Karnataka High Court
Karnataka State Road Transport ... vs The Deputy Labour on 15 March, 2012
Author: Aravind Kumar
Bench: Aravind Kumar
IN THE HIGH COURT OF KARNATAKA AT DATED THIS THE 15TH DAY OF MARCH. 2012! BEFORE: THE HON'BLE MR. JUSTICE it W.P.NO.36549/201.__2_l (L-CK_SORTC)a."'u'H' it BETWEEN: C' it it E H Karnataka State Road Transport Corporation Kolar Division, A Kolar by its V ' Divisional Controller * A Represented ' . . Chief Law O.ffiee'1"=._ ; " .. PETITIONER (BY SMT.Ni.RMIVLALA AND: A ' A 1 .. 'The V Deputy Lab o'urv__C_pr.nmissioner 5And' the'Appe11ate Authority, U'nder'the P_ayment._of Gratuity Act Bangalore, - Region- :2 ' A ' . Karmeeka Bhawaii Bannergatta" Road, L"-._p_Banga1ore.. -- 560 026. Assistant Labour Commissioner ._ Ar1_d"'Contro11ing Authority, -Under the Payment of Gratuity Act Division -3 Karmeeka Bhawan, Banneragatta Road, Bangalore - 560 026 3. Sygabuthhullakhan Major S /O Abibullakhan K.G.Moha11a, Kolar. _ ' A .:1'~"\ESPC.):1:'--T1I.3':'E1\}'1'dd&-34'. ' ' ~ I ' (BY SRI.S.B.MUKKANNAPPA','~.I'-. FOR' S.B.MUKKANNAPPA AND ASSOCIATES' ._EOR R-3. SRI.M.G.ANJANA MUR'1'HY__,'H_CC:P EOR_ R41_AND R-2) THIS WRIT PETITION IS1 L?NiL;E_RT_'ARTICLES 226 & 227 OF THE C_ONSTITU'FIC)N'-QIF' INDTA PRAYING TO QUASH THE ORD;ERS_-I9ASSED"BYTHE FIRST RESPONDENT DATED 15.03.2:.0"1'1.__VI.D'E . THIS cOI\Z/I'II~IC«ON FOR PRELIMINARY HEARING 513' ORO,IIP<THIS*«DAY,; THE COURT MADE THE FOLLOWING; A I it RD E R Has-----Sought for quashing of the order paSSed:by_ "fi.r:St.4"reS'pondent, appellate authority order dated -- it 1, vAnn.vC§::<ure--C. '2_,_wHeard Smt.NiI°mma1a, learned Counsel appearing for petitiOner--corporation and Sri.S.B.Mukkannappa, learned V counsel appearing for third respondent--workman. Perused the records. 3. Third respondent joined the "services'"of::'petitioner; " " 33 corporation as a conductor in the, yaé'ar~' 1'9._7'1 dismissed from service on 30. 10199.. by co1rporatiO.n.~».i._Aggrieved'. . 3' by the order of dismissal,;__workn1an~:raisedda" before Labour Court which and directed reinstatement of to which third respondent Was. and on attaining age of services in the year 2007. 4. 5'Corporationdcaicuiated active number of years of third respondent as 33 years 5 months and" consideration the last drawn pay at V".1-yVV?i_1,212'/--- V-deterrnined the total gratuity payable at 33'44'«_fg%3;?3f1;6t53/93"(11,212X33.5). In View of the fact that third respondent was dismissed on 30.10.99 and payment was da/ made on 17.12.99 to third respondent workman by corporation, a sum of ?1,32,804/-- was deducted and of ?1,641,378/-- was paid. Thus, total gratuity paid was '<'2,97,182/-. 5. While determining "the amount ?1,32,804/-- in the year i999, a sum of ?89,376/- towards theloanv by it on behalf of workman its $'tat{;"'Bari';< bank in a total sum of of ?43,428/--. On petitione.r--Vb'ein:g to order of Labour Court on __?$9,376/~ which was paid by corporation respondent to the Banks was :_sought ,_to?:.be_pAVrccovered...a,n«d a sum of ?72,569/-- was recovered (from vpof reinstatement to the date of ' V'-._,superannuation},7 However corporation proposed to recover .:d_tf_j.,the._interest"on the amount of ?1,32,804/-- @ 11% on the gro'u_ridp_t'I.:at third respondent was not entitled to retain this zunount and once workman was reinstated it has to be repaid éz to the Corporation and as such it calculated the interest payable at ?l,l4,909/-- and after deducting this',an1:o;1_nt including a sum of ?34,896/- a sum of ' to third respondent-workman in the year 2007;'"--%Ii'heseV'facts" 'V are not in dispute. 