ITI LTD v. THE APPELLATE AUTHORITY

(BY SRI T KRISHNADA RAI, ADVOCATE FOR R2, SRI. RAJESH A, CGSC FOR R1) …RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO I. CALL FOR THE ENTIRE RECORDS LEADING TO THE IMPUGNED Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA - 2 - NC: 2026:KHC:11164 WP No. 32573 of 2025 HC-KAR ORDER PASSED BY THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT 1972 AND THE DEPUTY CHIEF LABOUR COMMISSIONER (CENTRAL), BENGALURU IN APPEAL NO. 36 (316) 2023/B1 DATED 14/7/2025 IE ANNEXURE -A TO WRIT PETITION AND ETC. THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE ORAL ORDER Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondents.

An application at I.A.No.1/2026 filed by respondent No.2 - employee to vacate the stay.

With the consent of both sides, the case is heard on merits.

The gratuity payable to respondent No.2 was delayed on the ground that there was pending domestic enquiry against respondent No.2 and in the domestic enquiry, the charges are not proved and only after completion of the domestic enquiry, the gratuity is paid. However, there was a delay in making the payment. - 3 - NC: 2026:KHC:11164 WP No. 32573 of 2025 HC-KAR

Under these circumstances, respondent No.2- employee claimed interest on the delayed payment of gratuity. The Controlling Authority rejected the claim of contesting respondent No.2. However, on an appeal filed by contesting respondent No.2, the Appellate Authority has allowed the appeal and directed payment of interest on the delayed payment. This order is called in question by the employer.

Learned counsel for the petitioner would also urge that respondent No.2-employee was facing the domestic enquiry and she resigned on 14.08.2021. However, domestic enquiry was held pursuant to the charges levelled against her and in the said domestic enquiry, the Enquiry Officer has found that the charges are proved.

It is further submitted that since the charges were established, in terms of the order dated 03.09.2002, the act of respondent No.2- employee was condemned and ban was imposed on future employment. - 4 - NC: 2026:KHC:11164 WP No. 32573 of 2025 HC-KAR

Learned counsel for the petitioner would also urge that since respondent - employee was facing domestic enquiry, there was no obligation on the part of the employer to pay the gratuity amount and moreover, the gratuity amount payable to the respondent-employee was not yet determined and it was subject to the outcome of the domestic enquiry where the employer was also required to assess the loss caused to the employer by the act or omission on the part of the respondent-employee. Thus, the learned counsel would argue that there is no obligation on the part of the employer to pay the interest on the alleged delay.

It is his further submission that since domestic enquiry concluded on 03.09.2002, there was 30 days time to pay the amount and the last date would be 02.10.2002. The amount was paid on 08.12.2002. Hence, at the most, there is a delay of 2 months for which petitioner is ready to pay the interest. - 5 - NC: 2026:KHC:11164 WP No. 32573 of 2025 HC-KAR

Learned counsel appearing for the contesting respondent No.2-employee would submit that in view of the law laid down by Apex Court in the following cases, the employer is bound to pay interest on the delayed payment of gratuity even in a situation where the payment is delayed on account of domestic enquiry: (a) Y.K. Singla vs. Punjab National Bank & Others1 (b) Kerala State Cashew Development Corporation Ltd. & Another Vs. N Ashokan2 (c) H. Gangahanume Gowda vs Karnataka Agro Industries Corporation Limited3.

The Court has considered the contentions raised at the Bar and perused the records.

The payment of gratuity is governed under Section 7 of Payment of Gratuity Act, 1972 (for short 'Act of 1972'). Section 7(3A) of the Payment of Gratuity Act, 1972 reads as under: