The Supreme Court ruled that aided school teachers in Maharashtra are governed by the Maharashtra Civil Services (Pension) Rules, 1982 (under Article 309) for gratuity, not the Payment of Gratuity Act, 1972. The Court held that since their pay and service conditions are state-regulated, they fall under the more beneficial state scheme, which includes pension and death-cum-retirement gratuity (DCRG). Legal heirs need not produce a heirship certificate if nominated, but must submit an indemnity undertaking. Interest at 7% was mandated for delayed payments.
Facts Of The Case:
The petitioner, Vikram Ghongade, is the son of a deceased teacher employed at an aided school in Maharashtra. His mother passed away while in service, and he sought gratuity under the Payment of Gratuity Act, 1972. However, his claim was rejected by the original authority, appellate authority, and the High Court, prompting him to approach the Supreme Court. The respondents, including the school and state authorities, argued that as an aided school employee, the deceased teacher was governed by the Maharashtra Civil Services (Pension) Rules, 1982, which provide death-cum-retirement gratuity (DCRG) under Article 309 of the Constitution.The petitioner contended that teachers are entitled to gratuity under the 1972 Act, citing the Birla Institute of Technology v. State of Jharkhand judgment, which overruled earlier restrictions. He also argued that since the school had already settled his mother’s provident fund by recognizing him as the nominee, a legal heir certificate should not be mandatory. The state, however, insisted that aided school teachers, whose salaries and benefits are government-funded, fall under the 1982 Rules, which offer more favorable terms, especially for deaths occurring before five years of service. The Supreme Court ultimately upheld the applicability of the state rules, directing the petitioner to claim DCRG under the 1982 scheme with an indemnity undertaking, while also awarding him 7% interest for the delayed payment.
Procedural History:
The case originated when the petitioner, Vikram Ghongade, filed a claim for gratuity under the Payment of Gratuity Act, 1972 before the Controlling Authority after his mother, a teacher at an aided school, died in service. The authority rejected his application, holding that aided school teachers were excluded from the Act’s purview and were instead governed by the Maharashtra Civil Services (Pension) Rules, 1982. The petitioner then appealed to the Appellate Authority under the Gratuity Act, which upheld the rejection, agreeing that the deceased teacher’s service conditions fell under state rules.Dissatisfied, the petitioner approached the Bombay High Court, which directed him to submit requisite documents, including a legal heir certificate, for processing his claim under the 1982 Rules. The High Court also noted the state’s undertaking to expedite the matter upon compliance. When the petitioner failed to secure relief, he filed a Special Leave Petition (SLP) in the Supreme Court, arguing that the Gratuity Act applied and that the nominee provision sufficed for his claim. The Supreme Court, after examining the legal framework, upheld the applicability of the state rules but simplified the procedural requirements, ruling that a nominee could claim DCRG without a heirship certificate, subject to an indemnity undertaking. The Court also mandated 7% interest for delayed payments, modifying the High Court’s directions.
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Court Observation:
In its judgment, the Supreme Court made several key observations. First, it clarified that teachers in government-aided schools are not covered under the Payment of Gratuity Act, 1972, but instead fall under the Maharashtra Civil Services (Pension) Rules, 1982, since their salaries and service conditions are regulated by the state. The Court emphasized that the 1982 Rules provide a more beneficial scheme, particularly in cases of death before completing five years of service, where the gratuity amount exceeds what the 1972 Act offers.The Court rejected the argument that aided school teachers hold posts under the Central or State Government, but acknowledged their employment is functionally equivalent due to government oversight in pay, pensions, and service terms. It noted that the 1982 Rules apply broadly to employees whose conditions are governed by state provisions, ensuring parity with government teachers.On procedural aspects, the Court held that a legal heir certificate is unnecessary if the claimant is a nominee, as nomination itself creates a fiduciary obligation to distribute funds to all legal heirs. However, it mandated an indemnity undertaking to safeguard against competing claims. Additionally, the Court directed the payment of 7% simple interest on delayed gratuity amounts, ensuring timely relief for the petitioner. These observations balanced statutory interpretation with equitable relief.
Final Decision & Judgement:
The Supreme Court allowed the Special Leave Petition in part, ruling that the petitioner was entitled to Death-cum-Retirement Gratuity (DCRG) under the Maharashtra Civil Services (Pension) Rules, 1982, rather than the Payment of Gratuity Act, 1972. The Court held that aided school teachers, being governed by state-regulated service conditions, fall under the more beneficial pension scheme, which includes gratuity and other post-retirement benefits. It dispensed with the requirement of a legal heir certificate, given the petitioner’s status as a nominee, but directed him to submit a notarized indemnity undertaking to protect against potential claims by other heirs. Additionally, the Court mandated that the DCRG amount be paid with 7% simple interest from one month after the teacher’s death until actual payment, ensuring compensation for the delay. The judgment streamlined the claim process while upholding the state’s authority to regulate service benefits for aided school employees, thereby balancing administrative efficiency with equitable relief.
Case Details:
Case Title:Vikram Bhalchandra Ghongade vs. The Headmistress, Girls High School and Junior College, Anji (Mothi) & Ors. Citation:(2025) INSC 824 Appeal Number:Special Leave Petition (Civil) No. 19436 of 2024 Date of Judgment:14 July 2025 Bench: Justice K. Vinod Chandran & Justice Sudhanshu Dhulia
Download The Judgement Here