The right to interest on delayed gratuity payments is statutory and mandatory under Section 7(3-A) of the Payment of Gratuity Act, 1972.

JUDGMENT :

M. K. Thakker, J.

1. Rule returnable forthwith. Learned advocate Mr.Jeet Rajyaguru waives service of Rule on behalf of respondent.

2. This petition is filed under article 14, 226 and 227 of the Constitution of India with the following prayer:

“Your Lordships be pleased to quash and set-aside the order dated 02.05.2023 passed by the Learned Controlling Authority, Rajkot in Gratuity Application (Case) No.27 of 2022 passed by the Learned Appellate Authority, Rajkot in Gratuity Appeal No.155 of 2023, in the interest of justice;”

3. It is the case of the petitioner that respondent No.1 was working as a Deputy Executive Engineer with the Board from 30.03.1984, on completion of 36 years and 6 months service, respondent No.1 retired on attaining the age of superannuation on 30.09.2020. The gratuity of Rs.20,00,000/- was paid to the respondent-workman on 21.09.2021 and as there was a delay of 10 months in payment of gratuity the application was preferred under section 7 (3-A) of the Payment of Gratuity Act, 1972 for seeking payment of interest on delayed period. Learned Controlling Authority has passed an order allowing the application preferred by the respondent-workman and directing the respondent to pay the 10% interest for the period of delayed payment i.e. 01.11.2020 to 01.09.2021 and same was confirmed by the Appellate Authority in Gratuity Appeal No.155 of 2023 which is subject matter of challenge before this Court.

4. Heard learned advocate Ms.Chauhan for the petitioner and learned advocate Mr.Jeet Rajyaguru for the respondent.

4.1. Learned advocate Ms.Chauhan submits that there was no mens rea for not paying the gratuity in the prescribed time limit, however, due to administrative reasons the delay was caused in payment of the gratuity. However, learned Controlling Authority as well as learned Appellate Authority without considering the same has allowed the application and directed the petitioner to pay the 10% interest for the period which is delayed.

4.2. Learned advocate Ms.Chauhan submits that in view of the above submission, the impugned order be quashed and set aside and it may be held that workman is not entitled for the interest directed by the learned court below.

5. On the other hand learned advocate Mr.Jeet Rajyaguru has submitted that as per the provisions of section 7 (3- A) of the of the Payment of Gratuity Act, 1972, respondent-workman is entitled for the interest if the gratuity is paid beyond period of 30 days from the date of retirement. Learned advocate Mr.Jeet Rajyaguru submits that the reasons which are stated by the petitioner does not fall under the proviso which is mentioned under section 7(3-A) therefore, learned Controlling Authority as well as Appellate Authority has rightly ordered in his favour and therefore, no interference is required.

6. Considering the submissions made by the learned advocate for the respective parties and perusing the provisions i.e. section 7(3-A) of the Payment of Gratuity Act, 1972 which reads as under :-

“(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.]”

7. This Court has also considered the decision rendered in Special Civil Application No.2717 of 2022 :-

“6. This Court has, while deciding similar issue in Special Civil Application No. 2717 of 2022, held and observed in paras – 8 to 14 as under :-

“8. At this stage, it is fruitful to refer the decisions of th