The right to interest on delayed payment of gratuity is statutory and mandatory under the Payment of Gratuity Act, 1972.

1.Present petition is filed by the petitioners under Articles 226 and 227 of the Constitution of India and under the provisions of the Payment of Gratuity Act, 1972 for quashing and setting aside the impugned order dated 26.10.2021 passed by the Controlling Authority, Rajkot in Gratuity Application No. 90 of 2020 and the order dated 18.04.2022 passed by the Appellate Authority, Rajkot in Gratuity Appeal No.3 of 2022.

2.Heard Ms.Niyati Chauhan, learned counsel appearing for the petitioners. Perused the material available on record.

3.Ms.Chauhan, learned counsel appearing for the petitioners submits that the impugned order passed by the Controlling Authority and confirmed by the Appellate Authority awarding interest at the rate of 10% is illegal, unjust and contrary to the facts and material available on record and contrary to the provisions of the Payment of Gratuity Act. Ms.Chauhan, learned counsel urges the Court that the impugned order passed by the concerned authority may be quashed and set aside and present petition may be allowed.

4.I have perused the material along with the relevant documents available on record. I have also gone through the impugned order passed by the Controlling Authority and confirmed by the Appellate Authority.

5.It appears that the respondent was retired from the service on 30.06.2018 and, therefore, as per rules, he was entitled to get the payment of gratuity on that day i.e. 30.06.2018. However, the authority has not paid the amount of gratuity on that day. Therefore, the respondent – workman approached Controlling Authority and the Controlling Authority directed the concerned authority to pay 10% simple interest on the gratuity amount from 01.08.2018 to 14.12.2018 and from 01.08.2018 to 20.11.2019. Against the said order, the concerned authority had approached the Appellate Authority by filing Gratuity Appeal. After hearing both the parties, the Appellate Authority confirmed the order passed by the Controlling Authority and dismissed the appeal filed by the concerned authority.

6.This Court has, while deciding similar issue in Special Civil Application No. 2717 of 2022, held and observed in paras – 8 to 14 as under:-

“8. At this stage, it is fruitful to refer the decisions of the Hon’ble Apex Court and this Court with regard to awarding interest while interpreting provisions of Section 7(3-A) of the Payment of Gratuity Act.

9. In the case of State of Uttar Pradesh and others vs. Dhirendra Pal Singh reported in (2017) 1 SCC 49 Hon’ble Apex Court has held as under:-

“Head Note:B Service Law- Retirement/Superannuationretiral Benefits- Gratuity and Pension-Interest-Withholding of 30% of gratuity and pensionary dues found to be invalid.

9. In State of Kerala and others v. M. Padmanabhan Nair[1], this Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest. In said case the Court approved 6% per annum interest on the amount of pension decreed by the trial court and affirmed by the High Court. As to the rate of interest on amount of gratuity Section 7(3-A) of Payment of Gratuity Act, 1972, it is provided that if the amount of gratuity payable is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which 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. It further provides that no such interest shall be payable if the delay in payment is due to the fault of the employee, and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. In the present case, there is no plea bef