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2019 Supreme(Megh) 115
IN THE HIGH COURT OF MEGHALAYA
MOHAMMAD YAQOOB MIR, H.S. THANGKHIEW, JJ.
Azranath M. Momin and Others - Appellant
Versus
G.H.A.D.C. and Others - Respondent
WA No. 34 of 2017, WP (C) Nos. 17, 18, 19, 20 of 2017
Decided On : 18-03-2019
Advocate Appeared:
For the Appellant :Mr. SA Sheikh, Advocate
For the Respondent:Mr. S Dey, Advocate
The main legal point established is that the employer has a statutory obligation to pay gratuity within 30 days and to pay interest in case of delayed payment, as per Section 7(3) and (3A) of the Payment of Gratuity Act, 1972.
Headnote:
Interest - Gratuity Payment - Payment of Gratuity Act, 1972, Section 7(3) and (3A)
Fact of the Case:
The appellant, a retired employee, filed a writ petition seeking the release of gratuity and leave salary. The respondent, GHADC, cited financial crisis as the reason for delayed payment. The Single Judge granted 10 months for release of salary and service benefits but ignored the award of interest. The connected writ petitions raised similar issues.
Finding of the Court:
The court found that the claim for interest is a statutory right and cannot be denied. It emphasized the statutory obligation of the employer to pay gratuity within 30 days and to pay interest in case of delayed payment, as per Section 7(3) and (3A) of the Payment of Gratuity Act, 1972.
Issues: The issues revolved around the delayed payment of gratuity and leave salary to retired employees due to the financial crisis faced by the respondent-GHADC.
Ratio Decidendi: The court held that the employer is obligated to pay gratuity within 30 days and to pay interest in case of delayed payment, as per Section 7(3) and (3A) of the Act. It emphasized that the non-awarding of interest would violate the statutory provisions.
Final Decision: The court awarded simple interest at a rate of 6% per annum from the due date of gratuity and leave salary to the actual payment date, in favor of the petitioners. The appeal and connected writ petitions were disposed of accordingly.
JUDGMENT :
MOHAMMAD YAQOOB MIR, J.
1. Instant appeal is directed against the order dated 05.06.2017 passed in WP (C) No.391 of 2016 in terms whereof respondents were directed to release the salary of the petitioner and other service benefits within 10 (ten) months.
2. Appellant admittedly was an employee of respondent-GHADC on reaching superannuation retired on 12.11.2014. He was not paid gratuity and leave salary as a result whereof filed writ petition in the year 2016 with a prayer to command the respondents to release retirement benefits i.e. amount of gratuity and leave salary with interest till the actual payment is made.
3. The position of the petitioner was not disputed by the respondent- GHADC. In the affidavit-in-opposition they have stated that the orders dated 16.03.2016 and 17.03.2016 pertaining to sanction of gratuity and leave salary is not denied, however, GHADC is clearing the retiral benefits in favour of all retired employees in order of seniority because of financial crisis faced by them. It is further stated that the respondents have never denied responsibility to pay the dues but unfortunately due to paucity of funds immediate payment on retirement could not be made to the petitioner. The Executive Committee has inherited empty coffers and lots of debts in respect of payment of dues/retirement benefits to its retired employees. The respondents are sincerely working out for payment of retiral benefits to all its retired employees without any partiality.
4. Learned Single Judge has taken note of the affidavit-in-opposition and submission of learned counsel for the respondents and has acceded to the prayer of learned counsel for the respondents by granting 10 months time for release of salary and other service benefits in favour of the petitioner but award of interest has been ignored.
5. Petitioners in the connected writ petitions too were not paid the retiral benefits i.e. gratuity and leave salary. Therefore, issues for determination being identical were clubbed together.
6. When appeal as well as writ petitions were taken up for consideration on 07.09.2017. Learned counsel for the parties stated the retiral dues have already been paid to the appellant of WA No.34 of 2017 and also to the petitioners of connected writ petitions. Regarding grant of interest writ petitions were admitted to hearing.
7. The claim for interest is a statutory right so cannot be denied. Section 7 Clause (3) and (3A) of the Payment of Gratuity Act, 1972 (hereinafter referred to as the Act), are relevant to be quoted:-
"7. Determination of the amount of gratuity.- (1) A person who is eligible for payment of gratuity under this Act or any person authorized, in writing to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity become payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined.
2[(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable.
(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
