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PetitiQner Responderits WRIT PETITIONI'St N0.6439/2009 K.K.Sjngh Versus l;ii::i-: South Eastern Goaffields Limited and Others ^. fOST FOR ORDERON ^"^GTQBER. ^^.a^sbffvastava ^aBiBdras' '^SM:: Ei"1?'1-'.' »W M'!. ^^ s-ai :s '^Ssi jRgltai ^^ :r^"'<ef^ ;-,J ^, :"":-tiSi>i 8 "^ "'^ ^- ^ HIGMCOURTOFGHHATTISGARM:BILASPUR SinaleBeneh: Hon'bleShriManindraMQhanShrivastava,.!. Petitioner WRITPETITION(S1N0.6439/2009 K. K. Singh ^fersus South Eastern Coalfields Limited and Othere K •-i. Respondente Writ PetitionunderArticle 226/227pf theConstitution oftndia Present:- , •1,-' . :. . . :::; . • ,.: . ,:'-: • , ,• ; . 1' . • ' • :. ShriGaryMukhopadhyay,coUnSelforthepetitioner. Shrl P. S.Koshy,counselforrespondentNo.1. ORDER (Passedon ^2^| 0/2010) Bythis petition, the petitionertias claimed interestfor detayed paymeht of the amount of the gratuity with effect from the date thesame is payable in accordance With the provisions contained in Sectipn 7 of the Payment of Gratuity Act, 1972(hereinafter referred toas" the Acf). (2)Facteinbriefasdiscloseclinthepetjti6narethatthepetitJonerretiredon 31-07-2003 fromthepOstdfDeputyGhiefPersonnelManagerfromBishrampur Area bf South Eastern Coalfields Limited. According to the petitioner, though the petitioner applied for payment of gratuity in the prescribed format as provided under Section 7 of the Rules framed under the Act, no payment was made under Rule 8 ofthe Payment OfGratuity Central Rules. It is also the case ofthe petitioner that the petitionersubmjtted an application in preseribed proforma as required under Rule 8 ofthe Payment of Gratuity Central Rules, even fhen, the respondeht-Employer did riot issueany information either in Form-'L' or Form- 'IVI'. Later on, the petitionercame to knbw that the amount of the gratuity was withheld on the ground of pendehcy of disciplinary proceedings against the petitiSner. As gratuity was not paid, the petitjoner approachad thg Controlling 'm .aat', "•^•TOLSSiB^,iii**i (ll^.''t! '^" '•':";i:^ '--.ssj^ "-^; '^ iff^\ . '^ "» ^ AuthorityconstitutedundertheAct,whovideQrderdated 03-01-2006 (Annexure P-1) allowed the application and directed payment of Rs.3,50,QOO/- as gratuity amountalongw(thinterest@9%tothepetitionerwithin30daysofthereceiptof the order under intimation to the Contrplling Authority. (3) Further assertion of the petitioner is that even after the order of the Controlling Authority, no payment was made, but the Management went up in appeat as provided ynder the Act bydepositing the amount due and payable i.e. Rs.4,28,275/- before the appellate authority/Regional Labour Commissioher (Centrat), Jabalpur. Vide orderdated 27-04-2006 (Annexure P-2), appeal of the employer was dismissed and the rate of interest was enhanced from 9% to 10%. Thereafter, the Management filed a Writ Petition No.2983 of 2006 assailing the order passed by the appellate authority and vide order dated 26-06-2006 (Annexure P-3), an interim orderwaspassedbythe Courtstaying the effect and operation of the order passed by the appellate authority. Later on, ths writ petition was finally dismissed vide order dated 20-03-20re relying upon the judgments ofthe Supreme Court 'mlhecase ofJaswantSinghGill vs. Bharat CoklngCoai Ltd. and others, 2007(1) SCC 663. The.Management having lost in the legal battle, finally vide demand draftan amount of Rs.4,28,275/- was paid on 10-08-2009, that was the amount which remained deposited with the controlling aythority, eversince the Management deposited the amount while prefemng anappeal againstthe order ofthe controlling authority. W Learnedcpunsel for the petitioner argued that the petitioner isentitled to interestonthegratuJtyamounto<:R?.3,50,000/-witheffectfroin 01-08-2003 to 10-08-20(8 @ 10S^whiCh comes to RS.2,10.OOO/- whereas the petitioner has been paid only Rs.78,275/- towards interest and the petitiQner is entitted to balanceam6untofinterestofRs.1,31,725/-alongwithjnterest. i' 1 .E; ' va .