5. It is on account of gratuity according to third respond'ent--xvorl§m.an--Can':application came to be filed before of gratuity. Corporation active services rendered by. months contending that there was years 10 months which was not accepted «authority and continuous active s~e'rvi_ces_i_vvas__:de,terrninc--d.as 36 years 4 months. This fact is dispguted' in this Writ Petition. It is contended by corporation there is break in service for a period of 2 -.h.l.l'_fye_ar.s 10 months and this period has to be excluded for continuous active service. Controlling authority as Appellate authority has rightly held that V corporation has not been able to demonstrate that there was break in service since no material was placed and Vas._fisu_ch contention now raised in the present writ petition"lalso----:doe_s' merit consideration since learned counsel for"'petI_tio'ner_has" not been able to demonstrate before*,this' break in service for a period'll_o'f_2 producing any cogent material. service taken into consideration as well as appellate authority_:as 'deserves to be affirmed and by this Court also for the gratuity amount payable to " h of controversy in the present writ petition revolves "around"lVinterest charged and levied on the deduction while paying the gratuity on the ground thlat it is *~un:ab1e to recover interest from third respondent loan amount discharged to State Bank of India and l banks by Corporation while determining the gratuity M payable in the year 1999 and said amount being gratuity amount paid to third respondent was required to..b.el:7re-- deposited on his reinstatement on counsel for petitioner has relied uponthe circ'ulars'_~islsued by 0' " corporation dated 13.03.2000 and 0lz.4O8_;20l07'syhlichlreflebts that corporation is entitled to recoyer interest".:@A={._lv4% -vjfromfl' payment of gratuity in respect... employees. Sri.S.B.Mukkannappa, learned. for third respondent would vehemently' circular is inapplicable in concerned on the ground thatyas. i.e., on 30.10.99 this circular wasnot cannot be accepted for the simple or levy of interest on the levied in the year 2007 i.e., at the time' gratuity payable to third respondent his the age of superannuation on 31.10.2007. "contention of Sri.S.B.Mukkannappa cannot be it is hereby rejected. He has also contended H section 7(3A) of Gratuity Act for belated payments ck. made by employer they are liable to pay simple interest not exceeding 10% when the delay is not attribuptiablejflpto workman. Petitioner corporation cannot be levied§V_:éintcrfest the rate of 11% or 14% and as such said levy"of'inte'r'est.Vha.s ll" been rightly not accepted by controlling autliiorityais by appellate authority. He woulld"a_lso the court to section 13 off Gratuai_t_y:'2'lctV.._contendlng€that the said amount is not liable' of any decree or order of any court and said provision levy of interest is concerned----wehile._recoyeringgratuity amount. 7. Per', contr_aAI_Smt.Nirmmala, learned counsel a..ppeaIirigi«:.forV'corporation.would defend the levy of interest on Vstrengtht circulars referred to supra. While ' it t>--..'__avccepting'%the. authiority of corporation to recover interest from gratuitylarnount paid by employer to employee and by {..'_V"ho1di_11g:atl'iat corporation is entitled to levy interest by virtue of issued it cannot be said that corporation does not K have the authority to recover the interest. It is not in dispute that on 30.10.99 third respondent was dismissed frompsedrviee pursuant to which on 17.12.99 corporation has payable by calculating the amount as under: V' g V 9 V (a) amount due to State Bank of 't (b) amount due to HDFC (0) amount paid to third Z-- 8. This. enured to the benefit of (17. 12.99) and it continued Corporation got cause of action to eall uuppori to repay the said gratuity anzountji .._t0 «immediately on employee being reinstated 1.0.2006. In other words it means that 9 00 moneybgeionginegto corporation was in the hands of employee 30.10.99 to 04.10.2006. By Virtue of order passed by to reinstate the workman in the instant case, . was reinstated on 04.10.2006. It is not disputed by V 10 workman that he was not required to repay the said amount in as much as while making a application before controlling authority, workman has calculated ' service as 36 years 4 months i.e., frorn the.'date:'jof"joining0"' (28.06.1971) till date of superannuation(3ii;i_0;2007)';tr_fin View of the fact that workman"had reiterated'0.that~amount=.0' belonging to corporation was required_to_'be..refunded/ repaid to corporation on being not done so, corporation was recover the said amount from the of ?72,569/-- was recovered Ia 04.10.2006 to 31.06.200r'w1nehv0faotjis:aiaonot dispute. Though circular dated 13.03.2000 st.iipu14at'.e's«recovery of amount with interest reinstated employees for reasons best known corpp0rat1on"h_as,'"proceeded to determine the interest @ 11%. said Circular is not questioned by third ..0.0s0'_j.resp.ondent _ and as such the question of entitlement of 4'~._xcor"poratio.n to recover interest as specified in the circulars 0 7T'd~atedgg?13.03.2000 or 01.08.2007 cannot be construed as -1-' 11 Without authority of law. Merely because the corporation or employer as the case may be is required to pay fistatutory interest as required under sub~section (3) of when there is delay in payment of" gratu'ity'*- " it employer same yardstick is not required .. extended while the corporation_"i-sq. rec'oVjer.i.ngl.::tliew-.g,r:{tuity'V.l' amounts paid by it to an _emp1oye_eu:'on his relinstaternent and as such contention of learned counsel appearing for respondent 11% should not be accepted said contention stands rejected.' 'thevrhatter, corporation was justified inlviorderiiigi on gratuity amount paid in the yeia-rd was required to be repaid by Ht ennloyee on his reinstatement as per which was prevailing at the time third ' "»_.respond_e'nt attained superannuation. :f:The question that would arise would be as to what interest that petitioner-corporation is entitled to deduct V 12 from the gratuity payable to third respondent. The period to which the corporation is entitled to recover interest. islfroni 30.10.99 to 04.10.2006 which would be 6 _ and 4 days. Interest has been deterrnined"@* Elle' strength of circulars issued by corporatiori. hus."'inte1*:ts which is required to be calculated'-for the purp0'se}0f..pVa3.§ment of gratuity to third respondent and 4 days which is as under: Annual interest ;_ea1f;1::ila.ted *l;1%' -- '$14,608.44 Monthly and interest would be ?40.58 tttt Accordingly' 'eterinined as under: 14,608 .44. x06 ?87,650.61 g1~2017.37:.:9* ?1 1,442.00 vy'i0o°4;Ot:58x4 ttttt = ? 102.00 0' 0 _ 339,254.61 Itllis clear that corporation would be entitled to V uthevinterest as calculated hereinabove. A/0 13 10. In so far as deduction made towards income tax this court has already taken a View in W.P.9729/24()(V)Vt'3_4:'_"that deduction towards income tax cannot be prescribed limit if the amount exceed the presc1°ib:ed"'1imit exemption which admittedly is ?3,5():;OOQ;' of Income Tax Act, 1961. In the jiri-stant"case., has L' adjudicated the income and remitted to income tax is at liberty to make an application .__to for refund of excess income account of third respondentm deducted beyond exemptionllimit. tact that corporation is not entitled to delduct-tolizheextent of exemption provided under :..iricome._':p_tax>_yvhich a'dm.ittedly is ?3,50,000/-- during relevant periodllofty .:'Corporation is hereby directed to refund on ?3,50,000/- and pay the same to . 3. t.hird respondent / employee. 4/ 14 11. Though Smt.Nirmmala learned counsel appearing for petitioner would contend that amount of ?l,82,7fi5€i/Eiihas been deposited before controlling authority filing of appeal and it is contended thatflas * . not liable to pay interest for subsequent..:peiiod' accepted for two reasons: V V l _ d it -- Though application .enipl_oyefe seeking for payment of said been disbursed by appellate authority ' on.__the corporation and even thereafter" its grievance before this,--c-oi stay of the order of appellate and as such third respondent VVb~een 9' 'prevented from withdrawing the :a;m.ount:p_'it cannot be"'sa--id« or construed third respondent is not entitled' to interest till date of payment on the amount '-.....v.he is tenutitledl that View of the matter this court is of the ..d.lf'_j:consideredview that corporation is liable to pay interest till payment. 43/ 15 In the result, following order is passed: ORDER
1. Writ petition is allowed in part as observed
2. Controlling authority shall disbursed the respondent as ordered herein above Within frornthe-- date of receipt of certified copy of'the°order§" V
3. No order as to costs.
SBN