IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:06.06.2011 CORAM: THE HON'BLE MR.JUSTICE P.JYOTHIMANI WRIT PETITION NO.7985 of 2007 .. M.Subbaian .. Petitioner vs. 1.The Commissioner Kumbakonam Municipality Kumbakonam. 2.The Director of Municipal Administration Chepauk, Chennai 600 005. 3.The Secretary Municipal Administration and Water Supply Department Fort St.George Chennai 9. (R.3 impleaded as per order dt.18.1.2011) .. Respondents Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Mandamus as stated therein. For petitioner : Mr.S.Sadasharam For respondents : Mr.K.Rajkumar for R.1 Mr.K.Balasubramanian Spl.Govt.Pleader for R.2 & R.3 .. ORDER
The writ petitioner was employed as a Revenue Assistant/Bill Collector in the first respondent Municipality and retired under the Voluntary Retirement Scheme on 30.06.1995. At the time of retirement, his retirement benefits were not settled and the gratuity amount of Rs.46,591.25 was withheld. He has filed O.A.No.6652 of 1997, challenging the order withholding the gratuity, dated 24.02.1997 before the Tamil Nadu State Administrative Tribunal, Chennai, which was transferred to this Court and numbered as W.P.No.31936 of 2005 and the said writ petition was allowed on 24.02.2006. Thereafter, the petitioner made a representation to the first respondent to disburse the amount of Rs.46,591.25, being the gratuity amount with interest at the rate of 12% per annum from 30.06.1995 and in spite of his several representations, the amount has not been paid. After many representations, the respondents along with the letter dated 10.07.2006, have sent a cheque for a sum of Rs.46,591.25 drawn on the City Union Bank Limited. The petitioner has claimed interest for the period of non-payment of gratuity from 30.06.1995 to 10.07.2006 and since the same has not been paid, the present writ petition is filed for direction against the respondents to pay interest at the rate of 12% per annum on the sum of Rs.46,591.25 from 30.06.1995 to 10.07.2006.
2. It is seen that when the Director of Municipal Administration, viz., the second respondent has passed an order on 24.02.1997, retaining the gratuity amount of Rs.46,591.25 due to the petitioner, this Court in the order dated 24.02.2006, has set aside the said order by allowing the writ petition. In spite of the same, the amount was not paid. It is seen that only after the legal notice was issued enclosing the copy of the order, on 27.03.2006 the Municipality has chosen to send a cheque for the said amount on 10.07.2006. There is no explanation forthcoming from the respondents for the delay between 30.06.1995 to 10.07.2006.
3. As per the Government Order in G.O.Ms.No.122 Finance (Pension) Department dated 20.02.1995, in respect of delayed payment of Death-cum-Retirement Gratuity, the Government has fixed interest at the rate of 12% per annum compounded annually. The operative portion of the said Government Order is as follows:
“3. The Government have carefully examined the question of revision of rate of interest for the delayed payment of Death-cum-Retirement Gratuity and have decided to adopt the Government of India orders referred to in para 2 above in respect of State Government Employees. They accordingly direct that when payment of Death-cum-Retirement Gratuity has been delayed, the rate of interest shall be paid at the rate of 12% per annum compounded annually.”
4. The Honble Apex Court in S.K.Dua vs. State of Haryana and another (2008) 3 SCC 44 has held that, right for payment of interest for the delayed payment even in the absence of any statutory rules or guidelines arises from Part III of the Constitution of India under Articles 14, 19 and 21, since the retirement benefits are not in the nature of bounty. The Supreme Court has held as follows:
” 14. In the circumstances, prima facie, we are of the view that the grievance voiced by the appellant appears to be well founded that he would be entitled to interest on such benefits. If there are statutory rules occupying the field, the appellant could claim payment of interest relying on such rules. If there are administrative instructions, guidelines or norms prescribed for the purpose, the appellant may claim benefit of interest on that basis. But even in absence of statutory rules, administrative instructions or guidelines, an employee can claim interest under Part III of the Constitution relying on Articles 14, 19 and 21 of the Constitution. The submission of the learned counsel for the appellant, that retiral benefits are not in the nature of bounty is, in our opinion, well founded and needs no authority in support thereof. In that view of the matter, in our considered opinion, the High Court was not right in dismissing the petition in limine even without issuing notice to the respondents.”
In fact, in that case the High Court has relegated the petitioner therein to avail the remedies before the Civil Court and dismissed the writ petition, and the Supreme Court set aside the said order and remanded the matter to the High Court to pass fresh orders.
