No.1204 of 2012 (O&M) PMN College Managing Committee, Rajpura and another



.....Respondents

14. LPA No.1197 of 2012 (O&M) B.B.K. DAV College for Women, Amritsar


Smt. Sudesh Nanda and others

.....Respondents

15. LPA No.1045 of 2012 (O&M) Doaba College Managing Committee, Jalandhar City and another



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.....Respondents

16. LPA No.1198 of 2012 (O&M) D.A.V. College, Amritsar


D.K. Chohan and others

.....Respondents

17. LPA No.1199 of 2012 (O&M) Kharati Ram Mohindru D.A.V. College, Nakodar


Satish Chander and others

.....Respondents

18. LPA No.1200 of 2012 (O&M) Hans Raj Mahila Mahavidhyala, Jalandhar


Smt. Raj Gandhi and others

.....Respondents

19. LPA No.1201 of 2012 (O&M) D.A.V. College, Jalandhar


A.K. Rawal and others

.....Respondents

20. LPA No.1202 of 2012 (O&M) S.L. Bawa D.A.V. College, Batala


Narinder Lal and others


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.....Respondents

21. LPA No.1203 of 2012 (O&M) D.A.V. College Managing Committee, Chitra Gupta Road, New Delhi


Satish Chander and others

.....Respondents

CORAM:- HON'BLE MR.JUSTICE A.K. SIKRI, CHIEF JUSTICE

HON’BLE MR. JUSTICE RAKESH KUMAR JAIN, JUDGE Present: Mr.Rajdeep Singh Cheema, Advocate for the appellants in LPA Nos.1196 to 1203, 1317 and 1318 of 2012, Mr.J.S. Puri, Addl. Advocate General, Punjab Mr.Rajinder Goyal, Advocate for respondent No.3 in LPA-

1044-2012, for respondents No.3 & 5 to 10 in LPA-1045-2012, for respondent No.3 in LPA-1197-2012 and for respondents No.1 to 44 in LPA Nos.1196,1198,1199, 1200, 1201, 1202 and 1203 of 2012

Mr.Puneet Jindal, Advocate for the respondents in LPA

Nos.1010, 1184,1185,1043 and 1204 of 2012 Mr.R.D. Anand, Advocate for respondents in LPA Nos.1317 and 1158 of 2012 Mr.Vipul Jindal, Advocate for respondent No.11 in LPA No.1204 of 2012 Mr.Amrit Paul, Advocate for respondent No.4 in LPA-

1044-2012 and for respondent No.11 in LPA-1045-2012 .. A.K. SIKRI, C.J.:

Delay condoned.

Having regard to the commonality of facts as well as

legal issues raised in these appeals, they are taken up together and,


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after hearing the learned counsel for the parties, we proceed to

dispose of the same in the following manner.

All the appellants in these appeals are various colleges

and educational institutions (hereinafter referred to as “the non-

Government colleges”) which are privately-managed but affiliated to

the Panjab University. They are aided educational institutions

receiving grant-in-aid from the State Government under the Grant-

in-Aid Scheme. As per that Scheme, aid to the extent of 90% is

provided by the State which includes payment of salary i.e. pay and

allowances except the House Rent Allowance. In terms of Para 12.3

of the Panjab University Calendar, Chapter-VIII (E) (Volume-I), 10%

of this pay and allowances is to be shared by the non-Government

colleges.

Private respondents in all these appeals are the teachers

except few non-teaching staff. They had joined their services with

the non-Government colleges during the period 1972 to 1976. They

have all since retired from service on their retirement. These

teachers/staff had received an amount of Rs.3.5 lakhs each as

gratuity as per the then existing pay scales.

The State of Punjab implemented the revision of the Fifth

Punjab Pay Commission regarding pension and other retiral benefits

for those employees who had retired on or after 1.1.2006. Circular

in this behalf was issued on 17.8.2009 giving effect from 1.1.2006.

As a consequence, pay scales of teachers and equivalent cadres

were revised by the State Government of all employees working in


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the university and colleges with effect from 1.1.2006 vide

notification dated 2.9.2009.

It is not in dispute that these teachers/staff, who had

since retired, also became entitled for the benefit provided under

Circular dated 17.8.2009 read with notification dated 2.9.2009. For

according this benefit to these retired teachers/staff, the Panjab

University had sent communication to all the Principals of these non-

Government colleges, inter alia, mentioning that the maximum limit

of retirement-cum-death gratuity had been increased from `3.5

lakhs to `10 Lakhs which was made applicable from 1.1.2006.

Since these private respondents were not given benefit

of the aforesaid regulations and notification, they approached this

Court. Spate of writ petitions came to be filed by these persons.

Apart from seeking payment of enhanced gratuity from `3.5 lakhs to

`10 Lakhs, they also claimed leave encashment and arrears of pay

which, according to them, had become payable on the revision of

pay scales.

