Supreme Court holds aided‑school teachers covered by State Pension Rules; directs DCRG payment with interest on indemnity

A bench of Justices Sudhanshu Dhulia and K. Vinod Chandran heard a special leave petition by a son claiming death‑cum‑retirement gratuity (DCRG) after his mother, an aided‑school teacher, died while in service. The appeal challenged concurrent orders rejecting a claim under the Payment of Gratuity Act, 1972 and raised the question whether gratuity for aided‑school employees should be governed by the Act of 1972 or by the Maharashtra Civil Services (Pension) Rules, 1982.

The Court allowed the petition with modifications and clarified that aided‑school teachers whose pay, allowances and service conditions were regulated by the State were to be governed by the Rules of 1982 rather than the Payment of Gratuity Act in the facts of the case. The Court noted that comparison of the two schemes must be made “in toto” and that, on the scheme and benefits, the Rules of 1982 were more beneficial for dependents where death occurred before five years’ service. The Court, in its reasoning, observed: “We are of the opinion that the aided school teachers who are governed by the service conditions brought out by the State Government are also covered under the Rules of 1982. The extent of application as per the Rule 2(a) of the Rules of 1982 specifically makes it applicable to: ‘Any person for whose appointment and conditions of employment special provision is made by or under any law for the time being in force’. There can hence be no dispute raised on the applicability of the Rules of 1982, insofar as aided school teachers are concerned whose pay and allowances and service conditions are regulated by the Government.” The Court directed that the petitioner could approach the first respondent with an application for payment under the Rules of 1982 together with a notarised undertaking to indemnify the Government and the managing society, and ordered that the petitioner “shall also be paid simple interest @ 7% per year, starting from one month of the date of death of the employee, till the date of payment.”

Background

The petitioner was the son of a teacher at an aided girls’ high school who died while in service. He claimed gratuity as a legal heir under the Payment of Gratuity Act, 1972; the original authority, appellate authority and the High Court rejected the claim, holding that the teacher’s service conditions brought her within benefits under the Rules of 1982 framed under Article 309 of the Constitution and that she did not hold a post “under” the State Government for the limited purpose of exemption under the Act. The petitioner relied on Birla Institute of Technology v. State of Jharkhand (2019) to contend that teachers were eligible under the Act and argued that no specific exemption for Maharashtra aided schools had been made. The State urged that aided‑school employees received pay, allowances and pensionary benefits administered by the Government and that DCRG was payable under the Rules of 1982.

The authorities had also questioned the documentary basis of the petitioner’s claim, including competing claims by the deceased’s husband, who was alive though the petitioner said the couple were estranged. The Court held that “a mere estrangement would not disentitle the husband from the benefits due to the family of a deceased employee,” but recorded that payment to a nominee or one legal heir operated in trust for other legal heirs and absolved the employer from proving all heirs’ shares. Applying sub‑section (5) of Section 4 of the Gratuity Act, the Court observed that where employees had rights to better terms under another scheme or law, Section 4 would be inapplicable, and compared the computation of gratuity under the Act and under the Rules of 1982, finding the latter more beneficial on death prior to completion of five years. The Court therefore allowed the petition, directed the petitioner to file an application with the first respondent along with a notarised indemnity affidavit, and ordered expeditious payment with 7% simple interest from one month after death until payment. The Special Leave Petition was allowed and pending applications were disposed of.

Case Details: Case No.: 2025 INSC 824 (Special Leave Petition (C) No.19436 of 2024) Case Title: Vikram Bhalchandra Ghongade v. The Headmistress Girls High School and Junior College, Anji (Mothi), Tah. and Distt. Wardha & Ors. Appearances: For the Petitioner(s): Vikram Bhalchandra Ghongade (in person) For the Respondent(s): Learned Government Advocate (for State); representatives of the respondents as per record