Orissa High Court
Managing Director vs Managobinda Barik & Ors. ....... Opp. ... on 28 October, 2025
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.10606 of 2019
(In the matter of an application under
Articles 226 & 227 of the Constitution of India)
Managing Director, Odisha
State Cooperative Bank Ltd,
Bhubaneswar ....... Petitioner
-Versus-
Managobinda Barik & Ors. ....... Opp. Parties
Advocate for the parties
For Petitioner : Mr. K.P. Nanda, Advocate
Assisted by
Mr. D. Panigrahi, Advocate
For Opp. Parties : Mr. P.K. Bhuyan,
Advocate
----------------------------
CORAM: JUSTICE SANJAY KUMAR MISHRA
----------------------------------------------------------------------------
Date of Hearing: 10.10.2025 Date of Judgment: 28.10.2025
----------------------------------------------------------------------------
S.K. Mishra, J.
1. This writ petition has been preferred by the
Petitioner-Bank challenging the order dated 08.02.2019
passed by the Appellate Authority under P.G. Act-cum-
Joint Labour Commissioner (O.P. No.2) in P.G. Appeal
Case No.4 of 2018/10/2019, vide which the Opposite
Party No.2 confirmed the order dated 11.04.2018 passed
in P.G. Case No.20 of 2017 by the Controlling Authority
under the Payment of Gratuity Act, 1972, shortly, "the
P.G. Act".
2. Though the confirming order passed by the
Appellate Authority has been challenged on various
grounds, during hearing, relying on a recent order dated
09.09.2025 passed by the coordinate Bench in W.P.(C)
No.20586 of 2022 (M.D., Odisha State Co-Operative
Bank Ltd., Bhubaneswar Vs. Appellate Authority
under Payment of Gratuity Act cum Joint Labour
Commr, BBSR & Ors,) learned Counsel for the Petitioner
submitted that the Petitioner-Bank would like to
challenge the impugned order passed by the Appellate
Authority confining it to the rate of interest of 10%
awarded by the Controlling Authority, which was also
erroneously confirmed by the Appellate Authority.
3. The said submission of the learned Counsel
for the Petitioner was also duly recorded vide order dated
23.09.2025. Paragraph Nos.3 & 4 of the said order dated
23.09.2025, being relevant, are reproduced below:-
"3. Learned Counsel for the Petitioner
submits, though impugned is the order dated
08.02.2019 passed in P.G. Appeal Case No.4
of 2018/10/2019, as at Annexure-1, as per
the instruction received, he would like to
confine the prayer made in the writ
petition regarding the quantum of
interest awarded by the Controlling
Authority under the Payment of Gratuity
Act, which was confirmed by the Appellate
Authority vide the impugned order.
4. He further submits, in a recent order
dated 09.09.2025 passed by the
Coordinate Bench in WP(C) No.20586 of
2022, it held that six per cent interest is
payable on the gratuity amount."
(Emphasis Supplied)
4. Learned Counsel for the Petitioner, relying on
the said order passed in M.D., Odisha State Co-
Operative Bank Ltd (Supra), submitted that the
impugned order passed by the Appellate Authority, vide
which, apart from confirming the direction given by the
Controlling Authority for payment of gratuity to the
applicant Employee, it was also erroneously confirmed
that the rate of interest to be 10%, to be paid on the
unpaid gratuity. Hence, the said order deserves
interference.
5. In response to the said submission made by
the learned Counsel for the Petitioner-Bank so also order
passed by the coordinate Bench, learned Counsel for the
Opposite Party No.1 submitted that in W.P.(C) No.20586
of 2022, the coordinate Bench passed an incorrect order
that the concerned employee is entitled to interest at the
rate of 6%, even though there is a specific provision
under sub section (3A) of section 7 of the P.G. Act to pay
interest and the Central Government, exercising its power
conferred under sub section (3A) of section 7 of the P.G.
Act, has notified since 01.10.1987 to pay interest @ 10%,
which is still in vogue.
5.1. Learned Counsel for the Opposite Party No.1
further submitted that the said order in W.P.(C) No.20586
of 2022 has been passed in ignorance of the provisions
of the governing statute, so also earlier judgments of this
Court as well as the Supreme Court. Hence, such order
is rendered per incuriam. To substantiate his
submission, learned Counsel for the Opposite Party No.1
relied on the Judgment passed by the Supreme Court in
H.Gangahanumane Gowda Vs. Karnataka Agro
Industries Corporation Ltd, reported in (2003) 3 SCC
40, wherein the Respondent was directed to pay interest
@10% per annum on the gratuity amount payable to the
Appellant, from the date it became due till the date of
actual payment of gratuity.
