The High Court
Case Details
Signature Not Verified Digitally Signed Signed by: MADHUSMITA SAHOO Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Apr-2025 20:09:50 IN THE HIGH COURT OF ORISSA AT CUTTACK W.A. NO.543 OF 2025 Odisha State Financial Corporation, Cuttack …. Appellant Mr. Satyajit Pattanaik, Advocate -versus- Sarat Kumar Nayak and another …. Respondents
Legal Reasoning
Mr. Somya Jyoti Biswal, Advocate (For Respondent No.1) CORAM: THE HON’BLE THE CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE K.R. MOHAPATRA Order No.
Decision
ORDER 16.04.2025 2. 1. This matter is taken up through hybrid mode. 2. The Appellant in this Intra Court Appeal calls in the question the order dated 17th December, 2024 passed by learned Single Judge in W.P.(C). No.17221 of 2024 dismissing the writ petition and thereby confirming the order passed by the Appellate Authority under the Payment of Gratuity Act, 1972 (for brevity ‘the Act’) directing the Appellant to pay interest on delayed payment of gratuity to the Respondent No.1. 3. Mr. Pattanaik, learned counsel for the Appellant submits that on the date of superannuation of the Respondent No.1, i.e., on 30th April, 2018, he was paid the gratuity of Rs. 10 lakh, to which he was entitled. It is his submission that initially the Act was not applicable to the Odisha State Financial Corporation (for brevity ‘the Corporation’), but vide Gazette Notification dated 7th July, Page 1 of 5 Signature Not Verified Digitally Signed Signed by: MADHUSMITA SAHOO Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Apr-2025 20:09:50 2010, the Corporation with previous sanction of the State Government, adopted the payment of Gratuity with effect from 1st January, 2010. Thus, on the date of superannuation of the Respondent No.1, he was paid the gratuity amount of Rs.10 lakh. In the meantime, the Act has undergone amendment with effect from 29th March, 2018 enhancing the upper limit of gratuity from Rs. 10 lakh to Rs.20 lakh. Thus, there were several internal communications between the Corporation and parent department, namely, Public Enterprises Department, Government of Odisha to sanction the differential amount to be paid to the Respondent No.1. Accordingly, the differential amount of Rs. 7,33,713/- was paid to the Respondent on 5th May, 2023 receiving sanction from the concerned department of the State Government. In that process there was a delay in payment of the deferential amount of gratuity to the Respondent No.1. The delay in payment of deferential amount cannot be attributed to the Corporation, as the same could not have been paid without the prior sanction of the parent department as well as Finance Department of Government of Odisha. The Corporation raised the aforesaid issues before learned Single Judge and contended that it is not liable to pay the interest of Rs.3,64,846/- as awarded by the Appellate Authority under the Act. It is submitted that learned Single Judge without considering the case of the Appellant in its proper perspective, dismissed the writ petition. Hence, this Intra Court Appeal has been filed. 4. It is further submitted by Mr. Pattanaik, learned counsel for the Appellant that the delay in payment of gratuity was bona fide, because the Corporation had submitted proposal for payment of Page 2 of 5 Signature Not Verified Digitally Signed Signed by: MADHUSMITA SAHOO Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Apr-2025 20:09:50 the deferential amount of gratuity in due time. Due to delay in taking a decision/ sanction by the parent department, some delay occurred in such payment. He also refers to Section 7(3) of the Act and submits that on the date of superannuation of the Respondent, the amount of Rs.10 lakh as gratuity was payable to the Respondent, which was complied with immediately. The deferential amount of gratuity was paid to the Respondent on 5th May, 2023, which was within thirty days from the date of sanction of the PE Department. Thus, the Appellant is not liable to pay any interest as directed by the Appellate Authority under the Act. He, therefore, prays for setting aside the impugned order. 5. Mr. Biswal, learned counsel for the Respondent No.1 vehemently objects the same and submits that Section 4 of the Act makes it clear that the employees should have received the entire gratuity amount on the date of superannuation. The Respondent No.1 was superannuated on 30th April, 2018 and the deferential amount of gratuity was paid on 5th May, 2023. Thus, learned Single Judge has not committed any error in confirming the order of Appellate Authority directing the Corporation to pay the interest on delayed payment of deferential amount of gratuity. 6. We considered the rival contentions made by learned counsel for the parties. 7. Section 4 of the Act reads as under: “Payment of gratuity. (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, - (a) on his superannuation, or (b) on his retirement or resignation, or Page 3 of 5 Signature Not Verified Digitally Signed Signed by: MADHUSMITA SAHOO Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Apr-2025 20:09:50 (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.” 8. The case of the Respondent No.1 comes under Section 4 (1) (a) of the Act, which entitled the Respondent No.1 to receive the entire gratuity amount on the date of his superannuation. Undeniably, the Respondent No.1 was paid Rs.10 lakh towards gratuity on the date of his superannuation. In view of the amendment to the Act in the year 2018, which came into effect from 29th March, 2018, i.e., before the date of superannuation of the Respondent No.1, he was entitled to a higher amount of gratuity. As such, the Respondent No.1 should have been paid the entire amount of gratuity on the date of his superannuation. 9. In addition to above, the Board of the Corporation had already taken a decision to pay the enhanced amount of gratuity in view of the amendment of the Act. Thus, there is no difficulty on the part of the Corporation to pay the entire amount as gratuity on the date of his superannuation. But, taking the plea of prior sanction of the parent department, the Corporation delayed the payment of the enhanced amount of gratuity to the Respondent No.1. Page 4 of 5 Signature Not Verified Digitally Signed Signed by: MADHUSMITA SAHOO Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Apr-2025 20:09:50 10. Section 7 (3A) of the Act provides that if the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify. Respondent No.1 was entitled to receive the entire gratuity amount including the deferential amount paid belatedly on the date of superannuation in terms of Section 4(1) (a) of the Act. Admittedly, the deferential amount was paid to the Respondent No.1 belatedly on 5th March, 2023. Thus, we find no force in the submission made by Mr. Pattanaik, learned counsel for the Appellant. 11. In view of the above, we are of the considered opinion that the order of learned Single Judge impugned in this Intra Court Appeal warrants no interference. 12. Accordingly, this Intra Court Appeal, being devoid of any merit, stands dismissed. Urgent certified copy of this order be granted on proper application. (Harish Tandon) Chief Justice Rojalin/ms (K.R. Mohapatra) Judge Page 5 of 5