Relying on the judgment of the State of Rajasthan and Anr. v. Senior Higher Secondary School, Lachhmangarh reported in 2005 (10) SCC 346, The bench of Chief Justice UU Lalit and Ravindra Bhat has reiterated that Leave encashment is part of the salary. The Supreme Court held that the judgment passed by it in the earlier judgment is binding and conclusive as regards entitlement of the appellants' claim to leave encashment benefits as part of the salary.

In para 21 of the judgment, the Supreme Court held that "This court had categorically ruled, in Senior Higher Secondary School (supra) that leave encashment is part of salary. In the scheme 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 aid, 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 its 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."

While considering the judgment of the Chhattisgarh High Court passed in the case of Ambika Mission Boys Model School v. State of Chattisgarh, (2020) 2 CLR 177 the Supreme Court held "On the issue of gratuity, again, the question of liability 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 contained the conditions of grant, categorically cast the liability to pay gratuity on the 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"

Case Details:-

Civil Appeal No. 6953 / 2022

SPECIAL LEAVE PETITION (CIVIL) NO. 16813 OF 2019
JAGDISH PRASAD SAINI & ORS. ...APPELLANT(S)
VERSUS
STATE OF RAJASTHAN & ORS. ...RESPONDENT(S)

Read the Complete judgment:-

https://main.sci.gov.in/supremecourt/2019/23803/23803_2019_1_1501_38521_Judgement_26-Sep-2022.pdf