5.2. Learned Counsel for the Opposite Party No.1,
relying on a recent order of the Supreme Court dated
03.03.2025, passed in SLP(C) No. 4468 of 2022 (Gagan
Bihari Prusty Vs. Paradip Port Trust & Ors),
submitted that while dealing with a similar issue
regarding rate of interest, it is held by the Supreme Court
that the direction is given by the Single Judge Bench of
this Court to pay interest @ 6% on unpaid gratuity,
which was also erroneously confirmed by the Division
Bench in Writ Appeal No. 322 of 2019, is not justified. It
was further held that an employee is entitled to 10%
simple interest per annum on delayed gratuity as an
enforceable statutory right and any deviation amounts to
gross illegality. Learned Counsel further submitted that,
awarding of lesser interest, such as 6%, as ordered by the
coordinate Bench in W.P.(C) No.20586 of 2022, is legally
untenable.
5.3. Learned Counsel for the Opposite Party No.1
further submitted that, earlier also in M.D., Odisha
State Co-operative Bank LTD., Bhubaneswar V.
Prafulla Chandra Patnaik & Ors., reported in 2025 (I)
ILR-CUT-1314, this Court categorically observed that, the
Notification dated 01.10.1987 of the Central Government,
prescribing 10% simple interest per annum continues to
be valid as well as in force. The said judgment passed by
this Court was not brought to the notice of the coordinate
Bench, which has passed the order in W.P.(C) No.20586
of 2022 .
5.4. Learned Counsel for the Opposite Party No.1
placed reliance on the judgments of this Court in M.D.,
OSIC Vs. Abhay Kumar Samantray reported in 2022
(III) ILR- CUT- 639, as well as Order dated 31.10.2022
passed in W.P.(C) No.3329 of 2018 (Aska Cooperative
Central Bank Ltd., Vs. Controlling Authority under
Payment of Gratuity Act-Cum-Assistant Labour
Commissioner, Berhampur & Anr.), wherein it was held
that the Notification dated 01.10.1987, which prescribes
payment of 10% simple interest per annum by the
employer to his employee, in the event of delayed
payment of gratuity, continues to be in force and not
being superseded by any fresh notification of the
Government of India varying the said rate of interest.
6. At this juncture, it would be apt to reproduce
below the provision enshrined under sub-section (3A) of
Section 7 of the P.G Act, for ready reference;
"(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:"
(Emphasis Supplied)
7. Admittedly, in view of the said provision
enshrined under sub-section 3(A) of section 7 of the P.G.
Act, 1972, read with the notification made by the Central
Government dated 01.10.1987, the rate of interest
payable to an employee, in the case of default in payment
of gratuity, is to be 10% from the date the gratuity
becomes payable till the date of actual payment.
8. The coordinate Bench in Mohan Dakua &
ors. Vs. Steel Authority of India Ltd. & ors., reported
in 2015 (II) ILR-CUT 178 : 2015 (I) OLR 386 : 120 (2015)
CLT 1096, while dealing with a similar issue regarding
rate of interest, held as follows:-
"5. Reading of Sub-section (3) of Section 7 gives
a clear indication for release of the gratuity
within a period of thirty days from the date it
becomes payable to the person to whom the
gratuity is payable. Similarly in Sub-section (3-A)
of Section 7, there is a statutory mandate that in
case the gratuity is not released within the time
framed, the employer is required to pay the
simple interest at such rate not exceeding the
rate notified in the notification by the Central
Government from time to time for repayment of
long term deposit as the Government may be
certified by such notification.
6. From the pleadings of the parties, it appears
that there is no latches on the part of the
petitioners in the matter of release of the
gratuity. I find force in the submissions of
the petitioners which is not only supported
by the statutory provisions as at Sub-
section (3), (3-A) of Section 7 but also
covered by a decision decided by Hon'ble
Apex Court in case of H. Gangahanume
Gowda Versus Karnataka Agro Industries
Corporation Ltd. By deciding similar
matter, the Hon'ble Apex Court was pleased
to grant interest for the delayed period @
10% as available in para-9 and 10 of the
said decision. The petitioner's case is
squarely covered under the above decision
of the Hon'ble Apex Court.
