Tikendra Singh and 94 Ors v. State of Meghalaya and 2 Ors

J U D G M E N T (Made by Hon'ble, the Chief Justice) This appeal has been preferred against the judgment and order dated 08.03.2024, passed by the learned Single Judge in WP(C) No. 317 of 2021, by which the request of the employees for payment of interest on the delay of payment of gratuity, was negative.

¶2It is the case of the Employees/Appellants herein that they had approached the Controlling Authority under the Payment of Gratuity Act, 1972 [in short 'the PG Act'] and after hearing the parties, the Controlling Authority ordered gratuity payable to the employees. Aggrieved by the said order, the employer preferred a review before the Controlling Authority without filing an appeal and the review was ordered.

¶3In terms of Section 7(7) of the PG Act, the employer should have preferred an appeal. Unfortunately, the Controlling Authority has allowed the review and deprived gratuity to the employees. Since the order was blatantly illegal, the employees have approached this Court by way of WP(C) [SH] No. 154 of 2012 challenging the order of the Controlling Authority in reviewing the order-in-original dated

30.07.2010. The writ petition was allowed and the employer was directed to pay gratuity. The employer was unsuccessful in the intra-court appeal and the matter went up to the Supreme Court. Before the Supreme Court, the employer had agreed to pay gratuity and the same was recorded in the order dated 02.04.2018 in SLP (Civil) Diary No.35923/2017, which is extracted hereinunder: "Delay in filing the Special Leave Petition is condoned. Mr. Vijay Hansaria, learned Senior Counsel appearing for the petitioner states that the petitioner-company shall pay the amount of gratuity to the persons who have sought Voluntary Retirement under the Voluntary Retirement Scheme/Golden Handshake Scheme. This statement is recorded. In respect of leave encashment, notice is issued. Notice is accepted by Mr. Gaurav Agrawal, learned counsel for the respondents. He may file reply within three weeks. Rejoinder affidavit may be filed within a week thereafter. List immediately thereafter. The payment of leave encashment shall not be made for a period of six weeks. However, the amount of gratuity shall be paid to the respondents within a period of one month from today."

¶4After the order of the Supreme Court, the employer had paid gratuity to the employees. Since the payment of interest was not given by the employer, the employees have demanded interest and they have approached this Court by way of WP(C) No. 317 of 2021 which was rejected by the learned Single Judge on the ground that there is no satisfactory explanation on the delay in filing such petition and also on the ground of delay and laches, holding that after receipt of money in the year 2018, the writ petition was filed in 2021. Aggrieved by the order dated 08.03.2024 passed by the learned Single Judge, the instant Writ Appeal has been preferred.

¶5Before going into the merits of the matter, we feel it appropriate to extract the relevant portions of Section 7(3A) and Section 8 of the PG Act are extracted below: "7. Determination of the amount of gratuity:

(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity.

(2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount gratuity so determined.

(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." "Notification under Section 7(3-A) of the Payment of Gratuity Act: S.O. 874--In exercise of the powers conferred by subsection (3A) of Section 7 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies ten percent per annum at the rate of simple interest payable or the time being by the employer to his employees in cases where the gratuity is not paid within the specified period. This Notification shall come into force on the date of its publication in the Official Gazette (vide the Gazette of India, Extraordinary, P.II, Section 3(i) dated 1st October, 1987 at p.2)" "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." "Notification under Section 8 of the Payment of Gratuity Act:- S.O.1032(E). - In exercise of the powers conferred by Section 8 of the Payment of Gratuity Act, 1972 (39 of 1972), the Central Government hereby specifies 15 per cent per annum as the rate of compound interest, recoverable by the Collector for the time being, along with the amount of gratuity and payable to the person entitled thereto. This notification shall come into force on the date of its publication in the Official Gazette."

¶6A reading of Section 7(3A) of the PG Act makes it clear that, the employer will have to pay interest @ 10% p.a., in case the amount is not paid within the stipulated time, namely, 30 days. The employees can approach the Controlling Authority for determination of the payment of gratuity payable to them, in case of no response on the application made by them or after getting a reply from the employer.

