01Facts
Respondent No. 1, an Executive Engineer appointed in 1985, retired on superannuation on 30 November 2020.
p. 2, 4, 7 · ¶ 3.2–3.4, 5.1, 6The Board paid him gratuity in two instalments: ₹18,50,000 on 6 January 2023 and ₹1,00,000 on 13 July 2023, after deducting ₹50,000.
p. 2, 4, 7 · ¶ 3.2–3.4, 5.1, 6He sought interest for delayed payment, and the Controlling Authority ordered interest; the Appellate Authority affirmed that order.
p. 2, 4, 7 · ¶ 3.2–3.4, 5.1, 6The Board challenged the orders, arguing that a departmental inquiry and alleged loss justified withholding the gratuity and that the 10% interest rate was excessive.
pp. 2–3 · ¶ 3.5–3.6It conceded that no specific order had been made withholding gratuity on the basis of the relevant Finance Department circular.
pp. 2–3 · ¶ 3.5–3.602Issues
i.1. Whether the Board was liable to pay interest on gratuity paid after the prescribed period, notwithstanding the pending departmental inquiry and alleged loss.
p. 4 · ¶ 5ii.2. Whether the authorities’ award of interest at 10% per annum warranted interference.
p. 4, 7 · ¶ 5, 5.703Law Applied
Section 7(3A) of the Payment of Gratuity Act, 1972 requires an employer to pay simple interest on gratuity not paid within the prescribed period, subject to the statutory exceptions.
p. 6 · ¶ 5.5–5.6Under Section 4(6), gratuity may be forfeited only in the specified circumstances, including termination for the employee’s misconduct or negligence causing loss, and only to the extent permitted by the provision.
pp. 5–6 · ¶ 5.3–5.4The Court also relied on Champaran Sugar Company Ltd. v. Joint Labour Commissioner and Appellate Authority and Others (Civil Writ Jurisdiction Case No. 1090 of 1985, 11 November 1986), which it cited for an award of 10% simple interest on delayed gratuity.
p. 7 · ¶ 5.7Provisions in the judgment · 2
Gujarat Municipal Finance Board Act, 1979 Section 4Section 7
04Reasoning
The Court found that the respondent had retired on superannuation, not been terminated, and that the Board had no specific order authorising withholding of his gratuity.
pp. 6–7 · ¶ 5.5–5.7A pending departmental inquiry, without more, did not displace the statutory obligation to pay gratuity within the prescribed period or the obligation to pay interest for delay.
pp. 6–7 · ¶ 5.5–5.7The Court therefore upheld the authorities’ award and found no sufficient ground to interfere with the 10% rate, relying also on the cited Champaran Sugar decision.
pp. 6–7 · ¶ 5.5–5.705Holding
The Court dismissed the petition and confirmed the orders of the Controlling and Appellate Authorities, including the award of interest on delayed gratuity.
pp. 6–8 · ¶ 5.6–5.7, 6–7It clarified that the decision did not prevent the Board from pursuing recovery of any amount lawfully recoverable from the respondent.
pp. 6–8 · ¶ 5.6–5.7, 6–7The respondent was permitted to withdraw the interest in accordance with law after verification by the competent authority.
pp. 6–8 · ¶ 5.6–5.7, 6–7Original Court PDF
GUJARAT WATER SUPPLY AND SEWERAGE BOARDvsJAYESHBHAI RATILAL MEHTA
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