INTEREST ON DELAYED GRATUITY: MANDATORY OR DISCRETIONARY

Posted byPRADEEP KUMARPosted inindustrial relations, Labor LawTags:, , ,

By- Pradeep Kumar

INTRODUCTION

The Payment of Gratuity Act, 1972 is a social security enactment, whose main objective is to provide financial support to the employees separated from employment and to make provisions for the security of the employee and his family in case of old age, physical disablement or impairment and death. The underlying principle of the Act accepts gratuity as a compulsory statutory benefit.

Although the Preamble of the Act states that, it is- “An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, Railway companies, shops or other establishments”, the scope of the Act has been widened later, over the years, to cover all most all establishments, where 10 or more employees are/were employed and even to teachers in educational institutions. Most Shops & Commercial Establishment Acts of the States fill the void in case of establishments engaging less than 10 employees by mandating that gratuity shall be payable by such smaller establishments if the employee has worked continuously for 10 years or more.

The Act provides succour to tide over hardships and inconveniences in case of loss of employment and income of the family, and is a complete Code in itself.

The concept of ‘gratuity’ is derived from the word ‘gratuitous’, which means ‘gift’ or ‘present’ of the employer in lieu of the long services offered by the employee. However, as a social security enactment, the concept of a gift has ceased over time, and has been taken over as a concept of a social obligation by the employer towards his employee.

Gratuity in India is payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-

  1. on his superannuation, or
  2. on his retirement or resignation, or
  3. on his death or disablement  due to accident or disease, in which case the five-year continuous service is not required

In the case of death of an employee, gratuity payable to him/her is paid to the nominee or, if no nomination was made, to the heirs. Where any such nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority, who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.

Further while computing the gratuity payable to an employee who is re-employed on reduced wages after his disablement, the wages for the period preceding his disablement is taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement is taken to be the wages as so reduced.

Gratuity is paid at a rate of 15 days’ wages for every completed year of service or part thereof in excess of six months. The wages here means Basic Wages + Dearness Allowance last drawn by the employee. The 15 days’ wages is calculated by dividing the last drawn wages by 26 and multiplying the result with 15. Under Section 4(3), the maximum gratuity that is payable is fixed at ₹20,00,000 only. Any gratuity amount paid in excess of ₹20,00,000 only is taxable for the employee under the Income Tax Act.

ARRIVED LATE

In comparison to other labour enactments on social security, viz. the Employee’s Compensation Act, 1923; the Employees’ State Insurance Act, 1948;  the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Maternity Benefit Act, 1961, the advent of the  Payment of Gratuity Act into the Statute Books was a little bit late. This is simply because in those earlier years the employers were reluctant to admit the liability of gratuity and often confused it with the retrenchment compensations for their own advantage. In such a scenario, the Courts had to intervene.

in the case of The Indian Hume Pipe Co. Ltd. Vs. The Workmen and another [(1959) II L.L.J. 830; 1960 AIR 251] Justice P. Gajendragadkar observed that, “xxx in the absence of any provision in the  Industrial Disputes  Act excluding the claim or grant of  gratuity the mere  enactment  of s. 25F cannot oust the  jurisdiction  of industrial  tribunals  to  entertain  claims  for   gratuity schemes or make it improper or unjust to frame such  schemes for all employees including those who are retrenched.

The  object  of   granting retrenchment    compensation  is  to enable the workman who is given partial protection to tide over  the period of unemployment, and to keep  his  gratuity safe and unused so that it may be available to him after his retirement.   The two claims complement each other, and  the fact that they appear to constitute a double benefit  cannot affect their validity.”

In Express Newspapers Private Ltd. Vs. The Union of India and Others, (1955) 1 S.C.R. 1045 the 5-Judge Bench of the Supreme Court, in their judgment dated 8 January, 1958 by applying  the principles laid down in earlier judgment in Budhan Choudhary Vs. The State of Bihar, (1955) 1 S.C.R. 1045 observed: “Gratuity, however, was a reward for good, efficient and faithful service rendered for a considerable period and there could be no justification for awarding the same when an employee voluntarily resigned, except in certain exceptional circumstances. The award of -gratuity, therefore, to an employee who voluntarily resigned from service after a period of only three years, under s. 5(1)(a)(iii) of the Act, must be held to be unreasonable and wholly unjustified. The impugned Act was not discriminatory in character and did not violate Art. 14 of the Constitution. Working journalists formed a separate class by themselves and could be classified apart from the rest of the newspaper employees on a perfectly intelligible differentia rationally related to the object which the Act had in view. Nor could the provisions of either s. 12 or s. 17 of the Act, therefore, be said to be discriminatory in character.”

Earlier the State of Kerala enacted the Kerala Industrial Employees Payment of Gratuity Act, 1970 recognising gratuity a statutory right of the employees. Later, the State of West Bengal enacted the West Bengal Employees Payment of Gratuity Act, 1971 relating to gratuity of the employees.

Resultant to several court- decisions and basing upon earlier State laws in this regard, the Central Government upon realising and recognising gratuity as a legitimate retiral benefit of the employees, finally passed a Central legislation in this regard.

