Gujarat High Court
Divisional Controller vs Heirs Of Decd Kafukbhai Abdulrahem ... on 5 May, 2025
NEUTRAL CITATION
C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3197 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
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Approved for Reporting Yes No
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DIVISIONAL CONTROLLER
Versus
HEIRS OF DECD KAFUKBHAI ABDULRAHEM VOHRA & ORS.
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Appearance:
MR HAMESH C NAIDU(5335) for the Petitioner(s) No. 1
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CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 05/05/2025
ORAL JUDGMENT
1. The present petition is filed under Article 226 and 227 of the Constitution of India challenging the order passed by the learned Controlling Authority in Gratuity Application No.269 of 2024 granting the simple interest on the gratuity at the rate of 7.5% for the period from 01.01.2013 to 14.12.2022 and the order passed by the Appellate Authority under the Payment of Gratuity Act, 1972(hereinafter referred to as the "Act") dated Page 1 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined 23.12.2024 whereby, the appeal of the petitioner Company came to be rejected on the ground of delay.
2. It is the case of the present petitioner that husband of the respondent was working as a Driver and he remained on unauthorized leave for a period of two years and due to the said misconduct committed by the husband of the respondent, termination order was passed after holding departmental inquiry. As the Demand Reference was pending being Reference (IT) No.37 of 2000, the Approval Application came to be filed before the learned tribunal being Approval Application No.140 of 2003 in Reference (IT) No.37 of 2000. The said approval application came to be rejected by the learned tribunal vide order dated 18.05.2011 and being aggrieved by the said order rejecting the approval application, the petition came to be filed being Special Civil Application No.8535 of 2012 before this Court. This Court vide order dated 05.12.2012 has stayed the order passed by the learned tribunal rejecting the approval which was continued till 2021 and thereafter, this Court has dismissed the petition vide order dated 25.06.2021. Being aggrieved by the order passed by this Court Page 2 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined dismissing the petition, intra court appeal was filed being Letters Patent Appeal No.468 of 2022 with Letters Patent Appeal No.469 of 2022 which was also dismissed by this Court vide order dated 23.06.2022. Thereafter, petitioner had undertaken the exercise of pay fixation of the deceased husband of respondent No.1 and difference of pay fixation amounting to Rs.12,24,019/- was paid through cheque dated 22.11.2022 and another cheque was paid of Rs.6,06,742/- for the remaining amount. Thereafter, based on the said pay fixation, the gratuity was computed and was paid by the cheque on 14.12.2022 for an amount of Rs.5,50,790/-. As on dismissal of the Letters Patent Appeal, exercise of doing necessary paperwork was undertaken by the petitioner as termination order of the husband of respondent No.1 in the year 2003, was finally adjudicated on 23.06.2022 by the Division Bench of this Court holding the termination illegal, and immediately on receipt of the order, the amount towards gratuity was paid to the respondent No.1. Thereafter, wife of the deceased husband who was respondent No.1 has filed an application on 01.10.2023 under the Payment of Gratuity Page 3 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined demanding the interest on late payment of the gratuity amount.
2.1. The present petitioner has contended before the authority that the payable gratuity amount has been paid to the heirs of the deceased employee and the application was filed after substantial delay i.e. after the receipt of the money and as subject matter of dispute was pending before this Court and the stay was operating in favour of the petitioner Corporation which was discontinued on 23.06.2022, no interest is required to be paid on the same. Learned Controlling Authority, after hearing the parties has passed the order on 13.06.2024 directing the petitioner to pay interest at the rate of 7.5% on the amount of Rs.5,50,790/- from 01.01.2013 to 14.12.2022, which was challenged in the appeal before the Appellate Authority being Gratuity Appeal No.16563 of 2024, which was dismissed on the ground of delay of 40 days and same is the subject matter of challenge before this Court.
3. Heard learned advocate Mr.Hamesh Naidu for the petitioner.
3.1. Learned advocate Mr.Naidu submits that in case Page 4 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined where the termination of the concerned employee has attained finality only on 23.06.2022 when the Letters Patent Appeal came to be rejected, entitlement of the payment of gratuity would arise on the dismissal of the Letters Patent Appeal. It is submitted that immediately after dismissal of the appeal, exercise of pay fixation was undertaken in the year 2022 itself, therefore, the question of payment of interest did not arise. Learned advocate Mr.Naidu submits that under section 7(3)(a) of the Act, the amount towards interest will only be payable from the day the gratuity becomes payable. In the instant case, the gratuity becomes payable only on finalization of the termination vide order dated 23.06.2022, therefore, before the the said date, employee cannot claim the gratuity as a matter of right and in that background the order passed by the learned Controlling Authority is erroneous.
