Punjab-Haryana High Court
Kahan Singh vs Punjab State Civil Supplies ... on 30 April, 2024
Neutral Citation No:=2024:PHHC:060997
Neutral Citation No:2024:PHHC:060997
CWP-10876 of 2016 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
229 CWP-10876 of 2016
Date of Decision: 30.04.2024
Kahan Singh .... Petitioner
Versus
Punjab State Civil Supplies Corporation Limited and others
....Respondents
CORAM: HON'BLE MR. JUSTICE SANJAY VASHISTH
Present: Mr. Harpal Singh Saggu, Advocate for the petitioner.
Mr. Anil Kumar Sharma, Advocate for the respondents.
*****
SANJAY VASHISTH, J.(Oral)
1. By way of present writ petition, petitioner-Kahan Singh
has sought quashing of the order dated 23.10.2015 (Annexure P-2)
passed by the Appellate Authority under The Payment of Gratuity Act,
1972 (for short, 'the Act of 1972'); whereby period of payment of
interest @ 12 % per annum as granted by the Controlling Authority
i.e. 01.10.2013 till the time of payment has been reduced to
28.05.2015 till the time of payment.
2. Learned Counsel for the petitioner argues that the
petitioner served the department of Punjab State Civil Supplies
Corporation Limited (PUNSUP) regularly from 06.10.1997 to
31.08.2013. After rendering the service of about 36 years, the last
drawn wages of the petitioner were Rs.28,602/- per month. Therefore,
he filed an application for receiving of the gratuity amount of
Rs.5,94,038/- under the Act of 1972.
3. Prime contention of the petitioner is that within 30 days
of his retirement, employer (respondents herein) are bound to pay the
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complete gratuity amount, failing which respondents would be liable
to pay the said gratuity amount alongwith interest. Thus, while
observing that the petitioner had retired on 31.08.2013 with the last
drawn wages as Rs.28,602/- per month, held him entitled for gratuity
amount of Rs.5,94,041/-. Controlling Authority further granted the
relief to the petitioner that the said amount of Rs.5,94,038/- would
entail the interest @ 12% per annum from the date it fell due i.e
01.10.2013.
While saying so, Controlling Authority gave its reasoning
that it was the conduct of the Employer which made the employee to
contest the claim application. Had the right of the gratuity amount
been considered by the Employer itself, there was no occasion to
contest the litigation. It is employer-respondent(s), who reached in the
appeal and the Appellate Authority vide its order dated 23.10.2015
observed that the employee had retired from service with effect from
31.08.2013, but claimed his gratuity amount before the Controlling
Authority on 14.01.2014 i.e. after a period of about four months.
While referring to the Rule 10 of the Payment of Gratuity (Punjab)
Rules, 1973, Appellate Authority observed that the employee has to
approach the Controlling Authority for issuance of direction under
Section 7(4) of the Act of 1972, within 90 days of the occurrence of
the cause.
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4. While considering the submission addressed by the
Employer, Appellate Authority modified the order, though same is not
happily worded and observed that the employee would be entitled for
the interest amount only from the date of the passing of the order by
the Controlling Authority i.e. 28.05.2015 till the amount was
deposited.
5. Learned counsel appearing on behalf of the petitioner
submits that the view taken by the Appellate Authority is contrary to
the settled proposition of law as laid down by the Hon'ble Apex Court
in case titled as 'H. Gangahanume Gowda VS. Karnataka Agro
Industries Corpn. Ltd', 2003 AIR (Supreme Court)1526, Law
Finder Doc Id # 378, and referred to paragraph No. 7.
For the sake of convenience, paragraph No.7 of the
aforesaid judgment is reproduced herebelow:
"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 in due to the fault of the
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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. 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. v. 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 v. M/s. Birla
Textiles and another [1988(57) FLR 543 SC),
this aspect was noticed in the following words:
"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)
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in Section 7. That provision has
prospective application."
6. Considering the aforesaid interpretation of law laid down
by the Hon'ble Apex Court, this Court is also of the view that it is the
duty of the employer to pay the gratuity amount to its employees, who
so ever is entitled to receive the same within 30 days of his
retirement. Of course, if the Management commits default, it would
be held liable to pay the interest amount as prescribed under Section
7(3A) of the Act of 1972, which says as under:
"7. Determination of amount of gratuity
(1)xxx
(2)xxx
(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 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.
(4)xxx
(5)xxx
(6)xxx
(7)xxx
(8)xxx"
7. Learned counsel for the respondents-Employer is not in a
position to produce any other law contrary to the view point taken by
the Hon'ble Apex Court and same being relied by the petitioner.
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However, he proposes a slight modification in the order of the
Controlling Authority by saying that the amount of interest cannot
exceed the notified rate of interest by the Central Government as
provided under Section 7 (3A) of the Act of 1972.
8. Thus, the impugned award dated 23.10.2015 is hereby
modified and respondent(s)-Management is directed to pay the
gratuity amount to the petitioner alongwith interest @ 12 % per
annum from the date it became payable. However, it will be open for
the respondent(s)-Management to produce the notification of the
Central Government applicable at the time of retirement of the
employee for repayment of long term deposits as provided under
Section 7(3A) of the Act of 1972, the Authority would ensure that the
employee would not be entitled for the rate of interest over the
gratuity amount more than what the Central Government had notified
and is applicable on the date of the retirement, failing which whatever
has been held by the Controlling Authority would sustain in entirety.
Accordingly, the present writ petition is dismissed with
the aforesaid modification.
[SANJAY VASHISTH]
April 30, 2024 JUDGE
rashmi
Whether speaking/reasoned yes/no
Whether reportable? yes/no
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