Employers Must Deposit Gratuity & Interest Before Filing Appeal U/S 7(7) Of Payment Of Gratuity Act: Kerala High Court

The Kerala High Court has held that employers challenging gratuity awards under the Payment of Gratuity Act, 1972 must deposit both the gratuity and the accrued interest as a condition precedent for admission of an appeal.Justice K Babu was delivering a judgment in a writ petition filed by the Kerala State Financial Enterprises Ltd. (KSFE). The petitioners approached the Court challenging an order passed by the Regional Joint Labour Commissioner, Kollam, which is the Appellate Authority under the Payment of Gratuity Act, which directed the petitioner-employer to deposit the amount of gratuity determined by the sub-section (4) of Section 7 of the Act. Section 7 of the Gratuity Act deals with the determination of the amount of gratuity payable. The Court examined whether the phrase 'an amount equal to the amount of gratuity required to be deposited' mentioned in the proviso to sub-section (7) of Section 7 of the Act includes the entire amount directed to be paid under sub-section 4(c) of Section 7 of the Act, as a condition precedent for admitting the appeal. The petitioners submitted that the provision to sub-section (7) of Section 7 of the Act mandates only the deposit of the 'gratuity amount' as a condition precedent for admitting the appeal. It was further submitted that the Statute does not mandate that the interest accrued to the amount due to the employee as gratuity is required to be paid as a pre-deposit. Amicus Curiae submitted that the legislature has consciously intended that the pre-deposit is an amount equal to the amount of gratuity, which does not include interest for the gratuity amount by mentioning several phrases like, 'amount of gratuity', 'any amount', 'such amount', 'amount equal to the amount of gratuity' under various sub-sections in Section 7 of the Act. The Respondent, who appeared in person relied on BL Rubber Industries Private Ltd. v Ashok Kumar Khurana[WP(C) 21488/ 2013], Managing Director (COIRFED) v Regional Labour Commissioner (Central) [2015 KHC 192], etc and contended that the pre-deposit contemplated under the proviso to sub-section(7) of Section 7 of the Act is the amount equal to the amount of gratuity required to be deposited under sub-section (4) which includes the gratuity amount and interest. The petitioner and the amicus curiae have submitted that these decisions were per incuriam. A judicial decision is made per incuriam, if it is made in ignorance of a relevant statutory provision or a relevant, binding decision of court, and awareness of that earlier provision or decision would have led to a different result.The Court noted that the Payment of Gratuity Act is an Act which not only creates a right to the payment of gratuity but also, lays down the principles for its quantification thereof, and as also the conditions on which an employee may be denied gratuity and examined the Section 7 of the Act. The Court noted that sub-section 3-A of Section (7) provides that an employer is obliged to pay interest on the gratuity from the date on which the gratuity has become payable, till it is paid, with simple interest at such rate fixed by the Government. As per sub-section 4(a) of Section 7, in case of any dispute as to the amount of gratuity, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him as gratuity. The sub-section 4(c) of Section 7, of states that the Controlling Authority shall conduct an enquiry and after giving reasonable opportunity of hearing to both sides, determine the disputed matters and on finding that if any amount is payable to the employee, it shall direct the employer to pay such amount, as the case may be, such amount as reduced by the amount already deposited by the employer“Therefore, the amount to be determined under sub-section 4(c) of Section 7 includes the amount of gratuity and the interest accrued thereon.” the Court noted. The Court noted that the provision for appeal as laid down in sub-section(7) of Section 7 mandates that an amount equal to the amount of gratuity required to be deposited under sub-section(4) is to be deposited' as a pre-condition for admitting the appeal.“The amount required to be deposited under sub-section 4(c) of Section 7 is the amount of gratuity determined by the Controlling Authority, after adjudicating all disputes (including disputes relating to delayed payment) in the enquiry and found payable to the employee. This amount necessarily takes in the interest portion also.” Court noted. The court noted that the pre-deposit requirement in the Gratuity Act was incorporated to ensure that there is no delay in payment to the employee once the amount due to him is determined under sub-section (4) of Section 7 of the Act. “Likewise, the pre-deposit under the second proviso to sub-section (7) of Section 7 has been enacted to see that once the appeal is decided, if the amount found to be payable to the employee, shall be paid soon after the decision. This amount takes in ...

Employers Must Deposit Gratuity & Interest Before Filing Appeal U/S 7(7) Of Payment Of Gratuity Act: Kerala High Court

Anamika MJ

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