Section 7(3A) of the Payment of Gratuity Act, 1972, is applicable to cases where the application for payment of gratuity is made after the coming into force of the said section or where the amount of gratuity is determined after that date.

JUDGMENT :

B.P. Saraf, J.

1. The petitioner is aggrieved by the order of the Controlling Authority dated July 25, 1990 under the Payment of Gratuity Act, 1972 directing payment of simple interest ' 10 per cent on the amount of gratuity payable under Sub-section (3A) of Section 3 of the Payment of Gratuity Act, 1972 ("The Act") with effect from July 1, 1977 till the end of May, 1988 for a period of 10 years, 10 months and 29 days amounting to Rs. 7,615.00 and the order of the Appellate Authority under the said Act dated June 1, 1992 on appeal against the said order under Sub-section (7) of Section 7 of the Act, confirming the above order and dismissing the appeal.

2. The facts of the case, briefly stated, are as under:

The respondent, P.T.Vijayan was working with the petitioner from July 26, 1954. He superannuated from service on June 30, 1977. On superannuation, he was entitled to gratuity under the provisions of the Payment of Gratuity Act. A sum of Rs. 6,923.07 was paid to him by way of gratuity in the month of May, 1988 against his claim of Rs.7,500/- which was preferred before the Controlling Authority vide his petition dated February 12, 1988. In addition to the amount of gratuity, the Controlling Authority also awarded a sum of Rs.7,615.30 as interest for delayed payment of gratuity under Sub-section(7) of Section 7 of the Act. The interest was calculated with effect from July 1, 1977 till May, 1988 at the rat of 10 per cent per annum.

Aggrieved by the order of the Controlling Authority, insofar as it related to the levy of interest u/s 7(3A) of the Act, the Regional Labour Commissioner(C), Bombay, who is Appellate Authority under the Payment of Gratuity Act, 1972 u/s 7(7) of the Act. The Appellate Authority held that the petitioner was liable to pay the gratuity within one month of the date of superannuation i.e. July 30, 1977 whereas it was paid in the month of May, 1988. The Appellate Authority, therefore, held that the petitioner was liable to pay interest u/s 7(3A) of the Act as amended by Act 22 of 1987. The petitioner has challenged the above order by this writ petition.

3. The main contention of the learned counsel for the petitioner Mr.Rele is that the provision of Sub-section (3A) of Section 7 which came into operation for the first time with effect from August 12, 1987 cannot be applied to gratuity payable for period anterior to that date. According to him, this Section being prospective in application, its benefit can be availed of only in regard to the gratuity that falls due after that date. In the alternative, it is submitted that even if this provision is held to be applicable to cases where the amounts relating to period prior to the date of enforcement of the new provision relating to interest if the amount is paid after such date, interest under this Section cannot be paid for any period anterior to that date of coming into operation of this Section. Reliance is placed in this connection on the decision of the Supreme Court in Charan Singh Vs. Birla Textiles and Another, and the decision of this Court in Bombay Gas Public Ltd. Co. Vs. Papa Akbar and another,.

4. I have carefully considered the submissions of the learned counsel and perused the decisions referred to above. Section 7 of the Payment of Gratuity Act deals with procedure of determination of the amount of gratuity. Sub-section (1) provides for making an application in writing by the person eligible for gratuity to the employer for payment of gratuity. Sub-section (2) puts an obligation on the employer to determine the amount of gratuity as soon as it becomes payable and given notice in writing to the person to whom it is payable and also to the Controlling Authority specifying the amount of gratuity so determined whether an application referred to in Sub-section (1) has been made or not. Sub-section (3) provides for payment of gratuity within the prescribed time. If read:

"(3) The employer shall arrange to pay the amount of gratuity, within such t