Uttarakhand Sahkari Chini Mills Sangh Ltd.& another vs Ghan Shyam Gururani and others

K.M. JOSEPH, C.J. (Oral)

SHARAD KUMAR SHARMA, J.

The appellants are the 2nd and 3rd respondents in the writ petition. The writ petitioner has sought payment of interest on the delayed payment of

gratuity to him. There is no doubt that there is a delay in payment going by the provisions of Section 7 (3-A) of the Payment of Gratuity Act, 1972

(hereinafter referred to as the “Actâ€). The learned Single Judge by the impugned judgment dated 09.05.2018 has directed payment of interest

under Section 7 (3-A) of the Act. Feeling aggrieved, the appellants / respondent Nos. 2 and 3 in the writ petition, are before us.

We heard Mr. T.A. Khan, learned Senior Counsel assisted by Mr. Aditya Kumar Arya, learned counsel for the appellants and also Mr. Subhang

Dobhal, learned counsel for the writ petitioner / respondent No. 1.

The contentions taken by the appellants are as follow:-

There is no delay on the part of the appellants. Actually, the writ petitioner was originally an employee of the U.P. Cooperative Sugar Mills

Federation, i.e. 3rd respondent in the appeal. On the formation of the State of Uttarakhand, the services of the writ petitioner, on the basis of option,

was placed at the disposal of the 1st appellant. The writ petitioner retired on 31.05.2011, undoubtedly, while he was serving under the 1st appellant, but

the amount representing the gratuity for the service prior to the creation of the State of Uttarakhand was made available by the 3rd respondent in the

appeal belatedly. There was delay due to non-receipt of amount from respondent No. 3. Immediately, upon receipt of the amount by the appellants, it

was paid, hence, as a matter of fact, there is no delay and the amount was disbursed within a period of less than three weeks. Thus, there was no

delay on their part, hence, not liable to pay interest. Therefore, no liability can be fastened on the appellants. A case is also sought to be built up in the

appeal that the payment of gratuity due to the appellant is not under the provisions of Payment of Gratuity Act rather there are Rules, under which, the

payment is to be made.

It is true that Section 7 (1) of the Act speaks about a person, who is eligible for receipt of gratuity may in writing send application to the employer

for payment of gratuity. No doubt, Section 7 (2) of the Act provides that the employer shall whether an application is made or not determine the

amount of gratuity due and give notice in writing specifying the gratuity. The employer is to arrange for payment of gratuity within thirty days. The

gratuity, if not paid, will bear simple interest not exceeding the rate notified by the Central Government for repayment of long-term deposits, as

Government may, by notification specify.

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It is a relevant to notice that the proviso to under Section 7 (3-A) of the Act immunizes the delayed payment from levy of interest if the delay is due

to the fault of the employee and the employer has obtained permission in writing from the Controlling Authority for the delayed payment.

In the counter affidavit, we notice that there is no case, as such, set up that gratuity is not being paid as per the Act nor the pleadings raised in the

writ petition has been categorically denied. In other words, it is not a case that the payment of gratuity is governed by the statutory rules as is claimed

by the appellants before this Court nor the appellants have produced any such material even at appellate stage to substantiate their case. So, we need

not be detained by the said argument. This is not the case where any fault is sought to be placed at the doorstep of the employee (writ petitioner) so as

to attract proviso to Section 7 (3-A) of the Act to deny payment of interest.

In such circumstances, we would think that the appellants, having regard to the nature of the pleadings also in this case, cannot be exonerated from

the duty to pay interest on delayed payment of gratuity, which otherwise provision exits under the statute to make payment of the admitted delay in

making the payment. In such circumstances, we do not see any reason that we should deny the benefit of Section 7 (3-A) of the Act to the petitioner.

As regards the claim tried to be set up by appellants at this stage that it is the U.P. Cooperative Sugar Mills Federation / respondent No. 3, who is

liable to make the payment, if we go by the provisions of the Act, the writ petitioner can claim interest only as against the appellants being the

employer at the time of superannuation of the writ petitioner having regard to the state of the pleadings in this case at any rate. If the appellants have

a case that they are not at fault and that interest even if paid should be recovered from the U.P. Government, this is a matter we do not wish to go

into; but we leave it open to the appellants, if advised, to work out their remedies available under law before any competent forum. We have

expressed no view regarding merits of the said contention.

Subject to the above observations, the appeal will stand dismissed. No order as to costs.