Retiral Benefits Payment: Supreme Court’s Ruling on Pension Liability in Aided Institutions

The case of Nutan Bharti Gram Vidyapith vs. Government of Gujarat involves the payment of retiral dues to an employee who had been reinstated after dismissal. The employee, respondent no. 2, had been dismissed from service in 1994 but was reinstated by an order passed in 2000, with the appellant challenging the reinstatement. The case centers around whether the responsibility for paying the retiral benefits falls on the appellant or the State Government, considering that the institution is a grant-in-aid body. The dispute was escalated after the High Court directed the appellant to pay retiral benefits, and the State’s review petition sought to shift this burden to the State. The matter reached the Supreme Court, which issued a judgment on December 2, 2024.

Background of the Case

The appellant, Nutan Bharti Gram Vidyapith, is an aided educational institution in Gujarat. The respondent, an employee of the institution, was appointed as a lecturer but faced dismissal from service in 1994 due to charges of misconduct, including instigating strikes, improper behavior with colleagues, and violating institutional rules. Following the dismissal, the respondent filed an appeal with the Joint Director of Higher Education, which was dismissed. However, in 1996, the High Court ruled that the appeal was maintainable, and the matter was sent back for re-consideration. The respondent was ultimately reinstated in 2000, though by that time, he had reached superannuation.

In 2010, the High Court ruled that the respondent should be reinstated and awarded back wages, though the amount was limited to 75%. The appellant contested the decision, leading to further litigation. In 2022, the High Court modified the judgment and ruled that the appellant was liable to pay all the respondent’s retiral benefits, including pension, within eight weeks. This ruling was contested by both the appellant and the State of Gujarat, with both filing review petitions in 2023. The State petitioned to shift the liability to itself, as per the pension scheme for aided institutions, while the appellant contended that it should not be liable for the payment due to the prolonged legal battle and the respondent’s superannuation.

Read also: https://judgmentlibrary.com/supreme-court-rules-on-outsourced-employees-eligibility-for-experience-marks-in-government-recruitment/

Arguments of the Petitioner (Appellant)

The appellant’s counsel argued that:

• The responsibility for paying the pension lies with the State Government under the provisions of the pension scheme for aided institutions. The appellant should not be burdened with the payment of retiral benefits due to the prolonged delay in the proceedings.
• The appellant had already contested the reinstatement of the respondent on the grounds of misconduct and was not at fault for the delays in resolving the matter.
• The payment of retiral benefits should be the responsibility of the State, as the institution is a grant-in-aid body, and the pension scheme applies to the State and its officers.

Arguments of the Respondent (State of Gujarat)

The respondent, represented by the State of Gujarat, countered the appellant’s claims by asserting:

• The institution had an obligation to pay the retiral dues to the respondent, as the pension scheme for grant-in-aid institutions places the responsibility on the institution itself to handle such payments.
• The State’s involvement was peripheral, as it had already granted the pension scheme benefits to the employees of the appellant institution, and no exceptional circumstance existed to relieve the appellant of its responsibility to pay the pension.
• The Court should not allow the appellant to escape liability simply due to the time elapsed in litigation, as the respondent was lawfully reinstated and was entitled to his rightful pension benefits.

Supreme Court’s Analysis

The Supreme Court analyzed the facts and legal arguments carefully, focusing on the following points:

• The Court emphasized that under the applicable pension scheme for grant-in-aid institutions, the responsibility for paying retiral benefits is clearly outlined, and the appellant had a legal obligation to ensure the payment.
• The Court noted that the appellant, despite prolonged litigation, had not discharged its duty to pay the respondent’s pension, as mandated by the pension scheme.
• The Supreme Court further highlighted that while the appellant institution may have legitimate grievances regarding the reinstatement and conduct of the respondent, it could not evade responsibility for paying pension benefits to a legitimate employee of the institution.
• The Court rejected the appellant’s request to shift the liability to the State, emphasizing that the responsibility for pensionary benefits under the scheme was squarely on the institution, and the State’s involvement was secondary.

Final Judgment

The Supreme Court ruled in favor of the respondent, stating:

• The appellant was directed to pay the retiral benefits, including pension, to the respondent within eight weeks from the date of the Court’s order.
• The Court confirmed that the appellant institution, being a grant-in-aid institution, had the primary responsibility to disburse pension benefits to its employees.
• The State was not liable for the payment of retiral dues in this case, as the pension scheme specifically assigns this duty to the institution.
• The Court further held that the appellant institution’s prolonged litigation and failure to comply with legal provisions did not absolve it of its duty to pay the respondent’s pension, which had been delayed far too long.

This ruling underscores the responsibility of educational institutions that receive state aid to honor their obligations to their employees, particularly when it comes to retiral benefits, regardless of the length of litigation or administrative complications.

Read also: https://judgmentlibrary.com/no-retrospective-promotion-supreme-court-reverses-financial-benefits-for-retired-west-bengal-scientist/

Petitioner Name: Nutan Bharti Gram Vidyapith.
Respondent Name: Government of Gujarat.
Judgment By: Justice Rajesh Bindal, Justice J.K. Maheshwari.
Place Of Incident: Gujarat.
Judgment Date: 01-12-2024.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: nutan-bharti-gram-vi-vs-government-of-gujara-supreme-court-of-india-judgment-dated-01-12-2024.pdf