In Brief
Teachers employed by a non-government aided school in Rajasthan, after absorbing into State service under the 2010 Rules, sought leave encashment and gratuity benefits for their period of service in the aided institution. The High Court rejected their claim, holding these benefits were not part of 'salary'. The Supreme Court allowed the appeal, holding that leave encashment is part of 'salary' under the Act and that Rule 5(viii) of the 2010 Rules denying carry-forward of privilege leave is arbitrary and unconscionable. The State, having provided 70% grant-in-aid historically, remains liable for 70% of leave encashment; the management remains liable for 30% and for all gratuity. Amounts carry 10% interest from entitlement date."
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