Jagdish Prasad Saini & Ors. v. State of Rajasthan & Ors.

S. RAVINDRA BHAT, J. 1. Special leave granted. With consent of counsel for the parties, the appeal was heard finally. The appeal is directed against a judgment and order of the Rajasthan High Court, Jaipur Bench, 1 dismissing the appellant’s application, seeking enforcement of this court ’s previous judgment.2 2. The appellants were appointed against sanctioned posts by the fourth respondent (a senior secondary school, established and controlled by the fifth respondent trust, hereafter referred to collect ively as the “establishment”) in 1993. They continued to work uninterruptedly in that establishment on a regular basis. The establishment was re cipient of grant-in-aid from the State of Rajasthan (hereafter, “ State”). By a unilateral resolution dated 5th November 2008, the managing committee of the establishment decided to discontinue receipt of grant-in-aid from the State with effect from 1 st April 2008. Accordingly, the State by an 1 Dated 26th April 2019 in SBWMA No. 357/2017 2 Order dated 19th July 2016 in Civil Appeal No 6601-6603 of 2016 JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. order dated 28th December 2012 ceased to grant aid with effect from 1st March 2012. 3. In the meanwhile, the State had framed and brought into force the Rajasthan Voluntary Rural Education Service Rules, 2010 (hereafter, “2010 Rules”) with the objective of providing security to the employees working in aided institutions, and to absorb them in the State’s service. The appellants sought their absorption with the State in accordance with the rules, by unavailingly representing in this regard. Finally, they were driven to file writ petitions before the High Court. The State had, pursuant to the rules framed by it, absorbed other employees and teacher s from aided institutions, but denied this benefit to the appellants. 4. The appellants writ petitions were clubbed with several other petitions and disposed of by the High Court, refusing to direct the State to absorb these employees. The employees, including the appel lants, unsuccessfully sought review of those orders; which was reje cted on 29th November 2013. The appellants thereafter approached this court by petitions for special leave to appeal questioning the order s of the High Court. 5. By its final order of 19 th of July 2016, this court set aside the denial of absorption of the appellants. The court directed as follows: “..We are therefore convinced that the said eleven t eachers having been in the service of the school management i n the aided posts and were in receipt of such aid from th e state government, right from the date of their entry into servic e till the aid came to be discontinued in 2008, only at the instance of the school management, which has now been restor ed pursuant to the orders of this court, the state government can be directed to pass necessary orders for their abso rption applying the 2010 rules as from the date such rules came i nto effect. We therefore set aside the orders denying s uch absorption and remit the matter back to the respondent number one-state government to consider the claim of the eleven aided teachers for their absorption as from the date when the 2010 rules came into effect and such orders shall be passed within one month from the date of receipt of a copy of this order. After passing such orders of absorption, it is needless to state that whatever salary that fell due and payable to t he said 469 eleven teachers for the past period i.e. from 23.3.2008 s hall be restored in the manner such aid is to be granted prior to the coming into force of the 2010 rules. In other words, su ch aid is to be sanctioned to an extent of 70% and 30% to be borne by the school management, such calculation shal l be made, and the extent to which aid is to be sanctioned shall be granted up to the date by which the order of absorpt ion is passed on thereafter the full salary payable for an abso rbed teacher in the state service shall also be calculat ed and sanctioned by respondent No 1/ state government. On such orders being passed, we also direct the sch ool management to take necessary steps for praying the 30% of their liability from March 2008 up to date of the absorpt ion of the eleven teachers, as per the orders to be passed by the state government. We permit the school management to make such payment o f 30% to the eleven teachers in easy instalments by negoti ating with the concerned teachers in order to ensure that sudden huge financial liability is not cast on the school management so that the running of the school for the benefit of the school going children in that location.” ****** We also direct the school management to submit a stateme nt of calculation as regards the salary which was actu ally disbursed to the aided teachers as well as non-aided teachers from the month of April, 2008. The school management shall separately prepare a statement of calculation as regard s the salary paid to the aided teachers and forward it to the st ate government with proof of payment in order to enable the Stat e government to comply with our directions with regard to the payment of salary payable up to the date of absorpti on. As far as revision in the payment of salary is to be granted, the same shall also be prepared and appropriate order be passed by the state government. Such payment shall also be effect ed positively by the school management.” 