Chattisgarh High Court
K K Singh vs South Eastern Coalfields Limited And ... on 8 October, 2010
HIGH COURT OF CHATTISGARH BILASPUR
WRIT PETITION S NO 6439 OF 2009
K K Singh
...Petitioners
Versus
South Eastern Coalfields Limited and Others
...Respondents
! Shri Gary Mukhopadhyay counsel for the petitioner
^ Shri P S Koshy counsel for respondent No 1
CORAM: Honble Shri Manindra Mohan Shrivastava J
Dated: 08/10/2010
: Judgement
ORDER
Writ Petition under Article 226/227of the Constitution of India (Passed on 08/10/2010) By this petition, the petitioner has claimed interest for delayed payment of the amount of the gratuity with effect from the date the same is payable in accordance with the provisions contained in Section 7 of the Payment of Gratuity Act, 1972(hereinafter referred to as" the Act"). (2) Facts in brief as disclosed in the petition are that the petitioner retired on 31-07-2003 from the post of Deputy Chief Personnel Manager from Bishrampur Area of 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 of the Payment of Gratuity Central Rules. It is also the case of the petitioner that the petitioner submitted an application in prescribed proforma as required under Rule 8 of the Payment of Gratuity Central Rules, even then, the respondent-Employer did not issue any information either in Form-`L' or Form-`M'. Later on, the petitioner came to know that the amount of the gratuity was withheld on the ground of pendency of disciplinary proceedings against the petitioner. As gratuity was not paid, the petitioner approached the Controlling Authority constituted under the Act, who vide order dated 03-01-2006 (Annexure P-
1) allowed the application and directed payment of Rs.3,50,000/- as gratuity amount along with interest @ 9% to the petitioner within 30 days of the receipt of the order under intimation to the Controlling 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 appeal as provided under the Act by depositing the amount due and payable i.e. Rs.4,28,275/- before the appellate authority/Regional Labour Commissioner (Central), Jabalpur. Vide order dated 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 order was passed by the Court staying the effect and operation of the order passed by the appellate authority. Later on, the writ petition was finally dismissed vide order dated 20-03-2009 relying upon the judgments of the Supreme Court in the case of Jaswant Singh Gill vs. Bharat Coking Coal Ltd. and others, 2007(1) SCC
663. The Management having lost in the legal battle, finally vide demand draft an amount of Rs.4,28,275/- was paid on 10-08-2009, that was the amount which remained deposited with the controlling authority, eversince the Management deposited the amount while preferring an appeal against the order of the controlling authority. (4) Learned counsel for the petitioner argued that the petitioner is entitled to interest on the gratuity amount of Rs.3,50,000/- with effect from 01-08-2003 to 10-08-2009 @ 10% which comes to Rs.2,10,000/- whereas the petitioner has been paid only Rs.78,275/- towards interest and the petitioner is entitled to balance amount of interest of Rs.1,31,725/- along with interest.
Learned counsel for the petitioner submitted that in view of the statutory scheme engrafted under Section 7 of the Act, gratuity and the interest thereon is payable as required under the provisions contained therein. As the Management failed to pay the gratuity amount even after proper notice was served by the petitioner on the Management in the format as prescribed under the relevant rules, the petitioner is entitled to interest from the date on which the gratuity became payable to the date on which it was paid on the rates prescribed under sub section (3-A) of Section 7 of the Act. Learned counsel for the petitioner argues that there is only one circumstance under 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 ground. Learned counsel for the petitioner contended that in the present case, the only operative reason for withholding gratuity was pendency of some enquiry which could not be made a valid basis for withholding gratuity, because the said issue has already been decided in the case of the petitioner. It is further submitted that the employer is liable to pay the entire amount of interest from the date it became due and payable i.e. from 01-08- 2003 till 09-08-2009. In support of his submission, learned counsel for the petitioner relies upon decision in the case of H. Gangahanume Gowda Versus Karnataka Agro Industries Corpn. Ltd., 2003(3) SCC 40, Rajendra Deva vs. Addl. Labour Commissioner (Account), Kanpur-cum-Appellate Authority & Another, 1999(2) Labour Law Journal 211, South Eastern Coalfields Ltd. Versus State of M.P. and Others, 2003 (8) SCC 648, Abati Bezbaruah versus Dy. Director General, Geological Survey of India and Another, 2003 (3) SCC 148 and Jaswant Singh Gill vs. Bharat Coking Coal Ltd. and others, 2007 (1) SCC 663.