It is not in dispute that so far as these teaching and non-

teaching staff members are concerned, they are entitled to these

benefits. Therefore, insofar as relief claimed by the private

respondents in those writ petitions was concerned, there was hardly

any contest by the appellants-non-Government colleges, which are

supposed to contribute 10% of the salary and other allowances

except House Rent Allowance. The controversy, however, took a

curious turn, - Pehle Aap, Pehle Aap (you first). Whereas, the plea of


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non-Government colleges was that it is the State of Punjab which

should pay its share of grant-in-aid to enable these colleges to give

the aforesaid benefits to the private respondents, plea of the State

of Punjab was that in the first instance it was the obligation of these

non-Government colleges, to pay to their staff and thereafter claim it

from the State as that could be claimed only in the event of ‘deficit’.

The learned Single Judge weighed its scales in favour of

the State of Punjab giving direction to the appellant-colleges to

make the payment at the first instance and only then become

entitled for reimbursement of the amount paid to the employees.

For taking this stance, reference is made to the judgment of the

Apex Court in Shri Anandi Mukta Sadguru Shree Muktajee

Vandasjiswami Suvarna Jayanti Mahotsav Samarak Trust v.

V. R. Rudani and others, AIR 1989 SC 1607, in which case, the

Supreme Court adopted similar approach in the following manner:-

“9. Having heard the counsel for both parties, we are left with an impression that the appellants are really trying to side-track the issue and needlessly delaying the legitimate payments due to the respondents. The question whether the State is liable to recompense the appellants in respect of the amount payable to the respondents was not considered by the High Court and indeed could not have been examined since the State was not a party to the proceedings. However, by the persuasive powers of the counsel in this Court, the State has been impleaded as a party in these appeals. Perhaps, this court wanted to find out the reaction of the State on the appellants' assertion for reimbursement. We heard counsel for the State. He disputes the appellants' claim. In fact, he challenges the claim on a number of grounds. He says that the State is under no obligation to pay the appellants as against the sum due to the


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respondents. We do not think that we need rule today on this controversy. It is indeed wholly outside the scope of these appeals. We are only concerned with the liability of the management of the college towards the employees. Under the relationship of master and servant, the management is primarily responsible to pay salary and other benefits to the employees. The management cannot say that unless and until the State compensates, it will not make full payment to the staff. We cannot accept such a contention.”

Aggrieved by the aforesaid direction of the learned Single

Judge directing these appellants to make the payment at the first

instance, they have filed these intra-court appeals. Submissions

before us remain same which were before the learned Single Judge.

As per these appellants, all these non-Government colleges are

charitable in nature, which are non-profit making organisations and,

therefore, it is not possible for them to meet such huge financial

obligations which have arisen because of the revision in pay scales

on the implementation of 5th Punjab Pay Commission report. It was

also highlighted that they had made repeated requests to the State

for releasing for its pie/share of the salary and all allowances except

House Rent Allowance and there was no reason for the State to

defer the same till payment is made by these appellants to the

private respondents.

Mr.Puri, learned Additional Advocate General appearing

on behalf of the State of Punjab, on the other hand, submitted that

the Grant-in-Aid Scheme does not automatically entitle these non-

Government colleges to get 90% from the State. It is a scheme of

reimbursement only and is applicable in case of deficit.


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Learned counsel appearing for the private respondents, on the

other hand, submitted that due to this infight between the non-

Government colleges and the State, the retired teachers and other

staff members were the sufferer, who are not getting their legitimate

dues. A fervent plea was, therefore, made to ensure that their leave

encashment, gratuity and arrears of pay, etc. are paid to them

without any further delay.

Before we deal with the respective contentions, it would

be necessary to take note of some decisions of this Court rendered

on earlier occasions, covering this very aspect, inasmuch as, it is not

the virgin territory we are treading. The directions contained in the

orders given earlier will enlighten the path and lead us to

appropriate decision which is required to be taken.

Such a situation had arisen even when the

recommendations of earlier pay commissions were implemented. A

Division Bench of this Court decided the issue in Hindu College

Governing Council and another vs. N.D. Malhotra and

another, 1993(1) RSJ 757.

