Disposed

Sri v. Byrappa v Hmt Limited

Karnataka HC2 Apr 2024WP/1283/2024

Case brief

AI extract

What is this about?

Retired HMT employees sought interest on delayed payment of earned leave encashment (paid after about 10-13 years) and gratuity. The court held the employer's denial unjustified, relying on Supreme Court authority that leave encashment is part of terminal benefits, and directed payment of interest at 6% p.a. on delayed leave encashment and 10% p.a. on delayed gratuity with balance amount.

What the court decided

AI extract

Sri v Byrappa Vs Hmt Limited — Pension and Retirement Benefits | Karnataka HC (2024)

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1 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 2^ND DAY OF APRIL, 2024

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BEFORE

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THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM

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WRIT PETITION NO.1283 OF 2024 (S-RES)

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BETWEEN:

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SRI.V. BYRAPPA S/O VENKATESWARAPPA AGED ABOUT 68 YEARS R/AT NO.S-56, SECTOR 1 HMT COLONY JALAHALLI BENGALURU – 560 013

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Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATAKA

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SRI.G.R.VASUDEV S/O LATE G.B.RAMAKRISHNA AGED ABOUT 67 YEARS R/AT NO.86, II MAIN RAMANJANEYANAGAR CHIKKALLASANDRA BENGALURU -560 061

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SRI.A.PURUSHOTHAMA S/O LATE KESHAVA HEBBAR AGED ABOUT 71 YEARS R/A NO.90, 'APOORVATHA' JAYANAGAR HOUSING SOCIETY 3^RD STAGE GUBBALALA MAIN ROAD OPP.SHOPWELL, SUBRAMANYAPURA POST BENGALURU -560 061

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SRI.K.M.MUNIBASAVARAJU S/O LATE MUNIHUCHAPPA

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2 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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AGED ABOUT 78 YEARS R/AT NO.490, 6^TH CROSS, 9^TH MAIN 2^ND BLOCK, HMT LAYOUT VIDYARANYAPURA BENGALURU -560 097

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SHARANAPPA S/O ADIVEPPA AGED ABOUT 71 YEARS RESIDING AT NO.461, 10^TH CROSS 3^RD BLOCK, HMT LAYOUT VIDYARANYAPURA BENGALURU – 560 097 (SENIOR CITIZEN BENEFIT ARE NOT CLAIMED)

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…PETITIONERS

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(BY SRI. SUBRAMANYA BHAT M.,ADVOCATE)

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AND:

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HMT LIMITED (GOVERNMENT OF INDIA UNDERTAKING) REPRESENTED BY THE CHAIRMAN AND MANAGING DIRECTOR HMT BHAVAN, NO.59, BELLARY ROAD BENGALURU – 560032

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2. MANAGING DIRECTOR

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HMT MACHINE TOOLS LIMITED HMT BHAVAN NO.59, BELLARY ROAD BENGALURU - 560 032

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GENERAL TECHNICAL MANAGER HMT MACHINE TOOLS LIMITED (MBX) BENGALURU COMPLEX

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3 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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JALAHALLI BENGALURU - 560 013

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…RESPONDENTS

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(BY SRI.SRIDHARAN NARAYAN HEGDE, ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECTING THE RESPONDENTS TO PAY INTEREST AT THE RATE OF 6 PERCENT P.A. ON THE DELAYED SETTLEMENT OF EL ENCASHMENT BENEFITS AND SIMPLE INTEREST OF 10 PERCENT AND 15 PERCENT OF COMPOUND INTEREST ON GRATUITY FROM THE DATE ON WHICH THE SAME FELL DUE TILL THE DATE OF ACTUAL PAYMENT OF THE SAID BENEFITS TO THEM AND ETC.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The captioned writ petition is filed seeking direction against respondents to pay interest at the rate of 6% p.a. on the delayed payment of earned leave encashment benefits as well as simple interest of 10% and 15% of compound interest on gratuity amount from the date on which the same fell due till the date of actual payment.

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NC: 2024:KHC:13492 WP No. 1283 of 2024

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The said petition is seriously contested by the

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respondents by filing statement of objection.

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Heard learned counsel appearing for the petitioners and learned counsel appearing for the

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respondents. Perused the records.

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Petitioners are aggrieved by denial of interest

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on the delayed payment of earned leave encashment benefits as well as interest on the gratuity amount. Petitioners’ grievance is that petitioners were made to run around pillar to post. This is 8^th round of litigation. The respondents have deposited leave encashment as well as gratuity amount only in contempt proceedings. Though respondents have paid leave encashment and gratuity, petitioners are denied of interest. The petitioners claimed that leave encashment was released after 11 years.

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The Hon’ble Apex Court in the case of JAGDISH PRASAD SAINI VS. STATE OF RAJASTHAN

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5 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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AND OTHERS¹ has held that earned leave encashment would be a part of salary and the right accrued to an employee cannot be denied. The Hon’ble Apex Court was of the view that the encashment of leave would be part of terminal benefits.

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On examining the records, I find some force in

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the submissions made by the learned counsel appearing for the petitioners.