The Payment of Gratuity Act, 1972 (No. 39 of 1972) was passed by the Parliament of India on 21 August 1972, published in the Official Gazette,  and came into force on 16 September 1972.

JOURNEY OF THE ACT

Some important Notifications showing the long journey of the Act so far are shown below:

  1. The Act was brought into Force w.e.f. 16th September, 1972 vide Notification No. S.O. 601 (E), dated the 16th September, 19721.
  2. Section 1(3)(c) was made applicable to Motor Transport undertakings employing 10 persons vide Notification No. G.S.R. 415, dated   the 8th April, 19742.
  3. The Act was applied to Clubs vide Notification No. G.S.R. 1255, dated the 17th September, 19793.
  4. Applicability of the Act was extended to “local bodies” vide Notification No. S.O. 239,  dated 8th January, 19824.
  5. Solicitors’ offices was brought within purview of the Act vide Notification No. S.O. 111, dated 28th December, 19825.
  6. Applicability of the Act was extended to trusts or societies registered under the Societies Registration Act, 1860 vide Notification No. S.O. 2218, dated 20th August, 19976.
  7. Applicability of Act was enlarged to Educational Institutions vide Notification F. No. S-42013/1/95-SS-II, dated 3rd April, 1997.
  8. Applicability of the Act extended to the Chambers of Commerce and Industry vide Notification number G.S.R. 3203, New Delhi dated 30th October, 19807.
  9. Applicability of the Act was extended to Inland Water Transport Establishments vide Notification number G.S.R. 133, New Delhi, dated 24th December, 19808.
  10. Raising of wage ceiling under Sec. 2(e) from Rs. 1000 only p.m. to Rs. 1600 only p.m. along with amendment of Sec. 4, insertion of new Secs. 7A, 7B and amendment of Sec. 13 was made vide the Payment of Gratuity (Amendment) Act, 1984 (No. 25 of 1984) published in GoI Extra. Pt. II Sec. 3 No. 33, dated 18th May 1984.
  11. Insertion of Sub-sec. (3A) under Sec. 1, addition of Sub-Sec. (2)   to Sec. 5 w.e.f. 18th May 1984 along with substitution of Sec. 2 & insertion of Sec. 2A (with retrospective validation from 11th February 1981) were made vide the Payment of Gratuity (Second Amendment) Act, 1984 (No. 26of 1984), published in GoI Extra. Pt. II Sec. 3 No. 34, dated 18th May 1984.
  12. Notification under section 7(3-A)- Rate of Interest @10% p. a. S.I. was specified vide Notification No. S.O. 874(E), dated 1st October, 19879.
  13. Notification under section 8- Rate of interest specified vide Notification No. S.O. 1032 (E), dated 1st December, 198710.
  14. The wage ceiling under Sec. 2(e) was raised by change of “Rs. 1,600 only p.m.” to “Rs. 2,500 only” p.m. or such higher amount as the Government may specify”; in the definition of “family” under Sec. 2(h) the words, “and the widow” were  substituted to the words, “and the dependent parents of his wife and the widow”;  continuous service under  Sec. 2A was amended; amendment of Sec. 4, 5, 6, 7, 8, 9 were made along with  insertion of Secs. 4A (compulsory insurance), and the ceiling of “20 months’ wages” for payment of gratuity was replaced by a monetary ceiling of Rs 50,000/- only vide the Payment of Gratuity (Amendment) Act, 1987 (No. 22 of 1987) published in GoI Extra. Pt. II Sec. 3 No. 31, dated 12th  August 1987.11 Later the wage ceiling was raised to Rs. 3,500 only p. m.
  15. The wage ceiling under Sec. 2(e) omitted, gratuity ceiling u/S. 4 was raised from Rs. 50,000 only to Rs. one lakh only p. m., and Sec. 11 was amended (substituting the powers of trial of offences from Presidency Magistrate to JMFC) vide the Payment of Gratuity (Amendment) Act, 1994 (No. 34 of 1994) published in GoI Extra. Pt. II Sec. 2 No. 49, dated 24th  May 1994.
  16. The gratuity ceiling under Sec. 4 was raised by change of “Rs. one lakh” only p.m.  to “Rs. Three lakh fifty-thousand” only p.m. vide the Payment of Gratuity (Amendment) Act, 1998 (No. 11 of 1998) published in GoI Extra. Pt. II  Sec. 1 No. 26, dated 22nd June, 1998.
  17. Gratuity was extended to employees covering teachers by way of the Payment of Gratuity (Amendment) Act, 2009 (No. 47 of 2009), dtd. the 31st December, 2009 with retrospective effect vide Number S.O. 1080, dated the 3rd day of April, 199712.
  18. Gratuity Ceiling under section 4 sub-section (3) increased from “three lakhs and fifty thousand rupees”  to “ten lakh rupees” vide the Payment of Gratuity (Amendment) Act, 2010 (No. 15 of 2010).
  19. The effective date of the above hike in gratuity ceiling  was fixed by Notification No. S.O. 1217 (E), dated 24-5-2010, and was fixed to 24th day of May, 2010.
  20. Under continuous service in the Explanation in section 2A (2) (iv), the words “twelve weeks”, were substituted by the words “such period as may be notified by the Central Government from time to time”, and in section 4 (3), for the gratuity ceiling “ten lakh rupees” was substituted by the words “such amount as may be notified by the Central Government from time to time” vide  the Payment of Gratuity (Amendment) Act, 2018 (No. 12 of 2018) published in GoI Extra. Pt. II —Sec. 1 No. 16, dated the 29th March, 2018.
  21. The Central Government  specified the amount of gratuity payable   shall not exceed twenty lakh rupees vide Notification  No. S.O. 1420 (E), dated the 29th March, 201812.
  22. The Payment of Gratuity (Amendment) Act, 2018 (12 of 2018) was brought into force w.e.f.  the 29th day of March, 2018 Vide S.O. 1419(E), dated the 29th March, 201813.

