Labour Law II Assignment

Sub: Case Analysis –

INDEPENDENT SCHOOLS’ FEDERATION OF INDIA (REGD.)

v.
UNION OF INDIA AND ANOTHER
2022 LiveLaw (SC) 719

Submitted By,
Jash C James
Roll No. 39
5/7th B.B.A, LL.B

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 Table of Contents

Contents

Table of Contents ..................................................................................2

BACKGROUND ...................................................................................3

PROVISION OF LAW .......................................................................4

ISSUES INVOLVED ............................................................................5

ANALYSIS OF ISSUES .......................................................................6

DECISION ............................................................................................8

CONCLUSION .....................................................................................9

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 BACKGROUND

In April 1997, the Central Ministry of Labour and Employment notifies

that the PAG Act’s requirements applicable to educational institutions

with ten or more employees. According to the statute, the private

schools had to provide gratuities to their staff members which are

defined as educational institutions with 10 or more employees. In 2004,

the Supreme Court ruled in Ahmedabad Private Primary Teachers’

Association v. Administrative Officer & Ors., that teachers were not

considered “workers” as defined by the act since they were not engaged

in manual, supervisory, managerial, administrative, technical, or

clerical labour wherein the private schools claimed that teachers who

work in educational institutions or schools does not comes under the

ambit of Section 2(e) of the PAG Act.

However, as a result of a later amendment to the Act, Teachers are

included under the ambit of the definition of employees.

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PROVISION OF LAW

Apparently, multiple petitioners approached the apex court to contest

the constitutional legality of the Payment of Gratuity (Change) Act of

2009’s amendment to Section 2(e) and the addition of Section 13A.

The educational institutions had filed Appeal by filing Special Leave

Petition before the Hon’ble Supreme Court. The Hon’ble Supreme

Court in Civil Appeal No. 8162 of 2012 decided on 29 August 2022

in the case of Independent Schools Federation of India (Regd.) vs.

Union of India and another and other connected Appeals and Writ

Petitions.

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 ISSUES INVOLVED

The two main grounds of challenge raised and considered in this matter

can be summarised as:

(a) Whether the legislation vide the Amendment Act 2009

overrules the judicial decision in Ahmedabad Private Primary

Teachers’ Association (supra) and violates the doctrine of

separation of powers?

(b) Whether the retrospective amendments are unreasonable,

excessive and harsh, and therefore, unconstitutional?

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 ANALYSIS OF ISSUES

The first issue was analyzed and observed that the object and

purpose of the Notification No. S-42013/1/95-SS.(II) was

catalyzed as the legislation in question rectifies the infirmities and

defects pointed out by the Court through the amended clause (e)

to Section 2, defining the word “employee” and the newly

inserted Section 13A with retrospective effect from 3rd April

1997. Further, opined that the legislature can amend the language

of the provision that was the subject matter of the court decision,

and such an amendment does not overrule the court decision.

Moreover, the earlier decision in Ahmedabad Private Primary

Teachers’ Association by the Court had interpreted the PAG Act,

as it then existed in the statute and when the legislature acts within

its conferred power to bring in a valid law even after a court ruling

to rectify a legal mistake, the legislature exercises its

constitutional power to enact the law does not overrule an earlier

court decision and thus, the doctrine isn’t violated.

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In the second issue, the legislature, vide the Amendment Act,

2009, given retrospective effect to the amended provision of the

Act enables the PAG Act applicable to the educational

institutions with ten or more employees which thereby enforces

and gives effect to what was intended by the notification, which

was not achieved on account of the technical and legal defect.

The court observed that the issue is devoid of merit that the

Ahmedabad Private Primary Teachers’ Association (supra)

indicated that a legislation should intervene to grant the benefit of

gratuity to teachers.

Another argument on behalf of the private educational institutions

was whether they would be liable to pay gratuity for a period of

service prior to 3rd April 1997. On reliance with the case of

Management of Goodyear India Limited. v. Shri K.G. Devessar

where somewhat similar controversy had arisen, held that the

gratuity is payable to the employee.

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 DECISION

The court held that the power to amend includes the power to

amend the statute with retrospective effect is not confined and

restricted to any particular type of statutes, and is also a

constitutional power vested within the legislature,

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.

In light of the aforementioned observations, the Supreme Court

mandated that private schools comply with the PAG Act’s

requirements and thus, within six weeks teachers’ and

employees’ shall be paid gratuities together with interest.

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 CONCLUSION

The subject matter of the case deals with the scope of definition of

“Employee” in the Payment of Gratuity Act, 1972. The amendment

with retrospective effect to make the provisions equally applicable to

teachers brought equality and give fair treatment to the teachers. In this

case, the apex court enshrined that even after a court ruling, when the

legislature acts within its power to bring in a valid law and rectify a

legal error, the legislature exercises its constitutional power to enact the

law and does not overrule an earlier court decision and the power to

amend the statute with retrospective effect, is a constitutional power

vested with the legislature, which is not confined and restricted to any

particular type of statutes.

Furthermore, it brought a distinction between retroactive effect and

retrospective operation. The Retrospective statute operates backwards

and takes away vested rights accrued under law whereas, The

retroactive statute does not operate retrospectively, but it operates in

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future, albeit it does not become retrospective in operation when the

operation is based on the character and status that arose earlier.

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