Teachers of U.P. Basic Institutions are NOT “Employees” under the Payment of Gratuity Act, 1972
Commentary on Bindra Prasad Patel v. State of Uttar Pradesh & 3 Ors. (2025 AHC 106762)

1. Introduction

Bindra Prasad Patel, an award-winning Headmaster of a junior high school governed by the U.P. Basic Education Board, sought statutory gratuity after superannuating at the age of 64 following a two-year national award extension. His writ petition was dismissed by a Single Judge; he preferred an intra-court appeal (Special Appeal No. 41/2025) before a Division Bench of the Allahabad High Court comprising Ashwani Kumar Mishra J. & Praveen Kumar Giri J. The crux was whether a teacher of a “basic institution” can invoke the Payment of Gratuity Act, 1972 (PGA) despite not opting for the State Government’s early-retirement-linked gratuity scheme.

Key Issues:

• Does a teacher of a U.P. Basic Education Board institution fall within the definition of “employee” under s.2(e) PGA?
• Does the existing State gratuity scheme, though grounded in executive Government Orders (G.Os) rather than a statute, satisfy the exclusion clause in s.2(e)?
• Can the appellant, having retired at 62/64 without exercising the 60-year option, still claim gratuity under the PGA by virtue of s.14 (over-riding clause)?

2. Summary of the Judgment

The Division Bench dismissed the appeal, holding that:

1. Teachers (including Headmasters) in institutions established by the U.P. Basic Education Board hold posts “under the State Government”.
2. They are governed by an existing gratuity scheme created through various G.Os (1994, 2002, 2004 et seq.), satisfying the second limb of the PGA exclusion clause.
3. Consequently, such teachers are excluded from the PGA definition of “employee”, and cannot claim gratuity thereunder. Their entitlement remains confined to the State scheme, which is conditional upon opting for superannuation two years earlier (60 instead of 62).
4. Because Mr Patel never exercised that option, no gratuity is payable to him.

3. Detailed Analysis

3.1 Precedents & Authorities Cited

• Biharilal Dobray v. Roshan Lal Dobray, (1984) 1 SCC 551 – Supreme Court declared that a teacher of a Basic Primary School holds an “office of profit under the State Government.” The Division Bench relied heavily on this to answer the first limb of s.2(e).
• Ahmedabad Private Primary Teachers’ Association v. Administrative Officer, (2004) 1 SCC 755 – Held teachers of private unaided schools are not workmen under the PGA. Cited to show historical exclusion before 2009 amendment.
• Payment of Gratuity (Amendment) Act, 2009 & Independent Schools’ Federation of India v. Union of India, 2022 SCC OnLine SC 1113 – Upheld retrospectivity of gratuity to teachers in private schools post‐notification. Distinction drawn: those teachers are not holding posts under Government; U.P. Basic teachers are.
• District Basic Education Officer v. Shivkali, 2021 (10) ADJ 23 (DB) – Beneficial interpretation allowing heirs gratuity when teacher died before exercising option; sets stage for present debate but did not decide PGA applicability.
• Noor Jahan (2018) and Usha Rani (2019) – Allowed gratuity within the State scheme; SLP dismissed by SC in 2022. Shows the State’s own scheme is operative.
• University College Ret. Teachers Welfare Assn., Lucknow Bench (2024) – Petitioner relied on; deemed distinguishable.

3.2 Court’s Legal Reasoning

1. Two-fold statutory test (s.2(e) PGA)
   The Bench highlighted the conjunctive nature: exclusion applies if (a) the person holds a post under the Government and (b) is governed by any other Act or by any rules providing for payment of gratuity. Both conditions were found satisfied.
2. “Post under the State Government”
   Using Biharilal Dobray, the Court re-affirmed that the Basic Education Board is a statutory body but completely controlled, financed, and regulated by the State; hence its teachers are Government servants for constitutional purposes.
3. Existence of an alternative gratuity scheme
   The appellant argued the scheme was merely executive, not an “Act or Rules.” The Court adopted a purposive interpretation, holding that executive rules issued under Article 162 possess legal force and fall within the phrase “any…rules.” Therefore, the presence of G.Os providing gratuity satisfies the exclusion clause.
4. Section 14 PGA (over-riding clause)
   Since the appellant is not an “employee” under s.2(e), s.14 never gets triggered. Thus the State scheme cannot be overridden.
5. Absence of Option = Absence of Right
   Even inside the State scheme, gratuity is conditional upon foregoing the final two years of service. Mr Patel served full tenure (actually beyond, due to award-based extension) and never opted out; hence, no vested right accrued.

3.3 Likely Impact on Future Litigation & Policy

• Settles, within U.P., the lingering debate whether Basic Education teachers can directly invoke the PGA. All similar writs may now face dismissal unless overturned by the Supreme Court or the legislature amends the PGA or State policy.
• Clarifies that executive G.Os constitute “rules” for s.2(e) exclusion, affecting other semi-government sectors with bespoke gratuity schemes.
• Enhances pressure on State to revisit the early-retirement pre-condition, because teachers now have no statutory alternative.
• Ensures financial predictability for the State by containing potential retroactive gratuity liability running into hundreds of crores.

4. Complex Concepts Simplified

• Payment of Gratuity Act, 1972 (PGA): Central law mandating a one-time lump-sum payment to “employees” who complete 5 years’ service on retirement, resignation, death etc.
• Section 2(e) – “Employee”: Defines who is covered and expressly excludes those holding posts under Government and already having any other gratuity provision.
• Government Orders (G.Os): Executive instruments issued by the State Government; when not contrary to legislation, they have the force of “rules” under Article 162.
• Section 14 (Over-riding Effect): Gives PGA supremacy over inconsistent laws – but only if the person is first covered by the Act.
• Early-Retirement Linked Gratuity Scheme: U.P. offered gratuity only to those teachers who voluntarily retired two years earlier (58→60 or 60→62, depending on era). Opting out forfeits later claim.

5. Conclusion

The Allahabad High Court has firmly drawn a jurisdictional boundary around the Payment of Gratuity Act, 1972 in relation to teachers employed under the U.P. Basic Education Board. Re-affirming Biharilal Dobray and expanding the interpretation of the s.2(e) exclusion, the Court held that:

• Basic teachers occupy posts under the State Government;
• The State’s executive gratuity scheme, albeit conditional, constitutes “rules providing for gratuity”;
• Consequently, they stand outside the PGA, and benefits under that central statute cannot be claimed.

In practical terms, gratuity for such teachers remains a matter of State policy choice, not statutory right under the PGA. For stakeholders, the decision offers clarity but also highlights the need for policy reform if equitable coverage is desired. For lawyers, the ruling provides a precedent that executive “rules” with gratuity provisions suffice for s.2(e) exclusion, a principle likely to echo beyond the education sector.