6. After this order, in September 2016, the establishment moved an application seeking directions from this court. The application JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] contended that the establishment had to pay the 11 aided emp loyees, (i.e., the appellants) to the tune of ` 57.68 lakhs, and privilege leave salary to the tune of 36.20 lakhs. The application also produced a chart of calculation of gratuity and leave encashment. This applicat ion was not allowed. Contemporaneously, the appellants also filed cont empt proceedings, i.e., C.P. No (Civil) 640 – 642/ 2017, in the disposed of Civil Appeal Nos. 6601-6603 of 2016. This court by order of 6th March 2017, allowed the appellants to withdraw the contempt petitions, wit h liberty to move the High Court for enforcement of orders of this court. In these circumstances, the appellants moved the High Court contending that the orders of this court had not been properly complied with, to the extent that they had not been paid privilege leave encashment and gratuity amounts. 7. The High Court by the impugned order rejected the applications preferred before it on the ground that since the salary require d to be disbursed had in fact been paid to the appellant employees, there was no cause to pursue the matter further. The High Court was of the opinion that neither gratuity nor leave encashment was covered by the expression “salary”, even under Rule 10 of the 2010 Rules or under the Rajasthan Non-Government Educational Institutions (Recognition Grant-In-Aid and Service Conditions, Etc.) Rules, 1993 (hereafter, “1993 Rules”). 8. The aggrieved appellants have therefore approached this court. It was contended on their behalf by Mr Deepak Nargokar, learned senior counsel, that the expression “salary” included both components, i.e., gratuity, as well as leave encashment. It was pointed out that one of the original appellants who approached this court, was in fact paid gratuity as well as leave encashment by the respondent establishment . It was also argued that under Rule 5 of the 2010 Rules, employees were entitled to leave encashment and gratuity benefits from private institutions. 9. The learned senior counsel next relied upon the averments made in the application by the management establishment, especially para 13(6), filed in this court3. It was submitted that the management establishment clearly admitted to its liability for payment of leave en cashment dues and gratuity. In these circumstances, the establishment could not deny those liabilities. He also relied upon the chart pr oduced by the establishment management which specifically set out the gr atuity and 3 In Civil Appeal Nos 6601-6603 of 2016 471 leave encashment amounts which all the 11 employees were entitled to, according to it. He also relied upon the judgment of this court in State of Rajasthan and Anr. v. Senior Higher Secondary Schoo l, Lachhmangarh4 where the court declared that leave encashment had, “to be read and understood with the definition of the word salary” . 10. Learned senior counsel for the State, Dr. Manish Singhvi argued that in terms of Rule 5 (xi) of the 2010 Rules, every empl oyee had executed an undertaking that she or he accepted all terms and conditions of service prescribed by the 2010 Rules. Furthermore, the concept of ‘carry forward of balance of privileged leave’ too was denied by Rule 5(viii) of the 2010 Rules. It was submitted that in terms of Rule 5(viii), the employees could seek payment of leave encashment of balance of privileged leave only from the private institutions. The State, therefore, could not be fastened with the liability on that score. So far as the question of gratuity liability was concerned, Dr. Singhvi relied upon the judgment in Rajasthan Welfare Society v. State of Rajasthan 5 and submitted that by virtue of Rule 82 of the 1993 Rules, the employees of aided educational institutions were entitled to gratuity under the Payment of Gratuity Act, 1972. Yet, in terms of Rule 14 of the 1993 Rules, gratuity was not an approved expenditure. As a consequence, this court held in no uncertain terms that gratuity was not part of the recurring grant and that the State was not liable in that regard. 11. Mr. C.U. Singh, learned senior counsel appearing for the establishment, submitted that the order of this court was explicit in its terms and that leave encashment and gratuity could not be said to form part of “salary”. It was further submitted that the example provided by the appellants, i.e., that one amongst them (Mr S.S . Shekhawat, respondent no.8) was paid gratuity is a solitary instance which per se could notcast liability without any corresponding obligation in law. 12. It was further submitted that privileged leave cannot be included within the term salary which under the Rajasthan Non-Govern mental Educational Institutions Act, 1989 (Section 2(r)) means “aggregate of the emoluments of an employee” . Learned counsel relied upon the judgment of this court in Senior Higher Secondary School Lachhmangarh (supra) and submitted that corresponding aid, therefore, 4State of Rajasthan and Anr. v. Senior Higher Secondary School, Lachhmangarh, 2005 (10) SCC 346 5Rajasthan Welfare Society v. State of Rajasthan, 2005 (5) SCC 275 JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] has to be disbursed by the State Government, to enable the payment of privileged leave. 