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2017 Supreme(Cal) 320
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
ARIJIT BANERJEE, J.
Goutam Nandi – Petitioner
Versus
United Bank of India and Others – Respondents
WP No. 585 of 2014
Decided On : 13-04-2017
For the Petitioner: M.R. Sarbadhikari.
For the Respondent: R.N. Majumder.
The main legal point established in the judgment is that retiral benefits of an employee are payable immediately upon his superannuation, and if there is a delay in releasing such benefits for which the employee cannot be blamed, he is entitled to receive interest at a reasonable rate. The court also emphasized that the right of a retired employee to get his retiral dues on the date of attaining superannuation is a valuable right which accrues in his favor on the date of his attaining superannuation.
Headnote:
Interest on Gratuity - Leave Encashment - Second Option for Availment of Pension - Secs. 7(3), 7(3A) of the Payment of Gratuity Act, 1972, Secs. 4(1), 4(2)(b) of the Interest Act, 1978 - The petitioner's claim for interest on delayed payment of gratuity must succeed. Law is now well-settled that retiral benefits of an employee are payable immediately upon his superannuation. If there is a delay in releasing such benefits for which the employee cannot be blamed, he is entitled to receive interest at a reasonable rate. The right of a retired employee to get his retiral dues on the date of attaining superannuation is a valuable right which accrues in his favour on the date of his attaining superannuation. Further, gratuity is no more considered to be a bounty to be doled out by the employer at its whim. It is not charity. An employee has a statutory right to receive gratuity upon retirement. If the employer delays in payment of the gratuity amount, he is obliged to pay interest to the retired employee. This is compensatory in nature. The petitioner's claim for leave encashment also succeeds. Rule 38 does not disentitle the petitioner to the benefits of leave encashment in spite of the fact that he was compulsorily retired by way of punishment. The Bank could not have considered the petitioner's request for pension prior to his termination since he had not opted for the Pension Scheme. However, after the punishment of dismissal was substituted by that of compulsory retirement, the petitioner did make representations to the Bank for opting for the Pension Scheme. It seems such representations have not elicited any response. Since the petitioner is entitled to the superannuation benefits, the respondent no. 2 is directed to consider the petitioner's representations for coming under the Pension Scheme of the Bank and take a reasoned decision in respect thereof in accordance with law and the applicable rules and regulations of the Bank, if any, within a period of eight weeks from the date of communication of this order, after giving an opportunity of hearing to the petitioner.
Fact of the Case:
The petitioner, an erstwhile employee of the respondent Bank, filed a writ application claiming interest on delayed payment of gratuity, leave encashment, and consideration for availing pension as per the Bank's Pension Regulations/Circulars. The petitioner was dismissed from service, but the order of dismissal was set aside by the Court. The respondent Bank then imposed the lesser punishment of compulsory retirement on the petitioner. The present writ application was filed in this factual background.
Finding of the Court:
The court found in favor of the petitioner, allowing the claim for interest on delayed payment of gratuity and leave encashment. The court also directed the respondent no. 2 to consider the petitioner's representations for coming under the Pension Scheme of the Bank and take a reasoned decision in respect thereof in accordance with law and the applicable rules and regulations of the Bank, if any, within a period of eight weeks from the date of communication of this order, after giving an opportunity of hearing to the petitioner.
Issues: The issues involved in the case were the entitlement to interest on delayed payment of gratuity, leave encashment, and consideration for availing pension as per the Bank's Pension Regulations/Circulars.
Ratio Decidendi: The court held that the petitioner is entitled to interest on delayed payment of gratuity and leave encashment, as retiral benefits of an employee are payable immediately upon his superannuation, and if there is a delay in releasing such benefits for which the employee cannot be blamed, he is entitled to receive interest at a reasonable rate. The court also directed the respondent no. 2 to consider the petitioner's representations for coming under the Pension Scheme of the Bank and take a reasoned decision in respect thereof in accordance with law and the applicable rules and regulations of the Bank, if any, within a period of eight weeks from the date of communication of this order, after giving an opportunity of hearing to the petitioner.