^a_ Leamed counsel forthe petitioner submitted that in view of the statutory schemeengraftedunderSection7oftheAct,gratuityandtheJnterestthereonJs payable as requiredunder theprovisions contained therein.As theManagement failed to pay the gratuity amount even after proper notice waS served by the petitioner on the Management jn the formatas preseribed under the relevant rules, the petitioner is entiUedto interest from the date on which the gratuity became payable to the date on which itwas paid on the rates prescribed under sub section (3-A) of Section 7 of the Act. Learned counsef for the petitibner argues that there is only one cireumstance uhder which payment of interest is arrested i.e. if the delay in payment is caused due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on such greund. Learned counsel for the petitionercontended that in the present case, the only operative reason for withholding gratyity was pehdehcy 6f some enquiry which eould not be made a valid basis for withholding gratuity, because thesaid issue has already been decided in the case of the petitioner. It is further submitted that the gmployer is liable to pay the entire amouht of interest from the date it beeame due and payabtei.e.from 01-08-2003 tilire-08-2009.lnsupp6rtQfhis submission, teamed counsel for the petitioner relies upon decision in the case of -N. Gangahanume Gowda Versus Kamataka Agrd Industries Qorpn. Ltd., 2003(3) SCC 40, /p^endra Devavs.Acfca LabourCommissioner(Account), Xw>p(^cum-Appeflatea4uEfr<wrty&Ano(fte^ 1998(2) LabourLawJournal ^W^,S<H^EastemCoameldstM.^/erstfSStateafmP/and0^ers,'2W! (8) SCC S4S, AbatlBezbaruah veisus By. Director General, Geological Surveyof India and Another, 2003 (3) SCC T48 andjaswant Singh Gill vs. Bharat Coklng CoalLtd. and others, 2007 (1) SGC 663. i^^si^vs&ws'sweas^saS^^i n ^,.~ •"--ff.. ^K (5) Per Contra, learned cbynsel for the respondente would submjt that the petitionerisnotentitledtoanyinterestastheamountwhiehhadbecpmedue and payabletothe petjtionerundertheAct,wascteterminedbytheCbntrolling Authorily ascontainedinitsorcteFdated 03-01-2006. It is submittea that the employer cleposited the amountywhjch had become 3ue and payable i.e.Rs.4,28,275/-iMthetiroeof11lingappea|,andtherefora,theManagementhad performed its part of obligation under the law. tt was fbr the petitioner to seek appropriateorderfromtheappellateauthorityforreleaseoftheamount.Further submission of learned counsel forthe respondent No.1 is that vide order dated 26-06-2006 passedinWrit PetitionNo.2983of 2006, aninterimorder was passedwherebytheeffectandoperationoflheorderoftheappelfateauthOrity was stayed by this Gourt and that interim onler remained in force and operation till the writ petition was dismissed by, the Gourt vide order dated 20-03-20p9. Therefore/theManagementisnofcKableforpayraentofjntereStinrespeGtc^^t^^ period durihg whieh the raattei' remainesl pending and therewas an interim order against paymerrt as dunng that,penod the amount coultf not be paid to the petitioner ahd the same became payable only after dismissat of the writ petition, whichwasfinallypaidbytheControtlingftuthorityyncterademariddraftpayabie tothepefitioner. (6) The undisputed facte ofthe case are ttiatthe petitioner ha3 retiFed from serviceon 31-0^2003 and hisgratuityviras not paid.ltjsalso not ihdisputethat vide orderd^y 03^1-2006 ^flexure P-1), theCohtrollingAi an order in lavpyr of tllfe petitioner fer payment of gratuity directing r^|Sondent No.1 t6 pay f^.3,50,OOOAas gratuity amourrtalong with simp^ per annum on the same to the petitioner within 30 ctays from the^^^ orderfortheperiodwitheffecAfrom 01-08-2003 to 30-12^005. ^ai^ passed by^ttie Controlling Authority, the^employer preferred air appeal asd ^ depositedtheamountdueandpayabtei.e.Rs.4,28,275/-.Theappellateauthority djsmissecltheappealbutmodjfiedtherateofinterest@9%td10%perannum. Thereafter;a writpetitionwas preferredwherein an interim orderwas granted by this Courton 26-06-2006. ThewritpetJtiQnitselfwasflnallydismissedbythis Courtvideorderdated 20-03-2009 inWrit Petition No.2983 of 2006. (7) From the aforestated undisputed facte which are clearly borneoutfrpm the records ofthe ease, it is clearthatthe petitioner remained deprived of the money due and payable to him, firstly ori aceount of pendency of appeal and thereafter on account of pendency ofthe writ petitionwherein an interim order was passed. In viewof the provisiohs contajned in Section 7 of the Act, the employerisobligedunderthelawtopaysimpleinterestattheratesnotifiedby theCentralGovemment6ntheamountofgratuitypayableundersub-section(3) ofSectioh 7oftheAct,fromthedate6r>whichthegratyitybecamepayableto the date on which it is paid. The only condition under which the employer is absolved from its liability to pay interest has been exhaustively enumerated under the proviso tosub section (3-A) of Section 7 of the Act, It is not the case of the respondents that delay in payment was due to,the fault of the employee and the employer obtained permissipn in writirig