Chief Administrative Officer, Gujarat ... vs Pareshkumar Munikumar Desai
2025 Latest Caselaw 8026 Guj

Gujarat High Court

Chief Administrative Officer, Gujarat ... vs Pareshkumar Munikumar Desai on 18 November, 2025

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                             C/SCA/14066/2024                                        ORDER DATED: 18/11/2025

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                                  IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                  R/SPECIAL CIVIL APPLICATION NO. 14066 of 2024

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                          CHIEF ADMINISTRATIVE OFFICER, GUJARAT WATER SUPPLY AND
                                              SEWERAGE BOARD
                                                    Versus
                                   PARESHKUMAR MUNIKUMAR DESAI & ORS.
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                       Appearance:
                       NIYATI D CHAUHAN(9082) for the Petitioner(s) No. 1
                       MS ASHLESHA M PATEL(6127) for the Respondent(s) No. 1
                       NOTICE SERVED for the Respondent(s) No. 2,3
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                          CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK

                                                        Date : 18/11/2025

                                                          ORAL ORDER

1. Present petition is filed by the petitioners under Articles 226 and 227 of the Constitution of India and under the provisions of the Payment of Gratuity Act, 1972 for quashing and setting aside the impugned order dated 29/30.11.2022 passed by the Controlling Authority, Ahmedabad in Gratuity Case No.589 of 2022 and the order dated 17.04.2023 passed by the Appellate Authority, Ahmedabad.

2. Heard Ms.Niyati Chauhan, learned counsel for the petitioner and Ms.Ashlesha Patel, learned counsel for the respondent. Perused the material available on record.

3. Mr.Chauhan, learned counsel appearing for the petitioner

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submits that the impugned order passed by the Controlling Authority and confirmed by the Appellate Authority awarding interest at the rate of 10% is illegal, unjust and contrary to the facts and material available on record and contrary to the provisions of the Payment of Gratuity Act. Ms.Chauhan, learned counsel urges the Court that the impugned orders passed by the concerned authority may be quashed and set aside and present petition may be allowed.

4. I have perused the material along with the relevant documents available on record. I have also gone through the impugned order passed by the Controlling Authority and confirmed by the Appellate Authority.

5. It appears that the respondent was retired from the service on 31.08.2018 and, therefore, as per rules, he was entitled to get the payment of gratuity on that day i.e. 31.08.2018. However, the authority has not paid the amount of gratuity on that day. Therefore, the respondent - workman approached Controlling Authority and the Controlling Authority directed the concerned authority to pay 10% simple interest on the gratuity amount from 01.09.2018 to 01.12.2019. Against the said order, the concerned authority had approached the Appellate Authority by filing Gratuity Appeal. After hearing both the parties, the Appellate Authority confirmed the order passed by the Controlling Authority and dismissed the appeal filed by the concerned authority.

6. This Court has, while deciding similar issue in Special Civil Application No. 2717 of 2022, held and observed in paras - 8

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to 14 as under:-

"8. At this stage, it is fruitful to refer the decisions of the Hon'ble Apex Court and this Court with regard to awarding interest while interpreting provisions of Section 7(3-A) of the Payment of Gratuity Act.

9. In the case of State of Uttar Pradesh and others vs. Dhirendra Pal Singh reported in (2017) 1 SCC 49 Hon'ble Apex Court has held as under:-

"Head Note:B Service Law- Retirement/Superannuationretiral Benefits- Gratuity and Pension-Interest-Withholding of 30% of gratuity and pensionary dues found to be invalid.

9. In State of Kerala and others v. M. Padmanabhan Nair[1], this Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest. In said case the Court approved 6% per annum interest on the amount of pension decreed by the trial court and affirmed by the High Court. As to the rate of interest on amount of gratuity Section 7(3-A) of Payment of Gratuity Act, 1972, it is provided that if the amount of gratuity payable is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which 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. It further provides that no such interest shall be payable if the delay in 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. In the present case, there is no plea before us that the appellants had sought any permission in writing from the controlling authority. As to the delay on the part of employee, it has come on the record that he made representations, whereafter he filed a suit in respect of withheld amount of gratuity and pension. In Y.K. Singla v. Punjab National Bank and others[2], this Court, after discussing the issue relating to interest payable on the amount of gratuity not paid within time, directed that interest at the rate of 8% per annum

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shall be paid on the amount of gratuity.

10. In the light of law laid down by this Court, as above, and further considering the facts and circumstances of the case, we modify the impugned order passed by the High Court in respect of interest directed to be paid on the amount of withheld gratuity and pension. We direct that the appellants shall pay interest at the rate of 6% per annum on the unpaid amount of pension from the date it had fallen due and interest at the rate of 8% per annum on the unpaid amount of gratuity from the date of retirement of the employee."

10. In the decision in the case of Ashvinkumar Ramniklal Jani vs. State of Gujarat reported in 2022 SC OnLine Guj 575, the Court has held as under:-

"7.XXX

4. This Court has heard learned AGP Ms.Asmita Patel who has fairly submitted the Court may pass appropriate order considering the decision rendered in case of H.Gangahanume Gowda Vs. Karnataka Agro Industries Corporation Ltd. reported in (2003) 3 SCC 40. The Apex Court in the said authority has decided the interest on delayed payment of gratuity. It is also held that the same is mandatory and not discretionary. When it is not the case of the respondent that the delay in the payment of gratuity was due to the fault of the employee and that it had obtained permission in writing from the controlling authority for the delayed payment on that ground, the respondent had been directed to pay interest @ 10% on the amount of gratuity to which the appellant is entitled from the date it became payable till the date of payment of the gratuity amount.

