417 V9 CWPNo760 of 2009 1 1 1 0 IN THE HIGH COURT OF PAB AND HANA AT CHIGARH CWPNo760 of 2009 DATE OF DECISION September 022011 Sukhdev Singh Petltloner 1 versus C 0 Co Municipal Council and others Respondents I C5 CORAM HONBLE MRS JUSTICE DAYA CHAUDHARY Presentl MrGagneshwar WaliaAdvocate for the petltloner Z MrManish Bansal Advocate for respondent no1 tr DAYA CUDHARYJ The present petition has been filed for Z quashing or order dated 2822007 passed by the CQ Controlling Authority as well as Appellate Authority m Z to the extent that interest has been granted on the 9 amount of gratuity from the date of application and not from the date it became due Learned counsel for the petitioner submits that the petitioner is entitled for interest from the date the gratuity became due As per provision of Section 2 of the Payment of Gratuity Act 1972 for short the ActI the interest on the gratuity lS to be paid to the employee by the employer from the date gratulty becomes payable Even ln case the Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 1 418 CWP No760 of 2009 2 application has not been made the amount of gratuity 1 lS to be paid within 30 days from the date it becomes payable Learned counsel for the petitioner further submits that in case the amount is not paid within the prescribed period the employer shall pay the interest from the date on which the gratuity becomes payable Both the authorities have paid the interest 1 C not from the date it became due but from the date of 0 0 submission of the application Learned counsel for I the petitioner also submits that payment of interest C I on the delayed payment of gratuity 1S mandatory Although there is proviso that payment of interest Z w on the delayed payment of gratuity can be waived off ln case the delay ln payment of gratuity is due to I fault of the employee but lIl that case the employer Z has to obtain permisslon from the competent 00 authority There was neither any such pleading by 7 the respondent nor any such finding has been given by Z the authorities below and both the orders of the Il authorities below are liable to be set aside Learned counsel for respondent Nol opposes the claim of the petitioner by raising a preliminary objection on the ground that delay lS Orl the part of the petitioner The petitioner misappropriated and embezzled the funds of Municipal Council Srl Hargobindpur and did not deposit the G Receipt books with the answering respondents at the time of Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 419 6 3 CWPNo760 of 2009 a0eev Il his retirement Subsequently the petltloner 1 deposited an amountof Rs182450 with the COUncil and the delay occurred due to the fault of the petltloner The recovery was effected from the petitioner after a period of eight months of his retirement and only because of that reason the m interest was given to the petitioner from the date of makingof application and not from the date it became 0 0 due Learned counsel for respondent Nol further I 9 submits that the petitioner himself submitted his I application ln form N before the controlling Z authority after a delay of one year and five months after his retirement and he is not entitled for intereste Learned counsel for the petitioner relies I upon a judgment ln HeGanqahanume Gowda ve Karnataka Z Aqro Industries Corpone Ltde 20031 3 Supreme Court D Cases 40 V Z Heard the arguments of learned counsel for the parties and have also perused the documents available on the record Admittedly the petitioner was working as 1 Clerk with the respondent Council since 31121977 and he was superaated on 292004 At the time l of retirement the petitioner was not granted payment of gratuity as required under Payment of Gratuity Act 1972 for short the ActI vide order dated 282007 the respondent Council was directed to pay 1 Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 420 CWPNo760 of 2009 4 1 0 a sum of Rsl497301 to the petitioner aS SratUltY alongwith interest at the rate of 10 per annum from the date of application till the date of payment Against the order dated 28 2 2007 passed by the controlling authority an appeal was filed under sub 1 sectlon 7 of Section 7 of the Act which was dismissed vide order dated 7102008 and order passed by the controlling authority was uphelcl 0 0 The order passed by both the authorities are I subject matter of challenge in the present petltlon C5 to the extent of grant of interest Z The sole question for determination by this Court 1S whether the petitioner 1S entitled for interest from the date of application or from the I L date of gratuity became due Z Section 7 of the Act is relevant which is r10 reproduced as under 7 Z Sectionl 7 Determination of the amount of CL gratulty 11 A person who is eligible for payment of gratuity under this Act or any person authorised lIl wrltin to act on his behalf shall send a written application to the employer within such time and in such form as may be prescribed for payment of such gratuity Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 421 CWP No760 of 2009 5 0 21 As soon as gratuity becomes payable the employer shall whether an application referred to in sulsection has been made or not determine the amount of gratuity and give notice 111 writing to the person to whom the gratuity 1S payable and also to the controlling authority w specifying the amount gratuity SO 0 determined 0 I 0 31 The employer shall arrange to pay the I amount of gratuity within thirty days from Z the date it becomes payable to the person to whom the gratuity 1S payable I 3A1 If the amount of gratuity payable Z under subsection 1S not paid by the OO employer within the period specified ln 7 subsection the employer shall pay 1 1 Z from the date on which the gratulty Qe becomes payable to the date on which it is paicl simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of longterm deposits as that Government may by notification specifyl Provided that no such interest shall be payable if the delay lIl the payment 1S Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 422 CWPNo760 of 2009 6 1 due to the fault of the employee and the employer has obtained permisslon ln writing from the controlling authority for the delayed payment on this ground Il As per Section 7 as mentioned above it 1S 1 clear