JAGDISH PRASAD SAINI & ORS. versus STATE OF RAJASTHAN & ORS.

Citation: [2022] 13 S.C.R. 463 · Decided: 26-09-2022 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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JAGDISH PRASAD SAINI & ORS.
v.
STATE OF RAJASTHAN & ORS.
(Civil Appeal No. 6953 of 2022)
SEPTEMBER 26, 2022
[UDAY UMESH LALIT, CJI AND S. RAVINDRA BHATT, JJ.]
Rajasthan Voluntary Rural Education Service Rules, 2010 –
rr.5, 10 – Rajasthan Non-Government Educational Institutions
(Recognition Grant-In-Aid and Service Conditions, Etc.) Rules,
1993 – rr.47, 82 – Rajasthan Non-Government Educational
Institutions Act, 1989 – ss. 2, 29 – Appellants were appointed
against sanctioned posts by fourth respondent-school, controlled
by fifth respondent trust (collectively “establishment”) –
Establishment discontinued receipt of grant-in-aid from the State –
In the meanwhile, 2010 Rules were brought into force by the State –
Appellants sought absorption with the State in accordance with the
rules, denied – Eventually, Supreme Court set aside the denial of
absorption of the appellants and directed their regularization –
However, their complaint of non-compliance with the respondent’s
obligation to pay leave encashment and gratuity for the period they
were in the aided establishment was not gone into, permitted to
agitate grievance before High Court – By impugned judgment High
Court has now held that since arrears of salary had been paid,
nothing more was to be done – On appeal, held: Salary includes
leave encashment – Further, 2010 Rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions – Condition in clause (viii) of r.5 i.e., bar on carry
forward of balance privilege leave and requiring employees to seek
encashment from their previous employer i.e., aided institutions, is
an arbitrary condition which cannot be enforced – Also, in the
present case, the management establishment was recipient of 70%
aid, in the form of grant – Thus, the State cannot shrug its part of
the responsibility to pay the appellants the share of leave encashment
benefits, and hide behind either r.5 (viii) or the undertaking executed
by them – Appellants entitled to privilege leave entitlement benefits,
to be paid by the State and management establishment in the ratio
[2022] S.C.R. 463
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SUPREME COURT REPORTS
[2022] 13 S.C.R.
of 70:30, respectively – Management also liable to pay gratuity to
the appellants – Impugned order set aside – Service Law.
Service Law – Leave encashment, if part of salary – Held:
Yes.
Allowing the appeal, the Court
HELD: 1.1 Non-government educational institutions in
Rajasthan are governed by the Rajasthan Non-Government
Educational Institutions Act, 1989 (“Act”) and the rules framed.
Section 2 (r) of the Act defines salary as “the aggregate of the
emoluments of an employee including dearness allowance or any
other allowance or relief for the time being payable to him but does
not include compensatory allowance”. Section 3 of the Act provides
for recognition of grant-in-aid institutions; Sections 4 to 6 of the
Act provide for the eventuality of refusal of recognition, withdrawal
of aid and the remedies for the institution. Section 7 of the Act
onwards are regulatory provisions requiring audit, recruitment,
orders of termination of teachers, provision of tribunal for
redressal of teachers’ grievances regarding dismissal or
termination, etc. Section 29 of the Act is relevant for the present
purposes. The relevant provisions of the 1993 Rules are Rules
47, and, pertinently, 82. Rule 47 deals with privilege leave. [Paras
14-16][472-D-E, G; 473-A, E]
1.2 As far as leave encashment dues are concerned, the
issue is no longer at large. In Senior Higher Secondary School
Lachhmangarh this court held that “salary” under the Act,
includes leave encashment. The reasoning therein is binding,
and conclusive as regards entitlement of the appellants to claim
leave encashment benefits. However, the State had urged that
by virtue of Rule 5 of the 2010 Rules, the employees who were
regularized could not claim these benefits. The 2010 Rules were
framed in exercise of powers under proviso to Article 309 of the
Constitution. Evidently, these rules were framed to enable the
absorption of employees and teachers of non-government aided
institutions. What is relevant for the purposes of this case is that
by Rule 5(viii), carry forward of existing privilege leave is denied;
likewise, the period of service in aided institutions is not to be
reckoned for the purpose of gratuity under Rule 5(ix). Every
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employee had to furnish an undertaking in the prescrib

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