Interest On Delayed Payment Of Gratuity Mandatory, Not Discretionary: Gujarat High Court Reiterates

The Gujarat High Court has reiterated that there is a clear mandate on the employer under the provisions of Section 7 to the Payment of Gratuity Act, for payment of gratuity within time and to pay interest on the delayed payment of gratuity. In light of the above, the Bench of Justice Biren Vaishnav directed the Sardar Patel University to pay Rs. 10 lakhs towards gratuity of the Petitioner, a retired reader, along with interest at 9% for wrongfully withholding the graturty since his retirement in 2013.The direction was passed in petition filed under Article 226 of the Constitution where the Petitioner had prayed for the declaration that the action of the Respondents in not paying Rs. 10 lakhs along with 18% interest towards his gratuity, was arbitrary. The Petitioner joined services as a lecturer at the Sardar Patel University from 04.10.1979 onwards. He was confirmed in service from 28.09.1986. It was the Petitioner's case that since his appointment was made after 01.04.1982 on the post of reader, his services had been counted towards the pension scheme. He retired from service on 14.06.2013. The Petitioner claimed that he was entitled to Rs. 10 lakhs gratuity in view of a notification of 2010 pursuant to which the gratuity amount was enhanced from Rs. 3,50,000 to 10 lakhs. There were amendments in Section 4(3) of the Payment of Gratuity Act wherein the State extended this amount to CPF beneficiaries from 2010. Per contra, the AGP contended that the Petitioner was covered by the CPF scheme and not entitled to gratuity. The Bench noted that the Petitioner's retirement indicated that GPF was deducted from his salary. Therefore, he was governed by the GPF scheme. Additionally, in an earlier Civil Application with identical facts, the question of gratuity of Rs. 10 lakhs was raised. The High Court had then relied on H.Gangahanume Gowda Vs. Karnataka Agro Industries Corporation Ltd (2003) 3 SCC 40 to observe that the interest was payable on delayed payment of gratuity. It was also held that the same was "mandatory and not discretionary." The Government had raised the amount of gratuity to Rs. 10 lakhs and the Petitioner therein had retired in 2011 was entitled to interest due to non-payment of gratuity worth Rs. 6.50 lakhs apart from 9% interest. Noting that the Petitioner in the instant case had retired on 2013 "through no fault of his", the Bench opined that he was entitled to interest on the delayed payment of gratuity in accordance with D.D.Tiwari (D) Thr. Lrs vs Uttar Haryana Bijli Vitran Nigam and other. Justice Vaishnav remarked, "Since the petitioner superannuated on 14.06.2013 and the amount of gratuity has been wrongfully withheld by the respondents, the petitioner shall be entitled to interest at the rate of 9% from the date of his superannuation till the date of actual payment," it said. Case Title: ASHVINKUMAR RAMNIKLAL JANI Versus STATE OF GUJARAT Click Here To Read/Download Order

Interest On Delayed Payment Of Gratuity Mandatory, Not Discretionary: Gujarat High Court Reiterates

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