Payment of gratuity capped by statutory limits cannot be overridden by administrative directives; interest claims on delayed payments are unsupported when full settlement acknowledged.

JUDGMENT This writ petition has been filed challenging Ext.P6 order of the second respondent, the Controlling Authority under the Payment of Gratuity Act, 1972 (in short, the 1972 Act), and the Ext.P8 order of the third respondent, the Appellate Authority under the 1972 Act, which directs the payment of 10% interest on the amount of Rs.1,57,326/-, which was the amount of gratuity allegedly short-paid to the first respondent due to the incorrect application of the ceiling limit in accordance with the provisions contained in the 1972 Act.

2. The learned counsel representing the petitioner asserts that upon the retirement of the first respondent, the provisions of the 1972 Act capped the maximum gratuity at Rs. 3,50,000/-. The learned counsel contends that this amount was disbursed to the first respondent upon his retirement. It is submitted that certain employees filed an Original Application as O.A.No. 288 of 2012 before the Central Administrative Tribunal (CAT), Ernakulam Bench, asserting that under Ext.P.1 Office Memorandum issued by the Central Government, the gratuity cap for all Central Public Sector Undertakings would be Rs. 10 lakhs. It is submitted that though the Original Application was dismissed by the CAT, Ernakulam, the order in O.A.No. 288 of 2012 was challenged by filing an OP(CAT) No. 42/2014 before this Court. It is stated that through P2 judgment dated December 10, 2019, the Original Petition was allowed, and this Court directed the payment of gratuity without applying the statutory limit. However, it was clarified that the aforementioned directions would apply only to the 26 petitioners involved in the Original Petition. It is submitted that subsequently, the first respondent and seven others commenced legal proceedings before the Consumer Disputes Redressal Forum, asserting their entitlement to gratuity without reference to the statutory ceiling limit prescribed under the 1972 Act. In an effort to resolve the matter amicably, the petitioner made an additional payment of Rs.1,57,326/- to the first respondent, thereby compensating for the gratuity that would have been payable to him without regard to the statutory limit of Rs.3,50,000/- as stipulated in the 1972 Act. It is submitted that though the 1^st respondent accepted the payment specifically acknowledging through Ext.P.4 that the same will be in full and final settlement of all his claims, the first respondent initiated proceedings before the Controlling Authority, resulting in the issuance of Ext.P6 order directing the payment of interest at a rate of 10% on the alleged short payment made by the petitioner for the period from April 1, 2010, to August 15, 2021. The Appellate Authority dismissed the appeal through Ext.P7 order.

3. The learned counsel appearing for the 1^st respondent submits that in terms of Ext.P1 Office Memorandum issued by the Government of India in the Department of Public Enterprises, from 01.01.2007 i.e a day before the date of retirement of the 1^st respondent, the ceiling limit of gratuity for employees of Central Public Sector Undertakings like the petitioner were increased to Rs.10 lakhs and there was no rhyme or reason for the petitioner to have denied such gratuity to the 1^st respondent. It is submitted that Ext.P2 judgment of this Court clearly finds, on the basis of Ext.P1 Office Memorandum, that from 01.01.2007, the employees of the petitioner Company are entitled to gratuity without reference to the ceiling limit under the provisions of the 1972 Act. It is submitted that the observations in Ext.P2 judgment of this Court that the payment of gratuity at the higher limit would be only to the 26 petitioners before this Court is no ground to deny the higher amount of gratuity to persons like the petitioner