Dear Friends Hon'ble Justice Ram Mohan Reddy of the Karnataka High Court has this morning, stayed

an amendment made by Parliament of India to the Payment of Gratuity Act, 1972. This Amendment effectively brought teachers under the Payment of Gratuity Act, 1972. Problem? Well, this Amendment was brought into effect on 31-Dec-2010. Instead of applying from that day onwards, this amendment was made retrospective from 03-Apr-1997. This retrospective amendment was challenged by Karnataka Unaided Schools Managements Association. Of course, I submitted arguments on this. Also, a few other associations represented by Advocate Basavaraj also argued in this case. This morning, the High Court felt that it was desirable to stay the retrospective operation of the Payment of Gratuity Act, 1972 in so far as teaching staff in educational institutions are concerned. My primarya argument has been: The Parliament of India does not have any power to make a retrospective amendment to any law so as to affect substantive rights of its citizens. Further, the interpretation of any law is the sole province of a Court. As such, once the Supreme Court ruled that the definition of an 'employee' in the Act did not cover a 'teacher', the Parliament certainly had the power to amend the definition of the 'employee' provided such amendment acted prospectively only. Further, even assuming that there is a power in the Parliament to make a retrospective law to even affect substantive rights, in this case, the Parliament took a full six years to upset the Judgment of the Supreme Court. As such, even on that count, the amendment was bad. Considering that nearly 3% of the general population comprises of teachers, educational institutions would simply become bankrupt if its teachers who served in the past decade came asking for gratuity solely because the Parliament had made a retrospective amendment. Now, let me reproduce here, a mail that was sent when the Court had directed notice: http://www.facebook.com/note.php?note_id=211717542201759 The Karnataka High Court directs Notice to Central Government and State of Karnataka on challenge to Gratuity to 'teachers'. by Kv Dhananjay on Tuesday, May 31, 2011 at 7:50pm Dear Friends The Hon'ble Justice S.Abdul Nazeer of the Karnataka High Court today issued Notice to the Central Government and State Government on KUSMA Petition challenging the retrospective amendment to the Payment of Gratuity Act. As for interim stay, this is what I said to Court: At this hearing, I will not be pressing for interim stay. But, on the next date of hearing, I will. Now, whats all this gratuity stuff really about? Let me explain it by putting myself in the position of a private educational institution and its lawyer and you, in the position of a teacher: On 31-Dec-2009, the Parliament amended the Payment of Gratuity Act, 1972 by amending the definition of the 'employee' contained in that Act. So what? Who cares? You might say. Actually, you should. Because it was meant to help you. You: Really. How?

The definition of the 'employee' in the Payment of Gratuity Act, 1972 was of a limited nature. You would not have been covered by it unless the Parliament amended it. You: Is it so? Now, tell me. How much do I benefit from this Amendment? First of all, tell me, what Gratuity is about? Gratuity is nothing but a gift of money that is given by an employer to an employee after a long and meritorious service. Under the Payment of Gratuity Act, 1972, whenever a qualifying employee completes 5 years of service, he becomes eligible to receive gratuity. You: Thats wonderful. How much money do I get now? I just cannot wait. Well, if you put in more than 5 years of service, then, when you leave service, you will get a gratuity that is (15 days salary last drawn * number of years you had served). Meaning, if you had worked for 20 years and your leaving month's salary is Rs.25000, 15 days salary comes down to Rs.12500. Now, Rs.12500 * 20 years is Rs.2,50,000. You: Oh my God! How can you guys be so cruel to challenge this as well in Court? Actually, do you know what really has been challenged in Court? You: No. What have you challenged? The Parliament said on 31-Dec-2009 that, they wanted to also bring in 'teachers' within the purview of the 'Payment of Gratuity Act'. We certainly welcome such a move. You: Whats the problem then? But the problem here is: the Pariament is saying that teachers should be covered from a past date - 03Apr-1997. The Private Unaided Educational Institutions are saying: The Parliament cannot really do this. We welcome labour legislation measures by the Parliament. But, here, the Parliament is making a law in 2009 telling educational institutions to begin doling out Gratuity for period beginning from 03-Apr-1997. Educational institutions will be doomed. You: I am now beginning to understand this. Why did the Parliament really say in 2009 that they wanted to benefit 'teachers' from 1997? Still, what is the 'teacher' population in this State? Good question. Some 3% of the population of this country is engaged in the teaching profession. In Karnataka alone, there are not less than 18 Lakh teachers. In 1997, the Central Government came out with a Notification saying that educational institutions will be covered under Payment of Gratuity Act. You: Come on then. If the Central Government said in 1997 that educational institutions were to be covered from 1997 itself, what you are doing now is bad. It is only proper for the Parliament to say in 2009 that the law will have retrospective operation from 1997. Listen to me very carefully now. In 1997, when the Central Government came out with its Notification, many educational institutions thought that only the non-teaching staff would be covered under the Gratuity Act. You: Outrageous. Why? Because, the definition of an 'employee' in the Payment of Gratuity Act is such that, an employee should fall within one of seven descriptions. His work should be: skilled, semi-skilled, unskilled, manual, clerical, technical or supervisory. You: Stop this. I, being a teacher, my work certainly falls within one of the seven descriptions above.

