The statutory notification setting the interest rate for gratuity under the Payment of Gratuity Act is binding until modified by a new notification from the government.

JUDGMENT :

Heard the learned counsels appearing on behalf of the parties.

2. This writ petition has been filed for the following reliefs:

“(i) For quashing the impugned order dated 14.03.2023 passed by the Labour Commissioner cum Appellate Authority under Payment of Gratuity Act, Respondent no.2 in Appeal Case No. PG-03/2021 whereby and where under the learned Labour Commissioner has directed payment of interest @ 10% per annum to the respondent no.4 (Annexure-1) on the amount of gratuity payable to respondent no.4.

(ii) For quashing the order dated 19.08.2021 passed by the Deputy Labour Commissioner-cum-Controlling Authority under the Payment of Gratuity Act, 1972, Kolhan Division, Jamshedpur in G.A. Case No. 02 of 2017 whereby and where under the respondent no.3 has directed the payment of simple interest @ 10% per annum on the amount of gratuity (Rs. 10,67,308.00) within 30 days from the date of the issuance of the order. (Annex 3) And or for issuance of any such writ(s)/ order (s)/ direction(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case for doing conscionable justice to the petitioner.”

Arguments of the Petitioner.

3. The learned counsel for the petitioner, while assailing the impugned orders passed by the Deputy Labour Commissioner-cum-Controlling Authority under the Payment of Gratuity Act as well as the order passed by the Appellate Authority, has submitted that the direction to pay interest at the rate of 10% on the due amount of gratuity is contrary to the provision of Section 7 (3-A) of Payment of Gratuity Act, 1972 (hereinafter referred to as the Act of 1972). He submits that as per the said provision, the maximum interest at the rate of 10% can be awarded. The learned counsel has submitted that the “maximum” necessarily means that there has to be an application of mind and considering the facts and circumstances of the case any amount less than the same may be required to be paid. The learned counsel has also submitted that a plea was raised before the Appellate Authority that the current simple rate of interest notified by the Central Government on long-term deposits is only 6%, and therefore, the award of 10% was not in accordance with the law. The learned counsel has also submitted that the concerned employee had worked till 04.06.2013, although his date of superannuation has been taken to be 03.07.2011. However, this aspect of the matter has also not been taken into consideration by the authorities.

4. The learned counsel has further submitted that the Appellate Authority, while dismissing the appeal, has referred to notification dated 01.10.1987 to sustain the award of interest at the rate of 10%, but the notification certainly cannot override the provision of the Act which prescribes that the maximum rate is 10%, meaning thereby any amount less than 10% can also be granted.

5. The learned counsel has relied upon the judgment passed by the Hon’ble Madras High Court in W.P. (MD) No. 12860 of 2021 (S. Vasanthan Vs. The Managing Director and Anr.) dated 28.07.2021, and submitted that in the said case, the amount of interest at the rate of 10% was reduced to 8.5% by referring to the rate notified by Central Government for repayment of long-term deposits during the period involved in the case which was found to be 8.7% per annum to 8.5% per annum.

6. The learned counsel has also relied upon the order dated 18.11.2021 passed in WA No.322 of 2019 (Gagan Bihari Prusty Vs. Paradip Port Trust and Ors.) by Hon’ble High Court of Odisha at Cuttack to submit that the rate of interest was reduced from 10% to 6% by the concerned learned Single Judge, and the order was sustained by the Hon’ble Division Bench. The learned counsel has also relied upon the order dated 07.12.2020 passed in W.P.(C) No.6890 of 2012 (Dinesh Pandey Vs. Steel Authority of India Ltd. And Ors.), by this Court to submit that a direction was issued by this Court to pay interest on gratuity at the rate of 6%.

Arguments of