RELEVANT PROVISIONS OF THE ACT

For the purpose of this article, the noteworthy Sections of the Act are mentioned below:

4. Payment of gratuity .- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

 Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.

Explanation .- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days’ wages for each season.

 Explanation .- In the case of a monthly rated employee, the fifteen days’ wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government from time to time.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced;

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1),-

(a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;

(b) the gratuity payable to an employee may be wholly or partially forfeited-

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

7. Determination of the amount of gratuity .-(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, 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.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, 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 so determined.

(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.

(3-A) 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)(a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, or in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity.

[* * *]

(b) Where there is a dispute with regard to any matter or matters specified in clause (a), the employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute.

(c) The controlling authority shall, after due inquiry and after giving the parties to the dispute a reasonable opportunity of being heard, determine the matter or matters in dispute and if, as a result of such inquiry any amount is found to be payable to the employee, the controlling authority shall direct the employer to pay such amount or, as the case may be, such amount as reduced by the amount already deposited by the employer.

(d) The controlling authority shall pay the amount deposited, including the excess amount, if any, deposited by the employer, to the person entitled thereto.

(e) As soon as may be after a deposit is made under clause (a), the controlling authority shall pay the amount of the deposit-

(i) to the applicant where he is the employee; or

(ii) where the applicant is not the employee, to the nominee or, as the case may be, the guardian of such nominee or heir of the employee if the controlling authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.

(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority shall have the same powers as are vested in a Court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely:-

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examination of witnesses.

(6) Any inquiry under this section shall be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf:

Provided that the appropriate Government or the appellate authority, as the case may be, may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days.

Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4), or deposits with the appellate authority such amount.

(8) The appropriate Government or the appellate authority, as the case may be, may, after giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify or reverse the decision of the controlling authority.

8. Recovery of gratuity .-If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon  at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto:

 Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate:

Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.

It may not be impertinent to mention here that, interest for non-payment/delayed payment of gratuity under Sec. 7 (3A) of the Act is mandatory. It shall accrue from the date on which the gratuity becomes payable till the date of actual payment at a simple interest at such rate notified by the Central Government for repayment of long-term deposits, as specified by notification,

Further, the words, “as arrears of land revenue and pay the same to the person entitled thereto” imply that such interest as calculated per the notification is a legal entitlement, and must be treated as if a property of the employee concerned from which he is deprived by the recalcitrant employer. Hence such a defaulting employee is liable to pay simple interest as if he had invested the due amount of the eligible employee in long-term deposits instead of paying the same within 30 days of employee’s entitlement. However, interest may not be payable by the employer if facts and circumstances prove that gratuity so delayed is due to the fault of the employee.

Last but not the least, if the Act is applicable to the establishment and/or employee, then Sec.14 of the Act has an over-riding effect on any other enactments, as given below: 

    “14. Act to override other enactments, etc- The provisions  of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith  contained in any enactment other than this  Act or in any instrument or contract having  effect by virtue of any enactment other than this Act.”

INTEREST ON DELAYED PAYMENT OF GRATUITY: MANDATORY

Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub-section (3) was substituted and (3-A) was added to Section 7 of the Principal Act by Sec. 7 of the Payment of Gratuity (Amendment) Act, 1987 (No. 22 of 1987), which came into force with effect from 1-10-1987. 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.14

For the readers to get a greater sense of the legislative intent behind the 1987 Amendment, I may reproduce the Objects and Reasons of the Payment of Gratuity (Amendment) Act, 1987 :

“The Payment of Gratuity Act, 1972, provides for payment of gratuity to persons employed in factories, mines, oil fields, plantations ports, railway companies, shops and certain other establishments employing ten or more persons and for matters connected therewith or incidental thereto. The Labour Ministers’ Conferences held in 1980 and 1982 had recommended, inter alia, that the time limit for payment of gratuity might be prescribed in the Act itself and that there should be a suitable provision for recovery of interest in cases where the payment of gratuity is delayed. The Indian Labour Conference held in November, 1985 had recommended that a provision for compulsory insurance of employers’ liability and setting up of gratuity fund for payment of gratuity be incorporated in the Act. The Trade Unions have been representing for suitable enhancement in the wage limit for coverage and ceiling for payment of gratuity.

  1. Based on the above recommendations and representations, it is proposed to carry out certain amendments in the Act. Some of the more important amendments are:
  • (i) the coverage of the Act is being extended to Rs. 2500 per month and an enabling provision is being made in raising the wage-limit for coverage from time to time;
  • (ii) provision is being made for depositing the amount of gratuity payable to a minor with the controlling authority who shall invest the money in a bank or a financial institution for the benefit of minor;
  • (iii) the existing ceiling of 20 months’ wages for payment of gratuity is be replaced by a monetary ceiling of Rs. 50,000;
  • (iv) provision is being made for compulsory insurance of to pay gratuity under the Act or in the alternative for the setting up of a gratuity fund under the provisions of the Act in relation to establishments employing five hundred or more employees;
  • (v) provision is also being made for payment of simple interest at a specified rate, if the amount of gratuity is not paid within thirty days from the date it becomes payable;
  • (vi) penalties prescribed under the Act are being made more stringent.

The other amendments proposed in the Bill are of a minor and consequential nature. “

(Emphasis supplied by bold letters is mine)

The amendments made by the 1987 amendment Act, which are relevant for the purpose of this article are reproduced hereunder:

    “7. Amendment of section 7. – In section 7 of the principal Act, for subsection (3), the following subsections shall be substituted, namely:-

(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.”

 (3-A)- 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 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.”

Thereafter, the Central Government in exercise of the powers conferred by Sub Section (3-A) of Section 7 of the Payment of Gratuity Act, 1972, notified the following vide  Notification dated 1st October, 1987:

Notification under section 7(3-A)

 “S.O. 874(E), dated 1st October, 19879– In exercise of the powers conferred by sub-section (3-A) of section 7 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies ten per cent. 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”

Notification under section 8

“S.O. 1032 (E), dated 1st December, 1987– In exercise of the powers conferred by section 8 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies 15 per cent. per annum as the rate of compound interest, recoverable by the Collector for the time being, along with the amount of gratuity and payable to the person entitled thereto.

2. This notification shall come into force on the date of its publication in the Official Gazette.

        (A.K. Bhattarai)

                                                          Under Secretary”

Although both the Notifications relate to the year 1987, no other Notification appears to have been issued by the Central Government on the rate of interest for delayed payment under Se. 7 (3A)  the Payment of Gratuity Act, and for further interest after controlling authority   issue a certificate proceeding  under Sec. 8 for recovery of gratuity from the employer.

Whereas Sec. 7 is governed by the Payment of Gratuity Act, 1972, Sec. 8 is controlled by the Revenue Recovery Act or Public Debt Recovery Act. For better understanding of the calculation procedures of interests at the two different stages, and the finer nuances of “money due” and a “benefit which must be computed in terms of money”, the judgments of Madras High Court in R. Palaniappan vs. District Collector (W.P.No.6097 of 2012) as well as the Apex Court in M/S. Agencia E. Sequeira Fabril Gasosa Vs. Labour Commissioner [1997 (3) SCC 150] may be referred to by interested and curious readers.

It may further be mentioned here that, as per the Proviso under Sec. 8, the amount of interest payable under section 8 shall, in no case exceed the amount of gratuity payable under the Act when recovery of gratuity is made by the Collector or any other Certificate Officer under him having delegated powers.

Payment of gratuity would not depend upon the employee filing an application before the employer demanding gratuity but will have to be paid immediately on cessation of employment in terms of Section 4 of the Act, irrespective of the demand.14

When the employer fails to arrange the payment of gratuity within thirty days from the date it becomes payable to the petitioner, the deposit of the amount with the appellate authority after the order passed by the controlling authority would not absolve the employer of its liability to pay interest as visualised by Sub-sec. (3-A) of S. 7 of the Act.15 

CASE LAWS: WHEN DOCTORS DIFFERED

On the question of interest on delayed payment of gratuity, different Courts gave different opinions at different times. Although the facts and circumstances of each case may be different, it must be admitted that, there is no cohesion on the point. Let’s discuss some of them to illustrate the point.

In Kerala State Cashew Development Corporation Ltd.  Vs. N. Asokan, the Corporation sought to explain the delay of eight years before the Court saying that its financial condition was such that it was not in a position to pay gratuity amount to the respondent. The Apex Court held, “We are not inclined to interfere with the order impugned in this appeal, by which the High Court has affirmed an order of a learned Single Judge of the High Court of Kerala at Ernakulam, directing the Kerala State Cashew Development Corporation Ltd. (hereinafter referred to as “the Corporation”), the appellant herein, to pay gratuity with interest to the respondent. For the reasons aforesaid, the appeal is dismissed. We, however, grant six weeks’ time to the appellant-Corporation to pay interest on the delayed payment of gratuity in compliance with Section 7(3A) of the Act.”

