CWP 6735/07 //1// In the High Court of Judicature for Rajasthan Jaipur Bench ** Civil Writ Petition No.6735/2007 Dr. RNS Tyagi Versus Rajasthan Agriculture University & (2) Ors. Date of Order ::: 10/11/08 Hon'ble Mr. Justice Ajay Rastogi Mr. Ajay Gupta, for petitioner Mr. RA Katta, for respondent University At joint request, matter is finally heard and disposed of at admission stage. Instant petition has been filed claiming interest over balance amount of gratuity paid to petitioner in November, 2003. Petitioner was initially appointed in Department of Agriculture and his services were transferred to University of Udaipur from where he was further transferred to Rajasthan Agriculture University, Bikaner from where he finally stood retired on 31/12/92 on attaining age of superannuation. His terminal benefits particularly gratuity, was computed on the basis of last pay drawn and other allowances like Dearness allowance and adhoc dearness allowance, were not taken note of; as such petitioner filed CWP-3899/96 raising his grievance (supra), which was finally accepted by this Court vide judgment dt.16/07/02 directing respondents to compute his gratuity apart from basic pay, dearness allowance & ad hoc dearness CWP 6735/07 //2// allowance and be paid within sixty days – in pursuance whereof, balance amount of gratuity was paid to the petitioner in November, 2003, as has been averred in para 8 of instant petition. However, only grievance of petitioner is that there being statutory obligation upon respondents to pay interest on account of delay in payment of gratuity admissible to employee in terms of S.7(3A) of Payment of Gratuity Act, 1972 (“the Act”), if delay is attributable to the employer. At this stage, it would be relevant to mention that petitioner initially filed contempt petition No. 503/2003 – during pendency whereof, Rs.22,543/- were paid to petitioner in November, 2003 in compliance of judgment dt.16/07/02 in his earlier CWP-3899/96. Contempt petition was dismissed on 10/07/07. However, it was observed that petitioner will be at liberty to redress his grievance as regards interest part. Hence this petition. Respondents have filed reply to petition, inter-alia averring therein that in terms of R.89 (5) of Payment of gratuity to employees Rules, 1970 (“Rules, 1970”) there is a clear bar that if gratuity is not paid in full, that will not carry interest on its arrears if paid subsequently. It CWP 6735/07 //3// has also been averred that earlier petitioner approached this Court by way of CWP-3899/96 and prayed for interest, but this Court only directed respondent to pay balance amount of gratuity within two months and there was no order to pay interest, it tantamounts to deemed rejection; as such instant petition is not maintainable and is barred by principle of res judicata. I have considered rival contentions of Counsel for both the parties and with their assistance, examined material on record. Only question which requires for consideration is that if balance amount of gratuity is paid at a later point of time, for the belated payment of gratuity, whether employee is entitled for interest under the Act, 1972. In support, Counsel for petitioner placed reliance upon decision of Apex Court in H.Gangahanume Gowda Vs. Karnataka Agro Industries Corpn. Ltd (2003(3) SCC 40) and also of this Court in Dr. Chinraji Lal Sanghi Vs. Raj. Agriculture University (2003(3)WLC 128). It will be relefant to quote relevant provisions of the Act, 1972. S.7(3) & (3A) of the Act relevant for the purpose of instant issue reads ad infra: "7. Determination of the amount of gratuity :- CWP 6735/07 //4// (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.” From the Scheme of the Act, it clearly emerges that after amount of gratuity being determined and payable to the employee, it is incumbent upon employer to pay gratuity within 30 days and if employer fails to pay gratuity due and payable, within time specified U/s 7(3), irrespective of the reason, if employee is not at fault for the delay in payment then delayed payment shall carry interest at such rates notified by Central CWP 6735/07 //5// Government and there is no escape/defence available for employer. In H.Gangahanume Gowda Vs. Karnata Agro Ind. Corpn (supra) where interest was claimed over delayed payment of gratuity, which was disallowed by High Court on the premise that there was divergence of Courts' opinion in course of pendency of issue as to whether University employee was entitled to computation of gratuity according to liberal definition of “pay” as was applicable prior to University's notification and while examining reasons pointed out by employer State; thus Apex Court while examining identical issue of interest payable U/S 7(3A) of the Act observed ad infra: “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 CWP 6735/07 //6// 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 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. “ Thus, the intent of enactment is that irrespective of reasons of delay if any caused but not faulting to the employee, such amount of gratuity shall always carry interest in terms of S.7(3A) of the Act. In Rajasthan Agriculture University Vs. Ram Krishna Vyas (1999(4) SCC 720), it has been considered by Apex Court to direct employer to calculate emoluments for the purpose of gratuity, in addition to last pay as defined in R.7(24) of Rajasthan Service Rules, dearness allowance and ad hoc dearness allowance which the employee was drawing at the time of retirement have to be CWP 6735/07 //7// added while computing amount of gratuity payable under the Act, 1972. However, controversy decided by this Court in earlier petition preferred by petitioner vide judgment dt.16/07/02 upon final adjudication by Apex Court in Rajasthan Agriculturel Unviersity Vs. Ram Krishna Vyas (supra) and once it was finally observed by Apex Court that gratuity has to be computed on basic pay besides dearness allowance and ad hoc dearness allowances there was no justification for respondents to still deprive the petitioner of the gratuity and to wait for decision in writ petition filed by petitioner. In Dr.Chiranjilal Vs. Raj. Agriculture University (supra), a Co-ordinate Bench of this Court while disposing of identical petition, ordered payment of interest over delayed payment which became due and payable to the employee after taking note of statutory requirement in terms of S.7(3A) of the Act. As regards submission of respondent's Counsel about plea being earlier raised and deemed to have been rejected with regard to interest is of no substance for the reason that once this Court has finally upheld that petitioner was entitled for payment of gratuity CWP 6735/07 //8// based on last pay drawn including basic pay, dearness allowance, ad hoc dearness allowance, as was finally settled by Apex Court in Rajasthan Agriculturel Unviersity Vs. Ram Krishna Vyas (supra), there was no occasion for this Court in earlier petition to consider for grant of interest since enactment itself upholds that delay in payment of gratuity shall carry interest at the rate as notified by Central Government in terms of S.7(3A) of the Act, 1972; whereas on the contrary despite respondents being under legal obligation to pay interest in terms of statute still they have compelled a retired personnel to approach this Court by way of instant petition only for claim of interest, to which he was entitled for under law. As regards plea raised by respondents about R.89(5) of Rules, 1970, it is of no application in the facts of instant case. It has not been brought to the notice of this Court as to what was the rate of interest notified by Central Government. However, under R.89 of Rajasthan Service Rules if there is a delay in payment of retiral dues, he is entitled for interest @12% per annum but taking into consideration over-all view of matter, this Court considers it proper to award interest @9% per CWP 6735/07 //9// annum. Consequently, writ petition succeeds and is hereby allowed. Respondents are directed to make payment of interest @ 9% per annum in terms of S.7(3A) of the Act, 1972 over-delayed payment of gratuity in question from the date of it became due till actual payment in favour of petitioner. Necessary orders be passed to ensure compliance of this order within two months. No order as to costs. (Ajay Rastogi), J. K.Khatri/p.9/6735CW07Grat1011.doc