Partly allowed

Kerala State Electricity Baord Ltd. v. P.Ambili

Kerala HC14 Jan 2020WA/1972/2017

Case brief

AI extract

What is this about?

The High Court of Kerala allowed a writ appeal holding that interest under Section 7(3A) cannot be granted when an employee's failure to apply for gratuity stemmed from his own consent to adjust dues. Consequently, interest is restricted to the principal amount under Section 8.

What did the court decide?

Writ Appeal allowed; judgment of Single Judge setting aside to the extent it granted interest in excess of statutory provision.

Kerala State Electricity Baord Ltd. Vs P.Ambili — Pension and Retirement Benefits | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN

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THE HONOURABLE MR.JUSTICE V.G.ARUN

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TUESDAY, THE 14TH DAY OF JANUARY 2020 / 24TH POUSHA, 1941

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W.A.No.1972 OF 2017

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AGAINST THE JUDGMENT IN W.P(C)No.6937/2017 DATED 14-03-2017 OF HIGH COURT OF KERALA

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APPELLANTS/ RESPONDENTS 1 TO 4:

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1 KERALA STATE ELECTRICITY BAORD LTD., REP. BY ITS SECRETARY, VAIDHYTHI BHAVANAM, PATTOM, THIRUVANANTHAPURAM-695024.

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2 THE CHIEF ENGINEER (HRM), KERALA STATE ELECTRICITY BAORD LTD., VAIDHYTHI BHAVANAM, PATTOM, THIRUVANANTHAPURAM-695024.

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3 THE ACCOUNTS OFFICER (PENSION AUTHORISATION) KERALA STATE ELECTRICITY BAORD LTD., VAIDHYTHI BHAVANAM, PATTOM, THIRUVANANTHAPURAM-695024.

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4 THE EXECUTIVE ENGINEER, TRANSMISSION DIVISION, KERALA STATE ELECTRICITY BAORD LTD., VAIDHYTHA BHAVANAM, KOTTARAKKARA, KOLLAM DISTRICT-691506.

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BY ADVS. SRI.N.N.SUGUNAPALAN (SR.) SRI.S.SUJIN

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RESPONDENT/ WRIT PETITIONER:

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P.AMBILI, (W/O.LATE P.N.RAMACHANDRA DAS, A/E, RETIRED), ASHA BHAVAN, THAZHATHUVADAKKU P.O., ENATHU VIA, PATTAZHY, KOLLAM DISTRICT-691526.

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R1 BY ADV. SRI.N.SASIDHARAN UNNITHAN

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THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 14.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.A.No.1972 of 2017

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K.Vinod Chandran & V.G.Arun, JJ.

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---------------------------------------W.A.No.1972 of 2017

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Dated this the 14^th day of January, 2020 JUDGMENT

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K. Vinod Chandran,J:

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An interesting question arises in this case as to

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whether an employee is entitled to interest, even beyond the original amount of gratuity, if there is delay caused in payment and compound interest is mulcted on the employer

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under Section 8 of the Payment of Gratuity Act, 1972 ['Gratuity Act' for brevity]. The learned Single Judge relied on Rajasekharan Nair v. Kerala State Electricity Board [2013 (3) KLT 98 ] to hold that reliance cannot be placed on Section 8 to contend that employees are not entitled to interest in excess of principal amount of gratuity payable to them.

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2. The learned Senior Counsel Sri.N.N.Sugunapalan, however, points out that the proceedings were taken by the legal heir of the employee, i.e., wife, after his death. In fact, there were dues to the Board, which the retired employee was liable to make good and the employee, on retirement on 30.04.2005, had also submitted a written consent for the purpose of recovering the entire dues from

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W.A.No.1972 of 2017

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the gratuity payable. Later, the applicant died in 2013 and his wife approached the Controlling Authority. The Controlling Authority found that there can be no recovery made from gratuity unless in accordance with Section 4(6) of the Gratuity Act. However, in directing compound interest, the Controlling Authority restricted it to that permissible under Section 8, i.e., to the extent of the amount of gratuity itself. The said amounts have already been paid, is the contention of the learned Senior Counsel.

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3. We notice that there is a restriction on the Controlling Authority as per Section 8 to confine interest to the amount of principal amount of gratuity. But under Section 7(3A), there is liability on the employer to pay simple interest at such rate notified by the Central Government for the delay in payment subject only to the condition as contained in the proviso that such interest shall not be payable if the delay in 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. Rajasekharan Nair also spoke about the two distinct provisions; one under Section 8 and the other the liability of the employer under Section 7(3A); which could be alternatively enforced under the provisions of the

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W.A.No.1972 of 2017 - 4 -

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Act. However, in the present case we have to find differently on the peculiar facts arising here.

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4. The respondent's husband retired as an

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Assistant Engineer from the KSEB on 30.04.2005. Admittedly he did not make an application under Section 7(1) of the Act for the purpose of payment of gratuity. This was also due to his awareness that there were dues to the Board; which he consented to be adjusted from the gratuity payable. We see from sub-section (1) Section 7 that a person who is eligible for payment of gratuity under the Gratuity Act shall, in writing, make an application to the employer for payment of gratuity. Rule 7 of the Payment of Gratuity (Central) Rules, 1972 ['Central Gratuity Rules' for brevity] also prescribes such an application to be made ordinarily within thirty days from the date the gratuity become payable in the prescribed form, to the employer. Admittedly such an application was not made, since the retired employee had consented to the adjustment of the amounts from the gratuity payable. The law as to such adjustment being not permissible is fairly clear. But, since the retired employee did not make an application at all during his life time, there is default on his part. Hence, under proviso to Section 7(3A) he cannot claim

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W.A.No.1972 of 2017 - 5 -

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interest under Section 7(3A). The payment was not made by the employer only because of the consent to adjust the amounts as made by the retired employee. In such circumstances, we do not think that this is a fit case in which interest can be granted under Section 7(3A). We make it clear that the findings are confined to the facts of the present case and we allow the Writ Appeal setting aside the judgment of the learned Single Judge to the extent it granted interest in excess of that provided under the Act.

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Writ Appeal is allowed with no order as to costs.

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Sd/K.VINOD CHANDRAN JUDGE

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Sd/V.G.ARUN JUDGE

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Vku/-

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[true copy]

Kerala State Electricity Baord Ltd. v. P.Ambili

Case brief

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Kerala State Electricity Baord Ltd. v. P.Ambili

Case brief

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