High Court of Meghalayaat Shillongwa No · 2024

23.Smti. Phinolis Khyriem24.Smti. Maffulda Sohklet25.Shri. Phorming Lyngdoh26.Smti. Monica Shullai27.Smti. Bonsimai Kharmuti28.Smti. Litri Shabong29.Smti. S. Shangdiar30.Shri. Gohen Sangma31.Smti. Pilorina Sangma32.Shri. Jinathson A Sangma33.Smti. Andromery Rodborne34.Shri. Peterson Sangma35.Shri. Biren Lamin36.Shri. Rorence Marak37.Shri. Joslin Sangma38.Shri. Niralson Marak39.Shri. Kallendra Marak40.Shri. Stanford Phanwar41.Shri.Ruseng Marak42.Shri. Blinder Marak43.Shri. Supendra R. Marak44.Smti. Midil Dkhar45.Smti. Rita Ch. Marak46.Smti. Hatmon Lyngdoh47.Shri. Jrim S. Nongdhar48.Smti. Jentilia SangmaPage 2 of 20

49.Shri. Sonaki Kyndiah50.Shri. G.D. Koch51.Smti. Abrilla B. Marak52.Shri. Samuel Reenborne53.Smti. Kalpana Momin54.Smti. Sujola Marak55.Shri. Devaswar Sarkar56.Shri. Akramuz Zaman57.Shri. A.K. Marbaniang58.Shri. Fristhing Marak59.Smti. Pdianglin Phanbuh60.Smti. Millianda Shylla61.Smti. Amy H. Syiem62.Smti. Marlyn Kharumlong63.Smti. Justina Nongkynrih64.Smti. Dorisnora Lyngdoh65.Smti. Esther Dkhar66.Shri. Bosterwell Marbaniang67.Smti. Monica Pohrmen68.Shri. Khlainbor B Palle69.Smti. Perinda Mukhim70.Smti. Mildred Kharmuti71.Shri. Sunolsing Sangma72.Smti. Geovita Bamon73.Shri. A.H. Lyngdoh74.Shri. Wilzeng M. SangmaPage 3 of 20

75.Shri. Wanbha Kharumnuid76.Shri. Ivanhoe Dkhar77.Shri. Wilson Lamare78.Shri. Kishan Sonar79.Smti. Deborah Betsy Giri80.Smti. Pramita Shabong81.Smti. Edwa F. Jyrwa82.Smti. Miracle Paswet83.Smti. Miracle Lyngwa84.Smti. Henantha N. Marak85.Smti. Rani 86.Smti. Sirbilis Syiemlieh87.Smti. Philomina Nongsiej88.Smti. Nasib Bany Nongbet89.Smti. S. Ch. Marak90.Smti. Kynti Mary Marwein91.Smti. Tina Rani92.Smti. R. Dkhar93.Smti. Dipali Nag94.Deovalenty Lyngdoh95.(Lt.) Arsent Ch. Marak ...Appellants- Versus - 1.State of Meghalaya represented by the Commissioner and Secretary, Cooperation Department, Govt. of Meghalaya.Page 4 of 20

2.Managing Director, Meghalaya Cooperative Marketing and Consumer Federation (MECOFED), Lumdiengjri, Shillong.3.The Registrar of Co-operative Societies, Govt. of Meghalaya, Shillong. ...RespondentsCoram:Hon’ble Mr. Justice S. Vaidyanathan, Chief JusticeHon’ble Mr. Justice B. Bhattacharjee, JudgeAppearance:For the Appellants:Mr. A. Khan, Adv.Mr. S.A. Sheikh, Adv.For the Respondents:Mr. N.D. Chullai, AAG withMr. E.R. Chyne, GA [For R 1&3]Mr. P. Yobin, Adv. [For R 2]i)Whether approved forYes/Noreporting in Law journals etc.:ii)Whether approved for publicationYes/Noin press:J U D G M E N T(Made by Hon’ble, the Chief Justice)This appeal has been preferred against the judgment and orderdated 08.03.2024, passed by the learned Single Judge in WP(C) No. 317of 2021, by which the request of the employees for payment of intereston the delay of payment of gratuity, was negative.2. It is the case of the Employees/Appellants herein that theyhad approached the Controlling Authority under the Payment ofGratuity Act, 1972 [in short ‘the PG Act’] and after hearing the parties,Page 5 of 20 the Controlling Authority ordered gratuity payable to the employees.Aggrieved by the said order, the employer preferred a review before theControlling Authority without filing an appeal and the review wasordered. 3. In terms of Section 7(7) of the PG Act, the employer shouldhave preferred an appeal. Unfortunately, the Controlling Authority hasallowed the review and deprived gratuity to the employees. Since theorder was blatantly illegal, the employees have approached this Courtby way of WP(C) [SH] No. 154 of 2012 challenging the order of theControlling Authority in reviewing the order-in-original dated30.07.2010. The writ petition was allowed and the employer wasdirected to pay gratuity. The employer was unsuccessful in the intra-court appeal and the matter went up to the Supreme Court. Before theSupreme Court, the employer had agreed to pay gratuity and the samewas recorded in the order dated 02.04.2018 in SLP (Civil) DiaryNo.35923/2017, which is extracted hereinunder:“Delay in filing the Special Leave Petition is condoned.Mr. Vijay Hansaria, learned Senior Counsel appearing forthe petitioner states that the petitioner-company shall pay theamount of gratuity to the persons who have sought VoluntaryRetirement under the Voluntary Retirement Scheme/GoldenHandshake Scheme.This statement is recorded.Page 6 of 20 In respect of leave encashment, notice is issued.Notice is accepted by Mr. Gaurav Agrawal, learned counselfor the respondents. He may file reply within three weeks.Rejoinder affidavit may be filed within a week thereafter.List immediately thereafter.The payment of leave encashment shall not be made for aperiod of six weeks.However, the amount of gratuity shall be paid to therespondents within a period of one month from today.”4. After the order of the Supreme Court, the employer had paidgratuity to the employees. Since the