7. Further, the petitioners have also referred to
the statutory provisions as recorded to
hereinabove and they are entitled to interest for
delayed payment of Gratuity under the statute
also.
8. Under the circumstances, I allow the writ
petition directing the opposite party (S.A.I.L.) to
calculate the interest @ 10% to be paid to each of
petitioners independently. Calculation as
directed be made within a period of four weeks
from the date of communication of the order and
payment as calculated be released in favour of
each of the petitioner within a period of two
weeks thereafter".
(Emphasis Supplied)
9. In General Manager (P & EEL), Mahanadi
Coalfields Ltd. Vs. Asim Kumar Chatterjee, reported
in 122 (2016) CLT 260: 2016 LabIC 2302 : 2016 (149)
FLR 497: 2016 (II) CLR 212, referring to Mohan Dakua
(supra), this Court upheld the orders passed by the
Controlling Authority as well as confirmed order passed
by the Appellate Authority for payment of gratuity along
with 10% interest per annum. Paragraph Nos.1 and 8 to
13 of the said judgment, being relevant, are extracted
below:-
"1. The General Manager (P/EEL),
Mohanadi Coal Fields Limited, Burla,
Sambalpur, being the petitioner, has filed
this petition seeking to quash the order dated
23.04.2015 passed by the Controlling
Authority under the Payment of Gratuity Act,
1972 and Regional Labour Commission
(Central), Rourkela in Application No.
36(2)/2014-RKL-R vide Annexure-8 by which
direction has been given to the petitioner to
pay the gratuity amount of Rs. 10,00,000/-
along with interest @ 10% per annum
calculated at Rs. 3,22,192/- within a period
of 30 days from the date of receipt of the
order."
"8. In Mohan Dakua (Supra) referred to
by the learned counsel for opposite
party No. 1, this Court has held that
payment of gratuity is to be released
within a period of 30 days from the date
it becomes payable and as such, for the
delay in payment of gratuity since no
latches having been found on the part of
the employer and the employer having
not obtained prior permission from the
controlling authority for such delayed
payment, it is liable to pay interest @
10%.
9. In H. Gangahanume Gowda(supra),
the apex Court has held that in view of
the clear mandate under the provisions
of Section 7 to employer for payment of
gratuity within time and to pay interest
on the delayed payment of gratuity and
there is also provision to recover the
amount of gratuity with compounded
interest in case the 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(3- A), no discretion was left to deny
interest to the employee on belated
payment of gratuity and directed to pay
interest @10%.
10. Similarly in Kerala State Cashew
(supra) the apex Court has held that in case
the employer has obtained permission in
writing from the Controlling Authority for
delayed payment in that case no interest
shall be payable to the employee. In the
present case such permission having not
been obtained, the employer is liable to pay
interest on the gratuity amount.
11. In Y.K. Singla (supra) the apex Court
has held that Sub-section (3-A) of section 7 of
the Act, 1972 is a most relevant provision for
determination of interest to the employee and
perusal of Sub-section (3-A) of section 7 of
the Act, 1972 leaves no room for any doubt
that in case gratuity is not released to an
employee within 30 days from the date it
becomes payable under Sub-section (3) of
Section 7, the employee 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, by notification
specify.
12. In D.D. Tewari (D) Thr. LRs. (supra) the
apex Court has held that if pensionary
benefits on gratuity amount is erroneously
withheld by the employer, the employee is
entitled to interest from the date of
entitlement till the date of actual payment.
Similar view has also been taken in
Rajnagar Textile Mills(supra).
13. For the forgoing reasons and keeping in
view the judgments cited above, it is no more
res integra that the opposite party No. 1 is
entitled to get interest on the gratuity amount
payable to him and therefore, the impugned
order passed in Annexure-8 dated
23.04.2015 by opposite party No. 2 is wholly
and fully justified".
(Emphasis Supplied)
10. In Manager Director, Odisha Small
Industries Corporation Ltd. Vs. Abhay Kumar
Samantray, reported in 2022 (III) ILR-CUT 639, this
Court held as follows:-
"20. So far as awarding 10% simple interest on
the determined amount, it may not be out of
place to mention that the Central Government, in
exercise of the powers conferred by Sub-Section
(3-A) of Section 7 of the P.G. Act, 1972, vide
Notification dated 01.10.1987, notified as
follows:
"TO BE PUBLISHED IN PART II, SECTION 3,
SUB-SECTION (II) OF THE GAZETTE OF INDIA-
EXTRAORINARY) PUBLISED ON 01.10.1987
New Delhi, the 1st October, 87
NOTIFICATION
S.O. 874(E), In exercise of the powers
conferred by sub-section (3A) of section 7 of
the Payment of Gratuity Act, 1972 (39 of
1972), the Central hereby specifies ten
percent per annum as the rate of simple
interest payable for the time being by the
employer to his employee in cases where the
gratuity is not paid within the specified
period.