Final Decision: The court directed the respondents to pay interest on the gratuity amount paid to the petitioner at the rate of 9 per cent per annum with effect from 1 September, 2007 till the date of actual payment. The respondents were also directed to release in favor of the petitioner leave encashment for 240 days with interest at the rate of 8 per cent annum from 1 September, 2007 till the date of actual payment. The respondent no. 2 was directed to consider the petitioner's representations for coming under the Pension Scheme of the Bank and take a reasoned decision in the matter within eight weeks from the date of communication of this order.
1. In this writ application the petitioner, an erstwhile employee of the respondent Bank, claims the following reliefs:
(a) A Rule in the nature of Mandamus commanding the Respondents to act in accordance with law and to release the Leave Encashment of 240 days with interest for delayed payment which the petitioner entitled of Bank rate of 11.5% per annum.
(b) A Rule in the nature of Mandamus commanding the Respondents to pay interest amounting to Rs. 1,87,560.80p on Gratuity amount for delayed payment at Bank’s rate of 11.5% per annum for 1410 days.
(c) A Rule in the nature of Mandamus commanding the Respondents to consider the 2nd option of the Writ Petitioner for availment of Pension as per Bank’s Pension Regulation/ Circular and release the Pension with interest at Bank’s rate.
2. When the petitioner was a Scale-II Officer of the respondent Bank, he was issued a charge-sheet. A domestic enquiry followed. He was dismissed from service of the Bank on 24 August, 2007. The petitioner’s appeal against the order of the Disciplinary Authority was dismissed and the order of termination of his service was confirmed by the Appellate Authority by an order dated 2 January, 2008. The petitioner challenged the said orders before this Court by filing WP No. 120 of 2008. By a judgment and order dated 24 February, 2010 Debasish Kar Gupta, J., set aside the order of dismissal. The operative portion of the said judgment and order reads as follows:-
“In view of the above settled principles of law I quash and set aside the impugned punishment. I further direct the disciplinary authority to pass the final order of punishment against the petitioner by inflicting punishment other than the punishment of ‘dismissal which shall ordinarily be disqualification for future employment’ upon the petitioner in the light of the above discussion.
The writ petition succeeds to the extent as discussed and directed hereinabove.”
3. The respondent filed an appeal against the order of the learned Single Judge. The said appeal was, however, not pressed subsequently and was dismissed as not pressed by an order of the Division Bench dated 30 August, 2010. This was in view of the fact that by an order dated 11 August, 2010, the Bank had imposed the lesser punishment of compulsory retirement on the petitioner in accordance with the Learned Single Judge’s order.
4. In the above factual background, the present writ application has been filed. As would appear from the prayers in the writ petition extracted above, the petitioner’s claim is on three accounts. Firstly, he claims interest on the delayed payment of gratuity. Secondly, he claims leave encashment of 240 days with interest. Finally, he prays for an order directing the respondent Bank to consider his case for availing of pension as per the Bank’s Pension Regulations/Circulars. I will deal with each issue separately.
Re: Interest on Gratuity:-
5. It is not in dispute that the bank released the Provident Fund and gratuity amounts to the petitioner on 2 August, 2012. The Bank has paid interest on the delayed payment of provident fund amount but has not paid interest on the delayed payment of gratuity. The petitioner claims interest on the gratuity amount for the period 24 August, 2007 to 2 August, 2012 amounting to Rs. 1,87,560/- as per calculation shown in annexures P-18 and P-19 to the writ petition. Learned Counsel for the petitioner submitted that interest at a reasonable rate is payable for delay in releasing the gratuity amount and other retiral benefits. In this connection he referred to a Full Bench decision of the Patna High Court in the case of Champaran Sugar Go. Ltd. vs. The Joint Labour Commissioner, 1987 (35) BLJR 104. He also relied on a decision of the Hon’ble Apex Court in the case of Devaki Nandan Prasad vs. State of Bihar, AIR 1983 SC 1184.
6. Learned Counsel then referred to Secs. 7 (3) and (3A) of the Payment of Gratuity Act, 1972 which read as follows:-
“S. 7(3) The employer shall arrange to pay