¶7In the case on hand, the factum of payment of gratuity is admitted, which had also attained finality. Though it has been contended by the employer that the employees ought to have approached the Controlling Authority for the purpose of claiming interest without prejudice to their rights and according to the employer, there is no need to pay any interest for the reason that the employees have already given up their right in claiming interest.

¶8We are not inclined to accept the said contention of the employer for the simple reason that as when there is an admitted fact with regard to payment of gratuity, there is no need to relegate the employees to go before the Controlling Authority after a lapse of 20 years, as the gratuity was due as early as in 2004 itself.

¶9Mr. P. Yobin, learned counsel for the employer/R2 herein contended that the application for payment of gratuity had been filed with a delay of five years and when there was no plea with regard to payment of interest at any point of time, the claim of the employees seeking payment of interest is not justified. Learned counsel, in support of his contention, has relied upon a judgement of the Madras High Court dated 28.07.2021 made in the case of The Management of Jaigopal Garodia Vivekananda Vidyalaya v. R. Poornachandran & anr passed in W.P.Nos.15871 and 15872 of 2020, in which one of us

(CJ) is a party, wherein, the claim of interest was deprived.

¶10Learned counsel for the employees/appellants herein submitted that gratuity had been directed to be paid in terms of Section 7 and the entire Section is required to be read as a whole and not in isolation and upon going by a harmonious reading, gratuity has to be necessarily paid in accordance with the provisions of the PG Act.

¶11A reading of the order dated 28.07.2021 of the Madras High Court in the case of The Management of Jaigopal Garodia Vivekananda Vidyalaya (supra), would reveal that the order of the Controlling Authority was challenged and the matter has been remanded back to the Controlling Authority and the Court has held that the employees cannot treat the Court as a gambling place to get the benefit. The issue of laches was considered by the Court and the matter was remanded to the Controlling Authority in that case. However, the order of the Madras High Court may not be applicable to the facts of the present case, more so, in the light of the judgment of the Supreme Court in D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Limited reported in (2014) 8 SCC 894.

¶12It is no doubt true that in case there is a delay in filing application, claiming gratuity, interest can be deprived and in terms of Section 7 of the PG Act, once the Controlling Authority passed an order, the employees are entitled to gratuity along with interest. In this case, the Controlling Authority has reviewed the order filed by the employer, which, according to the employees, is not sustained.

¶13The provisions of Rule 18(5) of the Payment of Gratuity (Central) Rules, 1972 read as under: "18. (5) Within 14 days of the receipt of the copy of the Memorandum of appeal, the opposite party shall submit his comments of each paragraph of the Memorandum with additional pleas, if any, to the appellate authority with a copy to the appellant."

¶14The parties are entitled to raise additional pleas before the Appellate Authority. In this case, admittedly, both parties have not approached the Appellate Authority either aggrieved by the original order of the Controlling Authority or against the order of review and strangely, the employees have directly invoked Article 226 of the Constitution of India by filing a petition before this Court. If the contention of the employer is accepted that the matter may be remanded back to the Controlling/Appellate Authority to decide the issue of payment of interest, it will not serve any purpose for the reason that it would amount to multiplicity of proceedings one by one before the Controlling Authority, Appellate Authority, High Court and thereafter Supreme Court. Ultimately, the employer, after conclusion of proceedings before all the Forums, will be forced to deposit the interest amount only in the coffins of the employees and not into the accounts of the employees, which is not the intent of the welfare legislation.

¶15The Apex Court in its judgment reported in (1999) 4 SCC 450 held that when the facts are not in dispute, relegating to an alternate remedy is not required. Payment of gratuity to the employees is a duty cast upon the employer provided the Act is applicable. In this case, the Act is applicable to the employees, which is not disputed by the employer too. The statutory interest payable automatically follows in the absence of payment of gratuity by the employer to the employees within the stipulated time. Gratuity is not a gratis or a bounty, and it has to be paid to the employees for the services rendered by them in case they complete more than five years of continuous service in terms of the PG Act.

¶16In terms of Section 7 (3A), the interest on payment of gratuity is 10% per annum from the date it become due till it is actually paid. Section 8 of the PG Act deals with inquiry proceedings and the rate of interest payment under the said Section is 15%. A combined reading of Sections 7 and 8 discloses that the maximum interest on gratuity payable shall not exceed the principal gratuity amount.

