Statutory liability to pay interest on delayed gratuity persists notwithstanding pending litigation or termination disputes.

The appellant Corporation terminated the service of the workman, Farukbhai Abdulrahem Vohra. Because a general reference was pending, the Corporation sought approval for termination from the Labour Court, which was refused

Subsequent challenges to this refusal were dismissed by the High Court in a Writ Petition and a Letters Patent Appeal

The workman retired in 2012. Following the finality of the litigation, the Corporation computed and paid terminal benefits in 2022

The workman’s heirs approached the Controlling Authority claiming interest on the delayed payment of gratuity from the date of entitlement (01.01.2013) to the date of actual payment (14.12.2022). The Controlling Authority awarded interest at 7.5% per annum

The Corporation’s appeal was dismissed by the Appellate Authority due to a delay of 169 days, which exceeded the maximum condonable period

The learned Single Judge subsequently dismissed the writ petition challenging these orders

1. Whether the Corporation is liable to pay interest on the delayed payment of gratuity even if the delay was purportedly due to ongoing litigation

2. Whether the learned Single Judge erred in dismissing the challenge against the Appellate Authority's order which was rejected on grounds of limitation

The Court applied the statutory mandate concerning the payment of gratuity, which dictates that such payment must be made within thirty days from the date it becomes payable

The principle established is that the liability to pay interest on delayed gratuity is statutory and does not cease merely because litigation regarding the employee's status or termination was pending

the court adhered to the principles of the Limitation Act regarding the "maximum condonable period" beyond which an appellate authority lacks jurisdiction to excuse delay

The Court reasoned that the facts were undisputed: the workman was entitled to gratuity upon his superannuation in 2012

Although the Corporation was contesting the Labour Court’s refusal to approve his termination, this litigation did not absolve the employer of its statutory obligation to pay interest on the withheld amount once the termination was deemed unlawful

The Court linked the statutory entitlement of the workman to the mandatory nature of interest, stating that the Controlling Authority’s direction to pay 7.5% interest was legally sound

Regarding the procedural aspect, the court noted that the appeal was filed 169 days late—beyond the statutory limit—meaning the Appellate Authority and the Single Judge were justified in refusing to entertain the merits of the case

The order of the Controlling Authority and the subsequent dismissal of the appeal on grounds of limitation were upheld as legally justified

The Division Bench of the High Court dismissed the Letters Patent Appeal and the connected Civil Application