Karnataka High Court
The National Textile Corporation Ltd vs Sri.S.S.Ashok on 24 November, 2020
Author: S.G.Pandit
Bench: S.G.Pandit
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF NOVEMBER, 2020
BEFORE
THE HON'BLE MR.JUSTICE S.G.PANDIT
WRIT PETITION NO.19409 OF 2015 (L-PG)
BETWEEN:
THE NATIONAL TEXTILE CORPORATION LTD.
GOVERNMENT OF INDIA UNDERTAKING
MAGADI ROAD, MINERVA MILL COMPOUND,
BANGALORE - 560 023.
REPRESENTED BY THE CHAIRMAN
AND MANAGING DIRECTOR.
... PETITIONER
(BY SRI. S.V.SHASTRI, ADVOCATE)
AND:
1. SRI.S.S.ASHOK,
S/O LATE M.T.SRINIVASAN,
AGED ABOUT 64 YEARS,
RESIDING AT NO.4, UPSTAIRS,
17TH MAIN, P.K.LAYOUT, III STAGE,
BANGALORE - 560 070.
2. THE CONTROLLING AUTHORITY,
UNDER THE PAYMNET OF GRATUITY ACT,
& ASST. LABOUR COMMISSIONER (CENTRAL)
"SRIRAM SADAN ", III CROSS,
III MAIN, II PHASE, TUMKUR ROAD,
YESHWANTHPURA, BANGALORE - 560 022.
3. THE APPELLATE AUTHORITY,
UNDER THE PAYMNET OF GRATUITY ACT,
REGIONAL LABOUR COMMISSIONER (CENTRAL)
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"SRIRAM SADAN ", III CROSS,
III MAIN, II PHASE, TUMKUR ROAD,
YESHWANTHPURA, BANGALORE - 560 022.
... RESPONDENTS
(BY SMT.SUVARNA, ADVOCATE FOR
SRI. K.PUTTEGOWDA, ADVOCATE FOR R1;
SMT.M.C.NAGASHREE, ADVOCATE FOR R2 AND R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER PASSED BY THE R-3 IN GRATUITY
APPEAL DATED 23.3.2015 VIDE ANNEXURE-H
CONFIRMING THE ORDER DATED 20.2.2014 PASSED BY
THE R-2 VIDE ANNEXURE-G AND ETC.,
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, THROUGH VIDEO
CONFERENCE, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner-Employer is before this Court under Article 226 of the Constitution of India, praying for a writ of certiorari to quash the order passed by the 3rd respondent-Appellate Authority in Gratuity Appeal No.36(06)/2014-B2 dated 23.03.2015 vide Annexure-H confirming the order in Application 3 No.48(182)2012-B3, dated 20.02.2014 passed by the 2nd respondent-Controlling Authority vide Annexure-G.
2. The brief facts of the case are that 1st respondent was an employee of petitioner-The National Textile Corporation Limited (for short 'the Corporation'). The 1st respondent was imposed with punishment of termination and recovery, against which he was before this Court in W.P.No.10726/2010. This Court by order dated 02.08.2011 allowed the writ petition and quashed the order of termination and recovery. Further it observed that the petitioner would be entitled to all consequential benefits. In the meanwhile, the 1st respondent attained the age of superannuation on 31.03.2009. As on the date of his superannuation, he was entitled for gratuity. The petitioner settled the gratuity to 1st respondent on 09.12.2011. As there was delay in payment of gratuity, the 1st respondent 4 claimed interest for the delayed period, by filing application under Section 7 of Payment of Gratuity Act, 1972 (for short 'the Act') before the Controlling Authority and Assistant Labour Commissioner (Central), Bengaluru. The Controlling Authority by order dated 20.02.2014 directed the petitioner to pay simple interest at the rate of 10% per annum from 01.04.2009 to 09.12.2011 on gratuity amount of Rs.7,17,673/-. Aggrieved by the said order of Controlling Authority, the petitioner filed an appeal before the Appellate Authority and Regional Labour Commissioner (Central), Bengaluru in Gratuity Appeal No.36(06)/2014-B2. The Appellate Authority by order dated 23.03.2015 dismissed the appeal and confirmed the order of the Controlling Authority. The petitioner is before this Court assailing the orders dated 20.02.2014 and 23.03.2015 passed by the Controlling and Appellate Authorities.
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3. Heard Sri. S.V.Shastri, learned counsel for the petitioner who is present in person and Smt. Suvarna, learned counsel appearing for Sri. K.Puttegowda, learned counsel for respondent No.1 through video conference as well as Smt. M.C.Nagashree, learned counsel for respondent Nos.2 and 3. Perused the writ petition papers.
4. Sri. S.V.Shastri, learned counsel for the petitioner submits that since the writ petition was pending with regard to the order of punishment passed against the 1st respondent, the petitioner could not settle the gratuity amount. The 1st respondent became entitle to gratuity only after passing of the order at Annexure-A, dated 02.08.2011. In pursuance to the said order, the gratuity was paid to 1st respondent on 09.12.2011. Further, the learned counsel submits that there is a delay by 1st 6 respondent in approaching Controlling Authority seeking for payment of interest on gratuity amount and there is no explanation for the said delay. It is his further submission that the Controlling Authority as well as the Appellate Authority wrongly interpreted Section 7(3A) and 7(4)(a) of the Act. Thus, he submits that the petitioner would not be liable to pay the interest on belated payment of gratuity.
