Holding

Under the Grant-in-Aid pension scheme, the liability to pay retiral benefits rests with the State Government and cannot be shifted to the private college, irrespective of the employee's misconduct.

Summary

The private college Nutan Bharti Gram Vidyapith, which receives grant-in-aid from the Gujarat Government, challenged a High Court order directing it to pay retiral benefits to a former lecturer dismissed for misconduct. The lecturer was dismissed in 1994, reinstated by an appellate authority in 2000, and later superannuated, after which the High Court ordered the college and the State to pay his retiral dues. The college argued that under the Grant-in-Aid pension scheme, liability for pension lies solely with the State and that the college should not be burdened despite the employee's misconduct. The Supreme Court examined the scheme's provisions and held that there is no exception allowing the State to shift the liability to the institution. It further found that the college's litigation after reinstatement does not justify denying the employee his pension rights. Consequently, the Court set aside the High Court's review order, allowed the college's review, and held the State liable to pay the retiral benefits.

Issues considered

Whether a private college covered under a grant-in-aid scheme is liable to pay retiral benefits to its employee under the scheme.
Whether the employee's misconduct and the college's challenge to the reinstatement order can exempt the college from liability for pension under the scheme.

Subjects

Liability of private college to pay retiral benefits to employeeGrant-in-aid scheme of the State GovernmentRetiral benefitsMisconductReinstatementDismissalPunishmentBack wagesReview petitionsPensionary benefitsDiscipline in the institution

Judgment

[2024] 12 S.C.R. 366 : 2024 INSC 935

Nutan Bharti Gram Vidyapith
v.
Government of Gujarat and Anr.
(Civil Appeal No(s). 13958-13959 of 2024)
02 December 2024
[J.K. Maheshwari and Rajesh Bindal,* JJ.]

Issue for Consideration
Issue arose as regards the liability of the appellant-private college
covered under the grant-in-aid scheme of the State Government,
to pay retiral benefits to the respondent-employee.

Headnotes†
Service law – Retiral benefits – Liability of the
appellant-private college covered under the grant-in-aid
scheme of the State Government, to pay retiral benefits to the
respondent-employee – Respondent dismissed from service
on account of misconduct – Challenge to – Respondent
directed to be reinstated as the dismissal was found to be an
extreme punishment by the appellate authority – High Court
upheld the order of reinstatement since the respondent had
already superannuated, however directed the appellant to
pay back wages to the extent of 75% – In appeal, back wages
granted to the respondent set aside, however, the appellant
and the State directed to pay retiral dues to the respondent –
Thereagainst, the review petitions filed wherein the appellant
directed to pay the retiral dues – Correctness:
Held: Appellant is an institution entitled to Grant-in-Aid and the
employees thereof are entitled to pensionary benefits in terms
of the said Scheme – State directing the reinstatement of the
Respondent no. 2 cannot be fatal for the Appellant and burden it
with the retiral benefits of Respondent no. 2 whereas the Scheme
provides for otherwise – No exception provided in the Scheme
to enable the State to deny payment of retiral benefits to an
employee of the Grant-in-Aid Institution under certain circumstances
and shift the burden on the institution – There were serious
charges against the Respondent no. 2 which included inter alia
instigation of students to go on strike, improper behaviour with the
co-employees, attempt to pollute the atmosphere in the institution,
* Author
[2024] 12 S.C.R. 367

Nutan Bharti Gram Vidyapith v. Government of Gujarat and Anr.

violation of rules and regulations of the institution and involvement
in the activities which may cause damage to the institution – After
inquiry, with a view to maintain discipline in the institution, it was
found appropriate that the Respondent no. 2 be dismissed from
service – However, appellate authority found that the punishment
of dismissal too harsh and the issues could have been resolved
by way of discussion – Appellant, keeping in view the discipline
in the institution, thought it appropriate to challenge the same – In
such circumstances, it cannot be opined that it’s conduct was such
that it should be burdened with the retiral benefits of delinquent
employee – It cannot be said that the action taken by the appellant
against the Respondent no. 2 was without jurisdiction – Impugned
order passed by the High Court set aside – State to pay retiral
dues to Respondent no. 2. [Paras 13-16]

Case Law Cited
Educational Society, Tumsar and Others v. State of Maharashtra
and Others (2016) 3 SCC 512 : 2016 SCC Online SC 93 –
distinguished.