13. So far as the gratuity was concerned, learned counsel reli ed upon a decision of the Chhattisgarh High Court in Ambika Mission Boys Model School v. State of Chhattisgarh 6 and urged that the State was primarily liable to disburse the gratuity of empl oyees of aided institutions. It was also submitted that the Chhattisgarh High Court had relied upon the previous judgment of this court in RegionalProvident Fund Commissioner v. Sanatan Dharam Girls Secondary School & Ors7, to hold that although aided institutions did not “belong” to the Central or the State Government yet they were under the “control” of the State under various ways. The judgment had further noted that the Payment of Gratuity Act, 1972 had amended the definition of “employee” under Section 2(e) with retrospective effect from 3rd April 1997. Analysis and Conclusions 14. Non-government educational institutions in Rajasthan are governed by the Rajasthan Non-Government Educational Instituti ons Act, 1989 (hereafter “Act”) and the rules framed. Section 2 ( r) of the Act defines salary as “the aggregate of the emoluments of an employee including dearness allowance or any other allowance or r elief for the time being payable to him but does not include c ompensatory allowance”. Compensatory allowance, by Section 2 (d) means: “(d) ”compensatory allowance” means an allowance granted to meet personal expenditure necessitated by the sp ecial circumstances in which duty is performed and shall include a travelling allowance but shall not include a sumptu ary allowance nor the grant of a free passage to or fro m any place outside India”. 15. Section 3 of the Act provides for recognition of grant-in-aid institutions; Sections 4 to 6 of the Act provide for the eve ntuality of refusal of recognition, withdrawal of aid and the rem edies for the institution. Section 7 of the Act onwards are regulat ory provisions requiring audit, recruitment, orders of termination of teachers, provision of tribunal for redressal of teachers’ grievances regarding dismissal or 6Ambika Mission Boys Model School v. State of Chattisgarh, (2020) 2 CLR 177 7RegionalProvi dent Fund Commissionerv. Sanatan Dharam Girls Secondary School & Ors, 2007 (1) SCC 268 473 termination, etc. Section 29 of the Act, which is relevant for the present purposes, states as follows: “29. Pay and allowances of employees.— (1) The scal es of pay and allowances except compensatory allowances w ith respect to all the employees of an aided institution s hall not be less than those prescribed for the staff belonging to similar categories in Government institutions. (2) Notwithstanding any contract to the contrary, the salary of an employee of a recognised institution, for any period after commencement of this Act, shall be paid to him by the management before the expiry of the fifteenth day o r such earlier day, as the State Government may, by genera l or special order appoint, of the month next following the month in respect of which or part of which it is payable: Provided that if at any time the State Government deems it f it, it may prescribe a different procedure for payment or salary and allowances. (3) The salary shall be paid without deductions of an y kind except those authorised by the rules made under this A ct or by any other law for time being in force.” 16. The relevant provisions of the 1993 Rules are Rules 47, and, pertinently, 82. Rule 47 deals with privilege leave.8 Rule 82 is as follows: 847. Privilege Leave.- (1) Non-Teaching Staff - Members of the non-teaching staff whether temporary or permanent, shall be enti tled to privilege leave of 30 days in a calendar year. Fifteen days privilege leave shall be credited to the leave account of the employee on 1st January an d the remaining fifteen days on 1st of July, each year subject to the total accumulation upto a maximum of 300 days. (2) Teaching staff - (a) Privilege leave is not admissible to the members of teaching staff, whether temporary or permanent, in respect of duty performed in any calendar year, in which they avail themselves o f the full vacation, except to the extent indicated under clau se (b) of this sub-rule; (b) The teaching staff in schools and colleges shall be entitled to fifteen days/privilege leave in a calendar year. The leave account shall JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] “82. Gratuity and Insurance.- (1) The employees of the Aided educational institutions shall be entitled to Gratu ity as admissible under Payment of Gratuity Act, 1972 as amended. from time to time. (2) The managing committee shall arrange for Group Insurance of its employees under the respective sch eme of Life Insurance Corporation of India.” 