2014(5) ALL MR 211
IN THE HIGH COURT OF JUDICATURE AT BOMBAY (NAGPUR BENCH)
R.K. DESHPANDE, J.
Allahabad Bank Vs. The Appellate Authority Under the Payment of Gratuity Act, 1972 & Regional Labour Commissioner (Central), Nagpur & Anr.
Writ Petition No.1318 of 2004
4th February, 2014
Petitioner Counsel: Mr. K.K. PILLAI
Respondent Counsel: Mrs. ANJALI JOSHI, Mr. S.K. PARDHY
Payment of Gratuity Act (1972), S.7(3-A) - Allahabad Bank (Officers') Service Regulations (1979), Cl.20(3)(iii) - Delayed payment of gratuity - Denial of interest - Defence of employer that payment delayed due to disciplinary enquiry continuing even after superannuation of employee - Not a case that enquiry delayed due to fault of employee or that employer had obtained requisite permission for delayed payment - Not even a case that any amount of gratuity was forfeited in disciplinary order by way of punishment - Held, non-payment of interest cannot be defended on basis of disciplinary action - Employee entitled to interest u/s.7(3-A). (Paras 3, 4, 5)
JUDGMENT
JUDGMENT :- The claim for delayed payment of interest on the amount of gratuity, which was payable under Sub-section (1) of Section 7 of the Payment of Gratuity Act, 1972, was rejected by the Controlling Authority by its order dated 26/09/2003 relying upon the provision of Clause 20(3)(iii) of the Allahabad Bank (Officers') Service Regulations, 1979. The appellate authority has reversed this order of the Controlling Authority on 16/12/2003 and has directed the payment of interest at the rate of 10% per annum on the amount of gratuity of Rs.3,50,000/- for the period from 01/02/2001 till the date of passing of order. The direction was issued as required by Sub-section (3-A) of Section 7 of the Payment of Gratuity Act. The employer is, therefore, before this Court in this writ petition. Rule was granted in this matter on 21/09/2005 and the impugned order was stayed.
2. It is not disputed that the respondent-employee has been paid with the entire amount of gratuity. The claim for payment of interest made under Sub-section (3-A) of Section 7 of the Payment of Gratuity Act, which is reproduced below -
"Section 7(3-A) 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 delayed payment on this ground."
3. In terms of the aforesaid provision, no justification can be entertained for non-payment of interest, except that the delay in making payment of gratuity was due to the fault of the employee and the employer has obtained the permission in writing from the Controlling Authority for the delayed payment on this ground. It is not the case of the petitioner-Bank that the enquiry was delayed due to the fault on the part of employee and that a permission was obtained in writing of the Controlling Authority for making delayed payment of gratuity. The consequences provided under Sub-section (3-A) of Section 7 of the said Act cannot, therefore, be stalled.
4. It is not in dispute that on 31/01/2001 the respondent-employee attained the age of superannuation and the enquiry was continued thereafter till 04/05/2003 when the ultimate order of punishment was passed against the respondent-employee. It is not the case of the employer that a power under clause (a) or (b) of Sub-section (6) of Section 4 available with the employer was invoked and an order was passed either forfeiting the amount of gratuity to the extent of any damage or loss caused to the employer or that the services of the employee were terminated on the ground of his riotous or disorderly conduct or any other act of violence on his part or on the ground of that such act on the part of employee constituted an offence involving moral turpitude. It is an undisputed position that the entire amount of gratuity was paid to the respondent-employee.
5. The denial of interest payable under Sub-section (3-A) of Section 7 of the said Act was on the basis of Clause 20(3)(iii) of the Allahabad Bank (Officers') Service Regulations, which is reproduced below -
"Clause 20(3)(iii) The officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The concerned officer will not receive any pay and allowances after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF."
The object of Clause 20(3)(iii) of the Allahabad Bank (Officers') Service Regulations is to authorize the Management to continue the disciplinary proceedings initiated against an employee even after the date of his attaining the age of superannuation. The provision says that the concerned officer will not receive any pay and allowances after the date of superannuation. It also states that he will also not be entitled for the payment of retirement benefits till the proceedings are completed and the final order is passed except his own contribution to CPF. Keeping in view the object of the provision, it has to be held that the action of non-payment of interest in terms of Sub-section (3-A) of Section 7 of the Payment of Gratuity Act cannot be defended on the basis of such clause.
6. In view of above, no fault can be found with the view taken by the appellate authority under the Payment of Gratuity Act and the writ petition is dismissed with no order as to costs.