Sunil Ramanlal Patel vs Ahmedabad Municipal Corporation
2023 Latest Caselaw 8604 Guj

Gujarat High Court

Sunil Ramanlal Patel vs Ahmedabad Municipal Corporation on 12 December, 2023

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      C/SCA/21308/2019                                  ORDER DATED: 12/12/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 21308 of 2019

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                         SUNIL RAMANLAL PATEL
                                 Versus
                    AHMEDABAD MUNICIPAL CORPORATION
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Appearance:
MR PRIYANK P JHAVERI(5303) for the Petitioner(s) No. 1
MS SURBHI BHATI, AGP for the Respondent(s) No. 2,3
MR HAMESH C NAIDU(5335) for the Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 2,3
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     CORAM:HONOURABLE MRS. JUSTICE MAUNA M. BHATT

                                 Date : 12/12/2023

                                   ORAL ORDER

1. This petition is filed challenging the order dated 07.05.2018 of the Controlling Authority in Gratuity Case No. 527 of 2017 and the order of the Appellate Authority dated 16.07.2019 in Appeal No. 104 of 2018, wherein the application filed by the petitioner seeking gratuity for a period of 36 years and the payment of interest on delayed payment of gratuity has been rejected.

2. Notice for final disposal was issued by this Court vide order dated 5.12.2019. Considering the issue involved and with the consent of both the parties, this matter is taken up for final hearing.

3. The facts in brief are as under: -

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The petitioner joined the service with respondent on 09.10.1980. Subsequently his service was regularized and he retired upon attaining the age of superannuation on 28.02.2017. Pursuant to his retirement, the petitioner made an application for payment of gratuity under the provisions of Payment of Gratuity Act, 1972 ('the Act' for short). The same was considered and an amount of Rs.8,11,920/- was quantified.

The said amount was quantified by counting 34 years of service of the petitioner. Aggrieved by the quantification of gratuity, the petitioner preferred an application being Gratuity Case No. 527 of 2017. The said application was rejected by an order dated 07.05.2018. Against the order dated 07.05.2018, in Gratuity Case No. 527 of 2017, the petitioner preferred Appeal No. 104 of 2018 and the same was rejected by order dated 16.07.2019. Aggrieved by the orders dated 07.05.2018 and 16.07.2019 the present petition is filed.

4. Heard learned advocate Mr. Priyank Jhaveri for the petitioner. He submitted that the order of the Controlling Authority dated 07.05.2018 is erroneous because despite 36 years of service by the petitioner, he was paid gratuity by counting service of 34 years. Further, though amount of gratuity was paid belatedly, the Controlling Authority erred in not awarding interest. For payment of interest Leaned Advocate, relied upon the decision of this Court dated 28.09.2015 in Special Civil Application No. 13384 of 2015, wherein the interest was awarded on the delayed payment of gratuity.

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4.1 Against the order of Controlling Authority dated 07.05.2018, the petitioner preferred appeal and the Appellate Authority also rejected the appeal by not counting 36 years of service and also rejected the appeal for payment on interest on delayed payment of gratuity.

5. On the other hand, learned advocate Mr. Hamesh Naidu for the respondent placing reliance on the affidavit submitted that the petitioner joined the service on 09.10.1980 and superannuated on 28.02.2017. The Controlling Authority in the order has rightly considered that for the year 1980-81 and 1982-83, the petitioner had not completed 240 days in a year and therefore out of total service put in by the petitioner deducting these two years, the gratuity was calculated for 34 years of service. The order of Controlling Authority is correct and no interference of this Court is called for.

5.1 On the aspect of payment of interest learned Advocate submitted that there were two service books of the petitioner and to verify the correctness of the service book, the delay occasioned, which was not deliberate. The delay being procedural in nature, the Controlling Authority had rightly not awarded interest, again confirmed by the Appellate Authority and hence no interference is called for.

6. Considered the submissions. Undisputedly, the petitioner had joined the service on 09.10.1980 and retired upon attaining the age of superannuation on 28.02.2017. As per petitioner's own application at Annexure-A, he joined in the year 1980, regularized in the year 1983 and retired in the year

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2017. His last salary was Rs.41,392/- which the Controlling Authority had considered and awarded gratuity of Rs.8,11,920/- by counting 34 years of service. The authorities in the order had observed that for the year 1980-81 and 1982- 83, the petitioner had not completed 240 days in a year and therefore though he had put 36 years of service, the gratuity was quantified by deducting these two years.

7. The Hon'ble Supreme Court in the case of Lalappa Lingappa V/s. Laxmi Vishnu Textile Mills Ltd. reported in 1981 (2) SCC 238, has held as under:

"In our judgment, the High Court rightly observed : "It is important to bear in mind that in Explanation I the legislature has used the words 'actually employed'. If it was contemplated by Explanation I that it was sufficient that there should be a subsisting contract of employment, then it was not necessary for the legislature to use the words 'actually employed'." It is not permissible to attribute redundancy to the legislature to defeat the purpose of enacting the Explanation. The expression 'actually employed' in Explanation I to s.2 (c) of the Act must, in the context in which it appears, mean 'actually worked'. It must accordingly be held that the High Court was right in holding that the permanent employees were not entitled to payment of gratuity under

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sub-s. (1) of s.4 of the Act for the years in which they remained absent without leave and had 'actually worked for less than 240 days in a year."

8. Considering the fact that the petitioner for the year 1980- 81 and 1982-83, had not completed 240 days in a year, in the opinion of this Court there is no error in the order of Controlling Authority, in granting gratuity by counting 34 years of service. This is not a case where, petitioner was not granted gratuity from the date of his initial appointment. Consequently there is no error in order of the Appellate Authority confirming the quantification of gratuity done by the Controlling Authority by counting 34 years of service.

9. In relation to interest claimed on delayed payment of Gratuity, the Controlling Authority has recorded that there were two service books of the petitioner and for ascertainment of correctness of the service books, the delay occasioned and therefore no interest is payable. The Appellate Authority while confirming the order of the Controlling Authority for not awarding interest on delayed payment had not assigned reasons. Section 7(3) and Section 7(3A) of the Act reads as under:-

"7. Determination of the amount of gratuity.

xxxxxxx (3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to

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whom the gratuity is payable.

(3A) If the amount of gratuity payable under sub-section (3) is not paid by the 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:

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 this ground."

10. Under Section 7(3) of the Act, the employer shall pay the gratuity payable to the employee, within a period of 30 days. Section 7(3A) of the act, provides that if the gratuity payable Under Section 7(3), is not paid within 30 days, the employer from the date of gratuity payable till the actual date of payment, shall pay simple interest at the rate not exceeding the rate notified by the Central Government. Proviso to section 7(3A) refers that interest shall not be payable if the delay in payment is due to fault of employee. In the present case, delay had occasioned for ascertainment of correctness of the service book. This delay in the opinion of this court cannot be termed

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as fault of employee. Therefore, in view of Section 7(3A) of the Act, the petitioner is entitled for the payment of interest @ 10%.

11. Respondents are therefore directed to pay interest @10%, on the Gratuity paid, after 30 days from the date of petitioner's superannuation till the actual date of payment. The respondents are further directed to pay such amount within a period of 6 weeks from the date of receipt of this order.

12. With the above observation and directions, this petition is partly allowed. The order of controlling authority and Appellate Authority is modified to the above extent. The petition is disposed of accordingly.

(MAUNA M. BHATT,J) SHRIJIT PILLAI