List of Keywords
Liability of private college to pay retiral benefits to employee;
Grant-in-aid scheme of the State Government; Retiral benefits;
Misconduct; Reinstatement; Dismissal; Punishment; Back wages;
Review petitions; Pensionary benefits; Discipline in the institution.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 13958-13959
of 2024
From the Judgment and Order dated 26.07.2022 and 21.04.2023 of
the High Court of Gujarat at Ahmedabad in LPA No. 1456 of 2010
and MCA (for review) No. 1 of 2022 respectively

Appearances for Parties
Nikhil Goel, Sr. Adv., Mrs. Taruna Singh Gohil, Alapati Sahithya
Krishna, Ms. Hetvi Patel, Ms. Navin Goel, Ms. Siddhi Gupta,
Advs. for the Appellant.
Bhashkar Tanna, Sr. Adv., Ms. Swati Ghildiyal, Ms. Devyani Bhatt,
Ms. Dharita Malkan, Alok Kumar, Dhruva Kumar, Ms. Khushboo
Aakash Sheth, Advs. for the Respondents.
368 [2024] 12 S.C.R.

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Judgment / Order of the Supreme Court

Judgment

Rajesh Bindal, J.

1. Leave granted.
2. The Private College1 covered under the Grant-in-Aid scheme of the
State Government has filed the present appeal impugning the orders
passed by the High Court2 dated 26.07.20223 and 21.04.2023.4
3. At the time of hearing, the learned senior counsel appearing for
the appellant submitted that he only wishes to press the claim
regarding liability of the appellant-college to pay retiral benefits to
the respondent-employee.
4. Briefly noticed, the facts are that the respondent no.2 was appointed
as lecturer by the appellant. On account of certain misconduct, he
was issued a chargesheet on 07.08.1993. After inquiry, he was
dismissed from service on 06.06.1994.
4.1. Aggrieved by the dismissal, the respondent no. 2 preferred
an appeal to the Joint Director of Higher Education (appellate
authority). The said appeal was dismissed as not maintainable
vide order dated 15.11.1994.
4.2. By order dated 20.03.1996, in an application5 filed by the
respondent no. 2 before the High Court, his appeal before the
Joint Director of Higher Education was held to be maintainable
and the same was directed to be heard by appellate
authority-respondent no. 1. The appeal was allowed vide order
dated 21.08.1996.
4.3. Aggrieved against the aforesaid order, the appellant preferred
an application6 before the High Court where the above said
order was set aside and the matter was directed to be heard

1 Nutan Bharti Gram Vidyapith
2 High Court of Gujarat at Ahmedabad
3 Letters Patent Appeal Number 1456 of 2010
4 Miscellaneous Civil Application (for Review) Number 01 of 2022
5 Special Civil Application Number 12822 of 1994
6 Special Civil Application No. 7111 of 1996
[2024] 12 S.C.R. 369

Nutan Bharti Gram Vidyapith v. Government of Gujarat and Anr.

