2003 (2) TMI 528 - SC - Indian Laws

Summary

Issues:
- Whether the appellant is entitled to interest on belated payment of gratuity?
- Whether the High Court was correct in denying interest on belated payment of gratuity?
- Whether the discretion exercised by the learned Single Judge in denying interest on belated payment of gratuity was arbitrary?

Analysis:
- The appellant and other officials were suspended in 1999, challenging the suspension. The Corporation withdrew the suspension later. The appellant retired in 2000 without settlement of suspension period or salary. He filed a writ petition seeking various dues, including interest on belated gratuity payment. The Single Judge granted relief except for interest on gratuity. The appellant appealed this denial.
- The Division Bench found the appellant entitled to interest on belated gratuity payment but upheld the Single Judge's decision, stating the denial was not arbitrary. The appellant argued that interest on belated gratuity payment is a statutory right under the Payment of Gratuity Act, and the High Court erred in denying it based on discretion.
- The Act mandates payment of gratuity within a specified time and interest on delayed payment. The employer must pay interest if gratuity is not paid on time, subject to certain conditions. Denying interest on belated gratuity payment goes against the statutory compulsion. Previous cases have emphasized the importance of timely gratuity payment and the penalty of interest for culpable delays.
- The Single Judge denied interest on belated gratuity payment due to doubts about entitlement during ongoing court proceedings. However, this denial contradicts the Act's clear provisions mandating interest on delayed gratuity payments. The Division Bench erred in upholding this denial, wrongly assuming the Single Judge had discretion in awarding interest, which is not the case under the Act.
- The Supreme Court set aside the impugned order, directing the Corporation to pay interest on the gratuity amount at 10% from the due date till payment. The appeal was allowed with costs.