2. This notification shall come into force on
the date of its publication in the Official Gazette."
(No. S-70012/6/87.SS-II)
(A.K. Bhattarai)
Under Secretary"
21. Admittedly, the said Notification dated
01.10.1987 is still in force not being superseded
by any fresh Notification varying the rate of
interest as was notified by the Government of
India on 01.10.1987.
22. Hence, this Court is of the view that the
Controlling Authority under P.G. Act-
CumDivisional Labour Commissioner, Cuttack,
was justified to take into consideration the total
period of service of the Opposite Party from the
date of his initial engagement (14.11.1991) till
the date of his superannuation (31.03.2018), so
also award 10% simple interest on the
awarded amount for the delayed period, so
also ordering to pay further simple interest
@ 10% per annum till the payment is made,
if the Petitioner Corporation fails to deposit
the said ordered amount within 30 days from
the date of pronouncement of the judgment".
(Emphasis Supplied)
11. In M.D., Odisha State Co-operative Bank
Ltd. (supra), referring to various judgments of this Court
so also Supreme Court, this Court held as follows:-
"23. Law is well settled that any judgment or
order passed contrary to the statute is a nullity.
That apart, law is also well settled that any
judgment passed without taking note of the
earlier judgment of the same Court so also
Supreme Court is per incurium."
"25. This Court is also of the view that
order dated 01.05.2019 passed in W.P.(C)
No. 23834 of 2013, so also the confirmed
order passed by the division Bench in W.A.
No. 322 of 2019, are hit by the principle of
per incuriam as the Bench has passed such
an order contrary to the statute so also
without taking note of its own judgment in
Mahanadi Coal fields Ltd. (supra) so also
the earlier judgment passed by this Court in
Mohan Dakua (Supra) and judgment passed
by the Supreme Court in H. Gangahanume
Gowda (Supra) so also in Director (Trisul
Project) DRDO (Supra) pertaining to the said
issue regarding interest payable to an
employee under the P.G. Act, 1972.
26. Following the aforesaid principles, this
Court is constrained to hold that the order
passed by the coordinate Bench so also the
confirming order passed by the Division
Bench, having been rendered per incurium,
cannot be accepted, as a precedent to
decide the controversy regarding the rate of
interest in this case and wait till disposal of
SLP(C) No.4468 of 2022. Hence, this Court is of
the view that the oral prayer made by the
learned Counsel for the Petitioner to dispose of
the Writ Petition directing the Controlling
Authority to release the principal amount giving
liberty to the parties to move before this Court for
release of interest after disposal of SLP(C) No.
4468 of 2022 needs no consideration."
(Emphasis supplied)
12. The Supreme Court in H. Gangahanume
Gowda Vs. Kanataka Agro Industries Corpn. Ltd.,
reported in (2003)3 SCC 40: AIR 2003 SC 1526, held as
follows:-
"7. It is evident from Section 7(2) that as soon as
gratuity 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(3-A), 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. 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 v.
M. Padmanabhan Nair. Earlier there was no
provision for payment of interest on the
delayed payment of gratuity. Sub-section (3-
A) was added to Section 7 by an
amendment, which came into force with
effect from 1-10-1987. In the case of Charan
Singh v. Birla Textiles 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".
9. It is clear from what is extracted
above from the order of the 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 to
payment of gratuity was not right in
denying the interest on the delayed
payment of gratuity having due regard
to Section 7(3-A) 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 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 the 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(3-A), 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 to
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
first place 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/-."
(Emphasis Supplied)
13. The Supreme Court in Director (Thrisul
Project) DRDO, Andhra Pradesh Vs. P.B. Varalakshmi
and Others, reported in (2015) 15 SCC 398 directed as
follows:-
"2. The learned Additional Solicitor General
submits that in terms of the Rules the amount
can be disbursed only to the nominee, who is the
widow. Now that the inter se dispute between
the wife and the daughter has been settled, we
dispose of this appeal with the direction to the
appellant to disburse the eligible benefits to the
widow nominee who shall distribute the benefits
in terms of the compromise between her and her
daughter. The dues shall be disbursed with
interest @ 10% which is the statutory rate
fixed under the Payment of Gratuity Act,
1972".