afresh vide order dated 07.10.1996. Thereafter vide order dated
02.03.2000, the appeal filed by the private respondent was
allowed by appellate authority. He was directed to be reinstated
as the dismissal was found to be an extreme punishment.
5. The appellant challenged the aforesaid order before the High Court
by filing an application.7 The Learned Single Judge vide order dated
30.06.2010, noticing the fact that the private respondent had already
superannuated, upheld the order of reinstatement passed in the
aforesaid appeal. However, the High Court directed the appellant
to pay back wages to the extent of 75%. The aforesaid order was
challenged by the appellant by filing Letters Patent Appeal.8 Vide
order dated 26.07.2022, the appeal was disposed of while passing
the following directions:
“Private respondent No. 2 would not be entitled for any
backwages as ordered by learned Single Judge.
Services of the private respondent No.2 shall be treated
as continuous service from the date of his appointment
till date of his superannuation. Private respondent shall
be entitled for all the retiral benefits of his employment.
All the benefits shall be granted to the private respondent
No. 2 by the appellant as well as by the State authority
within a period of eight weeks from the date of receipt of
this order along with interest, as per the prevailing policy
in such cases.
If the amount is not paid within a period of eight weeks,
the appellant as well as respondent authority shall pay
the entire amount along with interest at the rate of 9%
per annum till it is actually paid.”
6. A perusal of the aforesaid direction shows that the back wages
granted to the respondent no. 2 were set aside and the appellant as
well as the State were directed to pay retiral dues to the respondent
No. 2. Aggrieved against the aforesaid order, the State as well as

7 Special Civil Application Number 4357 of 2000
8 Appeal No. 1456 of 2010
370 [2024] 12 S.C.R.

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the appellant filed Review Petitions.9 The review filed by the State
was allowed vide order dated 21.04.2023 and it was directed that
the appellant shall be liable to pay the retiral dues. The order as
modified is extracted below:
“7. We do recollect that the parties – the appellant
University and the employee (original respondent No. 2)
have agreed for such order and, therefore, the order
was passed directing to grant benefits to the employee.
However, through oversight, we have observed appellant
as well as respondent – State shall be liable to pay the
amount. Hence, we hereby modify the order. Paragraphs 6
sub-para (3) and (4) shall read as under:
“All the benefits shall be granted to the private respondent
No.2 by the appellant within a period of eight weeks from
the date of receipt of today’s order along with interest, as
per the prevailing policy in such cases.
If the amount is not paid within a period of eight weeks, the
appellant shall pay the entire amount along with interest
at the rate of 9% per annum till it is actually paid”.”
7. Aggrieved against the aforesaid modification, where the direction
has been issued to the appellant to pay retiral dues to the private
respondent, the college is before this Court.
8. Learned counsel appearing for the appellant submitted that the
order passed by the High Court is not in consonance with the
Scheme10 applicable for grant of retiral dues to an employee of an
aided institution. The relevant paragraph of the Scheme applicable
is extracted below:
“11. The pension papers of the members of the staff entitled
to pension, gratuity, etc. under the scheme should be
prepared in case of Gram Vidyapeeth staff by the Principal
of the Gram Vidyapeeth on the basis of service record
maintained by the Gram Vidyapeeth concerned. The entries

9 Miscellaneous Civil Application Number 01 of 2022 and Miscellaneous Civil Application Number 01
of 2023
10 Pension Scheme for the teaching/ non-teaching staff in the Gram Vidyapeeth, Government of Gujarat,
Education Department, Resolution Number GUS/1089-5369/B Sachivalaya, Gandhinagar dated
13.07.1990
[2024] 12 S.C.R. 371

Nutan Bharti Gram Vidyapith v. Government of Gujarat and Anr.

