Kerala State Cashew Dev.Corp.Ltd.& Anr vs N.Asokan

Kerala State Cashew Dev. Corp. Ltd. & Anr. ... Appellants

Versus

N. Asokan ...Respondent

ORDER

1. Leave granted.

2. We are not inclined to interfere with the order impugned in this appeal, by which

the High Court has affirmed an order of a learned Single Judge of the High Court

of Kerala at Ernakulam, directing the Kerala State Cashew Development

Corporation Ltd. (hereinafter referred to as "the Corporation"), the appellant

herein, to pay gratuity with interest to the respondent.

3. It is now an admitted position that during the pendency of the appeal, the amount

of gratuity, directed by the High Court to be paid to the respondent, has already

been paid. Since the gratuity amount has already been paid, the only question

that remains to be considered for us is whether interest on such delayed payment

of gratuity amount should also be directed to be paid to the respondent.

4. Section 7 of the Payment of Gratuity Act, 1972 (in short, "the Act") deals with

determination of the payment of gratuity. Since the gratuity amount has already

been paid, Section 7 (3A), which deals with payment of interest for delayed

payment of gratuity, would be necessary only to be dealt with in this appeal and to

consider whether interest on delayed payment of gratuity can be directed to be

paid by the appellant to the respondent in compliance with Section 7 (3A) of the

Act.

5. For this reason, we like to reproduce Section 7(3A) of the Act, which runs as

under :-

"If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify:

Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delay payment on this ground."

6. On a plain reading of this provision, as noted hereinabove, it is absolutely clear

that if any amount of gratuity, which is payable under Section 7 is not paid by the

employer within the period specified in sub-section (3), the employer is liable to

pay interest from the date on which the gratuity becomes payable to the date on

which it is paid, simple interest at such rate not exceeding the rate notified by the

Central Government from time to time for repayment of long term deposits but on

those delayed payment, where the employer has obtained permission in writing

from the Controlling authority for delayed payment, in that case, no such interest

shall be payable to the employee.

7. So far as the present case is concerned, no such permission was obtained by the

employer in writing from the Controlling authority and, therefore, sub-section

(3A) and its term would be squarely applicable in the facts of this case. In the

present case, eight years had passed after the retirement of the respondent but

gratuity amount was not paid and, therefore, there was a delay of eight years in

payment of gratuity amount, which is payable with interest at the rate specified in

Section 7(3A) of the Act.

8. The Corporation sought to explain the delay of eight years before the Court saying

that its financial condition was such that it was not in a position to pay gratuity

amount to the respondent. However, considering the aforesaid mandatory provision of Section 7(3A) of the Act and considering the fact that more than eight

years have elapsed since the retirement of the respondent, we are of the view that

the High Court was perfectly justified in dismissing the appeal and affirming the

judgment of the learned Single Judge, which also directed payment of interest to

the respondent.

9. For the reasons aforesaid, the appeal is dismissed. We, however, grant six weeks'

time to the appellant-Corporation to pay interest on the delayed payment of

gratuity in compliance with Section 7(3A) of the Act. There will be no order as to

costs.

10. We further make it clear that this order shall not be treated as precedent in other

similar cases.

...............................J. [TARUN CHATTERJEE]

...........................J. [R. M. LODHA] New Delhi.

July 27, 2009