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The respondents pursuant to initiation of contempt proceedings deposited an amount of Rs.1,25,82,932/- together with accrued interest. This amount was deposited pertaining to several employees. After this Court dropped contempt proceedings, the respondents have withdrawn amount. If deposit was made in the contempt proceedings along with accrued interest and the said amount was kept in FD in judicial deposit and the interest was accrued on such deposits, the

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1 2022 SCC Online 1298

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6 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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respondents having withdrawn the amount, now cannot deny interest. The action of respondents and their conduct is found to be unreasonable and not justified. The application filed by the respondents in contempt proceeding is placed on record. It would be useful for this Court to cull out the said application filed under Section 151 of CPC., which reads as under;

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“For the reasons sworn to in the accompanying affidavit, the respondents respectfully pray that this Hon’ble Court be pleased to order refund of the amount in deposit in a sum of Rs.1,25,82,932/- (Rupees One Crore Twenty Five Lakh Eighty Two Thousand Nine Hundred Thirty Two Only) together with accrued interest to the respondents/accused, in view of the order dated 20.09.2019 passed by the learned single Judge allowing Review Petition Nos.538/2017 & 543-544/2017 in W.P.Nos.45250/45252/2014 and Review Petition Nos.547/2017 and 576-579/2017 in W.P.Nos.27796-27800/2014, in the interest of justice and equity.”

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NC: 2024:KHC:13492 WP No. 1283 of 2024

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On perusal of the above said paragraph, it indicates that respondents have deposited amount with accrued interest pursuant to order dated 20.09.2019 passed by the learned Single Judge while allowing the Review Petition No.547/2017.

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If these significant details are taken into consideration, this Court is of the view that the respondents cannot deny the interest on the ground that the respondents/company is declared as sick company. Reliance placed on the judgment rendered by the Punjab and Haryana High Court in the case of GOPI CHAND AND OTHERS VS. THE H.M.T LIMITED AND OTHERS in CIVIL WRIT PETITION NO.5995/2011 by the learned counsel appearing for respondents has no application to the present set of facts.

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In the present case on hand, the respondents

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apart from denying leave encashment have also denied interest on the gratuity. In the present case on hand,

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8 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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there is a delay of three years in settling the gratuity. The Central Government vide Notification No.S.O.874(E) dated 01.10.1987 exercising powers under Section (3-A) of Section 7 of the Payment of Gratuity Act, 1972 has contemplated 10% interest p.a. to an employee where gratuity is not paid within specified period.

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There are no valid reasons and satisfactory explanation forthcoming from the respondents in not settling gratuity amount to which petitioners are legally entitled. If materials on record clearly gives an indication that delay is caused by respondents in not settling gratuity amount of petitioner No.3. Therefore, in terms of the above said Notification and memo of calculation furnished by the learned counsel appearing for the petitioners, petitioner No.3 is entitled for the balance amount of Rs.68,488/- along with interest at the rate of 10% p.a. on

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the delayed payment of gratuity. Petitioner Nos.1, 2, 4 and 5 have already received interest on the delayed payment of gratuity.

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9 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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This Court has also taken note of the memo

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of calculation furnished by the learned counsel appearing

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for the petitioners and the same is extracted as under;

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INTEREST ON DELAYED PAYMENT OF GRATUITY

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Rank of the	Due Date	Date of Payment	Amount Paid	Delay years	in	Amount of Interest
Parties
P3	01.07.2010	18.04.2016	3,72,240/-	5 years months	9	77,550/-
Balance Pay	able		Rs.68	,488/-

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INTEREST ON DELAYED PAYMENT OF EL ENCASHMENT

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Rank of the Parties	Due Date	Date of Payment	Amount Paid	Delay in years	Amount of Interest
P1	01.06.2013	04.10.2023	34,931/-	10 years	20,958/-
P2	01.07.2013	04.10.2023	87,843/-	10 years	52,705/-
P3	01.07.2010	04.10.2023	1,23,304/-	13 years	96,177/-
P4	01.05.2013	04.10.2023	1,31,261/-	10 years	78,756/-
P5	01.04.2013	04.10.2023	1,50,636/-	10 years	90,381/-

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Upon careful examination of the provided

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table, it is evident that due dates for payment of leave encashment to petitioner Nos.1 to 5 were 01.06.2013, 01.07.2013, 01.07.2010, 01.05.2013 and 01.04.2013

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10 - NC: 2024:KHC:13492 WP No. 1283 of 2024

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respectively. However, the actual payment to the petitioners was made on 04.10.2023. This significant delay resulted in a considerable period of 10 years for petitioner Nos.1, 2, 4 and 5 and 13 years for petitioner No.3. It is also evident that due date for payment of gratuity to petitioner No.3 was 01.07.2010. However, the actual payment to the petitioner No.3 was made on 18.04.2016. This significant delay resulted in a considerable period of 5 years 9 months for petitioner No.3. Such prolonged delay in disbursing leave encashment rightfully due to the petitioners has caused them significant financial hardship and inconvenience. Consequently, it is imperative for the respondents - Corporation to acknowledge and rectify this delay by compensating petitioners for the interest accrued during the extended period of non-payment.

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For the reasons stated supra, this Court proceeds to pass the following;

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11 -

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NC: 2024:KHC:13492 WP No. 1283 of 2024

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ORDER

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(i) The writ petition is disposed off directing the respondents – Corporation to pay interest on the delayed payment of earned leave encashment at 6% p.a. on Rs.34,931/-, Rs.87,843/-, Rs.1,23,304/-, Rs.1,31,261/- and Rs.1,50,636/- respectively from the date it fell due till the date the payment is made to the petitioners.

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(ii) The respondents – Corporation is hereby directed to pay balance amount of Rs.68,488/- along with interest at the rate of 10% p.a. in respect of the delayed payment of gratuity amount to petitioner No.3.

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(iii) The respondents – Corporation shall comply with this order within six months from the date of receipt of a copy of this order.

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(iv) Pending applications, if any, are also disposed off.

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Sd/JUDGE

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NBM List No.: 1 Sl No.: 7

Sri v. Byrappa v Hmt Limited

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Sri v. Byrappa v Hmt Limited

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