• Gratuity delayed payment. SC ordered payment now.

The HC ordered payment of retiral benefits with Interest. SC upheld it. Employer says he would pay 10% simple. Gratuity Act  (3A) If the amount of gratuity payable under sub-section (3)
is not paid by the employer within the period specified in subsection(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 CentralGovernmentfrom time to time for repayment of long-term deposits, as that Government may, by notification specify:. 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 1*[at such rate as the
Central Government may, by notification, specify],
Govt. notification in Gazette of India No: SO 1031(E)  dt. 1st December 1987 dated says 15% interest per annum compound.(I have copy of the notification) Supreme court Judgement in VIJAY L MALHROTRA VS. STATE OF UTTAR PRADESH LAWS(SC)-2000-1-36 Supreme Court Of India states 18% simple on all payments. Can I claim 15% per annum compound (15% compound is favourable.) or is there any other recent guidelines in this regard.
Asked 9 months ago in Civil Law from Chennia, Tamil Nadu
The SC has in Vijay Malhotra's case laid down 18% on all payments. So it is 18% that you can claim. There is no recent guideline to the best of my knowledge.
Ashish Davessar
Advocate, Jaipur
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section 7(3 A ) has been interpreted by Apex Court in case of H. Gangahanume Gowda v. Karnataka Agro Industries Corpn. Ltd., reported in 2003 AIR SCW 885, where, paragraph 7 and 9 are relevant, therefore, same are quoted as under :

"7.	It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to 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 of gratuity. Under Section 7(3), the employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under sub-section (3A) of Section 7, if the amount of gratuity is not paid by the employer within the period specified in sub-section (3), he 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; 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 that ground. From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has obtained permission in writing from the Controlling Authority for the delayed payment on that ground. Under Section 8, provision is made for recovery of gratuity payable under Act, if not paid by the employer within the prescribed time. The Collector shall recover the amount of gratuity with compound interest thereon as arrears of land revenue and pay the same to the person entitled. A penal provision is also made in Section 9 for non-payment of gratuity. Payment of gratuity with or without interest as the case may be does not lie in the domain of discretion but it is a statutory compulsion. Specific benefits expressly given in a social beneficial legislation cannot be ordinarily denied. Employees on retirement, have valuable rights to get gratuity and any culpable delay in payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala and Ors. v. M. Padmanabhan Nayyar, 1985 (50) Fac LR

2)  in the case of Vijay L. Mehrotra v. State of U.P. and others, 2000 AIR SCW 2678, the Apex Court has laid down as under :-

".........
3.In case of an employee retiring after having rendered service, it is expected that all the payment of the retiral benefits should be paid on the date of retirement or soon therafter if for some unforeseen circumstances the payments could not be made on the date of retirement.
4.In this case, there is absolutely no reason or justification for not making the payments for months together. We, therefore, direct the respondent to pay to the appellant within 12 weeks from today simple interest at the rate of 18 per cent with effect from the date of her retirement, i.e. 31st August, 1997 till the date of payments.

5) in your case you can claim 18%simple interest 
Ajay Sethi
Advocate, Mumbai
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OVERNMENT OF NCT OF DELHI 
Finance (Accounts) Department 
‘A’ Wing, 4th Level, Delhi Secretariat, 
I.P.Estate, New Delhi.

No.F.12/9/2011-AC/DSIII/1163-1171

Dated: 29.08.2011

OFFICE MEMORANDUM

Subject: Regarding payment of interest on delayed payment of gratuity.

           A number of proposals are being received from various departments seeking approval for payment of interest on delayed payment of gratuity in respect of retired government servants on account of administrative lapses.

          The attention of all the Departments is invited to the provisions laid down in RuIe-68 of CCS (Pension) Rules, 1972 and Government of India’s decisions thereunder. It has been provided that, if the payment of gratuity has been authorized later than the date when its payment becomes due, and it is clearly established that the delay in payment was attributable to administrative lapses, interest shall be paid at such rate as may be prescribed, and in accordance with instructions issued from time to time. In all cases where the payment of interest has been sanctioned by the department with the approval of the competent authority, such department shall fix responsibility and take disciplinary action against the government servant or servants responsible for the delay.

         All necessary steps should, therefore, be taken by the Head of Office for ensuring that payment of interest on delayed payment of gratuity is avoided. Officials dealing with such files should be held accountable and responsibility be fixed for not taking timely action in this regard.

        However, where disciplinary or judicial proceedings against a government servant are pending on the date of his retirement, no gratuity is to be paid until conclusion of the proceedings and issue of final orders thereon.

        Henceforth, it has been decided that in all cases of payment of interest on delayed payment of gratuity attributable to administrative delays [barring cases where disciplinary or judicial proceedings against a government servant are pending on the date of his retirement] action will be taken against officials responsible for such delays which may include recovery of the amount of Interest paid on account of delayed payment of gratuity from the salary of delinquent officers/officials.

sd/- 
(B.L. Sharma) 
SpI. Secretary (Finance)

http://it.delhigovt.nic.in
Ajay Sethi
Advocate, Mumbai
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In Punjab State And Ors. vs Shaminder Singh on 5 September, 2005, the high court of Punjab and Haryana has dismissed the appeal preferred by the state with regard o the higher rate of the interest ordered by the supreme court in the Vijay Malhtra Vs. State of UP stating that the orders passed by the apex court is clear and expressed that the view taken by the Supreme Court in Vijay L. Mehrotra's case (supra) has been rightly followed and no exception is provided for this Court to interfere in the discretion exercised in awarding the interest in the facts and circumstances of the present case. No question of law warranting interference of this Court in exercise of jurisdiction under Section 100 of the Code has been raised. The appeal is without merit and is liable to be dismissed.
However, this is with regard to the simple interest alone and since ther are lot of controversies over this land mark judgment, your application seeking 15% at the compounded rate may not find a smooth sailing, however, you may petition the court on the same lines  pleading your sufferings and losses due to mental and physical strain in this regard.  
T Kalaiselvan
Advocate, Vellore
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