The Madhya Pradesh High Court reaffirmed that teachers initially appointed under Panchayat service and later absorbed into the State service are entitled to receive gratuity under the Payment of Gratuity Act, 1972. The decision was passed by Justice Vivek Jain, who dismissed a writ petition filed by the State of Madhya Pradesh challenging the gratuity awarded to Shivnath Singh Kushwah, a retired teacher.
Shivnath Singh was first appointed as a Shiksha Karmi Grade II in 2008. He was later absorbed into the Adhyapak cadre and finally migrated to the State’s School Education Department under the M.P. School Education Service (Teaching Cadre) Recruitment Rules, 2018. After his retirement in 2020, the State denied his gratuity claim, arguing that he hadn’t completed five years of service post-absorption and therefore wasn't eligible under the M.P. Civil Services Rules, 1976.
Read Also:- MP High Court Permits NEET UG Result Declaration Across India, Except 11 Indore Centres
“The exclusion from the definition of ‘employee’ under Section 2(e) of the Payment of Gratuity Act only applies if an individual is governed by separate gratuity rules, which is not the case here,” the Court clarified.
The State contended that Shivnath Singh was not an employee as per the Act and that it wasn't liable as an employer under Section 2(f). It also cited Rule 44 of the Civil Services Rules, which requires a minimum of five years of service for gratuity eligibility. However, the Court found these arguments inconsistent.
Justice Jain pointed out that the Panchayat service was non-pensionable, and the employee was not covered under any alternative gratuity rules. Hence, the exclusion clause in the Gratuity Act did not apply. The Court also emphasized that while the State denied coverage under pension rules, it could not simultaneously deny gratuity benefits under the Gratuity Act.
“The State cannot blow hot and cold. It cannot deny pension by saying he was not under the pensionable scheme and also deny gratuity citing the same rules,” the Court observed.
The Court highlighted that Rule 18(2) of the 2018 Rules only limits pay and allowances before absorption, not statutory benefits like gratuity. It also referred to a Supreme Court ruling that differentiated gratuity from pension, reaffirming that both are independent entitlements.
The Court ruled that Shivnath Singh’s service from 2008 to 2020 must be considered as continuous, thus qualifying him for gratuity. It upheld the order of the Controlling Authority, directing the State to pay ₹10,04,767 as gratuity with interest.
Case No. W.P. No. 31272/2024
Counsel for the Petitioners: Shri Ravindra Dixit, Government Advocate
Counsel for the Respondents: Shri Suryabhan Singh Solanki and Ms. Sakshi Basnet