5. Per contra, learned counsel Smt. Suvarna appearing for respondent No.1 justifies the orders passed by the Controlling Authority as well as Appellate Authority. Learned counsel would submit that 1st respondent was entitled for gratuity as on the date of his superannuation i.e., on 31.03.2009. It is not the case of the petitioner that 1st respondent was not entitled for gratuity as on the date of his superannuation. Further, she invites attention of this Court to sub-sections (3), (3A) and (4)(a) of Section 7 7 of the Act and submits that the employer shall pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable and failing to pay such gratuity, the employer would be liable to pay simple interest at such rate, not exceeding the rate notified by the Central Government. The employer-petitioner has also not obtained permission from the Controlling Authority for making belated payment nor deposited the disputed gratuity amount with Controlling Authority. In those circumstances, the Controlling Authority as well as Appellate Authority are justified in directing the petitioner to pay interest on the gratuity amount for the delayed period.
6. On hearing the learned counsels for the parties and on perusal of the writ petition papers, I am of the view that the petitioner has not made out any ground 8 to interfere with the impugned orders under challenge for the following reasons:
7. There is no dispute that the 1st respondent was an employee of petitioner-Corporation. It is also not in dispute that 1st respondent was before this Court in W.P.No.10726/2010, challenging the order of termination as well as recovery. Taking note of the fact that 1st respondent has attained the age of superannuation during the pendency of the writ petition, this Hon'ble Court by order dated 02.08.2011 allowed the said writ petition (W.P.No.10726/2010) and also observed that the petitioner would be entitled to all consequential benefits. The 1st respondent attained the age of superannuation on 31.03.2009. As on the date of superannuation, 1st respondent was entitled for gratuity. Admittedly the petitioner had not made payment of gratuity as on the date of superannuation of 1st respondent nor deposited the 9 disputed amount of gratuity before the Controlling Authority as required under law. It is not the case of the petitioner that the 1st respondent was not entitled for payment of any gratuity or the petitioner is not liable to pay any gratuity to 1st respondent.
8. Sub-section (1) to (4)(a) of Section 7 of the Act reads as follows:
"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.10
[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:
Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.] (4)(a) If there is any dispute 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 11 controlling authority such amount as he admits to be payable by him as gratuity."
sub-section (2) of Section 7 of the Act makes it clear that 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. Thereafter, under sub-section (3) of Section 7 of the Act, the employer shall pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. If the gratuity is not paid within time, the employer becomes liable to pay interest. Sub-section (3A) of Section 7 of the Act provides for obtaining permission from Controlling Authority for the delayed payment of gratuity. Sub-section (4)(a) of Section 7 12 of the Act provides for depositing of gratuity payable to the employee before the Controlling Authority.
9. Admittedly, the petitioner-Corporation paid the gratuity to the 1st respondent on 09.12.2011. The petitioner neither deposited the gratuity amount for which 1st respondent was entitled nor obtained permission from the Controlling Authority for delayed payment. The Hon'ble Apex Court in the case of GANGAHANUME GOWDA vs. KARNATAKA AGRO INDUSTRY CORPN LTD reported in (2003) 3 SCC 40 at Paragraph No.7 held as follows:- "7. It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the 13 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(3-A), 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 14 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 v. M.Padmanabhan Nair [(1985 1 SCC (L&S) 278 : (1985) 50 FLR 145]. Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub- section (3-A) was added to Section 7 by an amendment, which came into force with effect from 1-10-1987. In the case of Charan Singh v. Birla Textiles [(1988) 4 SCC 212 : 1988 SCC (L&S) 947 : (1988) 57 FLR 543] this aspect was 15 noticed in the following words: (SCC pp. 214-15, para 4) "4. 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."
10. A reading of the above decision of the Hon'ble Apex Court would makes it clear that an employer is liable to pay interest on belated payment of gratuity amount. The question of delay in making application by the 1st respondent to the Controlling Authority praying for interest as contended by the learned counsel for the petitioner would not arise in the facts and circumstances of the case. It is not the case of the petitioner that delay in payment of gratuity is due to the fault of the employee or the petitioner obtained 16 permission from the Controlling Authority for the delayed payment of gratuity. The contention of the petitioner that the Controlling Authority and Appellate Authority wrongly interpreted Section 7 of the Act has no merit. The interpretation by the Authorities is supported by the Gangahanume Gowda's Case (supra). The Hon'ble Apex Court has made it clear that the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable and failing to pay, the employer shall pay simple interest as notified. Admittedly, the petitioner paid gratuity amount on 09.12.2011 to 1st respondent, whereas he was entitled for gratuity on 31.03.2009. On receipt of the gratuity amount, the 1st respondent made an application before the Controlling Authority praying for interest on belated payment of gratuity amount. In the sequence of events which had taken place, it would be clear that there is no delay on the 17 part of the 1st respondent in approaching the Controlling Authority seeking for interest on belated payment of gratuity amount.
There is no merit in the writ petition.
Accordingly, writ petition stands rejected.
Sd/-
JUDGE SMJ