17. In the present case, the appellants had to fight for their entitlements. The State initially refused them the benefit of regularization. Their petitions for relief were unsuccessful. Ultimately, this court, by its order, dated 19th July 2016, directed their regularization. The court even initiated suo motu contemptproceedings, after which the appellants were paid their salaries and arrears according to the recommendations of the Pay Commission. However, the appellants’ complaint of non-compliance with the respondent’s obligation to pay leave encashment and gratuity be credited with fifteen days privilege leave immediately after expiry of every calendar year, the unavailaed portion of t he so credited privilege leave shall be qualified for carry forward to the next year upto a maximum of 300 days. (c) The teaching staff appointed during a calendar y ear shall be allowed privilege leave @ 1 1/4 days for each completed month of his service immediately after the expiry of that calendar year subject to the condition laid down in clause (b) above in p roportion of 8:7 respectively; (d) The privilege leave admissible to such an employ ee in respect of any calendar year in which he is prevented from ava iling himself of the full vacation shall be in such proportion of 15 days as the number of days of vacation not taken bears to the full vacation. If in any calendar year the employee does not avail the full vacation, fifteen days privilege leave will be admissible to him at the end of the vacation in respect of that calendar year. (e) Vacation may be taken in combination with or in continuation of any kind of leave under these rules provided that the total duration of vacation and privilege leave taken in combinatio n or in continuation of other leave, shall not exceed the a mount of privilege leave due and admissible to an employee at a time under sub-rule (1) above. 475 for the period they were in the aided establishment was not gone into. They were permitted to agitate that grievance before the High Court. Upon their doing so, the High Court, by its impugned order, gave short shrift to their argument, holding that since arrears of sal ary had been paid, nothing more was needed to be done. 18. As far as leave encashment dues are concerned, the issue is no longer at large. In Senior Higher Secondary School Lachhmangarh (supra) this court held that “salary” under the Act, includes leave encashment. The relevant observations are extracted below: “19. The contention urged is that Section 16 refers to various conditions of service including pay whereas Section 29(1) refers only to ‘scales of pay and allowances’ and n ot the ‘conditions of service’. Learned Counsel submits th at by implication, Section 29 excludes the benefit of lea ve encashment. We are unable to accept the above contenti on. 20. Section 16 confers a rule-making power on the St ate Government to regulate recruitment and conditions of servic e including conditions relating to qualifications, pay, gr atuity, insurance, age of retirement, entitlement of leave, conduct and discipline etc. of employees of aided institutions. Sec tion 16 has to be read and worked harmoniously with Section 29 which directs maintenance of parity in the scales of pay and allowances between employees of aided institutions and Government institutions. 21. As we have held above the expression pay and allowances in Section 29 read with wider definition of the word ‘salary’ in Section 2(r) of the Act has a very vide connotat ion. We have come to the conclusion that the expression inc ludes benefit of leave encashment which is nothing but sal ary for the unavailed leave to the credit of the employee. 22. Section 16 confers rule-making power on the Sta te Government to regulate ‘Conditions of service’ of emp loyees of aided institutions. The Section specifically confe rs power to frame rules regarding entitlement of leave. If leave salary is of kind a salary within the wide definition of ‘salary’ unde r Section 2(r), the rules to regulate conditions of s ervice of employees of aided institutions, must be so framed as to JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] maintain parity in conditions of service in that rega rd with employees in Government institutions. That is the mandate of Section 29 of the Act. The contention, therefore, a dvanced that subject-matter of entitlement of leave encashm ent is covered by Section 16 of the State but is beyond the purview of Section 29 of the Act, is fallacious and has to be reject ed. 23. While construing the provision under consideration, it is to be borne in mind that interpretation of a welfare legislation should be to promote education. The service conditi ons of the employees of the aided institutions are sought to be improved and brought at par with those in Governmen t educational institutions to maintain educational standards. It has also to be borne in mind that our Constitution makers have placed the field of education at a higher pedestal and granted it a special status. Various provisions of the Constitution deal with the aspect of advancement of education. The primary education has been held to b e a fundamental right in the decision of this Court in Unni Krishnan, J.P. and Ors. v. State of Andhra Pradesh 1993 (1) SCC 