In Gorakhpur University & Ors Vs. Dr. Shitla Prasad Nagendra & Ors. since the appellant-university did not settle the first respondents claim for terminal benefits including the fixation and disbursement of the pension, the first respondent filed C.M.W.P. No.30428/97. The Writ Petition was opposed by the appellant- university contending that the first respondent, having not vacated the quarters held by him when he retired and within the permissible extended period, was liable for payment of penal rent in respect of such accommodation and that as a matter of fact the Finance Controller, Office of Directorate of Higher Education, U.P., who examined his pension papers, ordered on the recommendation of the university-authorities the adjustment of Rs.3,20,638.04 from the amounts due towards the retiral benefits. Further, a sum of Rs.64,441.54 was also ordered to be deducted from the Provident Fund amount due to first respondent.  The Division Bench of the Allahabad High Court by its Order dated 17.8.98, applying the principles laid down in Som Prakash Vs. Union of India (AIR 1981 S.C. page 212) and R. Kapur Vs. Director of Inspection (Painting and Publication) Income Tax & Anor. (1994) 6 SCC page 589) overruled the objections of the University holding that the pension and other retiral benefits cannot be withheld or adjusted or appropriated for the satisfaction of any other dues outstanding against the retired employee. The action of the university authorities to the contrary was held to be illegal and while allowing the claim of the first respondent, a direction came to be issued to pay the entire pension and Provident Fund etc. due to first respondent, with penal interest @ 18% within two months from the date of the order.

The Supreme Court on appeal of the University observed that, “xxx no infirmity or illegality could be said to be vitiated the order, under challenge in this appeal, to call for our interference, apart from the further reason that the disbursements have already been said to have been made in this case as per the decision of the High Court.”

The Full Bench of Patna High Court in Champaran Sugar Company, Ltd. v. Joint Labour Commissioner [1987 (35) BLJR 104; 1986 SCC OnLine Pat 228]19  has also held as follows:

“13. Having thus laid the duty at the door of the employer to pay gratuity within the prescribed time, S. 8 also provides the sanction for such payment and the methodology for its recovery with interest for the delay in payment caused by the default of the employer. The Act is itself specific that the controlling authority in such cases would recover the gratuity with compound interest at the rate of 9 per cent per annum by the coercive process of the issuance of a certificate recoverable as arrears of land revenue by the Collector. Not only that, the terminus for calculating the same is fixed at the date of the expiry of the prescribed time.”

Again in the case of Rajendra Deva v. Additional Labour Commissioner (Accounts), Kanpur-cum- Appellate Authority [1999 (2) AWC 1083, 1999 (81) FLR 914, (1999) IILLJ 211 All; 1999 SCC OnLine All 108] the application was contested, inter alia, on the ground that the last wages drawn by the petitioner was Rs. 1,400 only besides Rs. 38 per month as H.R.A. which was not to be included in the wages for the purpose of calculating the amount of gratuity. The petitioner thereafter filed replication stating therein that according to the pay structure prevalent in the establishment, he had earned an increment @ Rs. 40 per month w.e.f. 1.4.1989 and, therefore, his wages as on 16.5.1989 would be Rs. 1.440. The Controlling Authority on consideration of the facts and circumstances of the case allowed the petitioner’s application and held that he was entitled to payment of Rs. 16,615.38 paise as gratuity and interest @ 10% under Section 7(3A) of the Act.

Aggrieved against the said order, the respondent, employer filed an appeal which was initially dismissed for want of prosecution vide order dated 22.12.1993 but the matter came to be remitted by this Court to the appellate authority for decision on merit. The appellate authority thereafter allowed the appeal in part and held that calculation of the amount of gratuity on the basis of imaginary increment of Rs. 40 in the monthly salary of Rs. 1,400 was unjustified and the order passed by the Controlling Authority was modified accordingly. 

Thereafter the petitioner -employee filed a Writ Petition in the Allahabad High Court praying for issuance of writ order or direction for the payment of modified gratuity amount with interest and compensation of Rs. 40,000 for unnecessary delay and harassment in payment of gratuity.

The Hon’ble Allahabad High Court held:   “xxx the petitioner in the course of his submissions urged that the appellate authority was not justified in modifying the order passed by the Controlling Authority inasmuch as the increment earned by the petitioner was rightly added in the monthly salary last drawn by him. “Wages”, according to Section 2(s) of the Act of 1972 means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are “payable” to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance. The Controlling Authority in its order dated 10.12.1993 has clearly held that according to the pay scale prevalent in the establishment, the petitioner had earned the increment of Rs. 40 as on 1.4.1989 and for the purpose of calculating the gratuity, the increment so earned was to be added in the salary, actually paid to the petitioner inasmuch as was no order withholding payment of increment was brought on record. In the absence of any order withholding the annual increment, the Controlling Authority was, in my opinion justified in calculating the amount of gratuity on Rs. 1.440 as the wages\last drawn by the petitioner. 

xxx

The deposit of the amount with the appellate authority after the order passed by the Controlling Authority would not absolve the employer of its liability to pay interest as visualised by sub-section (3A) of Section 7 of the Act. The petitioner is, therefore, entitled to get interest till the date of actual payment of gratuity to him. He is also entitled to cost quantified at Rs. 2,000.”