3.2. Learned advocate Mr.Naidu has relied on the decision rendered by this Court in the case of Chandagauri Gordhandas Versus Naliniben Harishchandra Randheria & Others in Special Civil Application No.10525 of 2013 wherein, this Court has specifically Page 5 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined held that if the employee has raised the claim belatedly, then the employee would not be entitled for the interest on the gratuity amount and same cannot be claimed as a matter of right. It is submitted by the learned advocate Mr.Naidu that as the issue with regard to the termination was pending for consideration before this Court and once the same is finalized, the amount would become payable to the respondent employee. Learned advocate Mr.Naidu submits that if the wages of the year 2012 of the concerned employees was to be undertaken into consideration for payment of gratuity, payable gratuity amount would have been less than the amount paid.
3.3. In the instant case, after finalization of the issue of termination exercise of the pay fixation was under taken and thereafter, on that the revised pay gratuity was computed and paid to the heirs of the respondent. It is submitted by the learned advocate Mr.Naidu that learned Controlling Authority miserably failed to appreciate the fact that as there was a stay operating in favour of the petitioner-Corporation, the period of interest was awarded from 01.01.2013 till 14.12.2022. Page 6 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025
NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined As neither the termination, nor pay scale has been finalized, therefore, no interest could have been awarded for the said period. However, learned Controlling Authority by awarding the same has committed an error and therefore, same is required to be interfered with. Learned advocate Mr.Naidu submits that after receiving the gratuity amount on 14.12.2022, application claiming the interest was preferred on 01.09.2023, therefore, there was a delay in claiming the gratuity amount and on that ground also impugned order deserves to be set aside and petition is required to be allowed.
4. Having considered the arguments advanced by learned advocate, it emerges from the record that the workman was working as a Driver at Godhra Division with the petitioner Corporation and it was alleged that he was absent from the duty from 21.11.2001 to 04.01.2002, which led to departmental inquiry and the charge sheet was served upon the workman. After issuing the second show cause notice, the service came to be terminated by the petitioner-Corporation on 10.04.2003 and money order was sent for an amount of Rs.5000/- and Rs.3673/- Page 7 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025
NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined received by the respondent and issued receipt being No.9331 and 9332. The Corporation filed an Approval Application which was contested on the ground that one month salary has not been given and the inquiry was conducted in an illegal manner and considering the same, the Approval Application came to be rejected, thereafter, the Recovery Application was moved by the employee which was allowed. Challenging the Recovery Application and rejection of Approval Application, learned tribunal vide order dated 18.05.2011, in addition to affirming the order passed by the learned labour court in recovery application No.47 of 2012, had issued directions to comply with the order within a period of four months from the date of receipt, or the amount would carry 6% interest in realization. The Corporation questioned both the orders before this Court in a Writ Petition wherein, this Court while issuing the Notice vide order dated 05.12.2012, has stayed the impugned orders.
4.1. Thereafter the final order was passed by this Court wherein, the petition filed by the Corporation came to be rejected. Challenging the order of dismissal of the Page 8 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined petition, the appeal came to be filed before this Court which also came to be dismissed vide order dated 23.06.2022. It is undisputed fact that during the pendency of this proceeding, deceased employee retired on attaining the age of superannuation on 31.12.2012 and his last drawn wages was Rs.16,820/- alongwith D.A. of Rs.12,110/-. It is the claim of the petitioner that after dismissal of the intra Court Appeal, on calculating 35 years of service by deducting two years of unauthorized leave, the payment of wages alongwith the pay fixation was done by issuing two cheques dated 12.12.2022 and 14.12.2022 and the gratuity amount of Rs.5,50,790/- was paid on 14.12.2022. It is claimed by the petitioner that as proceedings are pending before this Court and on conclusion of the said proceedings on 23.06.2022, immediately the amount is paid, therefore, requirement of payment of interest would not arise. 4.2. In the above background question arising for consideration before this Court is that the gratuity which is withheld by the employer, would the employee be entitled for interest on the said withheld period if he is not found to be at fault?
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NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined
5. To answer the above question, the reference is required to be made on certain provisions of the Payment of Gratuity Act i.e. section 4 and 7 of the Act which is reproduced herein below:-
"Section: 4 Payment of gratuity.
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease: (2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages last drawn by the employee concerned: (3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand] rupees. (4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. (6) Notwithstanding anything contained in sub-section (1), -
(a) the gratuity of an employee, whose services have been Page 10 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.