6. The Apex Court in the above referred decision has held that the grant of gratuity well within time mandatory and not discretionary wherein the Apex Court has held that:-

"9. It is clear from what is extracted above from the order of learned Single Judge that interest on delayed payment of gratuity was denied only on the ground that there was doubt whether the appellant was entitled to gratuity, cash equivalent to leave etc., in view of divergent opinion of the courts during the pendency of enquiry. The learned Single Judge having held that the appellant was entitled for payment of gratuity was not right in denying the interest on the delayed payment of gratuity having due regard to Section 7(3A) of the Act. It was not the case of the respondent that the delay in the payment of gratuity was due to the fault of the

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employee and that it had obtained permission in writing from the controlling authority for the delayed payment on that ground. As noticed above, there is a clear mandate in the provisions of Section 7 to the employer for payment of gratuity within time and to pay interest on the delayed payment of gratuity. There is also provision to recover the amount of gratuity with compound interest in case amount of gratuity payable was not paid by the employer in terms of Section 8 of the Act. Since the employer did not satisfy the mandatory requirements of the proviso to Section 7(3A), no discretion was left to deny the interest to the appellant on belated payment of gratuity. Unfortunately, the Division Bench of the High Court, having found that the appellant was entitled for interest, declined to interfere with the order of the learned Single Judge as regards the claim of interest on delayed payment of gratuity only on the ground that the discretion exercised by the learned Single Judge could not be said to be arbitrary. In the light of what is stated above, the learned Single Judge could not refuse the grant of interest exercising discretion as against the mandatory provisions contained in Section 7 of the Act. The Division Bench, in our opinion, committed an error in assuming that the learned Single Judge could exercise the discretion in the matter of awarding interest and that such a discretion exercised was not arbitrary.

10. In the light of the facts stated and for the reasons aforementioned, the impugned order cannot be sustained. Consequently, it is set aside. The respondent is directed to pay interest @ 10% on the amount of gratuity to which the appellant is entitled from the date it became payable till the date of payment of the gratuity amount. The appeal is allowed accordingly with cost quantified at Rs. 10,000/-."

11. In the decision of full bench of High Court of Judicature at Patna, in the case of Champaran Sugar Company Ltd. Vs. Joint Labour Commissioner and Appellate Authority and others in Civil Writ Jurisdiction Case No. 1090 of 1985, dated 11 November 1986, the Hon'ble Full Bench has observed as under:-

"Head Note:-2 Payment of Gratuity Act, 1972, Ss. 4, 7 and 8- Payment of interest on delayed payments of gratuity - Right to interest on delayed payments of gratuity is statutory, the same can be granted in the absence of an express claim therefore in the application of the employee before the Controller:

19. To sum up on this aspect, answer to the second question is rendered in the affirmative and it is held that the right to interest on

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delayed payment of gratuity is statutory and the same can be granted in the absence of an express claim therefore in the application of the employee before the Controller."

12. Considering the facts and circumstances of the case, I am of the opinion that the right to interest on delayed payment of gratuity is statutory and the same can be granted in favour of the employee concerned at the time of his retirement. Further in case of H. Gangahanume Gowda Vs. Karnataka Agro Industries Corporation Ltd. reported in (2003) 3 SCC 40, the Apex Court has decided the interest on delayed payment of gratuity and the same is mandatory and not discretionary.

13. Further, the pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest.

14. In view of the aforesaid facts and in light of the provisions of law and considering the settled legal principle, I am of the opinion that present petition is required to be dismissed and the impugned order passed by the both the authorities deserve to be confirmed, as it is provided under Section 7(3-A) of the Payment of Gratuity Act that on the date of retirement, the amount of gratuity is required to be paid to the employee and in case of failing, such employee would be entitled for the interest over the late payment made in favour of the concerned employees at the rate of 10% simple interest."

7. Considering the facts and circumstances of the case and on perusal of the oral judgment dated 19.06.2024 passed in Special Civil Application No. 2717 of 2022 whereby this Court, after referring to the decisions of the Hon'ble Supreme Court as well as this Court, has decided the similarly situated issue, I am of the opinion that the right to interest on delayed payment of gratuity is statutory and the same can be granted in favour of the employee concerned at the time of his retirement.

8. In view of the above and for the foregoing reasons, the

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present petition is devoid of any merits and the same is required to be dismissed and no interference is required to be made in the impugned order. Accordingly, the present petition is dismissed. Notice is discharged.

9. The amount, if any, lying before the concerned Court / Authority be disbursed, as per the direction issued by the Controlling Authority, in favour of the respondent - workman after verifying his bank details and after following due procedure of law through R.T.G.S. or appropriate mode within period of four weeks from the date of receipt of copy of present order.

(HEMANT M. PRACHCHHAK,J) V.R. PANCHAL