that it is duty of the employer to determine 1 the amount of gratuity and for that a notice is to be 0 given specifying the amount of gratuity and the same 0 1S to be intimated to the controlling authority The I C5 amount of gratuity 1S to be arranged within a period I of 30 dayS and lIl case that amount is not paid Z within a period of 30 days then the employer lS to Q give interest from the date the gratuity becomes I payable It 1S also mentioned that in case the delay 1S On the part of the employee concerned then he 1S Z not entitled for interest As per case of the QO petitioner there was no delay on the part of the 7 Z petitioner and moreover the employer had to obtain Qn permission in writing from the controlling authority for the delayed payment of the amount of gratuity Neither a finding has been recorded with regard to any delay on the part of the petitioner nor such permlSSlon was SOught whereas case of the respondent Council 1S that delay was there on the part of the petitioner as he embezzled some amount of Council and subsequently the amount was deposited by Il Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 423 CWP No760 of 2009 7 him and the application was moved by the petitioner after a lapse of more than one year and five months It is clear from Section 7 of the Act that as soon as the gratuity becomes payable the employer 1S to determine the amount of gratuity 1 whether any application has been made or not an j lntlmation be sent to the controlling authority 0 specifying the amount Under Section 7 the 1 0 C0 employer 1S supposed to pay amount of gratuity I within a period of 30 days from the date it becomes t5 I payable Under sub section 3 of Section 7 if the Z amount of gratuity 1S not paid by the employer within a period specified under sub section 3 he shall pay rl from the date on which gratuity becomes payable to I the date on which it is paid and simple lnterest not Z exceeding the rate notified by the Central Government CQ from time to time for repayment of long term deposits 7 lS to be paid Although the proviso is there that in Z case the fault of the employee 1S there then the employer 1S not to pay interest In case the delay 1S on the part of the employee the employer has to obtain permission ln writing from the controlling authority In the present case neither any finding has been given nor any such permission has been sought by the employer Neither the embezzlement was proved nor any document was placed on record by the respondent Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 424 CWPNo760 of 2009 7 him and the application was moved by the petitioner after a lapse of more than one year and five months It is clear from Section 7 of the Act that as soon as the gratuity becomes payable the employer 1S to determine the amount of gratuity 1 whether any application has been made or not an intimation be sent to the controlling authority L specifying the amount Under Section 7 the 1 0 0 employer 1S supposed to pay amount of gratuity I within a period of 30 days from the date it becomes C5 payable Under sub section 3 of Section 7 if le amount of gratuity is not paid by the employer within Z 2 a period specified under sub section 3 he shall pay from the date on which gratuity becomes payable to I the date on which it is paid and simple interest not Z exceeding the rate notified by the Central Government io from time to time for repayment of long term deposits mW3 1S to be paid Although the proviso is there that in Z case the fault of the employee 1S there then the Llm employer lS not to pay lnterest In case the delay Il on the part of the employee the employer has to obtain pennission ln writing from the controlling authority In the present case neither any finding has been given nor any such permission has been sought by the employer Neither the embezzlenent was proved nor any document was placed on record by the respondent Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 425 CWP No760 of 2009 8 council It was neither the case before the controlling Authority nor before the appellate authority A finding has been given by both the authorities with regard to delay lIO payment of the gratuity but the interest has been paid from the date of application whereas as per mandatory provision 1 interest is to be paid from the date the gratuity L became due Under Section 9 of the Act a penalty 0 0 provision is there for non payment of gratuity and I the gratuity with or without lnterest 1S not t3 I discretion but it is a statutory compulsion The Z obnservation made by the Apex Court ln case H e Gangahanume Gowda s case supral is as under C tl payment of gratuity with or without I t interest as the case may be does not lie ln Z the domain or discretion but lt 1S a CO statutory compulsion Specified benefits m expressly given ln a social beneficial Z legislation cannot be ordinarily denied Qe Employees on retirement have valuable rights to get gratuity and any culpable delay lIl payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala 6 Ors VS M Padmanabhan Nlyar 11995 501 FLR 1451 Earlier there was no provision for payment of lnterest on the delayed payment of Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 426 CWPNo760 of 2009 9 gratulty Subsection 3Al was to Section 7 by an amendment which came into force with effect from lst October 1987 In the case of Charan Singh VS e Mls Birla Textiles this aspect was notlce ln the following words 1 4There was no provlslOn 111 the Act for payment of interest when 0 0 the same the quantified by the I 9 Controlling Authority and before I the Collector was approaching for Z its realization In fact it 1S Orl the acceptance of the position that there was a lacuna in the law that I Act 22 of 1987 brought about the Z incorporation of subsection 3 m 111 Section 7 That provision has m prospective application Il Z Ll Keeping lIl Vlew the facts and the law POSltlOrl as mentioned above the present petition 1S partly allowed The respondents are directed to pay interest 0 10 on the amount of gratuity to which the petitioner 1S entitled from the date it became payable till its actual realisation I11 0 September 2 2011 DAYA CHAUDHARYI 1 KD JTJDGE lM9 1 Il Anita 2014.04.02 14: 10 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document