Further in Achyutananda Parida Vs. State Of Orissa And Others (W.P.(C) No.10845 of 2009 on 31 January, 2017 the High Court of Orissa held that, “the petitioner has no laches in complying the requirements as asked by the opposite parties and the opposite parties are at fault in causing the delay in payment of pension and gratuity. xxx Hence, the decision of this Court in W.P.(C) No.9883 of 2005 is inapplicable to this case.   With due respect to the decision of the Hon’ble Supreme Court in the Case of D.D. Tewari (D) Thr. LRs v. Uttar Haryana Bijli Vitran Nigam Limited and others, (Supra) and in view of the facts and circumstances of this case that the opposite parties have got laches in causing the delay in sanction the pension and gratuity of the petitioner long after twelve years of his retirement, this Court would like to award interest on the delayed payment of pension and gratuity from the date of entitlement till the date of actual payment. Point No.(II) is answered accordingly.

xxx  

From the foregoing discussion and relying on the decision of the Hon’ble Supreme Court in the case of D.D. Tewari (D)Thr. LRs v. Uttar Haryana Bijli Vitran Nigam Limited and others (Supra), the writ petition is disposed of with a direction to the opposite parties to award interest @ 9% per annum on the delayed payment of pension and gratuity amount from 1.4.1997 till the date of actual payment in 2009.”

However, in Managing Director, Odisha Small Industries Corporation Ltd. Vs. Abhay Kumar Samantaray, 133 (2022) CLT 830, the Hon’ble High Court of Orissa in the judgment dated 14.09.2022 in W.P.(C) No.19346 of 2021 found imposition of simple interest @10% per annum for delayed payment of  gratuity to be in order.

The Court observed, “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.

xxx, there being no infirmity or illegal in the impugned judgment dated 14.08.2020 passed in P.G. Case No.6 of 2019, so also Order dated 13.04.2021 passed in P.G. Appeal No.1 of 2021, this Court is not inclined to interfere with regard to the impugned Orders, xxx.”

In Ashvinkumar Ramniklal Jani Vs. State Of Gujarat (R/Special C.A. No. 4452 of 2019) the respondents were directed to pay to the petitioner the amount of gratuity of Rs.10 lakhs within a period of 10 weeks from the date of receipt of copy of the order. Since the petitioner superannuated on 14.06.2013 and the amount of gratuity had been wrongfully withheld by the respondents, the petitioner was entitled to interest at the rate of 9% from the date of his superannuation till the date of actual payment.

In Vandana Vidhut Limited Vs. Appellate Authority & Anr. (Writ Petition (L) No.115 of 2014 on 16 December, 2015) the High Court of Chhattisgarh, Bilaspur citing the ratio of decision in Gangahanume Gowda  case observed, “As a fall out and consequence of the aforesaid discussion, the writ petition filed by the petitioner is partly allowed and respondent No.2 is entitled for gratuity of ₹ 45,346/-. The petitioner is directed to pay the amount of gratuity along with 10% interest on the amount of gratuity, to which respondent No.2 is entitled from the date of retirement till the date of actual payment.”

In Y.K. Singla v. Punjab National Bank and others16 , the Apex Court, after discussing the issue relating to interest payable on the amount of gratuity not paid within time, directed that interest at the rate of 8% per annum shall be paid on the amount of gratuity.

In State Of Uttar Pradesh And 2 Ors Vs. Dhirendra Pal Singh17, the Supreme Court directed that the appellants shall pay interest at the rate of 6% per annum on the unpaid amount of pension from the date it had fallen due and interest at the rate of 8% per annum on the unpaid amount of gratuity from the date of retirement of the employee.

IN THE NEWS: INTEREST FOR DELAYED PAYMENT OF GRATUITY- MATTER BEFORE THE SUPREME COURT 

Recently, a Special Leave Petition contesting a judgement by the Orissa High Court reducing interest on delayed gratuity payments from 10% to 6% under the Interest Act has been filed in the Apex Court.

 According to the petition, the issue in the case is whether the decision of the High Court to reduce the percentage of interest in Paradeep Port Trust Vs. Controlling Authority and others (W.P. (C) 13892 of 2005) holds good.

The gist of the case is that the Petitioner was employed as an Executive Engineer at the Paradip Port Trust in Orissa (Respondent No. 1) and has been aggrieved since 2002, when he was superannuated after more than 38 years of service.

He submitted Form N with the Assistant Labour Commissioner (C), Bhubaneswar. The Assistant Labour Commissioner (C) recognising the application of the Payment of Gratuity Act. 1972, ordered the Paradip Port Trust management to pay the Petitioner simple interest at a rate of 10% per annum.