(Emphasis Supplied)
14. In a recent order in Gagan Bihari Prusty
(Supra), which was preferred against the order dated
18.11.2021 passed in W.A No.322 of 2019, vide which
the division Bench of this Court upheld the order of the
coordinate Bench granting 6% interest on delayed
payment of gratuity, instead of 10%, the Supreme Court
held as follows:-
"1. Challenging the judgment dated
18.11.2021 passed by the High Court of
Orissa in Writ Appeal No. 322 of 2019
maintaining the order of the learned single
Judge granting interest on the delayed
payment of gratuity @ 6% per annum in
place of 10%, the petitioner is before this
Court."
"4. In our view, the said argument is of no
substances, in particular where an
employee retires and he has to receive the
gratuity belatedly, the interest would be
payable as per the notifications issued by
the Central Government without having any
excuse .Therefore, the direction of the
Single Judge maintained by the Division
Bench for payment of gratuity with interest
@ 6% per annum is not justified. The
petitioner would be entitled to get interest @
10% per annum on the amount of gratuity.
The differential amount of interest shall be
paid by the respondent within a period of
four weeks from today."
(Emphasis Supplied)
15. Since the learned Counsel for the Petitioner
relied on the order passed by the coordinate Bench in
W.P.(C) No. 20586 of 2022 to substantiate his stand that
the rate of interest on delayed payment of gratuity should
be 6%, instead of 10%, Paragraph Nos.10.2 and 10.3 of
the said order, being relevant, are extracted below:
"10.2. Therefore, this Court is not inclined to
interfere with the impugned order so far as it
relates to the direction on the Petitioner Bank to
release the gratuity amount of Rs.10,00,000/-.
However, with regard to the award of interest @
10%, it is the view of this Court that award
of interest @ 10% basing on a letter issued
by the Govt. of India on 01.10.1987, cannot
be made applicable to the present claim
taking into account the simple interest rate
available in the year 2020 and allowed by
different Public Sector Banks.
10.3. Therefore, this Court in view of the rate
of simple interest allowed by Public Sector Bank
in the year 2020, is of the view that award of
interest @ 10% requires interference of this Court.
While interfering with the same, this Court
held the Petitioner entitled to get interest @
6% per annum on the gratuity amount of
Rs.10,00,000/-. This Court accordingly while
disposing the writ petition, directs Opp. Party No.
2 to release the balance amount in favour of
Opp. Party No. 3 by calculating the interest @ 6%
on the total gratuity amount of Rs.10,00,000/-,
within a period of four (4) weeks from the date of
receipt of this order. Residue amount, if any, be
returned back to the Petitioner-Bank within the
aforesaid time period also."
(Emphasis Supplied)
16. Admittedly, so far as payment of interest to
the beneficiary for the period of delayed payment of
gratuity, there is a specific provision under Section 7(3-A)
of the P.G. Act, 1972, read with the Notification dated 1st
October, 1987, made by the Central Government in the
said regard. However, the coordinate Bench, while
passing the order dated 09.09.2025 in W.P.(C) No.20586
of 2022, did not take note of the said legal provisions
enshrined under Sub-Section (3-A) of Section 7 of the
P.G. Act, 1972, which authorizes the Central Government
to notify the rate of interest payable under the P.G.
Act,1972. That apart, it has been incorrectly indicated in
the said order that awarding interest @ 10%, basing on a
letter issued by the Govt. of India on 01.10.1987, cannot
be made applicable, even though the same is a
notification made by the Government of India in terms of
Section-7(3-A) of the P.G. Act.
17. Further, the said order has been passed in
ignorance of the previous judgments of this Court in
Mohan Dakua (supra), General Manager (P & EEL),
Mahanadi Coalfield Ltd. (Supra), M.D., Odisha State
Co-Operative Bank Ltd., Bhubaneswar Vs. Prafulla
Chandra Patnaik & ors. (supra) and Cuttack Central
Co-operative Bank Ltd. (Supra), so also the judgments
of the Supreme Court in H. Gangahanume Gowda
(supra), Director (Thrisul Project) (supra) and the recent
order dated 03.03.2025 passed in SLP(C) No. 4468 of
2022, relevant paragraphs of which have already been
reproduced in the forgoing paragraphs.
