Rachana M Patwardhan vs Regional Manager, National ...
2023 Latest Caselaw 2170 Bom

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                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    ORDINARY ORIGINAL CIVIL JURISDICTION

                                        WRIT PETITION NO.4360 OF 2022

                     Rachana M. Patwardhan                                 ...Petitioner
        Digitally
        signed by          vs.
        VISHAL
VISHAL  SUBHASH
SUBHASH PAREKAR
                     Regional Manager,
PAREKAR Date:
        2023.03.09
                     National Insurance Company Limited and Others         ...Respondents
        14:17:41
        +0530

                     Mr. D.J. Dalal, for the Petitioner
                     Mr. Piyush Shah a/w. Mr. Jay Vora, for Respondent No. 1.
                     Ms. Anusha Amin, for Respondent Nos. 2 and 3.

                                              CORAM :     N. J. JAMADAR, J.

                                              DATE :      MARCH 06, 2023

                     P.C.:

1. The challenge in this petition is to an order dated 7th January,

2022 passed by the Appellate Authority under section 7(7) of the

Payment of Gratuity Act, 1972 (the Act, 1972) whereby the

Appellate Authority declined to interfere with an order dated 21 st

June, 2021 passed by the Controlling Authority under the Act,

1972 rejecting the application preferred by the petitioner for the

payment of differential interest on gratuity under rule 10(1) of the

Central Rules.

2. By the said application, the petitioner sought a direction to

the respondent No. 1 employer to pay interest on the original

gratuity amount of Rs. 12,80,885/- for the period 24 th April, 2018 to

18th August, 2020.

                     Vishal Parekar                                                             ...1
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3. The petitioner retired from service on 30th November, 2015 as

an Assistant Manager putting in 37 years and 10 months

continuous service. As the respondent No. 1 committed default in

payment of gratuity within the statutory period, the petitioner

preferred an application before the Controlling Authority. By an

order dated 22nd December, 2017 the Controlling Authority directed

respondent No. 1 to pay gratuity quantified at Rs. 12,80,885/- along

with interest @ 10% p.a. w.e.f. 1 st December, 2015 till the date of

actual payment, under section 7(3-A) of the Act, 1972.

4. The respondent No. 1 preferred an appeal before the Appellate

Authority. By an order dated 12th October, 2019 the Appellate

Authority dismissed the appeal. In the meanwhile, the respondent

No. 1 deposited the original amount of gratuity along with interest

@ 10% till the date of deposit i.e. 24 th April, 2018 with Controlling

Authority. However, the said amount came to be credited to the

account of the petitioner on 18th August, 2020. The petitioner, thus,

preferred an application before the Controlling Authority for the

differential interest for the period 24 th April, 2018 to 18th August,

2020.

5. As noted above, by an order dated 21 st June, 2021 the

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Controlling Authority rejected the application opining, inter alia,

that the respondent No. 1 had already deposited the gratuity along

with interest till the date of deposit i.e. 24th April, 2018.

6. The Appellate Authority was also of the view that having

already deposited the original amount of gratuity along with

interest on 24th April, 2018 itself, the respondent No. 1 employer

can not be compelled to pay the differential interest as respondent

No. 1 was exercising the statutory remedy of appeal under section

7(7) of the Act, 1972.

7. Mr. Dalal, learned counsel for the petitioner strenuously

submitted that the Controlling Authority as well as the Appellate

Authority committed error in rejecting the claim for differential

interest. It was submitted that the liability to pay interest on

gratuity is statutory. No discretion is left with the authorities to

exempt or relieve the employer from payment of interest, if the

gratuity is not paid within the stipulated period, unless a case is

made out under the provisions of section 7(3-A) of the Act, 1972.

8. Mr. Dalal would urge that in the case at hand, by an order

dated 22nd December, 2017 the respondent No. 1 was directed to pay

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simple interest on the unpaid gratuity from 1 st December, 2015 till

the date of actual payment. Since, the amount of gratuity along with

interest came to be paid to the petitioner on 18 th August, 2020, the

date of deposit by the respondent No. 1 of this amount with the

Controlling Authority is of no significance.

9. Mr. Dalal placed a strong reliance on the following

observations made in the case of H. Gangahanume Gowda vs.

Karnataka Agro Industries Corpn. Ltd.1

7] ...... 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(3-A), no interest shall be payable if delay in payment of gratuity has obtained permission in writing from the controlling authority for the delayed payment on that ground.

10. Mr. Dalal submitted that the authorities below misdirected

themselves in construing the deposit of the amount with the

Controlling Authority as the compliance with the obligation of the

employer to pay the amount of gratuity along with interest. Mr.

Dalal submitted that the deposit of the said amount with the

Controlling Authority can not be said to be unconditional in as much

as respondent No. 1 had requested the Controlling Authority not to 1 (2003) 3 Supreme Court Cases 40.

Vishal Parekar                                                                   ...4
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release the said amount till the decision of the appeal. Such stand

does not arrest the accrual of interest, submitted Mr. Dalal.

11. To bolster up this submission, Mr. Dalal placed reliance on a

judgment of this Court in the case of Sharda Nandlal Das vs.

Assistant Labour Commissioner, (Central) Nagpur and Controlling

Authority2. In the said case, after the appeal was dismissed by the

Appellate Authority, the employer therein had addressed a

communication to the Controlling Authority not to release the

amount as it intended to challenge the order of Appellate Authority

before the High Court. This Court held by addressing such

communication, the employer ran the risk of paying compound

interest under section 8 of the Act, 1972 from the date of dismissal

of the appeal.

12. I find it difficult to accede to the submission of Mr. Dalal that

the aforesaid analogy can be applied to the facts of the case at hand.

In the instant case, the respondent No. 1 had deposited the amount

of original gratuity of Rs. 12,80,885/- along with interest @ 10% p.a.

from 1st December, 2015 to 24th April, 2018. During the pendency of

the appeal, the appeal came to be dismissed on 12 th October, 2019. It

does not seem that during the pendency of the appeal, the 2 2019 (4) Mh,L.J. 70

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petitioner had sought withdrawal of the amount deposited by

respondent No. 1 employer.

13. The emphasis on the actual payment, laid by Mr. Dalal, cannot

be construed to the extreme to mean that despite making the

deposit of the amount with the Controlling Authority and having

done all that which was in its power, respondent No. 1 employer

could still be held liable to pay interest on the said amount.

Therefore, I do not find any merit in the petition.

14. The petition stands dismissed.

                                          (N. J. JAMADAR, J.)




Vishal Parekar                                                           ...6