payment of interest was not givenby the employer, the employees have demanded interest and they haveapproached this Court by way of WP(C) No. 317 of 2021 which wasrejected by the learned Single Judge on the ground that there is nosatisfactory explanation on the delay in filing such petition and also onthe ground of delay and laches, holding that after receipt of money inthe year 2018, the writ petition was filed in 2021. Aggrieved by theorder dated 08.03.2024 passed by the learned Single Judge, the instantWrit Appeal has been preferred.5. Before going into the merits of the matter, we feel itappropriate to extract the relevant portions of Section 7(3A) and Section8 of the PG Act are extracted below:Page 7 of 20 “7. Determination of the amount of gratuity:(1) A person who is eligible for payment of gratuity underthis Act or any person authorised, in writing, to act on hisbehalf shall send a written application to the employer,within such time and in such form, as may be prescribed,for payment of such gratuity.(2) As soon as gratuity becomes payable, the employershall, whether an application referred to in sub-section (1)has been made or not, determine the amount of gratuityand give notice in writing to the person to whom thegratuity is payable and also to the controlling authorityspecifying the amount gratuity so determined.(3) The employer shall arrange to pay the amount ofgratuity within thirty days from the date it becomespayable to the person to whom the gratuity is payable.(3A) If the amount of gratuity payable under sub-section(3) is not paid by the employer within the periodspecified in sub-section (3), the employer shall pay, fromthe date on which the gratuity becomes payable to thedate on which it is paid, simple interest at such rate, notexceeding the rate notified by the Central Governmentfrom time to time for repayment of long term deposits, asthat Government may, by notification specify: Providedthat no such interest shall be payable if the delay in thepayment is due to the fault of the employee and theemployer has obtained permission in writing from thecontrolling authority for the delayed payment on thisground.”“Notification under Section 7(3-A) of the Payment ofGratuity Act: S.O. 874--In exercise of the powersconferred by subsection (3A) of Section 7 of the Paymentof Gratuity Act, 1972 (39 of 1972), the CentralGovernment hereby specifies ten percent per annum atthe rate of simple interest payable or the time being bythe employer to his employees in cases where the gratuityis not paid within the specified period. This Notificationshall come into force on the date of its publication in thePage 8 of 20 Official Gazette (vide the Gazette of India, Extraordinary,P.II, Section 3(i) dated 1st October, 1987 at p.2)”“8. Recovery of gratuity:If the amount of gratuity payable under this Act is notpaid by the employer, within the prescribed time, to theperson entitled thereto, the controlling authority shall, onan application made to it in this behalf by the aggrievedperson, issue a certificate for that amount to the Collector,who shall recover the same, together with compoundinterest thereon at such rate as the Central Governmentmay, by notification, specify,] from the date of expiry ofthe prescribed time, as arrears of land revenue and paythe same to the person entitled thereto: Provided that the controlling authority shall, beforeissuing a certificate under this section, give the employera reasonable opportunity of showing cause against theissue of such certificate:Provided further that the amount of interest payable underthis section shall, in no case exceed the amount ofgratuity payable under this Act.”“Notification under Section 8 of the Payment ofGratuity Act:- S.O.1032(E). - In exercise of the powersconferred by Section 8 of the Payment of Gratuity Act,1972 (39 of 1972), the Central Government herebyspecifies 15 per cent per annum as the rate of compoundinterest, recoverable by the Collector for the time being,along with the amount of gratuity and payable to theperson entitled thereto. This notification shall come intoforce on the date of its publication in the OfficialGazette.”6. A reading of Section 7(3A) of the PG Act makes it clear that,the employer will have to pay interest @ 10% p.a., in case the amount isnot paid within the stipulated time, namely, 30 days. The employees canPage 9 of 20 approach the Controlling Authority for determination of the payment ofgratuity payable to them, in case of no response on the application madeby them or after getting a reply from the employer. 