18. All the aforementioned judgments are much
prior to the order dated 09.09.2025 passed by the
coordinate Bench in W.P.(C) No. 20586 of 2022. So far as
the Petitioner-Bank, in M.D., Odisha State Co-Operative
Bank Ltd. Vs. Prafulla Chandra Patnaik & ors.
(supra), an identical issue was raised in the said case
pertaining to the selfsame Employer, i.e., Odisha State
Co-Operative Bank Ltd. This Court rendered a detailed
and reasoned judgment pertaining to the issue regarding
awarding of 10% interest on delayed payment of gratuity
taking note of the legal provisions enshrined under the
P.G. Act, 1972, notification made by the Central
Government under Sub-Section (3-A) of Section 7 of the
P.G. Act, 1972 and the judgments of this Court as well as
Supreme Court in the said regard.
19. During hearing of the present writ petition, it
has come to the notice of this Court that the learned
Counsel for the Petitioner-Bank in the present Writ
Petition was also the Counsel for the Petitioner-Bank in
the earlier writ petition, i.e., W.P.(C) No. 350 of 2017 in
M.D., Odisha State Co-Operative Bank Ltd. Vs.
Prafulla Chandra Patnaik & others, which stood
dismissed vide a detailed Judgment dated 24.12.2024. It
has also come to the notice of this Court that learned
Counsel for the writ petitioner, was also the conducting
Counsel for the selfsame Petitioner-Bank in W.P.(C) No.
20586 of 2022, wherein a contrary order has been passed
by the coordinate Bench, without reference to the statute
so also in ignorance of the previous judgments of this
Court as well as Supreme Court. It is not the case of the
Petitioner-Bank that being aggrieved by the said
Judgment, it has preferred an Intra Court Appeal and the
same is pending before this Court, or the said Appeal
has been allowed, thereby setting aside the Judgment of
this Court in M.D., Odisha State Co-Operative Bank
Ltd. (Supra).
20. During hearing of this case, being asked as to
whether the said judgment passed in W.P.(C) No.350 of
2017 was brought to the notice of the concerned Court,
Mr. Nanda, learned Counsel for the Petitioner-Bank
submitted that though it was brought to the notice of the
coordinate Bench, it distinguished the said judgment
while passing the order dated 09.09.2025 in W.P.(C) No.
20586 of 2022. But, it is revealed from the said order
passed by the coordinate Bench in W.P.(C) No. 20586 of
2022 that there is no reference to the judgment passed
by this Court in W.P.(C) No. 350 of 2017, which is
pertaining to the self-same bank and self-same issue and
was passed taking note of all the earlier judgments of this
Court as well as Supreme Court. Hence, the submission
made by learned Counsel for the Petitioner seems to be
incorrect.
21. Professional ethics of lawyers are guided by a
set of principles and rules that governs their conduct and
behaviour. These ethics are designed to ensure that
lawyers maintain the highest standards of integrity,
honesty and professionalism in their dealings with
clients, Courts and other stakeholders. By upholding
these ethics, lawyers can maintain the trust and
confidence of their clients, the public and the justice
system. A lawyer should be fair enough while arguing a
matter before any Court, including Constitutional Courts,
and should not suppress any fact as well as law and/or
mislead a Court. Once a lawyer loses the trust of the
Court in view of his wrongdoing or unfairness, which
includes suppression of fact, though normally it should
not be, such impression of the Court towards a particular
lawyer may affect the fate of his other clients, who are
having a fair chance of succeeding in the litigations. That
apart, such conducts also amount to professional
misconducts.
22. So far as binding effect of the order dated
09.09.2025 passed in W.P.(C) No. 20586 of 2022, though
uniformity and consistency are core of judicial discipline,
since such decision is rendered per incuriam, cannot be
accepted as a precedent to annul the impugned order
passed by the Appellate Authority under the P.G. Act,
1972, so far as the rate of interest awarded in favour of
the private Opposite Party.
23. Law is well settled that a decision is given per
incuriam when the Court has acted in ignorance of a
previous decision of its own or of a Court of coordinate
jurisdiction which covered the case before it, in which
case it must decide which case to follow. Law is also well
settled that when a judgment is rendered by ignoring the
provisions of the governing statute, such decision is
rendered per incuriam. The rule of per incuriam can be
applied where a Court omits to consider a binding
precedent of the same Court or the Superior Court
rendered on the same issue or where a Court omits to
consider any statute while deciding that issue.