from the Controlling Authority for the delayed payment on that ground. The order passed by the Controlling Authority awarding interest has been modified by the appellate authority only te the extent that the rate of interest has been enhanced ftxim 9% to 10% per annum. The writ; petition against the appellate authority has been flnally djsmissed.lnsolarasgrantofinterestiwth^effeetfromthedateofdepositofthe amount ofgratuity along with accrued ihterest at the time of preferring appeal beforetheappellateauthoritytillthedatetheactualpaymentafterthedismissal of the writ petition by this CourtisConcemed,theemployercannQtbeabSQlved from te liability to pay interest aslhe petitioner remained deprived of the amount ''<"> ~"c^a s %'s=ei>y ,fet(; payableto him onaccountof the appeat preferred byttie employereven ifthe amountwasdepositedbeforetheauthority. (8) Similar w'ew is tafcen by the High Court of Allahabad in the case of Rafendiv Deva vs. Addl. t-abour Commlssloner (Account), Kanpur-cum- Appellate Authority & Another, 1999 (2) Latmur Law Joumaf, 227 in fotlowingwords:- "6.1tisevidentfromsub-section(3-A)ofSection7oftheAct, extracted above.that the employer is liable to paysimple jntereSt at the prescribed rate from the date on which the gratuity becomes payable to the date on which it is paid. The deposit of the amount with the appellate authority would not absolve the employer of jte liability to pay interest once it is established that ttte employer ttas failed to dischaige the obligation cast upon it by sub-sections(2) and (3) of Sectioh 7 of the Act. In the instant ease the employer failed to determinetheamountofgratuttyandgivenoticejnwritingto the petitioner and also to the controlling aythority specifyng the amount of gratuity so determined as visualised by sub- secti6n@) ofSection 7ofthe Act. Itftjrther faUectto arrange the payment of gi^ity v hin thirty days from date it became payable tti the petitioner. The deposit»of the amount with theappellateauthority after the prder passed by the Controlling Authority would not absolve the employer of ite liability t6 pay interest visualjsed by sub-section(3-A) of Section 7 of the Act. The petitiorier is, therefere, entitled to get interest^till the date of actyal payment of gratuity to him. He is also entitled to cost quantified at Rs.2,000/-." JW^ (9) In so far as interest in respeGt of the period duringwhieh the interini order passed on 26-06-2006 in Writ Petition No.2983 of 2006 was operating.fn the opinion of this Court, the respondent No.1 is tiable to pay interest of that pertod alSobecausethepetitionerTemaineddeprivedofthemoneywhichwasduearid payabletQhim.TheinterimoFderbnlysuspendedtheoperationoftt payment of gratuity. Once writ petiUon has been dismissed,^ U^^ revived arid by appljcation of principles of restjtution, the Management is^obliged tocompensatethepetitionerliygrantinginterestin'reSpectoftheentireperiod of pendency 6f writ petitibn inclyding the penbd du^^ interimorderpassedbythisGouri:. i^. ^f (10) In thecaseofSouflfiEastemeoaffirefcteLM VwsusStateafM.P.and Others,(2(HW8Supren CowtCaSes648,Vw Supreme Courtexplained the principles of restitution in followjhg wprds;- "27. Section 144 CPC is not tte fouhtain souroe of restitution, it isratlwrastatutory<r^pgnitenctfapra-existi^ equityandfaii-pliay.1^atisw|w is;6^n^ from^Section 1^ tKe^ojH^|ha9^nhere^ resUtutJonsQ as;tQ^oi<sgmRlgt^ust^ Jaf BetfTam v^/Cec^^^^Atem^^ PriVyCouncilsaid:OMRy. 271) °ttisthedutyofthec6urtunderSection144oftheejvi! PrOcedureepdeto'placetHei^rtiesih^h&positionvAteh theywould havebccupjed; butforsuch ClecFee OF such part thereof as Has beeri varied or^^Fevei'^^ dpes thte;dytyor jurisdiGtion arjse merely under the sajd sectjon.ltisinMei'ehtinthegeneraljurisdictionpfthecourt to^aietsiFjght|y;;an^ fairty accprding to^^^^ ^owa^^ffa ^^ /o!MeS" CaimsL Lfi. said in Ro<^er y. Comptoir D'EscQmpte^^^^^^ :piOTsI2:'(ER::p.425)'^:^ • "[0]ne offhefirstandbishest duties of all cburts js fe take carelhat th&act pfWe court^es n^ thesuitors,andwhentheexpression,WeactoftheGou^ used, it does 'not mean ^hiSrelsE the aet oflhe prirnaiy court, or pf any interigediate.c^yirtgef^BBeal.b court as a whotey^ms;^'iloweSticou jyrisdjeBOT ev^^e^ :;,:flnally;disRoses^of^^case^'',:.:-•,,•;• ••••- This isalso on ffie pnncipl&th^ a w^ perpetuated by keepjng it aHve arid "respeeting it (A, Arsinagin Afec^v. &P.Ri3ffw!asam^^nJt ^^^^ power theiCQurts have appliea?ttie prirK:ip|es;(^ mynad situations notstrictfyfalljngwithjntheterms^^^^ .144/'' •-." ••'.'