645 and this aspect still holds the field despi te the decision having been overruled on some other aspect s in T.M.A. Pai Foundation and Ors. v. State of Karnatak a and Ors. 2002 (8) SCC. To improve education, various St ate Governments grant aid to educational institutions a nd, by and large, teachers of aided private schools deserv e to be treated at par with teachers of Government institutions to the extent possible. The provisions of these Acts deser ve to be liberally interpreted in favour of the teaching cla ss except where statute may compel otherwise. A statute of no other State has been brought to our notice where similar benefit has been denied to the teachers of the aided institu tions to improve education. The service conditions of the teachers also deserve to be improved.” 19. This court is of the opinion that the aforementioned reasoning is binding, and conclusive as regards entitlement of the appellant s to claim leave encashment benefits. However, the State had urged that by virtue of Rule 5 of the 2010 Rules, the employees who were regularized could not claim these benefits. The 2010 Rules were framed in exercise 477 of powers under proviso to Article 309 of the Constitution. Rule 5, to the extent it is relevant, states as follows: “5. Terms and condition for appointment of employee s in Government Service.—The regularly appointed existin g employees in the No.- Government Aided Educational Institutions who are working against sanctioned aid ed post on the date of commencement of these rules shall be appointe d under the Rajasthan Voluntary Rural Education Servi ce on the following terms and conditions, namely :— (i) The employee should possess the requisite educational and professional qualification for the respective posts a s per the relevant service rules applicable to the Government servant of similar cadre. (ii) The posts on which the employees shall be appoin ted in the Government shall constitute a separate dying cadr e for each category of employees. (iii) The appointed employees shall be posted only in the colleges/ schools, as the case may be, in the rural areas on the equivalent posts specified in column number 2 o f the Schedule. However, in case there is no such equivalen t post in the government, they shall be appointed on other posts carrying the same pay scale of aided posts: *************** ************** (vi) The salary of all the appointed employees shall b e fixed on the basis of the salary as drawn at the time of appointm ent as per the Sixth Pay Commission with effect from th e date they join in the government under these rules. Those who are drawing salary in Rajasthan Civil Services (Revised Pay Scale) Rules, 1998, Rajasthan Civil Services (Revis ed Pay Scales) for Government College Teachers including Librarian and PTI Rules, 1999 and Rajasthan Civil Services Re vised Pay Scales for Government Polytechnic College Teach ers, Librarians and Physical Training Instructors Rules, 2001 shall be allowed benefit of Rajasthan Civil Services (Revised Pay ) Rules, 2008, Rajasthan Civil Services (Revised Pay Scales) for Government College teachers including Librarian and PTI Rules, 2009 and Rajasthan Civil Services (Revised Pay Scales) JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] for Government Polytechnic College Teachers, Librarians and Physical Training Instructors Rules, 2010 respective ly with effect from the date they join in the Government af ter appointment under these rules. (vii) No arrears on any account whatsoever, (including arrears of salary, selection scale, Assured Career Progress ion or Career Advancement Scheme) shall be paid by the Sta te Government for the period prior to the date of their joi ning in the Government after appointment under these rules. (viii) Carry forward of the balance of Privilege Lea ve shall not be allowed. Employees shall be free to get paym ent of encashment of balance of P. L. from the respective gr ant-in- aid educational institutions. ****************** ****************** (x) The period of service in the aided institutions sh all not be counted for payment of gratuity, The employees shall be f ree to obtain payment of gratuity from the respective grant in aid educational institution. (xi) Each employee shall be required to execute an undertaking, in Form - II, that he/she voluntarily accepts all the terms and conditions of service prescribed unde r these rules and agrees to serve in the government educati onal institutions situated in the rural areas till attaining the age of superannuation in the service of Government.” 