5. The contention of Mr.K. Rajkumar, learned counsel appearing for the first respondent Municipality that the retention was due to the reason that during the service, the petitioner as a Bill Collector, has not collected the amount due to the Municipality by way of property tax, in spite of the circular having been issued, which empowers for the retention of 30% of the amount representing the DCRG. On the other hand, it is not the submission of the learned counsel for the Municipality that the petitioner was not allowed to retire under Voluntary Retirement Scheme. Admittedly, there are no disciplinary proceedings pending. The further contention that G.O.Ms.No.122 is not applicable to the facts of the present case is also not tenable. Under the Tamil Nadu Pension Rules,1978, Rule 45A which deals with interest on delayed payment of gratuity, is as follows:
“45-A. Interest on delayed payment of gratuity-
[(1) Interest at the rate of eight per cent per annum shall be payable on the death-cum-retirement gratuity paid beyond (a) period of two months from the date of retirement of a Government Servant.]
[Provided that on and from the 12th June 1987, the rate of such interest shall be as follows:
(a) seven per cent per annum beyond a period of three months and upto one year; and
(b) ten per cent per annum beyond a period of one year:
Provided further that no such interest shall be payable,-
(a) where the institution of departmental or judicial proceeding against the retiring Government servant concerned is pending; and
(b) for the fraction of a month.]
[(1-A). The period beyond which such interest is payable shall be as follows.-
(i)in the case of a Government servant retired otherwise on superannuation and where the Death-cum-Retirement Gratuity is withheld on account of disciplinary proceeding pending against him.-
(a) three months from the date of retirement where the Government servant is exonerated of all charges and where the Death-cum-Retirement Gratuity is paid on the conclusion of disciplinary proceedings;
(b) three months from the date of death where the disciplinary proceedings are dropped on account of death of a Government servant;
(c) three months from the date of issue of orders by the competent authority allowing payment of Death-cum-Retirement Gratuity where the Government servant is not fully exonerated on the conclusion of disciplinary proceedings and where the competent authority desires to allow payment of Death-cum-Retirement Gratuity;
(ii)six months from the date of retirement of a Government servant otherwise than on superannuation under Fundamental Rule 56(2) or 56(3) or Rules 33, 36, 38, 39 and 42 of the Tamil Nadu Pension Rules, 1978;
(iii)six months from the date of death of a Government servant while in service and where the delay is not caused on account of more than one claimant;
(iv)three months from the date of issue of orders revising the emoluments where the amount of Death-cum-Retirement Gratuity already paid is enhanced on account of revision of emoluments; and
(v)six months from the date of absorption in the case of permanent absorption in the Public Sector Undertakings or Autonomous bodies otherwise than on enmass transfer on conversion of Government department or a part thereof into Public Sector Undertakings or Autonomous bodies.]
[(2) The Government shall be the authority competent to sanction such interest.]”
6. For the non-payment of gratuity amount in time, interest at the rate of 10% per annum has been fixed if the delay is beyond one year. As early as in the year 1987, the Honble Apex Court in O.P.Guptha vs. Union of India (1987) 4 SCC 328, has held that the payment of gratuity is not a bounty and ordered payment of interest at the rate of 12% per annum for the delayed payment of arrears. The relevant portion is,
” 24. Normally, this Court, as a settled practice, has been making direction for payment of interest at 12 per cent on delayed payment of pension. There is no reason for us to depart from that practice in the facts of the present case.”
7. Section 8 of the Payment of Gratuity Act,1972, enables payment of interest in case of delayed payment subject to the condition that such interest shall not be more than the gratuity amount. The said section is as follows:
“Section 8. Recovery of gratuity.-
If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon [at such rate as the Central Government may, by notification, specify,] from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto:
[Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate:
Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.]
8. It was held by the Honble Apex Court, while construing Section 8 of the said Act in H.Gangathanume Gowda vs. Karnakata Agro Industries Corporation Ltd., [(2003) 1 LLJ 1119 (SC)] that, if the employer has not paid gratuity, there is a liability even to pay compound interest.
9. Considering the over all situation, especially taking note of the fact that the first respondent Municipality has taken enormous period for payment of the gratuity, which is the right of a person to receive it on the date of retirement, I am of the view that the petitioner is entitled for the relief claimed for. Accordingly, the writ petition stands allowed with direction to the respondents to pay interest at the rate of 12% per annum on the payment of Rs.46,591.25 from 30.06.1995 to 10.07.2006 and the said amount shall be paid within a period of 12 weeks from the date of receipt of a copy of this order. No costs.
Kh
To
1.The Commissioner
Kumbakonam Municipality
Kumbakonam.
2.The Director of Municipal Administration
Chepauk, Chennai 600 005.
3.The Secretary
Municipal Administration and
Water Supply Department
Fort St.George
Chennai 9