“Since there is no dispute regarding the admissibility of benefit of Contributory Provident Fund which is to be calculated at the rate of 10% of the salary which has been termed to include pay and all allowances except the house rent allowance in terms of para 12.3 of the Panjab University Calendar Chapter VIII(E) Vol.1, the Court is of the opinion that the writ petition deserves to succeed. The Court is also of the opinion that respondent No.4 could not have withheld such a benefit from the petitioners on the ground of paucity of funds. It therefore directs respondent No.4 to release the amount due to the petitioners by calculating it in


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accordance with terms of Rule 12.3 para 2 forthwith and release these benefits to the petitioners within a period of two months from today. The respondent-State of Punjab shall reimburse this amount after such a payment has been made within a period of three months from the time when a claim for such a reimbursement is lodged with them. There shall be no deviation in making such payments by the respondents whether it is in the shape of payment to the petitioners in the first instance by respondent No.4 or in the shape of reimbursement by respondents No.1 to 4. The amount shall be released to the petitioners alongwith interest at the rate of 9% from the date when it became due. The other benefits such as leave encashment and gratuity which were released to the petitioners belatedly shall also carry interest at the rate of 9% p.a from the date when they were due till the date when the payment was made. The liability to pay the same would be of respondent No.4.”

[Emphasis added]

On the basis of the law laid down by the Supreme Court in Shri

Anandi Mukta’s case (supra), the Court held that gratuity cannot be

denied to the retiring teachers by the privately managed

Government aided schools on the plea that no aid has been

extended to them towards their liability on this count. The Court

also came to the conclusion that insofar as liability of payment of

gratuity by privately managed Government aided schools to their

teachers and employees is concerned, under the relevant university

calendar and ordinances, it was that of these colleges. The Court had

negated the contention that Government had the obligation to give

90% aid also towards meeting their liability for payment of gratuity

to their employees, holding that gratuity was not a part of salary

and, as per the Scheme of Grant-in-Aid, salary alone was payable.


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In the present context itself, the issue came up before a

learned Single Judge of this Court in Civil Writ Petition No.8774 of

2004 and Civil Writ Petition No.76 of 2006. Learned single Judge of

this Court passed a common judgment dated 06.07.2010 in those

cases. It was not disputed that the Contributory Provident Fund at

the rate of 10 per cent of the salary was to be on the entire salary

and not only on the basic pay. The only argument of the educational

institutions in the said cases was that the payment should have been

made by the State Government in the first instance and thereafter

the employees could be reimbursed by the management. The State

of Punjab had made a statement that there was no difficulty in

making the payment against the aforesaid benefit, but it is the

college which was required to make the payment in the first instance

and it could seek reimbursement thereof subsequently from the

State Government. It is this aspect which was determined by the

learned single Judge directing the college to make the payment, in

the first instance, relying upon the judgment of the Supreme Court

in Shri Anandi Mukta’s case (supra).

LPA No.792 of 2011 was preferred in Civil Writ Petition

No.76 of 2006 before a Division Bench of this Court by the college

titled as Arya College Management Committee and another vs. T.D.

Kohli and others (which was one of the appellants before us). In

another Civil Writ Petition, LPA No.519 of 2011, was preferred by

Anglo Sanskrit High School, Khanna Trust and Management Society.

This LPA was decided by a Division Bench vide detailed judgment


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dated 05.04.2011, which governed LPA No.792 of 2011, as well. In

LPA No.519 of 2011, the Division Bench of this Court affirmed the

order of the learned single Judge directing the college to make the

payment before recovering it from the State Government. The

Division Bench also held that leave encashment was part of “salary”

and, therefore, it was the liability of State to give grant-in-aid of that

component as well to the non-Government colleges. This order has

been challenged by the State of Punjab by filing different Special

Leave Petitions (SLPs) in the Supreme Court. In these SLPs, leave

has been granted and the Hon’ble Apex Court has passed stay order

dated 16.3.2012 to the effect that “In the meantime, the contempt

proceedings taken by the respondent No.1, shall remain stayed”

The position that emerges before us, in respect of the

claims preferred by the private respondents, is as follows:-

i) As far as gratuity is concerned, as per the Division Bench

judgment of this Court in Hindu College Governing

Council (supra), liability is that of these non-

Government colleges because of the reason that gratuity

is not a part of salary and, therefore, is not reimbursable

under the Grant-in-Aid Scheme. The learned counsel for

these appellants had argued that the legal provisions qua

payment of gratuity had undergone a change and it had

become obligation of the State to make contribution qua

this as well. However, that is not the controversy before

us. It is an inter se dispute between the non-


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Government colleges and the State of Punjab. These

appeals arise out of the writ petitions filed by the

teachers/staff claiming enhanced dues of gratuity which

have become payable on enhancing the limit of gratuity

from Rs.3.5 lakhs to Rs.10 lakhs. Insofar as these

private respondents are concerned, there is no quarrel

that this gratuity is payable. Prima-facie, as per the

judgment of Division Bench in the case of Hindu

College Governing Council (supra), the liability is of

these appellants. Therefore, insofar as arrears on

account of gratuity payable to these private respondents

are concerned, it has to be paid by the appellants. We,

thus, direct the appellants to pay the amount of

enhanced gratuity to the private respondents and uphold

the order of the learned Single Judge on this aspect.

ii) As far as leave encashment is concerned, again amount

is payable to the private respondents on this account.