(5) Per Contra, learned counsel for the respondents would submit that the petitioner is not entitled to any interest as the amount which had become due and payable to the petitioner under the Act, was determined by the Controlling Authority as contained in its order dated 03-01-2006. It is submitted that the employer deposited the amount which had become due and payable i.e.Rs.4,28,275/- at the time of filing appeal, and therefore, the Management had performed its part of obligation under the law. It was for the petitioner to seek appropriate order from the appellate authority for release of the amount. Further submission of learned counsel for the respondent No.1 is that vide order dated 26-06-2006 passed in Writ Petition No.2983 of 2006, an interim order was passed whereby the effect and operation of the order of the appellate authority was stayed by this Court and that interim order remained in force and operation till the writ petition was dismissed by the Court vide order dated 20-03-2009. Therefore, the Management is not liable for payment of interest in respect of the period during which the matter remained pending and there was an interim order against payment as during that period the amount could not be paid to the petitioner and the same became payable only after dismissal of the writ petition, which was finally paid by the Controlling Authority under a demand draft payable to the petitioner. (6) The undisputed facts of the case are that the petitioner had retired from service on 31-07-2003 and his gratuity was not paid. It is also not in dispute that vide order dated 03-01-2006 (Annexure P-1), the Controlling Authority passed an order in favour of the petitioner for payment of gratuity directing respondent No.1 to pay Rs.3,50,000/- as gratuity amount along with simple interest @ 9% per annum on the same to the petitioner within 30 days from the date of the order for the period with effect from 01-08-2003 to 30-12-2005. Against the order passed by the Controlling Authority, the employer preferred an appeal and deposited the amount due and payable i.e.Rs.4,28,275/-. The appellate authority dismissed the appeal but modified the rate of interest @ 9% to 10% per annum. Thereafter, a writ petition was preferred wherein an interim order was granted by this Court on 26-06-2006. The writ petition itself was finally dismissed by this Court vide order dated 20-03-2009 in Writ Petition No.2983 of 2006.
(7) From the aforestated undisputed facts which are clearly borne out from the records of the case, it is clear that the petitioner remained deprived of the money due and payable to him, firstly on account of pendency of appeal and thereafter on account of pendency of the writ petition wherein an interim order was passed. In view of the provisions contained in Section 7 of the Act, the employer is obliged under the law to pay simple interest at the rates notified by the Central Government on the amount of gratuity payable under sub-section (3) of Section 7 of the Act, from the date on which the gratuity became payable to 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 to sub 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 permission in writing 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 to the extent that the rate of interest has been enhanced from 9% to 10% per annum. The writ petition against the appellate authority has been finally dismissed. In so far as grant of interest with effect from the date of deposit of the amount of gratuity along with accrued interest at the time of preferring appeal before the appellate authority till the date the actual payment after the dismissal of the writ petition by this Court is concerned, the employer cannot be absolved from its liability to pay interest as the petitioner remained deprived of the amount payable to him on account of the appeal preferred by the employer even if the amount was deposited before the authority.
(8) Similar view is taken by the High Court of Allahabad in the case of Rajendra Deva vs. Addl. Labour Commissioner (Account), Kanpur-cum-Appellate Authority & Another, 1999 (2) Labour Law Journal, 227 in following words:-
"6. It is evident from sub-section (3-A) of Section 7 of the Act, extracted above, that the employer is liable to pay simple interest 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 its liability to pay interest once it is established that the employer has failed to discharge the obligation cast upon it by sub- sections(2) and (3) of Section 7 of the Act. In the instant case the employer failed to determine the amount of gratuity and give notice in writing to the petitioner and also to the controlling authority specifying the amount of gratuity so determined as visualised by sub-section(2) of Section 7 of the Act. It further failed to arrange the payment of gratuity within thirty days from the date it became 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-section(3- A) 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/-."
(9) In so far as interest in respect of the period during which the interim order passed on 26-06-2006 in Writ Petition No.2983 of 2006 was operating, in the opinion of this Court, the respondent No.1 is liable to pay interest of that period also because the petitioner remained deprived of the money which was due and payable to him. The interim order only suspended the operation of the order of payment of gratuity. Once writ petition has been dismissed, liability stands revived and by application of principles of restitution, the Management is obliged to compensate the petitioner by granting interest in respect of the entire period of pendency of writ petition including the period during which, there was an interim order passed by this Court.
(10) In the case of South Eastern Coalfields Ltd. Versus State of M.P. and Others, (2003) 8 Supreme Court Cases 648, the Supreme Court explained the principles of restitution in following words:-
"27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari11 Their Lordships of the Privy Council said: (AIR p. 271) "It is the duty of the court under Section 144 of the Civil Procedure Code to `place the parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed'. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the court to act rightly and fairly according to the circumstances towards all parties involved."
Cairns, L.C. said in Rodger v. Comptoir D'Escompte de Paris12: (ER p.125) "[O]ne of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression, `the act of the court' is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case."
This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it (A. Arunagiri Nadar v. S.P. Rathinasami13). In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144."
(11) Moreover, in view of the statutory mandate contained in Section 7 of the Act, no discretion is available to absolve the employer from payment of gratuity with or without interest, on any consideration much less on the consideration that matter was subjudice in various fora. This aspect came up for consideration before the Supreme Court in the case of H. Gangahanume Gowda Versus Karnataka Agro Industries Corpn. Ltd., (2003) 3 Supreme Court Cases 40, wherein it was held:-
"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 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 ground.
9. It is clear from what is extracted above from the order of the 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 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 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 the 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(3-A), 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 to 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."
(12) As an upshot of the above discussion, I am of the considered opinion that the petitioner is entitled to payment of interest on the amount of gratuity payable to him, at the rate determined by the appellate authority till the date of actual payment. As the amount deposited before the Controlling Authority earlier while preferring statutory appeal, has been disbursed to the petitioner, the respondent 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 petitioner has retired from service way back in the year 2003, the balance amount of interest as is payable to him, shall be paid within a period of two months from the date of receipt of a copy of this order.
JUDGE