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2018 DIGILAW 272 (UTT)

UCO Bank v. Rakesh Kumar Mehrotra

2018-05-17

SUDHANSHU DHULIA

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JUDGMENT : Sudhanshu Dhulia, J. Miscellaneous application (IA No.3624 of 2018) is allowed. Counter affidavit filed on behalf of respondent no. 1 is taken on record. 2. The petitioner which is a bank has filed the present writ petition before this Court challenging the orders dated 19.08.2014 and 21.12.2015 passed by the Controlling Authority and Appellate Authority respectively. 3. Respondent no.1 who was an employee of the bank has faced a departmental enquiry where the charges were extremely serious in nature amounting to embezzlement, monetary loss to the bank, etc. In the departmental proceedings after a due enquiry, both the charges stood proved against respondent no. 1 and for each of the charges, respondent no.1 was punished with the penalty of reduction in the basic pay, by three stages in the time scale of pay with cumulative effect vide order dated 22.03.2012 which has attained a finality. Respondent no. 1 subsequently after reaching the age of superannuation retired on 01.08.2010. However, the gratuity which was withheld and was released subsequently in favour of respondent no. 1 was given without any interest. Demanding the interest on the gratuity for the period it was withheld, respondent no.1 approached the Controlling Authority which has ordered for payment of interest to respondent no.1 vide order dated 19.08.2014. Against this order, the bank went in appeal, where the order of the Controlling Authority was upheld. Hence, the present writ petition before this Court. 4. Learned counsel for the petitioner would argue that it is an admitted case that respondent no.1 has caused the monetary loss to the bank and gratuity is paid for gratuitous service. Evidently, in the present case, respondent no.1 has failed to discharge his service, and therefore, he is not entitled for the gratuity. 5. On the other hand, learned counsel for respondent no.1 would argue that it is not the case of the department that gratuity was not liable to be paid to respondent no.1. It is an admitted case that the department i.e. the bank itself has given the gratuity to respondent no.1. The only question is whether the respondent no.1 is liable to be given the interest for the period the gratuity remained withheld. 6. On this, the learned counsel for respondent no.1 has relied upon Section 7 (3-A) of the Payment of Gratuity Act (hereinafter referred to as the “Act”). The only question is whether the respondent no.1 is liable to be given the interest for the period the gratuity remained withheld. 6. On this, the learned counsel for respondent no.1 has relied upon Section 7 (3-A) of the Payment of Gratuity Act (hereinafter referred to as the “Act”). As per sub-section (3) of Section 7 of the Act, the employer has to give the amount of gratuity within thirty days from the date it becomes payable. Sub-section (3) of Section 7 of the Act reads as under:- “7. Determination of the amount of gratuity.- (1)…. (2)…. (3) The employee 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.” 7. Thereafter sub-section (3-A) of Section 7 of the Act states that in case the gratuity is not given within the period specified in sub-section (3) of the Act, it is to be given with interest. Sub-section (3-A) of Section 7 of the Act reads as under:- “7. Determination of the amount of gratuity.- (1)…. (2)…. (3)…. (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.” 8. As is clear from the proviso to sub-section (3-A) of Section 7 of the Act that the interest shall not be payable if such delay is on account of the fault of the employee himself, but the employer will have to obtain the permission of the controlling authority in writing for delayed payment on this ground. 9. As is clear from the proviso to sub-section (3-A) of Section 7 of the Act that the interest shall not be payable if such delay is on account of the fault of the employee himself, but the employer will have to obtain the permission of the controlling authority in writing for delayed payment on this ground. 9. Though under the above proviso a case could be made out in favour of the Bank that the interest was not liable to be given to respondent no.1 due to his own fault, but even here the second condition is not fulfilled inasmuch as the employer had not obtained the permission in writing from the Controlling Authority for denying interest on delayed payment of the gratuity. It is an admitted position that this permission as contemplated in the above proviso has not been taken by the Bank. 10. Learned counsel for respondent no.1 has relied upon paragraph nos. 18 and 20 of the decision of the Hon’ble Apex Court in the case of Y.K. Singla v. Punjab National Bank & others, reported in (2013) 3 SCC 472 , which read as under:- “18. Sub-section (3-A) of Section 7 of the Gratuity Act is the most relevant provision for the determination of the present controversy. A perusal of sub-Section (3-A) leaves no room for any doubt that in case gratuity is not released to an employee within 30 days from the date the same becomes payable under sub-section (3) of Section 7, the employee in question would be entitled to “……simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term loans, as the Government may, by notification specify”. There is, however, one exception to the payment of interest envisaged under sub-section (3) of Section 7 of the Gratuity Act. The aforesaid exception is provided for in the proviso under sub-section (3-A) of Section 7. A perusal of the said proviso reveals, that no interest would 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”. The exception contemplated in the proviso under sub-section (3-A) of Section 7 of the Gratuity Act incorporates two ingredients. The exception contemplated in the proviso under sub-section (3-A) of Section 7 of the Gratuity Act incorporates two ingredients. Where the two ingredients contemplated in the proviso under sub-section (3-A) are fulfilled, the employee concerned can be denied interest despite delayed payment of gratuity. Having carefully examined the proviso under sub-section (3-A) of Section 7 of the Gratuity Act, we are of the view that: (i) The first ingredient is that payment of gratuity to the employee was delayed because of some fault of the employee himself. (ii) The second ingredient is that the controlling authority should have approved such withholding of gratuity (of the employee concerned) on the basis of the alleged fault of the employee himself. None of the other sub-sections of Section 7 of the Gratuity Act would have the effect of negating the conclusion drawn hereinabove. 20. Our determination of the first ingredient is as follows. We are of the considered view that consequent upon the acquittal of the appellant by the Special Judge, CBI Court, Chandigarh, it would be erroneous to conclude that the gratuity payable to the appellant on attaining the age of superannuation i.e. on 31-10-1996 was withheld on account of some fault of the appellant himself. We may hasten to add, if the appellant had been convicted by the Special Judge, CBI Court, Chandigarh, then the first ingredient would also be deemed to have been satisfied. Conversely, because the appellant has been acquitted, he cannot be held to be at fault. Accordingly it emerges that the “fault” ingredient of the employee himself, for denial of gratuity when it became due, remains unsubstantiated. Since one of the two salient ingredients of the proviso under sub-section (3-A) of Section 7 of the Gratuity Act is clearly not satisfied in the present case, we are of the view that the appellant cannot be denied interest under the proviso to Section 7(3-A) of the Gratuity Act. Accordingly, the appellant has to be awarded interest under Section 7(3-A) of the Gratuity Act. Therefore, if the provisions of the Gratuity Act are applicable to the appellant, he would most definitely be entitled to interest under sub-section (3-A) of Section 7 of the Gratuity Act, on account of delayed payment of gratuity.” 11. In view of the facts of the case and the settled legal position, the writ petition fails and it is hereby dismissed.