20. Evidently, these rules were framed to enable the absorption of employees and teachers of non-government aided institutions. What is relevant for the purposes of this case is that by Rule 5(viii), carry forward of existing privilege leave is denied; likewise, the period o f service in aided institutions is not to be reckoned for the purpose of gratuity under Rule 5(ix). Every employee had to furnish an undertaking in the prescribed form to accept the terms and conditions. Ordinarily no public employer can be faulted in imposing pre-conditions before it recruits an employee. However, such conditions cannot be arbitrary, or so onerous as to be unconscionable. In the opinion of this court, the condition in clause (viii) of Rule 5 i.e., carry forward of balance privilege leave, i s barred and requiring employees to seek encashment from their previous employer, 479 i.e., aided institutions, is an arbitrary and unconscionable condition, which cannot be enforced. Speaking that such conditions are enforceable, this court, recently, in Pani Ram vs. Union of India & Ors. 9 after quoting the observations in Central Inland Water Transport Corporation Limited & Anr. V Brojo Nath Ganguly & Anr 10 held as follows: 23. “….Right to Equality guaranteed Under Article 14 of the Constitution of India would also apply to a man who has no choice or rather no meaningful choice, but to give his asse nt to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of Rules as part o f the contract, however unfair, unreasonable and unconscion able a Clause in that contract or form or Rules may be.” 21. This court had categorically ruled, in Senior Higher Secondary School (supra) that leave encashment is part of salary. In the sche me of the 1993 Rules, the assessment of, and determination of the extent of, aid to be granted to any institution, is provided by Rule 13. What forms part of the approved expenditure that would be the content of a id, is provided by Rule 14. In the present case, the management establishment was recipient of 70% aid, in the form of grant. In these circumstances, the State cannot shrug its responsibility to shoulder it s part of the responsibility to pay the appellants the share of leave encashment benefits, and hide behind either Rule 5 (viii) or the undertaking executed by them. The appellants are held entitled to privilege leave entitlement benefits. Such benefit shall be calculated from the date they entered the service of the establishment till the date of their absorption, by the State, in 2016. The State shall pay the benefits due to the extent of 70%, and the balance 30% shall be payable by the management establishment. 22. On the issue of gratuity, again, the question of liabilit y has been conclusively settled. Although the management relied on a Chhattisgarh High Court decision Ambika Mission Boys Model School (supra), this court is of the opinion that it cannot be construed as an authority, because the court in that case analysed the provisions of the Payment of Gratuity Act, 1972, as amended in 2009. However, in the present case, the scheme of the 1993 Rules, which con tained the conditions of grant, categorically cast the liability to pay gratuity on the 9Pani Ram vs. Union of India & Ors, 2021 SCC OnLine SC 1277 10Central Inland Water Transport Corporation Limited & Anr. V Brojo Nath Ganguly & Anr (1986) 3 SCC 156 JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] employer, i.e., the aided establishment, i.e., the fourth, fifth and sixth respondents in this case. Furthermore, Rajasthan Welfare Society (supra) is an authority, in that it considered the effect of the 1993 Rules, and held that it is the management of the aided institution which has to bear the liability towards payment of gratuity: “7. Rule 10 provides for general conditions governing grant- in-aid. It inter alia, provides that every institut ion which applies for grant-in-aid shall be deemed to have accepted its obligation to comply with the conditions laid therein, one of it being that the Management shall appoint teachers and other staff and shall follow the conditions of service, as laid down in the Rules. Rule 11 deals with the procedure for gr ant-in- aid. Rule 13 deals with the assessment of annual rec urring grant. In, inter alia, provides that annual recurring grant will be given on the basis of estimated expenditure of the current year and be subject to adjustment from the grant payable in the next year. It also stipulates that the approved expendi ture shall be arrived at according to the Rules and such other instructions that may be issued from time to time. Rule 14 deals with approved expenditure and to the extent relevant for the present case reds as under : Rule 14. Approved Expenditure- Approved expenditure referred to in Rule 13 above, shall related to the fo llowing items only- All the items from (a) to (v) mentioned belo w will form component ‘A’ of the admissible items of the expendi ture. (a) Actual salary, and provident fund contribution not exceeding 8.33% in respect of teaching and non-teac hing staff. (b) to (v).......” 8. Note 2 appended to Rule 14 is relevant for the p resent purposes and reads thus : “Note - 2. Charges on account of contribution made by th e Institution to a pension fund or a gratuity scheme or on account of the pension or gratuity paid to former t eachers are ordinarily not admitted for the purpose of gran t-in-aid unless the Rules on the subject are approved by Government; 481 Provided that in the case of staff obtained on lent services from any State Government or Government of India, pension and leave salary contribution shall be allowed as appro ved expenditure.” 