7. In the case on hand, the factum of payment of gratuity isadmitted, which had also attained finality. Though it has been contendedby the employer that the employees ought to have approached theControlling Authority for the purpose of claiming interest withoutprejudice to their rights and according to the employer, there is no needto pay any interest for the reason that the employees have already givenup their right in claiming interest.8. We are not inclined to accept the said contention of theemployer for the simple reason that as when there is an admitted factwith regard to payment of gratuity, there is no need to relegate theemployees to go before the Controlling Authority after a lapse of 20years, as the gratuity was due as early as in 2004 itself. 9. Mr. P. Yobin, learned counsel for the employer/R2 hereincontended that the application for payment of gratuity had been filedwith a delay of five years and when there was no plea with regard topayment of interest at any point of time, the claim of the employeesseeking payment of interest is not justified. Learned counsel, in supportPage 10 of 20 of his contention, has relied upon a judgement of the Madras HighCourt dated 28.07.2021 made in the case of The Management ofJaigopal Garodia Vivekananda Vidyalaya v. R. Poornachandran &anr passed in W.P.Nos.15871 and 15872 of 2020, in which one of us(CJ) is a party, wherein, the claim of interest was deprived.10. Learned counsel for the employees/appellants hereinsubmitted that gratuity had been directed to be paid in terms of Section7 and the entire Section is required to be read as a whole and not inisolation and upon going by a harmonious reading, gratuity has to benecessarily paid in accordance with the provisions of the PG Act. 11. A reading of the order dated 28.07.2021 of the Madras HighCourt in the case of The Management of Jaigopal GarodiaVivekananda Vidyalaya (supra), would reveal that the order of theControlling Authority was challenged and the matter has been remandedback to the Controlling Authority and the Court has held that theemployees cannot treat the Court as a gambling place to get the benefit.The issue of laches was considered by the Court and the matter wasremanded to the Controlling Authority in that case. However, the orderof the Madras High Court may not be applicable to the facts of thepresent case, more so, in the light of the judgment of the Supreme CourtPage 11 of 20 in D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Limited reportedin (2014) 8 SCC 894.12. It is no doubt true that in case there is a delay in filingapplication, claiming gratuity, interest can be deprived and in terms ofSection 7 of the PG Act, once the Controlling Authority passed an order,the employees are entitled to gratuity along with interest. In this case,the Controlling Authority has reviewed the order filed by the employer,which, according to the employees, is not sustained.13. The provisions of Rule 18(5) of the Payment of Gratuity(Central) Rules, 1972 read as under:“18. (5) Within 14 days of the receipt of the copy of theMemorandum of appeal, the opposite party shall submit hiscomments of each paragraph of the Memorandum with additionalpleas, if any, to the appellate authority with a copy to theappellant.”14. The parties are entitled to raise additional pleas before theAppellate Authority. In this case, admittedly, both parties have notapproached the Appellate Authority either aggrieved by the originalorder of the Controlling Authority or against the order of review andstrangely, the employees have directly invoked Article 226 of theConstitution of India by filing a petition before this Court. If thecontention of the employer is accepted that the matter may be remandedPage 12 of 20 back to the Controlling/Appellate Authority to decide the issue ofpayment of interest, it will not serve any purpose for the reason that itwould amount to multiplicity of proceedings one by one before theControlling Authority, Appellate Authority, High Court and thereafterSupreme Court. Ultimately, the employer, after conclusion ofproceedings before all the Forums, will be forced to deposit the interestamount only in the coffins of the employees and not into the accounts ofthe employees, which is not the intent of the welfare legislation.15. The Apex Court in its judgment reported in (1999) 4 SCC450 held that when the facts are not in dispute, relegating to an alternateremedy is not required. Payment of gratuity to the employees is a dutycast upon the employer provided the Act is applicable. In this case, theAct is applicable to the employees, which is not disputed by theemployer too. The statutory interest payable automatically follows inthe absence of payment of gratuity by the employer to the employeeswithin the stipulated time. Gratuity is not a gratis or a bounty, and it hasto be paid to the employees for the services rendered by them in casethey complete more than five years of continuous service in terms of thePG Act.Page 13 of 20