You should be patient. Now, each one of the seven words above has a specific meaning. We lawyers look for the meaning of a word in a most extensive manner. So, let me tell it straight here. There has been much debate on this issue. Finally, the Supreme Court said in 2004 that a 'teacher' would not be covered within any of the seven descriptions. Therefore, the Supreme Court held in 2004 that the 1997 Notification would merely cover non teaching staff in educational institutions. You: I am almost crying now. How can you play with words like that? My life is at stake here. Is this all that labour welfare legislation means to you, greedy and rich people? Crying? Already? Look. Someone else will have to cry if you do not cry. That is, my clients, educational institutions will have to begin to cry if you do not. But, listen to me for some more time. And you will not accuse us. And, probably, your tears will roll back. The seven terms used to describe an employee in Payment of Gratuity Act were also used to define an 'employee' in the Industrial Disputes Act, 1947 and Payment of Wages Act, 1948. As such, in 1986 and 1996, the Supreme Court had to decide whether a 'teacher' in an educational institution would be covered under the Industrial Disputes Act, 1947 and Payment of Wages Act, 1948. You: This is really something. Tell me, what happened in 1986 and 1996? Well, after extensive discussion, the Supreme Court held that the seven terms did not decribe the work of a teacher - in 1986 and 1996. So, the Supreme Court said that a 'teacher' in an educational institution would not be covered under the Industrial Disputes Act and Payment of Wages Act. You: You are beginning to sound reasonable now. I thought all rich people were bad and always unreasonable. Now, educational instituions are beginning to look reasonable. Because, in 1997, when the gratuity notification was issued by the Central Government, the educational institutions already had the benefit of two other judgments. They simply thought that a 'teacher' was not covered within the Gratuity Act. Soon enough, the Supreme Court in 2004 said the very same thing. So, if the Parliament wanted to bring in teachers within the fold of the Gratuity Act, it ought to have amended the definition of the 'employee'. You: You say 'amended'. What does the amendment say? Is an another description added like 'teaching'? No. Throught out, the Supreme Court had said that the defintion of the 'employee' in the Employees Provident Funds And Miscellaneous Act, 1952 was wide enough to cover the work of a 'teacher'. So, the definition found in that Act has been copied now to Payment of Gratuity Act as well. You: So, you are not challenging the prospective nature of the amendment. No. We are only challenging the retrospective nature of the amendment. We are arguing many things. You: But, why did not educational institutions in other States similarly challenge this retrospective amendment. It is not like you guys alone are the smartest people in this Country. Lawyers in Delhi, Mumbai or Chennai are such experts, bigger than the ones here. They should have done it. Well, when I was told about this retrospective amendment, I did my research and said 'No'. It cannot be challenged. I guess most lawyers in other States too might have said the same thing. However, delving deeper, I discovered that this was not quite right or reasonable. You: Why did you say 'No' at first sight? You see, it is well settled that the Parliament has the prerogative to make laws. Therefore, it also has the power to amend laws. It so happens that at times, it makes mistakes. When it does, it also has the powers to correct errors. So, nearly all the cases in which validating or correcting laws are made, Courts invariably accept it and throw out challenges.