The Respondent-Port Trust filed an appeal with the Appellate Authority-cum- the Regional Labour Commissioner (C), Bhubaneswar, who upheld the Assistant Labour Commissioner’s decision. The aggrieved Respondent subsequently filed a writ suit in the High Court of Orissa, challenging the Controlling Authority’s Order dated 10.10.2012 and the Appellate Authority’s Order dated 26.07.2013. The Single Judge lowered the interest incurred on the employer’s (Respondent No.1) delay in releasing gratuity from 10% to 6% per annum under the Interest Act, as required under the Payment of Gratuity Act, 1972.

The Petitioner, thereafter, filed an appeal with the Division Bench of the High Court, which was dismissed. The Division Bench of the High Court found that the Payment of Gratuity Act does not contain any clause mandating a minimum rate of interest on late payment, whereafter the litigation has reached the Apex Court. The Division Bench further went on to say that the Single judge had directed, after reviewing the provisions of the Interest Act. Instead of the claimed 10% interest on the delayed payment of gratuity amount, it would be appropriate in the interest of justice if interest for the delayed period was at the rate of 6% per annum, and that the Single judge had made no error, the Division Bench observed.

During the hearing of the SLP before the Supreme Court, the counsel for the petitioner has pleaded that the SLP was filed in response to the Division Bench’s ruling dismissing the writ appeal and confirming the Single judge’s order directing interest on the delayed payment of gratuity at 6% per year. Rather than awarding the claimed interest @10% per year in the impugned Order, the High Court found that the Payment of Gratuity Act makes no provision for a mandatory minimum rate of interest on late payments.

According to the petitioner in the SLP, the High Court should not have applied the provisions of the Interest Act instead of the Payment of Gratuity Act, 1972, because the Petitioner’s case is squarely covered by the Payment of Gratuity Act, 1972.

The Counsel for the petitioner has made the following submissions:

1. Simple interest became obliged to be paid for the delay in disbursing gratuity with the addition of sub-section (3A) to Section 7 of the Payment of Gratuity Act 1972

2. On October 1, 1987, the Union Ministry of Labour issued a notification setting the rate of interest at 10% per annum.

3. As a result the Single judge made an error by decreasing the interest payable to the petitioner on the late payment of gratuity from 10 to 6% per year.

The Supreme Court has admitted the SLP and issued notice to all concerned.

CRITICAL ANALYSIS: KARNATAKA AGRO INDUSTRIES CASE HAS THE FINAL SAY

The Apex Court in the Landmark Case of H. Gangahanume Gowda Vs. Karnataka Agro Industries Corporation Ltd. [(2003) 3 SCC 40] has held as follows:-

“xxx

In order to appreciate the above contentions urged, it is necessary to notice the provisions of the Payment of Gratuity Act, 1972 (for short ‘the Act’) to the extent they are relevant. They are extracted below:-

“7. Determination of the amount of gratuity (1) A person who is eligible for payment of gratuity under this Act or any person authorized, in writing 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.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub- section (1) has been made or not, 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 so determined.

……………………………..

(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.

8. Recovery of gratuity If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time as arrears of land revenue and pay the same to the person entitled thereto;

Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate.

Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.” 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(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. vs. M. Padmanabhan Nayyar [1985 (50) FLR 145]14. 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 vs. 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) in Section 7. That provision has prospective application.” In the background of this legal position, now we turn to the facts of the present case. The appellant was under suspension from 15.3.1999 to 21.5.1999. On attaining the age of superannuation, he retired from services of the respondent-Corporation on 1.1.2000.

The learned Single Judge, after considering the rival contentions, disposed of the writ petition issuing directions to the respondent-Corporation to settle the full salary and allowances for the period of suspension, gratuity, cash equivalent to leave salary, deferred leave, concession amount etc. As regards the claim of interest on gratuity, the learned Single Judge held as under:- “Since there was a doubt as to whether the petitioner is entitled to the gratuity, cash equivalent of leave salary etc., in view of the divergent opinion of the Courts during the pendency of an enquiry proceeding of a retired employee, in my view, the petitioner is not entitled to the relief of interest for the belated payment of gratuity and other amounts.” 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 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.

Unfortunately, the Division Bench of the High Court, having found that the appellant was entitled for 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.

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 in bold letters is mine).

In Charan Singh Vs. Birla Textiles & Anr. on 31 August, 1988 [1988 AIR 2022, 1988 SCR Supl. (2) 742] it has already been decided by the Apex Court that the provisions of the Interest Act and the provisions of Section 34 of the Code of Civil Procedure would be of no avail to the appellant since no notice was given demanding interest and the controlling authority is not a court for falling back on section 34 of the Code.

There is no gainsaying of the fact that whereas the Acts are substantive, the Rules and Regulations, Administrative Circulars, Notifications and Guidelines thereunder are procedural in nature. Both are two sides of the same coin.