16. In terms of Section 7 (3A), the interest on payment ofgratuity is 10% per annum from the date it become due till it is actuallypaid. Section 8 of the PG Act deals with inquiry proceedings and therate of interest payment under the said Section is 15%. A combinedreading of Sections 7 and 8 discloses that the maximum interest ongratuity payable shall not exceed the principal gratuity amount.17. In this case, by way of filing writ petition, the employeeshave sought for payment of interest and in any event, the rate of interestpayable under Section 7 (3A) or under Section 8, shall not be over andabove the principal amount of gratuity as stated supra. The employeeshave been deprived gratuity in the year 2004 after they were made toleave the respondents under the Golden Handshake Scheme and theirretiral benefits were paid only after 15 years in the year 2018.18. It is pertinent to mention here that the demand of gratuitytogether with interest is a statutory right, which cannot be deprived toemployees. The interest shall be payable along with the principal, incase of delay by the employer as mentioned earlier. In this case, as thereis a delay in payment of gratuity, the employees are entitled to the rateof interest as applicable in terms of Section 7 (3A), more so, secondproviso to Section 8 of the PG Act. In terms of Section 14 of the PGPage 14 of 20 Act, payment of gratuity along with interest cannot be taken away bymeans of an agreement or instrument. It is no doubt true in the presentcase on hand, the employees have not demanded interest either beforethe Single Judge or up to the Supreme Court. Of course, the SupremeCourt ordered payment of gratuity. Since the Supreme Court had notasserted about the interest on payment of gratuity, the employees cannotbe deprived in agitating the relief for interest, as the question ofacquiescence may not be applicable, when there is a statutory duty castupon the employer to pay the amount. 19. The Constitution Bench in a decision reported in (2002) 2SCC 244: Jaipur Zila Sahakari Bhoomi Vikas Bank Ltd. vs. RamGopal Sharma, at paragraph 13 held that no provision in the enactmentcan be made redundant and each provision is meant for a specificpurpose. For ready reference, paragraph 13 is extracted below:“13. … It is well-settled rule of interpretation that no part ofstatute shall be construed as unnecessary or superfluous. Theproviso cannot be diluted or disobeyed by an employer. Hecannot disobey the mandatory provision … The interpretation ofstatute must be such that it should advance the legislative intentand serve the purpose for which it is made rather than tofrustrate it. …”20. If the employees are deprived of gratuity, it runs counter tothe Constitution judgment and the Legislation itself. Of course, for thePage 15 of 20 delay in claiming interest, more so after receiving the amount in 2018and agitating the claim in 2021, we are of the view that the employeeswill have to be deprived interest to some extent, but not in its entirety.Otherwise, after the period of destruction of records by the employer,who has to maintain records for a particular period, the employees mayapproach the Authority for redressal. He/she may not have worked orworked for a required number of days, it would be difficult for theemployer to prove his case. Taking note of the judgment of the SupremeCourt in Krishna District Co-operative Marketing Society Limited,Vijayawada v. N.V. Purnachandra Rao & ors reported in (1987) 4 SCC99, there shall be an amendment to PG Act prescribing the maximumtime limit for claiming interest on gratuity. For the sake of convenience,the relevant passage of the said judgment is extracted hereunder:“11. We may incidentally observe that the Central Act itselfshould be suitably amended making it possible for an individualworkman to seek redress in an appropriate forum regardingillegal termination of service which may take the form ofdismissal, discharge, retrenchment etc. or modification ofpunishment imposed in a domestic enquiry. An amendment ofthe Central Act introducing such provisions will make the lawsimpler and also will reduce the delay in the adjudication ofindustrial disputes. Many learned authors of books on industriallaw have also been urging for such an amendment. The State Actin the instant case has to some extent met the above demand byPage 16 of 20 enacting section 41 providing for a machinery for settlingdisputes arising out of termination of service which can beresorted to by an individual workman. In this connection wehave one more suggestion to make. The nation rememberswith gratitude the services rendered by the former LabourAppellate Tribunal which was manned by some of our eminentJudges by evolving great legal principles in the field of labourlaw, in particular with regard to domestic enquiry, bonus,gratuity, fair wages, industrial adjudication etc. The IndustrialDisputes (Appellate Tribunal) Act, 1950 which provided for anall-India appellate body with powers to hear appeals against theorders and awards of