Are Teachers Absorbed From Panchayats Into State Service Entitled To Gratuity?: Madhya Pradesh High Court Answers

A bench of Justice Vivek Jain upheld that teachers transitioning from Panchayat roles to state service are entitled to gratuity under the Payment of Gratuity Act, 1972, and that their entire period of service including the years prior to formal absorption must be included when computing gratuity benefits.

The matter arose when a teacher who began his career in 2008 as a Shiksha Karmi Grade II under the M.P. Panchayat Shiksha Karmi (Recruitment and Conditions of Service) Rules, 1997, sought gratuity upon his retirement in 2020. Over time, he had been promoted to the positions of Adhyapak and later Madhyamik Shikshak. In 2018, the State issued the M.P. School Education Service (Teaching Cadre) Conditions and Recruitment Rules, 2018, which offered Panchayat teachers the option to migrate to the School Education Department. Heexercised this option and was absorbed into state service the same year.

However, upon his retirement in 2020, the State government refused to pay gratuity, claiming that since he had only served two years in state service post-absorption, he had not fulfilled the five-year service requirement stipulated under Rule 44 of the M.P. Civil Services (Pension) Rules, 1976. The State further argued that he did not qualify as an “employee” under Section 2(e) of the Payment of Gratuity Act, nor was the State an “employer” under Section 2(f), asserting that these definitions did not apply to Panchayat teachers or their roles post-absorption.

In response, the Controlling Authority directed the State to pay him gratuity amounting to ₹10,04,767. Aggrieved by this decision, the State filed a writ petition before the High Court.

The Court while dismissing the petition, rejected the State’s contention that his case was outside the scope of the Payment of Gratuity Act. The Court clarified that the exclusion from the definition of “employee” under Section 2(e) only applies if the employee is covered under another rule that provides for gratuity, which was not applicable in his case as his earlier Panchayat service was non-pensionable and not governed by any alternate gratuity scheme. Hence, the Act applied fully to him.

The Court also held that Rule 2(g) of the 1976 Pension Rules excluded only those government servants who were appointed after January 1, 2005, and were covered under the contributory pension scheme. Since he was absorbed into government service in 2018 and not originally appointed under the civil service rules, he could not be denied gratuity based on Rule 44 of the 1976 rules.

Further, the Court emphasized that gratuity and pension are distinct entitlements, relying on the Supreme Court’s ruling in M.P. Power Management Co. v. M.P. Vidyut Mandal Pensioners’ Association. It noted that gratuity is a statutory benefit conferred by the Payment of Gratuity Act and is not conditional upon eligibility for pension.

The Court clarified that while the rule disallowed pay-related benefits for the period before absorption into state service, it did not restrict statutory benefits like gratuity, which arise under central legislation and cannot be curtailed by state rules.

The High Court upheld the Controlling Authority’s direction to pay gratuity and dismissed the writ petition. The Court concluded that the entire service period, starting from his initial appointment in 2008, must be treated as continuous for gratuity purposes, and the State was obligated to honor his entitlement under the Payment of Gratuity Act, 1972.

Cause Title: The State of Madhya Pradesh & Ors. v. Shivnath Singh Kushwah & Ors.

Appearance:

Petitioners: Advocate Ravindra Dixit

Respondents: Advocates Suryabhan Singh Solanki and Sakshi Basnet