BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 08/09/2010 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.(MD)No.2922 of 2009 and M.P.(MD)No.1 of 2009 The Arumuganeri Salt Workers Co-operative Production and Sale Society Ltd., No.01291 Arumuganeri Arumuganeri Post, Thoothukudi District, represented by through its Special Officer. ... Petitioner vs 1.A.Rajan 2.The Appellate Authority, (Under the Payment of Gratuity Act) Indira Nagar, Anna Nagar, Madurai-625 020. ... Respondents PRAYER Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, to call for the records on the file of the respondents relating to the order passed by the second respondent in P.G.Appeal No.47/2008, dated 27.01.2009 and quash the same. !For Petitioner ... Mr.V.O.S.Kalaiselvam ^For Respondents ... No Appearance ****** :ORDER
*******
The petitioner is a Salt Workers Co-operative Production and Sale
Society Limited at Arumuganeri. They have come forward to challenge the order
passed by the second respondent, who is the appellate authority under the
Payment of Gratuity Act, 1972.
2. The first respondent in this Writ Petition, who was employed as a
worker in the Society, on daily wages basis, filed an application for payment of
gratuity, on his having resigned his employment on 01.06.2003. Notwithstanding
his resignation, the petitioner Society did not pay gratuity, which forced the
first respondent to move the controlling authority under the Payment of Gratuity
Act, 1972. His complaint was taken on file as P.G.No.337 of 2003 and notice was
issued to the writ petitioner. Before the controlling authority, the petitioner
took up the contention that the first respondent was daily rated employee and
was not appointed in a regular manner, inasmuch as he was not sponsored through
Employment Exchange and his appointment was the irregular appointment and the
action of regularizing him with effect from 01.03.1999 was itself is illegal
and, therefore, the audit department has objected for making any payment to the
first respondent. These contentions were rejected rightly so by the controlling
authority. The controlling authority, by referring to Section 14 of the Payment
of Gratuity Act, 1972, which has overriding effect over the other enactments,
found that the first respondent was eligible for gratuity for the period of
service from 30.12.1996 to 01.06.2003 in terms of Section 4(1) of the Payment of
Gratuity Act, 1972. Therefore, for the six years service rendered by him and on
the basis of his last drawn pay of Rs.2,800/-, the total gratuity was worked out
to Rs.9,692/-. The authority, without reference to Sections 7(3) and 7(3A) of
the Payment of Gratuity Act, 1972, had directed interest payment to be made, if
the gratuity is not paid within 30 days from the date of his order.
3. It is the stand of the petitioner Society that they have paid the
gratuity within 30 days. The matter did not end therein. The first respondent
filed an appeal under Section 7(7) of the Payment of Gratuity Act, 1972, before
the second respondent stating that the controlling authority did not grant
interest on the delayed payment of gratuity. The appeal filed by the first
respondent was taken on file as P.G.A.No.47 of 2008 by the second respondent and
notice was issued to the petitioner Management.
4. The short question that arose before the second respondent was
whether the first respondent is entitled for interest on the delayed payment of
gratuity. The second respondent, by its order dated 27.01.2009, found that the
first respondent is entitled for interest on the gratuity in terms of Section
7(3) and 7(3A) of the Payment of Gratuity Act, 1972 and, therefore, he directed
10% interest to be paid from the date on which the gratuity becomes due till the
date on which it was paid by the petitioner Management. Aggrieved by the said
order, the present Writ Petition has been filed.
5. Mr.V.O.S.Kalaiselvam, learned counsel appearing for the
petitioner contended that the payment of interest will arise only when there is
a delayed payment and in this case, there is no delay, since they have paid
gratuity as ordered by the controlling authority and hence, the question of
payment of interest will not arise.
6. This Court is unable to accept the said statement, since the
entire controversy relevance legal provision. It is necessary to extract Section
7(3) and Section 7(3A) of the Payment of Gratuity Act, 1972, which read as
follows:-
“(3) The employer shall arrange to pay the amount of gratuity within
thirty days from the date it becomes payable to the person to whom the gratuity
is payable.
(3A) 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.”
7. When Section 7(3A) talks about the gratuity becomes payable, it
is useful to refer to Section 4(1) of the Payment of Gratuity Act, 1972, which
reads as follows:-
“4.Payment of gratuity,- (1) Gratuity shall be payable to an employee on
the termination of his employment after he has rendered continuos service for
not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not
be necessary where the termination of the employment of any employee is due to
death or disablement.”
8. Therefore, the date i.e., relevant for determination of interest
is the date on which the gratuity becomes payable, which in the present case,
when the first respondent resigned his employment on 01.06.2003. Thereafter,
when the first respondent issued notice for payment of gratuity, the petitioner
employer did not honour the notice, nor deposit the amount with the controlling
authority raising whatever disputes that they want to raise. On the contrary,
it is only when the workman instituted a claim before the controlling authority,
they contended about the irregular nature of his employment and his alleged
disqualification from receiving gratuity. Therefore, from the beginning, it is
the stand of the petitioner society that the first respondent is not eligible
for gratuity. Therefore, there is no gain saying that they have paid gratuity,
pursuant to the order passed by the controlling authority. If Section 7(3) and
Section 7(3A) of the Payment of Gratuity Act, 1972, are read together, then
there is no difficulty in understanding the eligibility for receiving interest.
In the present case, the appellate authority has correctly construed the legal
provisions and there is no case made out to interfere with the interpretation
placed by the authority.
9. Under the said circumstances, the Writ Petition stands dismissed.
The petitioner Society shall pay the amount due pursuant to the impugned order,
within a period of 30 days from the date of receipt of a copy of this order,
without further driving the first respondent to any other forum. Consequently,
the connected miscellaneous petition is closed. However, there will be no order
as to costs.
SML
To
The Appellate Authority,
(Under the Payment of Gratuity Act)
Indira Nagar, Anna Nagar,
Madurai-625 020.