Industrial Tribunals and Labour Courts inIndia was repealed in haste. If it had continued by now thelabour jurisprudence would have developed perhaps on muchmore satisfactory lines than what it is today. There is a greatneed today to revive and to bring into existence an all- IndiaLabour Appellate Tribunal with powers to hear appeals againstthe decisions of all Labour Courts, Industrial Tribunals and evenof authorities constituted under several labour laws enacted bythe States so that a body of uniform and sound principles ofLabour law may be evolved for the benefit of both industry andlabour throughout India. Such an appellate authority can becomea very efficient body on account of specialisation. There is ademand for the revival of such an appellate body even fromsome workers’ organisations. This suggestion is worthconsidering. All this we are saying because we sincerely feelthat the Central Act passed forty years ago needs a second lookand requires a comprehensive amendment.”21. The Industrial Disputes Act, 1947 did not have a specifictime limit for the workman to question the non-employment. Section 2Aof the Act of 1947 was amended on 15.10.2010 prescribing thePage 17 of 20 maximum time limit of three years. As held by the Supreme Court, weare making only the suggestion and not giving any directions that thereshould be an amendment.22. Hence, this Court is of the view that instead of payinginterest at the rate of 10% per annum or 15% per annum in terms of thesecond proviso to Section 8, we restrict the rate of interest to 6% perannum, which means the employees will be entitled to 6% of interest onthe principal amount payable by the employer to them.23. The Apex Court, in a decision reported in (1993) 3 SCC214: Central Cooperative Consumers’ Store Ltd. vs. Labour Court,categorically held that the employer will have to pay the amountinitially and thereafter can recover the amount from the officers, whoare responsible for non-payment of gratuity with interest and theobservation reads as follows:“5. Public money has been wasted due to adamant behavior notonly of the officer who terminated the services but also due tocantankerous attitude adopted by those responsible for pursuingthe litigation before one or the other authority. They haveliterally persecuted her. Despite unequal strength the opposite-party has managed to survive. We are informed that theopposite-party has been reinstated. This was put forward as bonafide conduct of petitioner to persuade us to modify the order inrespect of back wages. Facts speak otherwise. Working life oropposite-party has been lost in this tortious painful litigation ofmore than twenty years. That for such thoughtless acts of itsPage 18 of 20 officers the petitioner-society has to suffer and pay an amountexceeding three lakhs is indeed pitiable. But considering theagony and suffering of the opposite-party that amount cannot bea proper recompense. We, therefore, dismiss this petition asdevoid of any merit and direct the petitioner to comply with thedirections of the High Court within the time granted by it. Wehowever leave it open to the society to replenish itself andrecover the amount of back wages paid by it to the opposite-party from the personal salary of the officers of the society whohave been responsible for this endless litigation including theofficer who was responsible for terminating the services of theopposite-party. We may clarify that the permission given shallhave nothing to do with the direction to pay the respondent herback wages. Step if any to recover the amount shall be takenonly after payment is made to the opposite-party as directed bythe High Court.”24. Admittedly, in the present case, there is a delay in claiminginterest and there was no plea seeking interest in the earlier round oflitigation. As stated earlier, gratuity is not a gratis or bounty, but a dutycast upon the employer to pay the same to the employees. The monetaryvalue of 2004 has drastically come down in 2024. Hence, we are of theview that in the present set of facts, the interest on gratuity at the rate of6% per annum on the entire principal amount shall be paid to theemployees by the employer within a period of four months from thedate of receipt of a copy of this judgment. It is made clear that if theamount is not paid within the time stipulated supra, the respondentsshall at first pay the interest amount and thereafter, recover the interestPage 19 of 20 Powered by TCPDF (www.tcpdf.org) portion (that was paid beyond the specified time supra) from the officersconcerned, who are responsible to comply with the orders of this Courtin respect of disbursement of amount in time.25. Accordingly, with the above observations and directions, WANo. 48 of 2024 is disposed of.(B. Bhattacharjee) (S. Vaidyanathan)JudgeChief JusticePRE-DELIVERY JUDGMENT INWA No.48 of 2024Page 20 of 20