¶17In this case, by way of filing writ petition, the employees have sought for payment of interest and in any event, the rate of interest payable under Section 7 (3A) or under Section 8, shall not be over and above the principal amount of gratuity as stated supra. The employees have been deprived gratuity in the year 2004 after they were made to leave the respondents under the Golden Handshake Scheme and their retiral benefits were paid only after 15 years in the year 2018.

¶18It is pertinent to mention here that the demand of gratuity together with interest is a statutory right, which cannot be deprived to employees. The interest shall be payable along with the principal, in case of delay by the employer as mentioned earlier. In this case, as there is a delay in payment of gratuity, the employees are entitled to the rate of interest as applicable in terms of Section 7 (3A), more so, second proviso to Section 8 of the PG Act. In terms of Section 14 of the PG Act, payment of gratuity along with interest cannot be taken away by means of an agreement or instrument. It is no doubt true in the present case on hand, the employees have not demanded interest either before the Single Judge or up to the Supreme Court. Of course, the Supreme Court ordered payment of gratuity. Since the Supreme Court had not asserted about the interest on payment of gratuity, the employees cannot be deprived in agitating the relief for interest, as the question of acquiescence may not be applicable, when there is a statutory duty cast upon the employer to pay the amount.

¶19The Constitution Bench in a decision reported in (2002) 2 SCC 244: Jaipur Zila Sahakari Bhoomi Vikas Bank Ltd. vs. Ram Gopal Sharma, at paragraph 13 held that no provision in the enactment can be made redundant and each provision is meant for a specific purpose. For ready reference, paragraph 13 is extracted below: "13. … It is well-settled rule of interpretation that no part of statute shall be construed as unnecessary or superfluous. The proviso cannot be diluted or disobeyed by an employer. He cannot disobey the mandatory provision … The interpretation of statute must be such that it should advance the legislative intent and serve the purpose for which it is made rather than to frustrate it. …"

¶20If the employees are deprived of gratuity, it runs counter to the Constitution judgment and the Legislation itself. Of course, for the delay in claiming interest, more so after receiving the amount in 2018 and agitating the claim in 2021, we are of the view that the employees will have to be deprived interest to some extent, but not in its entirety. Otherwise, after the period of destruction of records by the employer, who has to maintain records for a particular period, the employees may approach the Authority for redressal. He/she may not have worked or worked for a required number of days, it would be difficult for the employer to prove his case. Taking note of the judgment of the Supreme Court in Krishna District Co-operative Marketing Society Limited, Vijayawada v. N.V. Purnachandra Rao & ors reported in (1987) 4 SCC 99, there shall be an amendment to PG Act prescribing the maximum time limit for claiming interest on gratuity. For the sake of convenience, the relevant passage of the said judgment is extracted hereunder: "11. We may incidentally observe that the Central Act itself should be suitably amended making it possible for an individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge, retrenchment etc. or modification of punishment imposed in a domestic enquiry. An amendment of the Central Act introducing such provisions will make the law simpler and also will reduce the delay in the adjudication of industrial disputes. Many learned authors of books on industrial law have also been urging for such an amendment. The State Act in the instant case has to some extent met the above demand by enacting section 41 providing for a machinery for settling disputes arising out of termination of service which can be resorted to by an individual workman. In this connection we have one more suggestion to make. The nation remembers with gratitude the services rendered by the former Labour Appellate Tribunal which was manned by some of our eminent Judges by evolving great legal principles in the field of labour law, in particular with regard to domestic enquiry, bonus, gratuity, fair wages, industrial adjudication etc. The Industrial Disputes (Appellate Tribunal) Act, 1950 which provided for an all-India appellate body with powers to hear appeals against the orders and awards of Industrial Tribunals and Labour Courts in India was repealed in haste. If it had continued by now the labour jurisprudence would have developed perhaps on much more satisfactory lines than what it is today. There is a great need today to revive and to bring into existence an all-India Labour Appellate Tribunal with powers to hear appeals against the decisions of all Labour Courts, Industrial Tribunals and even of authorities constituted under several labour laws enacted by the States so that a body of uniform and sound principles of Labour law may be evolved for the benefit of both industry and labour throughout India. Such an appellate authority can become a very efficient body on account of specialisation. There is a demand for the revival of such an appellate body even from some workers' organisations. This suggestion is worth considering. All this we are saying because we sincerely feel that the Central Act passed forty years ago needs a second look and requires a comprehensive amendment."

