Interest under the Payment of Gratuity Act is due from the date of entitlement unless hindered by claim delays, resulting in dismissal of a petition for earlier interest claims.

JUDGMENT :

M. K. Thakker, J.

1. Rule returnable forthwith. Learned advocate Mr.Mehul Sharad Shah has waived the service of notice of Rule on behalf of the respondent.

2. This petition is filed under Articles 226 and 227 of the Constitution of India, challenging the order passed by the learned Appellate Authority under the Payment of Gratuity Act , whereby the order of the learned Controlling Authority in Gratuity Application No. 41 of 2022 has been confirmed. By the said order, the learned Controlling Authority directed the petitioner to pay interest at the rate of 10% from the date of filing of the application, i.e., 21.06.2022.

3. It is the case of the present petitioner that he was employed with Nadiad Nagarpalika as a Clerk in the Drainage Department, and retired from service on 31.12.2016, after completing 38 years and 8 months of service. According to the petitioner, he was entitled to receive gratuity amounting to Rs. 6,81,750/-. However, the respondent paid only Rs. 4,02,637/- towards gratuity. For the balance amount of Rs. 2,97,113/-, along with interest, the petitioner filed an application before the learned Controlling Authority on 21.06.2022. The learned Controlling Authority, while allowing the application, directed payment of interest at the rate of 10% from the date of the application. The said order was affirmed by the learned Appellate Authority, and the same is the subject matter of challenge in the present petition before this Court.

4. Heard learned advocate Mr.D.G.Shukla for the petitioner and learned advocate Mr.Mehul Sharad Shah for the respondent.

5. Learned advocate Mr. Shukla submits that both the Authorities have committed an error in directing the present respondent to pay interest at the rate of 10% from the date of the application. Learned advocate Mr.Shukla submits that, as per the provisions of Section 7 (3A) of the Payment of Gratuity Act , the petitioner would be entitled to interest from the date of his entitlement, i.e., from the date of superannuation. In support of his submission, learned advocate Mr. Shukla has relied on the decisions rendered by the Apex Court in the case of Kerala State Cashew Development Corporation Limited Versus N.Asokan , reported in (2009) 16 SCC 758, and H.Gangahanume Gowda Versus Karnataka Agro Industries Corporation Limited , reported in (2003) 3 SCC 40, and has submitted that, without considering these binding precedents, both the Authorities erroneously directed payment of interest from the date of the application, therefore, the present petition is required to be allowed and interest from the date of his entitlement i.e. 31.12.2016 is required to be granted.

6. Per contra, learned advocate Mr. Shah, who appears on advance copy, submits that initially, as per the applicable gratuity rules, the petitioner was entitled to gratuity equivalent to 16.5 months' salary. However, subsequently, pursuant to the decision rendered by this Court in Special Civil Application No.8265 of 2016, it was held that employees who retired prior to 30.03.2017 would be entitled to gratuity equivalent to 25 months’ salary. Learned advocate Mr.Shah submits that the petitioner was paid gratuity at the time of retirement. However, since the claim for the balance amount and interest was made after more than six years, the Authority was justified in awarding interest from the date of application. Learned advocate Mr.Shah submits that although a Letters Patent Appeal has been filed challenging the judgment and order passed in Special Civil Application No. 8265 of 2016, being Letters Patent Appeal No.699 of 2019, the same is pending adjudication. Nevertheless, as per his instructions, the Authority has decided no