The mandatory obligation of employers to pay gratuity within the specified timeframe includes the responsibility to pay interest on delayed payments, as established by the Payment of Gratuity Act.

Judgment :

S.K. Panigrahi, J.

1. In this Writ Petition, the Petitioner Corporation challenges the legality of the interest award of Rs.3,64,846/- granted to Opposite Party No.1 by the Appellate Authority, expressing grievance over the decision.

I. FACTUAL MATRIX OF THE CASE

2. The brief facts of the case are as follows:

(i) The petitioner in this case is the Odisha State Financial Corporation, a statutory body established under the State Financial Corporation Act, 1951. The first respondent (“Opposite Party No. 1”) is a retired employee of the Corporation, while the second respondent (“Opposite Party No. 2”) is the Appellate Authority under the Payment of Gratuity Act, 1972.

(ii) Initially, the Corporation adhered to its own service rules for gratuity payments, as outlined in the Odisha State Financial Corporation (Payment of Gratuity to Employees) Regulations, 1968. To enhance benefits for employees, the Corporation adopted the provisions of the Payment of Gratuity Act, 1972, with prior approval from the State Government, effective from January 2010.

(iii) The gratuity cap was revised to Rs. 10 lakh as of 01.01.2010. Subsequently, with an amendment to the Payment of Gratuity Act, 1972, the cap was further increased to Rs. 20 lakh, effective from 29.03.2018.

(iv) Opposite Party No. 1 retired on 30.04.2018 and was paid Rs. 10 lakh, the prevailing gratuity cap at that time. Following the 2018 amendment, Opposite Party No. 1 claimed the revised gratuity cap of Rs. 20 lakh and sought an additional Rs. 10 lakh.

(v) The petitioner Corporation then sought approval from the State Government to implement the revised gratuity cap. This process involved correspondence with the Micro, Small, and Medium Enterprises (MSME) Department, during which queries were raised and addressed between 2020 and 2021.

(vi) The Corporation’s Board of Directors passed a resolution on 28.03.2023 to implement the revised gratuity cap retrospectively from 29.03.2018. An office order was issued on 18.04.2023 to credit the differential gratuity to eligible employees, including Opposite Party No. 1.

(vii) As a result, Opposite Party No. 1 received the additional amount of Rs.7,33,713 on 04.05.2023.

(viii) Subsequently, Opposite Party No. 1 filed a claim with the Controlling Authority, seeking the differential gratuity of Rs. 7,33,713 along with interest. The Controlling Authority directed the Corporation to pay interest of Rs. 3,64,846 on the delayed differential amount.

(ix) The Corporation appealed the interest award, but the Appellate Authority upheld the decision of the Controlling Authority.

(x) Aggrieved by the decision of the Appellate Authority, the petitioner Corporation filed this writ petition, challenging the legality of the interest award.

II. SUBMISSIONS ON BEHALF OF THE PETITIONER

3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions:

(i) The petitioner contended that it was legally unable to implement the revised gratuity limit of Rs. 20 lakh without the prior approval of the State Government. All necessary steps were taken to secure the required approval, including correspondence with the relevant departments.

(ii) The petitioner demonstrated bona fide efforts to implement the revised gratuity limit, evidenced by:

a. Timely communications with the State Government.

b. Resolutions of the Board of Directors to adopt the revised gratuity once approval was granted.

(iii) The petitioner asserted that the revised gratuity became payable only on 18.04.2023, when the office order implementing the Rs. 20 lakh limit was issued. The differential amount was