Whether it is a part of salary or not is an issue which

now is in the lap of the Apex Court. Though this Court

has held it to be a part of salary of which grant-in-aid is

payable by the State Government, that direction has

virtually been stayed by the Apex Court, by staying the

contempt proceedings. This dispute between the non-

Government colleges and the State Government cannot

be allowed as a shield for denying the payment to the


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private respondents, which is admittedly, due to them.

Whether it comes from the pocket of the appellants or

from the coffers of the State Government is not their

concern. Having regard to the dicta of Shri Anandi

Murti’s case (supra), we are of the opinion that the

appellants should meet this liability as well by making

payment to the private respondents without any further

ado, inasmuch as, the private respondents were the

employees of these appellant-colleges and, therefore,

having regard to the relation of master and servant

between them, the appellants cannot shy away from

their primary responsibility to pay this amount. It would,

however, be open to these non-Government colleges to

claim reimbursement from the State of Punjab in case

Division Bench judgment of this Court dated 5.4.2011 in

LPA No.519 of 2011 [Anglo Sanskrit High School Khanna

Trust and Management Society (Regd.), Khanna and Anr.

Vs. State of Punjab and others] is ultimately upheld by

the Supreme Court.

iii) Insofar as arrears of pay and allowances are concerned,

90% of these arrears are payable by the State

Government. To that extent, this liability could not be

denied by the State Government. It is not in dispute

that the amount payable under this head is very

substantial. The appellants are not supposed to run


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educational institutions with profit motives as education

is treated as a benevolent activity/noble profession and

not commerce or industry. (See Modern School v.

Union of India and others, (2004) 5 Supreme Court

Cases 583). No doubt, it is the primary obligation of the

appellants to make this payment to their teachers and

staff and State Government is supposed to reimburse the

same, as held by the Division Bench of this Hon’ble Court

on earlier occasions. In K.C. Sharma vs. State of

Punjab, (CWP No.3583 of 2007), following directions

dated 17.12.2010 were given by this Court:-

“(iii) The issue of revised pay has been dealt with in Suram Singh and Sadhu Singh (supra) and while in Suram Singh, (supra), a direction was issued that arrears of revision of pay scales will be given on receipt of grant from the State Government, in Sadhu Singh, (supra), it was directed that the State Government should release the grant. From the scheme of grant-in-aid, Annexure D3, it is clear that for pay and allowances, grant-in-aid has to be paid. From Annexure D4, circular of the Central Government dated 27.7.1998, the Central Government has provided financial assistance to the State Government who revised pay scales to the extent of 80% of the additional expenditure involved and the State Government were to meet the remaining 20% expenditure. The State of Punjab vide notification dated 24.3.1999, Annexure D5 revised the pay scales of Privately Affiliated Colleges in the State of Punjab at par with the Government Colleges w.e.f. 1.1.1996.

From the above, it is clear that liability to give arrears w.e.f. 1.1.1996 is of the State of Punjab and 95% aid has to be given by the State Government.


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Accordingly, we direct that leave encashment benefit be given by Respondent No.2-management of the College, irrespective of aid from the State, while arrears of pay be given by Respondent No.3-College within one month from the date of receipt of the aid from the State in that regard. The State of Punjab is directed to release benefits for the arrears within three months from today.”

It is also trite law that financial crunch of the State Government

cannot be a ground to deny the payments as held in CWP

No.10097 of 2000 titled as Sadhu Singh and 129 others vs.

State of Punjab and others, decided on August 07, 2002.

In this conspectus and having regard to the totality of

circumstances, we feel that ends of justice would be met by

prescribing the following modalities/procedure for payments qua

arrears of salary:-

(A) Within fifteen days from today, the appellants shall make

the calculations of the arrears of salary payable to the

private respondents and ascertain the share of the State

Government. Details of these calculations shall be

forwarded by the appellants to the State Government.

(B) The State Government shall examine veracity of those

calculations and ascertain its share as per Grant-in-Aid

Scheme and release it by making payment to the

educational institutions within two months from the

receipt of calculations from the appellants.


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(C) Within ten days of the receipt of grant-in-aid from the

State of Punjab, the amount under this head shall be

released to the private respondents.

It is made clear that this period is prescribed for making

the payment on account of arrears of pay. Insofar as payment of

gratuity and ‘leave encashment’ is concerned, that shall be paid by

the appellants to the private respondents within one month from

today.

Subject to the aforesaid modifications, order of the

learned Single Judge is upheld and appeals are disposed of on the

aforesaid terms.

No costs.

( A.K. SIKRI ) CHIEF JUSTICE

October 01, 2012 (RAKESH KUMAR JAIN) pc JUDGE

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