24. That apart, Article 141 of the Constitution of
India unequivocally indicates that the law declared by the
Supreme Court shall be binding on all Courts within the
territory of India. The aforesaid Article empowers the
Supreme Court to declare the law. It is, therefore, an
essential duty of all the subordinate Courts, including
the High Courts, across the Country to follow the law laid
down by the Superior Court. When the Supreme Court
decides a principle, it would be the duty of the High
Court or a subordinate Court to follow the said decision.
A judgment or an order of the High Court, which refuses
to follow the decision and directions of the Supreme
Court or seeks to revive a decision of the High Court,
which had been set aside by the Supreme Court, is a
nullity.
25. The aforesaid views of this Court get
supported with the judgments of the Supreme Court in
State of U.P. & ors. Vs. Synthetic & Chemicals Ltd.
& ors., reported in (1991)4 SCC 139, V. Kishan Rao Vs.
Nikhil Super Speciality Hospital & anr., reported in
(2010)5 SCC 513, Siddharam Satlingappa Mhetre Vs.
State of Maharashtra & ors, reported in (2011) 1 SCC
694, Hyder Consulting (UK) Ltd. Vs. Governor, State of
Orissa, reported in (2015) 2 SCC 189 and Director of
Settlements, A.P. Vs. M.R. Apparao, (2002) 4 SCC 638.
26. Admittedly, the order dated 09.09.2025 passed
by the coordinate Bench in W.P.(C) No. 20586 of 2022
was without referring to the relevant statute, i.e., Sub-
Section (3-A) of Section 7 of the P.G. Act, 1972, in terms
of which Notification dated 01.10.1987 was made by the
Central Government. That apart, such an order has been
passed in ignorance of the previous judgments of this
Court as well as Supreme Court.
27. In view of the submissions made by the
learned Counsel for the parties, legal provisions so also
the settled position of law and the reasons detailed
above, this Court is of the view that order dated
09.09.2025 passed in W.P.(C) No. 20586 of 2022 is hit by
the principle of per incuriam, as the coordinate Bench
has passed such an order contrary to the statute so also
without taking note of the Judgments of this Court in
Mahanadi Coal fields Ltd. (supra), in Mohan Dakua
(Supra) so also in M.D., Odisha State Co-Operative
Bank Ltd.,Bhubaneswar Vs. Prafulla Chandra
Patnaik & ors (supra) and judgments passed by the
Supreme Court in H. Gangahanume Gowda (supra), in
Director (Trisul Project) DRDO (supra) and the order
dated 03.03.2025 passed in SLP(C) No.4468 of 2022 in
Gagan Bihari Prusty (supra) pertaining to the selfsame
issue regarding interest payable to an employee under
the P.G. Act, 1972 for delayed payment.
28. Consequently, in the absence of any
infirmity, the Order dated 08.02.2019 passed by the
Appellate Authority in P.G. Appeal Case No. 04 of
2018/10/2019, thereby confirming the order dated
11.04.2018 passed by the Controlling Authority in P.G.
Case No. 20 of 2017, is hereby upheld.
29. Before parting, it would be appropriate to
mention here that in view of the reasons detailed above,
including the judgment of this Court in M.D., Odisha
State Co-operative Bank LTD., Bhubaneswar V.
Prafulla Chandra Patnaik & Ors., reported in 2025 (I)
ILR-CUT-1314, to save the judicial time, parties were
sent for mediation to resolve the issue amicably.
However, to the reasons best known to the Petitioner-
Bank, the mediation failed and this Court had to re-
adjudicate the issue regarding rate of interest payable to
the Opposite Party No.1, even though law is well settled
on the said issue.
30. Hence, the writ petition stands dismissed
with costs of Rs.20,000/-(Rupees twenty thousand) only
to be paid to the Opposite Party No.1 within six weeks
hence, for wasting the judicial time of this Court so also
to compensate the hardship caused to a retired
employee, who had to fight out a long legal battle to get
his legitimate admissible dues of gratuity.
................................
S.K. MISHRA, J.
Orissa High Court, Cuttack
The 28th October, 2025/Prasant
Signed by: PRASANT KUMAR PRADHAN
Date: 29-Oct-2025 16:11:59