You: But, then, how are you challenging this retrospective amendment now? The Parliament is quite supreme when it comes to the power to make laws. But, when it comes to the 'interpretation' of a law, the Courts of law alone are supreme. Parliament may say anything it wants in a legislation. But the meaning of what the Parliament has said is a matter for Courts alone to interpret. Accordingly, when the Supreme Court had already held that the seven words, skilled, unskilled, semi skilled, manual, technical, supervisory and clerical do not include the work of a 'teacher' in 1986 and 1996, the Central Government could not have intended in 1997 that 'teachers' should be covered under Payment of Gratuity Act when in fact, the Payment of Gratuity Act used these very seven words to describe an 'employee'. As such, if the Central Government had intended in 1997 that teachers should be covered under Payment of Gratuity Act, it's intention simply ran contrary to the 'judicial meaning' of these seven words. So, the intention in 1997 itself was bad because it assumed a certain meaning to the seven words that was contrary to what Courts had said until then. As such, when the intention was bad in inception, it cannot be validated in 2009 by passing a retrospective amendment law. The amendment may only be prospective. You: Wow. Thats a beautiful analysis. You guys are really very... There are other grounds as well. Assuming that I do not make the above argument, my alternative argument is - when the Constitution of India says in Article 123 that the President of India may promulgate Ordinance during recess of Parliament, how could the Parliament take nearly 6 years to bring forth that amendment and make it retrospective. If you, the Parliament, wanted to correct some mistake that had crept it, soon after the Supreme Court gave its judgment on 13-Jan-2004, you should have brought in an Ordinance. Such powers have been conferred under the Constitution. Sitting still for nearly 6 years, the Parliament cannot suddenly wake up after 6 years to say that they want to correct some mistake of theirs by giving retrospective operation to their amednment. You: Also very nice. What else? The Judgments of our Supreme Court clearly forbid all forms of profiteering by educational institutions. As such, educational institutions could not have provided for excessive reserves in their Balance Sheets. So, if they are told today to provide gratuity for past periods, educational institutions will truly find it burdensone and many might not be in a posititon to pay. You: Why can't you simply hike your future fees? Laws in all States ban such increase. In Karnataka, the law on Prohibition of Capitation Fees and the Karnataka Education Act impose strict limits on the amount of fees that may be charged by educational institutions. Moreover, these institutions are unaided. That is to say, they receive no aid from the Government. So, the retrospective operation creates a massive financial burden upon private educational institutions which will remain unment should these institutions also comply with fee and capitation laws. You: What other arguments? There are several more. But I have simplified many of them to make it easier for you. You: Does a Judge really understand these things easily. Do not mistake me. But, you are talking about a number of higher concepts here. We are a poor country and do we really need all of this high conceptual thinking in our Courts?Further, are you only getting notices and done with it? Anybody can get Notices. One does not have to be very smart to merely get a Notice. I don't care if we are poor or not. I work without reference to the competency of people around me. I work and argue as if I am arguing before, say, the Supreme Court of the United States or the United Kingdom. I thought I have only one life and I want to live it with utmost competency and dignity. By the way, I win most of my cases - while setting great precedents in the process. And, the media has made me popular, very popular. Thanks to them. And, for your information: money always comes in with popularity. I love my work. Because I take on newer cases before new judges, many of the Judges take time getting used to me. Sometimes, they do not follow what I am saying and they tend to get angry. I smile at them.

And then, I simplify myself to the point that they understand what I am saying. I am happy to lose before a crowded Court room. And, to tell you the truth, it takes enormous courage to be rejected in a room full of your peers. I always visualise both the outcomes - success and rejection. I then visualise that I take both with equal stride. In the end, I end up doing well. Very well, because I was never afraid to lose. When you are not afraid to lose, are very popular and hard working, life is truly a gift. Do as I say and you will see. You: This amendment is by the Parliament of India. So, this matter has national relevance. Yes. Very much.The Writ Petition and Synopsis are here: https://docs.google.com/leaf?id=0B1fh2RGik6ynY2VkOWZkZDktZGU5ZC00MTBmLTg3MWUtNDI2ODgzZjllM 2Nh&hl=en_US https://docs.google.com/leaf?id=0B1fh2RGik6ynN2QzODdlZDYtN2I0NS00YzczLWIxNzItOGFkZjIwNTdlM2Zl &hl=en_US

Regards K.V.Dhananjay Advocate Supreme Court +91 9902909390