Case Note & Summary
The case involved an appeal concerning the denial of interest on the belated payment of gratuity to an employee who had retired. The appellant, H. Gangahanume Gowda, was suspended in March 1999 and later retired on January 1, 2000. After his suspension was revoked, he sought payment of his dues, including gratuity, but the respondent-Corporation did not settle these amounts timely. The appellant filed a writ petition seeking full salary, gratuity, and interest on the delayed payment. The High Court granted most reliefs but denied interest on the grounds of discretion. The appellant appealed this decision, arguing that the right to interest was statutory under the Payment of Gratuity Act, 1972. The Supreme Court analyzed the relevant provisions of the Act, particularly Sections 7 and 8, which mandate timely payment of gratuity and interest on delays unless the delay was due to the employee's fault. The court found that the learned Single Judge had erred in denying interest based on discretion rather than the statutory requirements. The Division Bench's upholding of this decision was also deemed erroneous. Consequently, the Supreme Court set aside the High Court's order, directing the respondent to pay interest at 10% on the gratuity amount from the date it became payable until payment was made, along with costs of Rs. 10,000.
Headnote
A) Employment Law - Gratuity Payment - Right to Interest on Delayed Payment - Payment of Gratuity Act, 1972, Sections 7, 8 - The court held that the employer is mandated to pay gratuity within the specified time and to pay interest on delayed payment, with no discretion to exempt from this obligation. The learned Single Judge's denial of interest was not justified as the delay was not due to the employee's fault, and the Division Bench erred in upholding this denial (Paras 1-5).
Issue of Consideration
Whether the Division Bench of the High Court was correct in denying interest on belated payment of gratuity despite finding the appellant entitled to it.
Final Decision
The Supreme Court set aside the High Court's order and directed the respondent to pay interest at 10% on the gratuity amount from the date it became payable until payment was made, along with costs of Rs. 10,000.
Law Points
- Payment of Gratuity
- statutory right to interest
- employer's obligation
- discretion in payment
- recovery of gratuity