9. Rule 82 provides that the employees of the aided educational institution shall be entitled to gratuity as payable under the Payment of Gratuity Act, 1972, as amended from time to tim e. ************ *********** ************ 14. The gratuity cannot be termed to be an emolument for the time being payable to the employees so as to come with in the definition of salary defined in Section 2 (r) of the Act. Fu rther, Rule 14 uses the word ‘actual salary’. Be that as it may, it seems clear the non-recurring payment of this nature ca nnot be included in the definition of salary. Gratuity is payable at the time of retirement/termination of the employment. Re liance on the decision of the case of Metal Box Company of I ndia Limited v. Their Workmen (1969) I LLJ 785 (SC) can render little assistance to the appellant. It is a case under P ayment of Bonus Act. It was only dealing with accountancy principles . Observations were made that an estimated liability under the gratuity schemes even if it amounts to a contingent l iability and is not a debt under the Wealth Tax Act, if prop erly ascertainable and its present value is fairly disco unted, is deductible from the gross receipts while preparing the pro fits and loss account. In trading circles or in rule or direction in the Bonus Act, there was no prohibition from such a practice. The question in that case was whether while working out the net profits the trader can provide from his gross recei pts his liability to pay a certain sum for every additional year of service which he receives from his employees. It was ans wered in affirmative. If such liability was properly ascertainable , it was possible to arrive at a proper discounted vale. This decision, in our view, is not relevant to determine the po int in issue in the present case. 15. Further, gratuity cannot be included in the app roved expenditure as under Rule 9 the State Government ca n JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.] sanction the grants under four Heads provided there in and gratuity does not fall under any one of them. It is not claimed that the gratuity falls under Heads 2 to 4. The Head No. 1 is ‘maintenance or recurring grant’. Admittedly a gratuity cannot come under the category of maintenance. It is also not a recurring grant as already noticed hereinbefore. It is, thus, clear that payment of gratuity cannot come under any of the four categories mentioned in Rule 9. 16. In view of the aforesaid, the gratuity within the meani ng of the Act and the Rules cannot form part of recurring grant . It is not includable as part of approved expenditure for the purposes of computing the amount of grant payable t o the purposes of computing the amount of grant payable t o the appellant. In this view, communication dated 26th May, 1994 of Government of Rajasthan to the effect that the R ules do not provide for grant-in-aid on amount of gratuity, the same being not included in the approved expenditures, cann ot be held to be illegal. This will, however, not affect the ri ghts of the employees to get the gratuity from the concerned institution. 17. Before parting, we wish to note that if representations are made by aided Non-Government Educational Institutions, the State Government would consider sympathetically the question of the gratuity amount payable to the employees being taken into consideration for the purpose of computing the amount of grant-in-aid. We, however, clarify that pending mak ing of such representation and its consideration, the paym ent of gratuity to the employees shall not be delayed.” Neither has Rule 82 changed, nor has any other material been brought to the notice of the court, to say that the manageme nt, i.e., respondent nos. 3-7 are absolved of their liability to pay gratuity, upon termination of their relationship with the appellants as their employers. Rule 82 is a condition of grant, which meant that the management establishment was conscious and aware of its liability when it applied and was granted aid, under the 1993 Rules. Therefore, it cannot escape its liability on that score. 23. In view of the above discussion, it is held that with respect to leave encashment, the State and the respondent nos. 3 to 7 are liable to 483 pay the appellants, in the ratio of 70:30 respectively. The re spondent State shall, within four weeks from today, determine t he extent of entitlement of each appellant, and communicate the extent of a mount payable by the management establishment (respondent nos. 3 to 7), to the appellants. These amounts shall be paid by all the respondents, within six weeks from today. The respondent nos. 3 to 7 shall also cal culate and pay the amount of gratuity, to the appellants (on th e basis of their initial date of entry in the school, till the date of order of absorption, by the respondent State), within six weeks from today. Since both se ts of respondents contested their liability and denied them to the appellants, the amounts payable to the appellants shall also carry interes t, at the rate of 10% from the date(s) of their entitlement, till the date of payment. 24. The impugned order is therefore set aside. The appeal is allowed in terms of the above directions. There shall be no order on costs. Divya Pandey Appeal allowed. (Assisted by : Deepak Panwar, LCRA) JAGDISH PRASAD SAINI & ORS. v. STATE OF RAJASTHAN & ORS. [S. RAVINDRA BHAT, J.]