Case Note & Summary
The judgment concerns two writ petitions arising from an order dated 27/02/2017 passed by the Assistant Labour Commissioner (Central), Nagpur, acting as the Controlling Authority under the Payment of Gratuity Act, 1972. The order directed the employer, Western Coalfields Ltd., to pay interest to the employee, Sharda Nand Lal Das, under Section 8 of the Act for delayed payment of gratuity. The employee had retired on 31/12/2012 after serving as General Manager (Legal). The employer disputed the quantum of gratuity, claiming that the employee was not entitled to certain allowances, and withheld payment. The Controlling Authority held that the gratuity amount was payable within 30 days of retirement and that the employer's dispute did not justify delay. The High Court upheld the order, emphasizing that Section 8 mandates interest on delayed gratuity from the date it becomes due until payment, regardless of any dispute. The court rejected the employer's argument that interest should run only from the date of the Controlling Authority's order, and clarified that the employer's obligation to pay gratuity is statutory and cannot be avoided by raising disputes. The petitions were dismissed, and the employer was directed to pay interest as ordered.
Headnote
A) Payment of Gratuity Act, 1972 - Section 8 - Interest on Delayed Gratuity - Employer's Dispute Over Quantum - The employer disputed the quantum of gratuity payable to the employee and withheld payment beyond the prescribed period. The Controlling Authority directed payment of interest under Section 8. The High Court held that the employer's dispute over quantum does not justify withholding payment beyond the prescribed period, and interest is payable from the date gratuity becomes due until actual payment. (Paras 1-29)
Issue of Consideration
Whether the employer is liable to pay interest under Section 8 of the Payment of Gratuity Act, 1972 on delayed payment of gratuity when there is a dispute regarding the quantum of gratuity payable.
Final Decision
Both writ petitions dismissed. The order of the Controlling Authority dated 27/02/2017 directing payment of interest under Section 8 of the Payment of Gratuity Act, 1972 is upheld. Employer directed to pay interest as ordered.
Law Points
- Interest on delayed gratuity is payable under Section 8 of the Payment of Gratuity Act
- 1972 from the date the gratuity becomes due until the date of actual payment
- irrespective of any dispute raised by the employer regarding the quantum of gratuity.
Case Details
2018 LawText (BOM) (12) 127
Writ Petition No. 2701 of 2017 and Writ Petition No. 3672 of 2017
Mr. Akshay M. Sudame (for petitioner-employee), Mrs. Mugdha Chandurkar (for respondent No.1), Mr. A.M. Ghare (for respondent No.2 employer)
Sharda Nand Lal Das (in WP 2701/2017) and Western Coalfields Ltd. (in WP 3672/2017)
Assistant Labour Commissioner (Central) and Controlling Authority under Payment of Gratuity Act, 1972, and Chairman-Cum-Managing Director, Western Coalfields Ltd. (in WP 2701/2017); Controlling Authority and Shri Sharada Nandlal Das (in WP 3672/2017)
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Nature of Litigation
Writ petitions challenging order of Controlling Authority under Payment of Gratuity Act, 1972 directing payment of interest on delayed gratuity.
Remedy Sought
Employee sought interest on delayed gratuity; employer sought to set aside the order directing interest.
Filing Reason
Employer disputed quantum of gratuity and withheld payment beyond prescribed period; employee claimed interest under Section 8.
Previous Decisions
Controlling Authority passed order dated 27/02/2017 directing employer to pay interest under Section 8 of the Payment of Gratuity Act, 1972.
Issues
Whether the employer is liable to pay interest under Section 8 of the Payment of Gratuity Act, 1972 on delayed payment of gratuity when there is a dispute regarding the quantum of gratuity payable.
Submissions/Arguments
Employer argued that interest should run only from the date of the Controlling Authority's order, not from the date gratuity became due.
Employee argued that interest is payable from the date gratuity becomes due until actual payment, regardless of dispute.
Ratio Decidendi
Interest under Section 8 of the Payment of Gratuity Act, 1972 is payable on delayed gratuity from the date it becomes due until the date of actual payment, irrespective of any dispute raised by the employer regarding the quantum of gratuity.
Judgment Excerpts
These two writ petitions that have come up for consideration before this Court, challenging order dated 27/02/2017 passed by the Assistant Labour Commissioner (Central), Nagpur and Controlling Authority under the Payment of Gratuity Act, 1972, whereby direction has been given to pay interest to the petitioner-employee under section 8 of the said Act on account of failure of the employer to pay the amount of gratuity payable under the said Act, within prescribed time.
Procedural History
Employee retired on 31/12/2012. Employer disputed quantum of gratuity and withheld payment. Employee approached Controlling Authority under Payment of Gratuity Act, 1972. Controlling Authority passed order on 27/02/2017 directing employer to pay interest under Section 8. Both parties filed writ petitions before the High Court. High Court dismissed both petitions on 20/12/2018.
Acts & Sections
- Payment of Gratuity Act, 1972: Section 8