in the service book of the staff will be made and attested by
the Principal of Gram Vidyapeeths and in case of Principal,
by the management of the Gram Vidyapeeth concerned and
such entries should be verified by the Director of Higher
Education of the officer authorized by him and a certificate
of verification recorded in the service books. The Director
of Higher Education should sanction the pension, gratuity,
etc. and forward the pension completed to the Director of
Pension and Provisions Fund. The pension, gratuity, etc.
so sanctioned will be payable from the Government
Treasurers. The Director of pension and Provident Fund
will produced be clean and issue a pension payment order
and/or gratuity payment order on the Treasury, from which
the pensioner illegible pension gratuity, under intimation
to Director of Higher Education.”
9. Learned counsel argued that the aforesaid Paragraph 11 of the
Scheme provides that the liability to pay pension is on the State
Government. The direction given by the High Court in the order
passed in the Review Application is not in consonance with the
aforesaid provisions. Hence, the same be set aside and the State
should be held liable to pay retiral dues to the respondent no. 2.
10. On the other hand, learned counsel for the State submitted that the
conduct of the appellant is to be seen before putting any liability
with the State to pay retiral dues to an employee. It is a case in
which the respondent no. 1/appellate authority vide order dated
02.03.2000 directed reinstatement of the respondent no. 2. However,
thereafter the college continued litigating, raising frivolous grounds,
as a result of which, the State is now sought to be burdened with
liability to pay pension to the respondent no. 2, who had not actually
worked for the requisite period. More than two decades have passed
thereafter and during this period, respondent no. 2 attained the
age of superannuation. In support, reliance has been placed upon
judgment of this Court in Educational Society, Tumsar and Others
vs. State of Maharashtra and Others.11
11. Learned counsel appearing for respondent no. 2 supported the
argument raised by learned counsel for the appellant while stating

11 (2016) 3 SCC 512 : 2016 SCC Online SC 93
372 [2024] 12 S.C.R.

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that in terms of the laws applicable to the appellant, being Grant-in-
Aid Institution, the duty to pay retiral dues lies with the State, which
cannot escape it’s liability.
12. Heard learned counsel for the parties and perused the paper book.
13. It is not a matter of dispute that the appellant is an institution entitled
to Grant-in-Aid and the employees thereof are entitled to pensionary
benefits in terms of the aforesaid Scheme. The only argument raised
by the learned counsel for the State is regarding conduct of the
appellant in fighting litigation after the State had directed reinstatement
of the respondent no. 2 and finally settling the matter before the High
Court. In our opinion, the same cannot be fatal for the appellant and
burden it with the retiral benefits of respondent no. 2 whereas the
Scheme provides for otherwise. There is no exception provided in the
Scheme to enable the State to deny payment of retiral benefits to an
employee of the Grant-in-Aid Institution under certain circumstances
and shift the burden on the institution.
14. The judgment relied upon by the State may not have application
in the facts of the case, wherein it was found that the action of
the Education Institution was without jurisdiction, transgressing its
power to terminate its employee. If the facts of the present case
are concerned, no such finding has been recorded by the appellate
authority. There were serious charges against the respondent no. 2
which included inter alia instigation of students to go on strike,
improper behaviour with the co-employees, attempt to pollute the
atmosphere in the institution, violation of rules and regulations of the
institution and involvement in the activities which may cause damage
to the institution. Out of 30 charges, 10 were proved. After inquiry,
with a view to maintain discipline in the institution, it was found
appropriate that the respondent no. 2 be dismissed from service.
However, the appellate authority found the charges established to
be trivial in nature and opined that those should have been sorted
out. The appellate authority found that the punishment of dismissal
is too harsh and the issues could have been resolved by way of
discussion.
15. The appellant, keeping in view the discipline in the institution, thought
it appropriate to challenge the same. In such circumstances, it cannot
be opined that it’s conduct was such that it should be burdened
with the retiral benefits of delinquent employee. It is not the opinion
[2024] 12 S.C.R. 373

Nutan Bharti Gram Vidyapith v. Government of Gujarat and Anr.

of the appellate authority or any Court that the action taken by the
appellant against the respondent no. 2 was without jurisdiction as
was the case in Educational Society, Tumsar and Others (supra).
16. For the reasons mentioned above, the appeals are allowed. The
impugned order dated 21.04.2023 passed by the High Court,
allowing the Review Application filed by the State and dismissing the
Review Application filed by the appellant, is set aside. The Review
Application filed by the appellant is allowed. As a consequence, the
order dated 26.07.2022 is modified. The consequence thereof is
that the State, respondent no. 1 shall be liable to pay retiral dues
to respondent no. 2.

Result of the case: Appeals allowed.

†
Headnotes prepared: by Nidhi Jain