¶21The Industrial Disputes Act, 1947 did not have a specific time limit for the workman to question the non-employment. Section 2A of the Act of 1947 was amended on 15.10.2010 prescribing the maximum time limit of three years. As held by the Supreme Court, we are making only the suggestion and not giving any directions that there should be an amendment.

¶22Hence, this Court is of the view that instead of paying interest at the rate of 10% per annum or 15% per annum in terms of the second proviso to Section 8, we restrict the rate of interest to 6% per annum, which means the employees will be entitled to 6% of interest on the principal amount payable by the employer to them.

¶23The Apex Court, in a decision reported in (1993) 3 SCC 214: Central Cooperative Consumers' Store Ltd. vs. Labour Court, categorically held that the employer will have to pay the amount initially and thereafter can recover the amount from the officers, who are responsible for non-payment of gratuity with interest and the observation reads as follows: "5. Public money has been wasted due to adamant behavior not only of the officer who terminated the services but also due to cantankerous attitude adopted by those responsible for pursuing the litigation before one or the other authority. They have literally persecuted her. Despite unequal strength the opposite-party has managed to survive. We are informed that the opposite-party has been reinstated. This was put forward as bona fide conduct of petitioner to persuade us to modify the order in respect of back wages. Facts speak otherwise. Working life or opposite-party has been lost in this tortious painful litigation of more than twenty years. That for such thoughtless acts of its officers the petitioner-society has to suffer and pay an amount exceeding three lakhs is indeed pitiable. But considering the agony and suffering of the opposite-party that amount cannot be a proper recompense. We, therefore, dismiss this petition as devoid of any merit and direct the petitioner to comply with the directions of the High Court within the time granted by it. We however leave it open to the society to replenish itself and recover the amount of back wages paid by it to the opposite-party from the personal salary of the officers of the society who have been responsible for this endless litigation including the officer who was responsible for terminating the services of the opposite-party. We may clarify that the permission given shall have nothing to do with the direction to pay the respondent her back wages. Step if any to recover the amount shall be taken only after payment is made to the opposite-party as directed by the High Court."

¶24Admittedly, in the present case, there is a delay in claiming interest and there was no plea seeking interest in the earlier round of litigation. As stated earlier, gratuity is not a gratis or bounty, but a duty cast upon the employer to pay the same to the employees. The monetary value of 2004 has drastically come down in 2024. Hence, we are of the view that in the present set of facts, the interest on gratuity at the rate of 6% per annum on the entire principal amount shall be paid to the employees by the employer within a period of four months from the date of receipt of a copy of this judgment. It is made clear that if the amount is not paid within the time stipulated supra, the respondents shall at first pay the interest amount and thereafter, recover the interest portion (that was paid beyond the specified time supra) from the officers concerned, who are responsible to comply with the orders of this Court in respect of disbursement of amount in time.

¶25Accordingly, with the above observations and directions, WA No. 48 of 2024 is disposed of. (B. Bhattacharjee) (S. Vaidyanathan) Judge Chief Justice PRE-DELIVERY JUDGMENT IN WA No.48 of 2024 Powered by TCPDF (www.tcpdf.org) Date: 2024.08.16 17:50:17 IST

