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2024 Supreme(Online)(UT) 3632
HIGH COURT OF UTTARAKHAND
Ritu Bahri, CJ, Rakesh Thapliyal, J
BABU RAM KASHYAP – Appellant
Versus
CANARA BANK ERSTWHILE SYNDICATE BANK – Respondent
WPMB 75 / 2023
Mr. Vipul Gupta, Mr. A.M. Saklani, Mr. Siddharth Sah, Mr. Ashish Joshi, Mr. Shashank Upadhyay
The definition of 'pay' for gratuity calculation includes special allowances and dearness allowance, and interest rates cannot be reduced once granted under the Payment of Gratuity Act.
Headnote:(A) Payment of Gratuity Act, 1972 - Section 7 - Calculation of gratuity - The appellant is entitled to a total gratuity of Rs. 15,22,042/- as per service regulations, with a further payment of Rs. 3,34,942/- due - The Appellate Authority misinterpreted Clause-46 of SBOSR regarding the calculation of gratuity and interest rates - The Supreme Court has held that controlling authorities have no discretion to award interest other than the statutory rate. (Paras 11, 12, 31)
(B) Employment Regulations - Definition of 'Pay' - The definition of pay includes special allowances and dearness allowance for calculating gratuity - The exclusion of special allowances from the calculation of gratuity is impermissible as per the Supreme Court's ruling. (Paras 13, 30)
Facts of the case:
The appellant, after 36 years of service, claimed gratuity, which was partially awarded by the Controlling Authority. The appeal was filed against the reduction of interest and misinterpretation of service regulations.
Findings of Court:
The court found that the appellant is entitled to the full gratuity amount, including special allowances, and the interest rate should be 7% as per the regulations.
Issues: The main issues were the correct calculation of gratuity beyond 30 years of service and the applicable interest rate.
Ratio Decidendi: The court ruled that the definition of pay must include all relevant allowances for gratuity calculation, and interest rates cannot be reduced once granted.
Result: Writ petitions allowed; the bank is directed to recalculate gratuity and pay the due amount with interest.
“Final Order”
In view of the above mentioned legal points, I am of considered opinion that the appellant Sh. Babu Ram Kashyap is entitled to receive total gratuity of 15,22,042/- (Rupees Fifteen Lakh Twenty Two Thousand & Forty Two Only) as the higher amount of gratuity as per the service Regulations of the bank. As the applicant has already received Rs. 11,87,100/-, he need to be paid further amount of gratuity equivalent to Rs. 3,34,942/- (Rupees Three Lakh Thirty Four Thousand Thirty & Nine Hundred & Forty Two Only), by the Respondent (The General Manager, Syndicate Bank, Head Office, Manipal) within 30 days from receipt of this order along with simple interest @ 7% p.a. from 12.10.2014.”
7. With respect to length of service, the gratuity was calculated for a period of three years beyond 30 years i.e. till 33 years. The petitioner, in the present case, has put in service of 36 years, three months and twelve days. The petitioner is also aggrieved that the benefit of six of years of service beyond thirty years has been wrongly denied.
8. The petitioner was communicated the claim order vide order dated 28th February, 2020 (Annexure PA-2). Against the order dated 28.02.2020, the petitioner filed an Appeal under Section 7(7) of PG Act (Annexure P-3). The Bank also filed an Appeal against the order dated 28.02.2020 passed by the Controlling Authority. Both the Appeals were decided by the Appellate Authority by a common order dated 29.11.2021 (Annexure P-4).
9. In the impugned order, while interpreting Clause-46 of SBOSR, the Appellate Authority held as under:-
“Now after noting the above findings, I conclude that the respondent is entitled to be paid additional amount of gratuity over and above what has already been paid to him but not as per calculation arrived at by the CA. The CA should include the component of DA only with Basic Pay and calculate the amount of payable gratuity accordingly. The CA should further calculate interest @ 5% only upon the difference of amount of gratuity paid and payable.”
10. The Appellate Authority has not given the benefit of calculation of gratuity beyond thirty years of service i.e. 36 years three months and twelve days, which was given by the Controlling Authority as per Regulation 46 of Syndicate Bank (Officers’) Service Regulations, 1979. Hence, this writ petition has been filed now. The challenge has been made on two grounds:-
(I) The CA reduced the interest from 7% p.a. to 5% p.a. which is against the Circular of the Reserve Bank of India dated 6th March, 2020 (Annexure No. 5 to the writ petition), which prescribes payment of interest at the rate of 10% till the date of making payment.
(II) Clause 46 of SBOSR has been misread and misinterpreted by only including Dearness Allowance as part of pay and not including Emoluments as part of pay.
I NTEREST:-
11. Counsel for the petitioner has referred to the judgments of the Hon’ble Suprem e Court in Y.K. Sigla vs. Punjab National Bank & Ors. (Civil Appeal No. 9087 of 2012, decided on 14.12.2012) and D.D. Tiw ari vs. Uttar Haryana Bizli Vitran Nigam Ltd. (Civil Appeal No. 7113 of 2014), wherein the Hon’ble Supreme Court has held that Controlling Authorities (CA) have no discretion to award interest on delayed payment other than the rate of interest as is provided under the statute in terms of Sub Section (3A) of Section 7 of Payment of Gratuity Act, 1972.
12. In another judgment of the Hon’ble Supreme Court in Assistant Com m issioner, Com m ercial Tax Departm ent, Works Contract & Leasing, Kota vs. Shukla & Brothers (2010) 4 SCC 785, it has been held that the rate of interest cannot be reduced by the Controlling Authority once it was granted as per the prevalent rules of banking. DEFI NI TI ON OF WORD ‘PAY’:-
13. The Hon’ble Supreme Court in the case of The Regional Provident Fund Com m issioner (I I ) W.B. vs. Vivekanand Vidhya Mandir & Ors. (Civil Appeal No. 6221 of 2011, decided on 28.02.2019) held that the basic principle is where the wage is universall