In this connection it is pertinent to mention the observation of the Apex Court in Union Of India And Anr. Vs. Deoki Nandan Aggarwal on 4 September, 1991 [1992 AIR 96, 1991 SCR (3) 873], where the Hon’ble Court in unequivocal terms observed that,“It is not the duty of the Court either to  enlarge the scope of the legislation or the intention of the  legislature when  the  language of the provision  is  plain  and unambiguous. The Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature the Court could not go to its aid to correct or make up the deficiency.  Courts shall decide what the law is  and not what it should be. The Court of course adopts a construction which will carry out the obvious intention of the legislature but could not legislate itself.  But to invoke judicial activism to set at  naught legislative  judgment  is subversive of the  constitutional harmony and comity of instrumentalities.”

CONCLUSION

Concept of Gratuity is a retiral benefit as a measure of social security. It is not gratuitous as seen from the  frame of reference of an employer, but earned by long and continuous service of the employee.

In the words of Hon’ble Justice (R) Lt. P.B. Gajendragadkar, “Gratuity is not paid to an employee gratuitously or merely as a matter of boon, but is paid to him for the service rendered by him to the employer; consequently he should not be wholly deprived of the benefit thus earned by long and meritorious service even though at the end of such service he might have been found guilty of misconduct which entailed his dismissal.”18

Pension and gratuity are no longer matters of any bounty to be distributed by Government but are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest. It is the duty of the employer to immediately dispense all terminal benefits to an employee who ceases to be so on attaining the age of superannuation and gratuity being a terminal benefit, the same cannot be denied to be paid immediately.19

Having said all this, I now come to the final question-

Whether the rate of interest on delayed payment of gratuity is mandatory or discretionary?

Whether such discretion exercised could not be said to be arbitrary?

In the peculiar facts and circumstances of a case, if the situation warrants so, could the discretion exercised by the courts be more sublime?

Well, I leave it to the wisdom of the readers.

FOOT NOTE:
  1. Gazette of India Extra., 16.09.1972, Part II, Sec. 3(ii), Page 1641.
  2. Gazette of India dated 20.04.1974, Part II, Sec. 3(i), Page 930.
  3. Gazette of India dated 106.10.1979, Part II, Sec. 3(i), Page 2354.
  4. Gazette of India dated 23.01.1982, Part II, Sec. 3(i), Page 351.
  5. Gazette of India dated 09.10.1982, Part II, Sec. 3(ii), Page 120
  6. Gazette of India dated 06.09.1997, Part II, Sec. 3(ii), Page 4292.
  7. Gazette of India dated Part II, Sec. 3(ii), dated 15.11.1980.
  8. Gazette of India dated Part II, Sec. 3(ii), dated 10.01.1980.
  9. Gazette of India, Extra. No. 493, dated 01.10.1987, Part II, Sec. 3(ii).
  10. Gazette of India, Extra. No. 603, dated 01.12.1987, Part II, Sec. 3(ii).
  11. W.e.f. 1-10-1987 in respect of Sections 2, 3 clauses (b) and (c) of Section 4, Sections 6, 7, 8 and 9 vide Notification No. S.O. 873(E), dated 1-10-1987.
  12. Subs. by G.N. No. P.G.A. 102003/ (1151) /Lab-4, dt. 28.1.2004 (M.G.G. Pt. I.L.P.160)
  13. Published in GoI Extra. Pt. II—Sect. 3 No. 1283, dated March 29, 2018
  14. State of Kerala v. M. Padmanabhan Nair [(1985) 1 SCC 429 : 1985 SCC (L&S) 278 : (1985) 50 FLR 145] .
  15. Varma Industrial Private Limited  Vs. Mr. P N Janakiraman Shetty (WP 2759/2019 Karn. HC)
  16. Y.K. Singla vs. Punjab National Bank & Ors on 14 December, 2012  CIVIL APPEAL NO.9087 OF 2012 (Arising out of SLP (Civil) No.14570 of 2012)  [(2003) 3 SCC 472]
  17. State Of Uttar Pradesh And 2 Ors vs. Dhirendra Pal Singh on 15 November, 2016 CIvil Appeal No. 10866 of 2016 (Arising out of S.L.P. (C) No. 33582 of 2016 (CC 18447/2016).
  18. The Garment Cleaning Works vs. Its Workmen on 3 March, 1961 [1962 AIR 673, 1962 SCR Supl. (1) 711]
  19. .Champaran Sugar Compmany Limited Vs. Joint Labour Commissioner And Appellate Authority ( 1986 SCC OnLine Pat.228); Mohanlal v. Appellate Authority under Payment of Gratuity Act, Bhopal ( 1990 SCC OnLine MP 166) and Rajendra Deva Vs. Additional Labour Commissioner (Accounts), Kanpur-Cum-Appellate Authority (1999 SCC OnLine All 108.).

Published by PRADEEP KUMAR

Blogger. Independent Author, Freelance Writer.

4 thoughts on “INTEREST ON DELAYED GRATUITY: MANDATORY OR DISCRETIONARY”

  1. A research article from a prolific author . .The article will be an invaluable reference for students of Labour Laws, bureaucrats, practicing managers as well as union leaders.

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  3. Pingback: LIMITS IN APPEAL UNDER THE PAYMENT OF GRATUITY ACT: A DISCOURSE – PRADEEP'S PEN

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