(b) the gratuity payable to an employee may be wholly or partially forfeited] -
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
(7) [***] Section: 7 Determination of the amount of gratuity. (1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount gratuity so determined.
(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. (3A) If the amount of gratuity payable under sub-section (3) is not paid by the Page 11 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:(4)
(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.
(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute.]
(c)] The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.]
(d)The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto.
(e)As soon as may be after a deposit is made under clause (a), Page 12 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined the controlling authority shall pay the amount of the deposit
-
(i) to the applicant where he is the employee; or
(ii) where the applicant is not the employee, to the nominee or, as the case may be, the guardian of such nominee or] heir of the employee if the controlling authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.
(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall have the same powers as are vested in a court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely :
(a) enforcing the attendance of any person or examining him on oath;
(b) requiring the discovery and production of documents,
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses. (6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code, 1860 (45 of 1860).
(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf:
(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or Page 13 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined reverse the decision of the controlling authority."
5.1. On perusal of sub section 2 of section 7 of the Act, it reveals that it is onerous responsibility of the employer to determine the amount of gratuity payable to the retiring employees, sub section 3 of section 7 enjoins a further responsibility on the employer to disburse the amount of gratuity payable to an employee within 30 days from the date it becomes payable. In the instant case when the employee attained the age of superannuation on 31.12.2012, it is apparent that gratuity had become payable to him on 31.12.2012. 5.2. Sub section 3-A of section 7 of Gratuity Act is also relevant for determination of the present controversy. Perusal of the said sections leaves no room for any doubt that in case gratuity is not released to an employee within a period of 30 days from the date it becomes payable, the employee in question would be entitled to simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term loans as the Government may specify by notification. There is, however, one exception to the payment of interest envisaged under sub section 3 Page 14 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined of section 7 of the Act which provides for in the proviso under sub section 3-A of section 7. Perusal of the said proviso, reveals that no interest would be payable, "if delay in payment is due to fault of the employee and the employer has obtained the permission in writing from the Controlling Authority for the delayed payment on this ground".
6. Admittedly in this case neither the employee can be faulted to exclude the employer for payment of interest, nor the employer has obtained the permission in writing from the Controlling Authority. The only ground raised before the Court is that approval application which was rejected was pending for the adjudication before this Court, however, for that ground the fault cannot be attributed to the employee for payment of the gratuity under the proviso of sub section 3-A of section 7 of the Act. It is contended by the petitioner that the exercise of pay fixation was done on dismissal of intra Court Appeal and thereafter, immediately the payment of gratuity is done. In the opinion of this Court, for that reason, employee cannot be held entitled for the interest which is provided under the statute itself.
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NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined
7. This Court has referred the decision rendered by the Apex Court in the case of H.Gangahanume Gowda Versus Karnataka Agro Industries Corporation Ltd. reported in 2003 3 SCC 40 wherein, it is held by the Apex Court that interest on delayed payment of the gratuity would be denied only on the ground that the payment of gratuity was due to the fault of the employees and they had obtained permission in writing from the learned Controlling Authority for the delayed payment, on that ground. There is a clear mandate in the provision of section 7 of the Act to the employer for payment of gratuity within time and to pay the interest on the delayed payment of gratuity. There is also provision to recover the amount of gratuity with the compound interest, in case of the payment of gratuity payable was not paid by the employer for payment of section 8 of the Act. If the employer did not satisfy the mandatory requirement of the proviso to section 7(3)-A, no discretion was left to deny the interest to the appellant on delayed payment of gratuity. The relevant paragraph is reproduced herein below:-
"7. It is evident from Section 7(2) that as soon as gratuity Page 16 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under sub- section 3(A) of Section 7, if the amount of gratuity is not paid by the employer within the period specified in sub-section (3), he shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits; provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. Under Section 8, provision is made for recovery of gratuity payable under the Act, if not paid by the employer within the prescribed time. The Collector shall recover the amount of gratuity with compound interest thereon as arrears of land revenue and pay the same to the person entitled.Page 17 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025
NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined A penal provision is also made in Section 9 for non-payment of gratuity. Payment of gratuity with or without interest as the case may be does not lie in the domain of discretion but it is a statutory compulsion. Specific benefits expressly given in a social beneficial legislation cannot be ordinarily denied. Employees on retirement have valuable rights to get gratuity and any culpable delay in payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala & Ors. vs. M.Padmanabhan Nayyar [1985 (50) FLR 145]. Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub-section (3A) was added to Section 7 by an amendment, which came into force with effect from 1st October, 1987. In the case of Charan Singh vs. M/s. Birla Textiles and Another [1988 (57) FLR 543 SC], this aspect was noticed in the following words:
"4. There was no provision in the Act for payment of interest when the same was quantified by the Controlling Authority and before the Collector was approached for its realization. In fact, it is on the acceptance of the position that there was a lacuna in the law that Act 22 of 1987 brought about the incorporation of sub-section 3(A) in Section 7. That provision has prospective application."
