S. Siri Jagan, J.

1. The employer, which is a company registered under the Companies Act, in a gratuity claim under the Payment of Gratuity Act is the petitioner herein. They are challenging Exts.P1, P3 and P4 orders of the Controlling Authority and the Appellate Authority under the Act passed in favour of the employee. The legal question raised in this writ petition is as to whether an employer can deduct certain amounts allegedly due from the employee to the employer from the amount of gratuity due to the employee under the Payment of Gratuity Act.

2. The petitioner herein is a Government Company. The 1st respondent opted for voluntary retirement under a Voluntary Retirement Scheme introduced by the Company. The amounts due as per the scheme were paid to him. Later on when gratuity was paid to him an amount of Rs.70432/- was deducted from the gratuity amount as excess exgratia payment made under the Voluntary Retirement Scheme. The 1st respondent later approached the Controlling Authority under the Payment of Gratuity Act seeking computation of the gratuity and payment. Rejecting the contention of the petitioner that they are entitled to deduct the excess amount of Rs.70432/- allegedly paid to the 1st respondent in excess of the amounts due to him, the Controlling Authority directed the petitioner to pay an amount of Rs.74962/- as balance gratuity due to the 1st respondent . The contention of the petitioner is that they are entitled to deduct the excess amount from the gratuity amount was rejected on the ground that Section 13 of the Act prohibits the same. Ext. P1 is the order of the Controlling Authority. Petitioners appeal against that order was rejected by Ext. P3 order by the Appellate Authority. By Ext.P4 order the Appellate Authority allowed the appeal filed by the 1st respondent claiming interest on the gratuity amount, granting interest @ 10% from 15.3.2001.

3. In this writ petition, the contention of the petitioner is that the Payment of Gratuity Act does not prohibit deduction of amounts due from the employee to the employer from the gratuity amount due to the employee and in the absence of any such prohibition in the Act the employer is entitled to deduct from the gratuity amount, amounts legally due to the employer from the employee. He submits that the reliance by the lower authority on Section 13 is totally misplaced as the same cannot be relied upon for the purpose of holding that an employer is not entitled to deduct amounts due to the employer from the gratuity. The petitioner relies on two decisions, one of the Delhi High Court and the other of the Calcutta High Court in support of their contention, wherein it has been held that the Payment of Gratuity Act does not put an embargo on the employer from deducting amounts due to it from the employee.

4. The counsel for the 1st respondent would submit that the deduction can be made only if there is a specific provision in the Act enabling the employer to deduct amounts from the gratuity. He would submit that gratuity being a retirement benefit due to an employee, without an enabling provision in the Act for deduction of amounts due to the employer therefrom, the employer is not entitled to deduct any amounts from the amount of gratuity. He contends that the underlying principle in Section 13 would be applicable to the question of deduction also. The underlying principle of Section 13 is to protect a gratuity amount payable to the employee in the hands of the employer. Since the very object of Section 13 is to protect the gratuity amount of the employee while the same is still in the hands of the employer that principle should be extended to deduction of amount by the employer himself also. The counsel for the respondents submits that otherwise unscrupulous employers would deduct amounts from the gratuity due to the employee without any rhyme or reason which has to be prevented which is the object behind the Section. He would further submit that assuming wit