•^ 'IWMtt. (11) Moreover, in viewofthe statutory mandate contgined in Section 7ofthe Act, no discretiori is available to absolve the employer from payment of gratuity with or withoyt interest, on any consideration.much less on the corisideration that matter was subjudice in various fora. Thjs aspectcame up forconsideration !r:. : before the Supreme Coyrt in the case of H. Gangahanume Gowda Versus KamsrtakaAgmlndustnWCorpn.Ltd.,{2003)3SlipremeCfwrtCases40, wherein itwas held:- ^^ "7. It is evident from Sectjon 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 afsb to the controlling authority speGifying the amount of gratuity. Under SeGtipn 7(3), the employer shall arrange to pay the amount bf gratuily within 30 days from the date it becomes payable. Under sub-seetion (3-A) of Section 7, jf 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 ttie Centra) Govemment from time to time forrepaymentof long-term deposits; provided that no such interestshall be payable ifthe delay in the payment is cfc/e tofhefaiiltofthe empteyeeand theemployerhasobtained permission in writing ftom the conttolSng authority for ie clelayecl payment on that ground. From the provisions made in S^ctjon 7, a elear cdmmand can be seen mandating the employertopayttiegfatyitywithinthespecifiedtimeandtopay inferest on the detayed payment of gratuity. No discretion is available to exempt or relieye^the emplpyer from paym6nt of gratuitywith orwithout interestas th? case may be. Howeyer, under the proviso tb Section 7(3-A), no jnterestshall be payable ifdelayjnpaymentofgratuityisduetothefaultofthe.employee andfurtherconditionthattheemployBrtiasoBtainedpermisSion i "i, :-:9. .1; "" "^i^ l? '^: ••iy. -^f J^ inwritihgfromthecontrolliMgauthorityforthedelayedpayment on that ground. 9. It is clear from what is extracted above from the order ofthe learned Single Judge that interest on delayed' payment of gratuity was cfenied only on the ground that there was doubt whetherthe appeltant was entitled to graluify, cash equivatent to leave etc., in view o^djvergent opihion of the courts during the pendenGy 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 resporident that the detay in the payment of gratuify was due to the fault of theemployee and that it had pbtained permission in writing from the controlling authority for the delayed payment onthat ground. As noticed above, there is a ctear mandate in the provisjons of Section 716 the employer fbr payment of gratuity within time and to pay interest on the delayed payment ofgratuity. There is also provision to recpver the amount of gratuity with compound interest in case the amountof gratuity payaible was not paid by the emplpyer in terms of !N46SeGtioh 8 of the Act. Since the employer did not sato'sfy the mandatory requirements of the (Sroviso to Section 7(3-A), no discretion was left t6 deny the intefest to the appellant on belated payment of gratuity. Unfortunately, the Dh/ision Bench of the High Court, having found that the appellant wasentitled to interest, declined to interfere with the order of the leamed Single Judge as regards the claim of interest ori del^ed payment of-gratuil^ only on the grouhd that the discretion exercised bythe leamed Single Judgecould not be said to be arbitrary. In the first place in the light ofwhat is stated above, the leamed Single Judge could not refuse the grant of interestexercising discretion as against the mandatory provisions contained in Section 7 of the Act. The Division Bench, in our opinion, committed an error ih assuminfi that the learnedSingleJudgecouldexercisethediscretionihthematter 1^&II- E' 7UMANE / . •\ 10 of awarcling interest and that such a discretion exercised was notarbitrary." . '^' ' '.: •'"• •..':..' ' • . •' . .. ••• ••• (12) As an upshpt of the abpve discussign, l am of the^eohsiderad opinion that the petitioner is entitledto payment of intereston ttieamount ot-gratuity payable to lijm, at tfie rate determihed by the appellate authority till the date of actual payment. As the amountdeposited beftiretheControtlingAuthorityearlierwhile preferringstatutoryappea(,hasbeendisburs6dtothepetitioner,therespondent No.1 is directed to pay the balance amount as would be payable towards interest in the light of the order passed by this Court; As the petitjoner has retiredfromserviceWaybaGkihtheyear2003,thebalaneeampuntofinterest asispa^btetohim,sha|lbepaidwithinaperiodoftwomonthsfrcnnthedateof receiptOfaeopyofthisorder. 1 „,, \ ManindraMohan Shrjvastava | Judge ^: y^.