8. The other ground on which the petitioner has challenged the order of learned Controlling Authority is that entitlement arises only after the dismissal of the intra court appeal. To test the argument if one would examine again the provision section 4 of the Payment of Gratuity Act, then it emerges that sub section (1 to 6) of section 4 Page 18 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined of the Gratuity Act provides that gratuity shall be payable to the employees on the termination of the office employment after he has rendered continuous service for not less than five years in the case where (a) he is superannuated; (b) he retired or resigned or;(c) on his death or disablement due to accident or disease.
9. Section 4 of the Act, read conjointly with Section 2(r) of the Act, where the superannuation is defined and it says thatin relation to an employee, means the attainment by the employee of such age as is fixed in the contract or conditions of service at the age on the attainment of which the employee shall vacate the employment. In the opinion of this Court, the employee's entitlement to gratuity arises immediately upon attaining the age of superannuation. Therefore, the pendency of the proceedings before this Court would not disentitle the employee from receiving the gratuity under the Payment of Gratuity Act.
10. The ground of delay which was raised by the learned advocate for the petitioner would also not come for the rescue on the ground that it is onerous responsibility of the employer to determine the amount of gratuity Page 19 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined payable to a retiring employee. In absence of any fault on the part of the employee the amount of gratuity cannot be withheld. This Court has referred the decision rendered by the Apex Court in the case of Y.K. Singla Versus Punjab National Bank & Others reported in 2003 3 SCC 472 wherein, before the Apex Court the case was that due tot he pendency of the criminal proceedings, the amount of gratuity was withheld. In that background, the Apex Court has held as under:-
"12. The right to withhold gratuity, is an issue separate and distinct, from the claim of interest, which has been raised by the appellant. The question that arises for consideration is, whether an employee whose gratuity has been withheld under Regulation 46(2) of the 1995 Regulations, would he be entitled to interest on the withheld payment of gratuity, if he is found not to be at fault?
13. According to the simple logic of the appellant, since his gratuity was withheld from 1996 (when he retired from service) till 2010 (when gratuity was eventually released to him), i.e., for a period of 14 years, for no fault of his, he is most definitely entitled to interest on the delayed payment. It is, however, not the simple logic of the appellant, which will determine the controversy in hand. For, logic gave rise to diametrically opposite views, one of which was expressed by the Writ Court, and the other by the Letters Patent Bench. We shall therefore endeavour to search for a legal answer, to the issue in hand.
14. The 1995, Regulations, are silent on the subject of an Page 20 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025 NEUTRAL CITATION C/SCA/3197/2025 JUDGMENT DATED: 05/05/2025 undefined employee's rights whose gratuity has been withheld, even in circumstances where it has eventually been concluded, that he was not at fault. This is exactly the situation in the present controversy, inasmuch as, the appellant's retiral benefits including gratuity, were withheld on 31.10.1996 when he retired on attaining the age of superannuation. The aforesaid withholding, was on account of a pending criminal proceeding. The said withholding has appropriately been considered as valid, under Regulation 46(2) of the 1995, Regulation. But the appellant was acquitted from the criminal prosecution initiated against him on 31.10.2009. As such, it is inevitable to conclude, that his gratuity was withheld without the appellant being at fault. It is in the aforesaid background, that we shall venture to determine the claim of the appellant for interest, despite the PNB having validly withheld his gratuity under Regulation 46(2) of the 1995, Regulations."
11. Considering the overall circumstances, this Court did not find any infirmity in the directions issued by the learned Controlling Authority confirmed by the learned Appellate Authority under the Payment of Gratuity Act. Hence, this petition being devoid of any merits deserves to be dismissed.
12. Resultantly, this petition being Special Civil Application No.3197 of 2025 is dismissed.
(M. K. THAKKER,J) NIVYA A. NAIR Page 21 of 21 Uploaded by MRS. NIVYA ABHAY NAIR(HC01901) on Wed May 07 2025 Downloaded on : Thu May 08 01:04:56 IST 2025