HIGH COURT OF MEGHALAYA AT SHILLONG WA No. 48 of 2024 Reserved on: 13.08.2024 Pronounced on: 16.08.2024 1. Shri. Tikendra Singh 2. Shri. W.C. Pakyntein 3. Shri A.A. Sangma 4. H.B. Passah 5. Shri. Sravan Sonar 6. Shri. Benjamin Khyriem 7. Shri. Mingnan Marak 8. Shri. R.H. Kharpran 9. Shri. Nazrul Islam 10. Shri. T.S. Marwein 11. Shri. Edencia Pathaw 12. Smti. Johny M.R. Marak 13. Shri. Lumlang Kynter 14. Shri. Elias Lamare 15. Smti. Music Nongtdu 16. Shri. Synran Sohtun 17. Smti. Womra Mukhim 18. Shri. Sisir Kumar Das Roy 19. Shri. Robert M. Jyrwa 20. Smti. Phidiar Kharjana 21. Smti. Ambrosina Ksing 22. Shri. Jogodish Momin Serial No.01 Supplementary List 23. Smti. Phinolis Khyriem 24. Smti. Maffulda Sohklet 25. Shri. Phorming Lyngdoh 26. Smti. Monica Shullai 27. Smti. Bonsimai Kharmuti 28. Smti. Litri Shabong 29. Smti. S. Shangdiar 30. Shri. Gohen Sangma 31. Smti. Pilorina Sangma 32. Shri. Jinathson A Sangma 33. Smti. Andromery Rodborne 34. Shri. Peterson Sangma 35. Shri. Biren Lamin 36. Shri. Rorence Marak 37. Shri. Joslin Sangma 38. Shri. Niralson Marak 39. Shri. Kallendra Marak 40. Shri. Stanford Phanwar 41. Shri.Ruseng Marak 42. Shri. Blinder Marak 43. Shri. Supendra R. Marak 44. Smti. Midil Dkhar 45. Smti. Rita Ch. Marak 46. Smti. Hatmon Lyngdoh 47. Shri. Jrim S. Nongdhar 48. Smti. Jentilia Sangma 49. Shri. Sonaki Kyndiah 50. Shri. G.D. Koch 51. Smti. Abrilla B. Marak 52. Shri. Samuel Reenborne 53. Smti. Kalpana Momin 54. Smti. Sujola Marak 55. Shri. Devaswar Sarkar 56. Shri. Akramuz Zaman 57. Shri. A.K. Marbaniang 58. Shri. Fristhing Marak 59. Smti. Pdianglin Phanbuh 60. Smti. Millianda Shylla 61. Smti. Amy H. Syiem 62. Smti. Marlyn Kharumlong 63. Smti. Justina Nongkynrih 64. Smti. Dorisnora Lyngdoh 65. Smti. Esther Dkhar 66. Shri. Bosterwell Marbaniang 67. Smti. Monica Pohrmen 68. Shri. Khlainbor B Palle 69. Smti. Perinda Mukhim 70. Smti. Mildred Kharmuti 71. Shri. Sunolsing Sangma 72. Smti. Geovita Bamon 73. Shri. A.H. Lyngdoh 74. Shri. Wilzeng M. Sangma 75. Shri. Wanbha Kharumnuid 76. Shri. Ivanhoe Dkhar 77. Shri. Wilson Lamare 78. Shri. Kishan Sonar 79. Smti. Deborah Betsy Giri 80. Smti. Pramita Shabong 81. Smti. Edwa F. Jyrwa 82. Smti. Miracle Paswet 83. Smti. Miracle Lyngwa 84. Smti. Henantha N. Marak 85. Smti. Rani 86. Smti. Sirbilis Syiemlieh 87. Smti. Philomina Nongsiej 88. Smti. Nasib Bany Nongbet 89. Smti. S. Ch. Marak 90. Smti. Kynti Mary Marwein 91. Smti. Tina Rani 92. Smti. R. Dkhar 93. Smti. Dipali Nag 94. Deovalenty Lyngdoh 95. (Lt.) Arsent Ch. Marak ...Appellants - Versus - 1. State of Meghalaya represented by the Commissioner and Secretary, Cooperation Department, Govt. of Meghalaya. 2. Managing Director, Meghalaya Cooperative Marketing and Consumer Federation (MECOFED), Lumdiengjri, Shillong. 3. The Registrar of Co-operative Societies, Govt. of Meghalaya, Shillong. ...Respondents Coram: Hon'ble Mr. Justice S. Vaidyanathan, Chief Justice Hon'ble Mr. Justice B. Bhattacharjee, Judge Appearance: For the Appellants : Mr. A. Khan, Adv. Mr. S.A. Sheikh, Adv. For the Respondents : Mr. N.D. Chullai, AAG with Mr. E.R. Chyne, GA [For R 1&3] Mr. P. Yobin, Adv. [For R 2] i) Whether approved for reporting in Law journals etc.: ii) Whether approved for publication in press: