Delhi High Court
Prof. Madan Mohan vs University Of Delhi And Ors. on 4 November, 2024
Author: Jyoti Singh
Bench: Jyoti Singh
$~18
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 04th November, 2024
+ W.P.(C) 1387/2020
PROF. MADAN MOHAN .....Petitioner
Through: Mr. Anil K. Aggarwal and Mr.
Pranjal Singh, Advocates with Petitioner in person.
versus
UNIVERSITY OF DELHI AND ORS. .....Respondents
Through: Mr. Mohinder J.S. Rupal, Mr. Hardik
Rupal and Ms. Aishwarya Malhotra, Advocates for
R1/DU.
Mr. Apoorv Kurup and Ms. Gauri Goburdhun,
Advocates for R-2/UGC.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGMENT
JYOTI SINGH, J. (ORAL)
1. This writ petition has been preferred on behalf of the Petitioner under
Article 226 of the Constitution of India seeking retirement gratuity due to
the Petitioner from 31.03.2018, i.e., the date of his superannuation along
with interest at the rate of 18% per annum till the date of actual payment.
2. Petitioner joined the University of Delhi as a Professor on 06.11.2006.
In the wake of his impending retirement, Petitioner made a representation on
12.02.2018 to settle his retirement dues. Upon retirement, Petitioner
received all his dues except retirement gratuity. In response to Petitioner’s
request, he was informed vide letter dated 08.05.2018 by the University that
benefit of retirement gratuity had been withheld pending a decision with
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regard to payment of gratuity to those covered under the New Pension
Scheme (‘NPS’). Petitioner thereafter made several representations followed
by a legal notice, but the gratuity was not released compelling the Petitioner
to approach this Court.
3. Learned counsel for the Petitioner, during the course of hearing hands
over a document which is an Internal Audit Section II Note dated
05.10.2023 and concedes that the retirement gratuity to the tune of
Rs.14,38,204/- has been received by the Petitioner but prays for interest on
delayed payment of gratuity as the same has been paid on 05.10.2023,
whereas it was due and payable on 31.03.2018. It is argued that Petitioner is
entitled to compound interest in accordance with Section 8 of the Payment
of Gratuity Act, 1972 (hereinafter referred to as ‘1972 Act’) or in the
alternative, at the rate of 10% per annum under Section 7 (3-A) of the 1972
Act.
4. Short affidavit has been filed on behalf of the University, in which it
is stated that there is no delay on the part of the University in releasing the
payment of gratuity and thus, the University cannot be saddled with interest.
Learned counsel explains that the University adopted O.M. dated 16.12.2022
issued by Ministry of Education, which provided that employees appointed
on or after 01.01.2004 and covered under NPS will be entitled to gratuity
under the 1972 Act, only in the Executive Council meeting held on
03.02.2023 and immediately thereafter, case of the Petitioner was processed
and gratuity was released.
5. Heard.
6. Insofar as the argument of the Petitioner that he is entitled to
compound interest under Section 8 of 1972 Act is concerned, plain reading
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of the said provision shows that Section 8 is applicable when person entitled
to gratuity makes an application to the Controlling Authority, appointed by
the Appropriate Government under Section 3 of 1972 Act, aggrieved by
non-payment of gratuity within the time prescribed under the 1972 Act, the
authority shall issue a certificate for the amount in question to the Collector,
who shall then recover the gratuity amount together with compound interest
thereon. Admittedly, Petitioner has not followed this course of action and on
a pointed query to the learned counsel, he submits that the Petitioner does
not press the compound interest and will be satisfied if interest is granted
under Section 7 (3-A) of 1972 Act.
7. The stand of the University that it is not at fault in delaying the release
of gratuity to the Petitioner since the University decided to adopt the O.M
dated 16.12.2022 issued by the Government only in its Executive Council’s
meeting held on 03.02.2023, as till that date it was unclear if Petitioner was
entitled to gratuity under 1972 Act, cannot be accepted. In University of
Delhi v. Ram Prakash and Ors., 2015 SCC OnLine Del 8634, this Court
was examining a challenged by the University of Delhi to an order passed by
the Controlling Authority under 1972 Act, whereby University was directed
to pay gratuity with simple interest as per Section 7(3-A) of the 1972 Act.
After examining Section 14 of the 1972 Act and following the judgments of
the Supreme Court, Court dismissed the petition and upheld the right of the
employee to gratuity. Relevant paragraphs are as follows:
“10. Before adverting to the facts of the present case, it is necessary to
reproduce relevant Section 14 of the Payment of Gratuity Act, 1972 which
reads as under:-
“14. Act to override other enactments, etc.–The provisions of this Act
or any rule made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any enactment other thanSignature Not Verified
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this Act or in any instrument or contract having effect by virtue of any
enactment other than this Act.”
11. The Apex Court in ‘Allahabad Bank v. All India Allahabad Bank
Retired Employees Association’, (2010) 2 SCC 44, observed as under:-
“14. A plain reading of the provisions referred to hereinabove makes
it abundantly clear that there is no escape from payment of gratuity
under the provisions of the Act unless the establishment is granted
exemption from the operation of the provisions of the Act by the
appropriate Government.
xxxx xxxx xxxx
31. No establishment can decide for itself that employees in such
establishments were in receipt of gratuity or pensionary benefits not
less favourable than the benefits conferred under the Act……
32. This Court in MCD v. Dharam Prakash Sharma [(1998) 7 SCC
221: 1998 SCC (L&S) 1800] observed:
“2. … The mere fact that the gratuity is provided for under the
Pension Rules will not disentitle him to get the payment of gratuity
under the Payment of Gratuity Act. In view of the overriding
provisions contained in Section 14 of the Payment of Gratuity Act,
the provision for gratuity under the Pension Rules will have no
effect…..”
12. In another case ‘Y.K. Singla v. Punjab National Bank’, (2013) 3
SCC 472, the Hon’ble Supreme Court of India had observed:-
“22. …… A perusal of Section 14 leaves no room for any doubt that a
superior status has been vested in the provisions of the Gratuity Act
vis-à-vis any other enactment (including any other instrument or
contract) inconsistent therewith. Therefore, insofar as the entitlement
of an employee to gratuity is concerned, it is apparent that in cases
where gratuity of an employee is not regulated under the provisions of
the Gratuity Act, the legislature having vested superiority to the
provisions of the Gratuity Act over all other provisions/enactments
(including any instrument or contract having the force of law), the
provisions of the Gratuity Act cannot be ignored. The term
“instrument” and the phrase “instrument or contract having the force
of law” shall most definitely be deemed to include the 1995
Regulations, which regulate the payment of gratuity to the appellant.”
13. A similar question came up for consideration before this Court in
W.P.(Civil) No. 5138/2014 titled as ‘University of Delhi v. Sharwan
Kumar Gupta’ wherein it was held:-
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“16. The Payment of Gratuity Act, 1972 is a complete code in itself. It
is clear from the law and the judgments mentioned above that
Provisions of Payment of Gratuity Act, 1972 shall have overriding
effect on all other provisions relating to Gratuity.
xxx xxx xxx
18. If the contention of the petitioner is accepted that Delhi University
Act, 1922 and State ordinances are statutory in nature, however,
Section 14 of Payment of Gratuity Act, 1972, has overriding effect
over the other Acts, Statutes and Regulations.
19. Admittedly, the petitioner has taken up the case for exemption
under Section 5, which is pending with the Central Government,
however, not granted to the petitioner till date. Therefore, in my
considered opinion, till this exemption is not granted, the petitioner is
governed by the provisions of this Act.
20. It is also admitted fact that the petitioner granted gratuity to some
of its employees, after the order was passed by the Controlling
Authority. If the plea of the petitioner is accepted that the respondent
no. 1 in all the petitions are not entitled for gratuity under the
Payment of Gratuity Act, 1972, then it tantamount to discrimination
and inequality before Law, which violates Article 14 of the
Constitution.
21. The Petitioner is an educational institution and employing more
than 10 persons. The exemption under Section 5 of the Payment of
Gratuity Act, 1972, has not yet been granted to it. The payment has
already been made to some employees of the petitioner under the
Payment of Gratuity Act, 1972″.
14. At this juncture, it is relevant to consider the provisions of sub
Section 2 of Section 5 of the Payment of Gratuity Act, 1972 which reads as
under:-
“5. Power to exempt.–
xxxx xxxx xxxx
[(2)] The appropriate Government may, by notification and subject to
such conditions as may be specified in the notification, exempt any
employee or class of employees employed in any establishment,
factory, mine, oilfield, plantation, port, railway company or shop to
which this Act applies from the operation of the provisions of this Act,
if, in the opinion of the appropriate Government, such employee or
class of employees are in receipt of gratuity or pensionary benefits not
less favourable than the benefits conferred under this Act.]”
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16. In view of rejection of the prayer for exemption, the statutory
provisions of the Payment of Gratuity Act, 1972 becomes applicable.
17. In the light of the aforesaid discussion, the petition is devoid of any
merit. Accordingly, the petition is dismissed.”
8. It is thus clear that the issue of the 1972 Act being applicable to
University employees tested on the anvil of Statute 28-A of the University
Statutes, was settled by this Court on 08.04.2015 by the aforesaid judgment
and it cannot be argued that this position of law was unclear. Linking the
payment of gratuity to NPS, in my view, was thus wholly irrelevant and as
held by this Court in Ram Prakash (supra), by virtue of Section 14 of the
1972 Act, its provisions shall have effect notwithstanding anything
inconsistent therewith contained in any enactment other than the said Act or
in any instrument or contract having effect by virtue of any enactment other
than the 1972 Act.
9. It is not in dispute that gratuity has been paid to the Petitioner but was
not paid when due. Petitioner retired on superannuation on 31.03.2018,
while gratuity was released on 05.10.2023 and there is a delay of over 5
years. The limited issue that arises for consideration is interest on delayed
payment of gratuity. It is no longer res integra that pension and gratuity are
not the bounty of the State, but are valuable rights that vest in the retired
employees. In D.D. Tewari (Dead) Through Legal Representatives v. Uttar
Haryana Bijli Vitran Nigam Limited and Others, (2014) 8 SCC 894, the
Supreme Court reiterated that pension and Gratuity are no longer the bounty
of the State to be distributed to the employees on their retirement but are
valuable rights.
10. In State of Kerala and Others v. M. Padmanabhan Nair, (1985) 1
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SCC 429, the Supreme Court observed that pension and Gratuity are
valuable rights and property in the hands of the employees and any culpable
delay in settlement and disbursement thereof must be visited with the
penalty of payment of interest at the current market rate till actual payment
to the employees. In this context, I may also allude to judgment of the
Constitution Bench of the Supreme Court in D.S. Nakara and Others v.
Union of India, (1983) 1 SCC 305, where the Supreme Court succinctly
described the concept of superannuation and entrancingly elucidated the
goals of pension and retiral benefits, as follows:-
“20. The antequated notion of pension being a bounty, a gratuitous
payment depending upon the sweet will or grace of the employer not
claimable as a right and, therefore, no right to pension can be enforced
through Court has been swept under the carpet by the decision of the
Constitution Bench in Deokinandan Prasad v. State of Bihar [(1971) 2
SCC 330 : AIR 1971 SC 1409 : 1971 Supp SCR 634 : (1971) 1 LLJ 557]
wherein this Court authoritatively ruled that pension is a right and the
payment of it does not depend upon the discretion of the Government but is
governed by the rules and a government servant coming within those rules
is entitled to claim pension. It was further held that the grant of pension
does not depend upon anyone’s discretion. It is only for the purpose of
quantifying the amount having regard to service and other allied matters
that it may be necessary for the authority to pass an order to that effect but
the right to receive pension flows to the officer not because of any such
order but by virtue of the rules. This view was reaffirmed in State of
Punjab v. Iqbal Singh. [(1976) 2 SCC 1 : 1976 SCC (L&S) 172 : AIR 1976
SC 667 : (1976) 3 SCR 360]”
11. The Supreme Court observed that a political society, which has a goal
of setting up a welfare State, would introduce and has, in fact, introduced a
welfare measure wherein retiral benefits are grounded on considerations of
State’s obligation to its citizens, who have rendered service during the useful
span of life so that they are not left to penury in their old age. That pension
and Gratuity are not the bounty of State has been emphasised and reiterated
and reinforced by the Supreme Court time and again and I may also refer to
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the judgments in State of Rajasthan and Others v. Mahendra Nath
Sharma, (2015) 9 SCC 540 and State of Himachal Pradesh and Others v.
Rajesh Chander Sood and Others, (2016) 10 SCC 77, in this context.
12. Equally settled is the law on grant of interest on delayed payments of
retiral benefits and the Supreme Court and other High Courts have time and
again held that when an employer delays release of retiral benefits, he is
bound to pay interest. Without burdening this judgment, I may refer to the
judgment of the Calcutta High Court in case of Padma Nath v. State of West
Bengal and Others, 2019 SCC OnLine Cal 2185, which captures other
judgments on the issue and relevant paragraphs are as under:-
“6. The decisions relied upon support the settled law on the right of a
retired teacher or employee to his/her retirement benefits without any
delay. The principle that the disbursement of pension and other retirement
benefits should not be treated as a matter of bounty but are valuable rights
and property and any delay in settlement or disbursement thereof must be
compensated with the penalty of payment of interest at the current market
rate till actual payment to the employee, as has been held in several cases,
including in State of Kerala v. M. Padmanabhan Nair ((1985) 1 SCC 429)
[see also D.D. Tewari v. Uttar Haryana Bijli ((2014) 8 SCC 894 : AIR
2014 SC 2861)]. In D.D. Tewari, the court awarded interest to the legal
representatives of the deceased employee upon holding that there has been
a miscarriage of justice on denial of payment of interest.
7. In Niranjan Kumar Mondal v. The State of West Bengal reported in
(2012) 1 WBLR (Cal) 903, this court relying on Aloke Shanker
Pandey v. Union of India reported in (2007) 3 SCC 545 : AIR 2007 SC
1198 explained the concept of grant of interest in that interest is not a
penalty or punishment but is an accretion on capital. Interest is therefore
to make good the loss of opportunity to the person who could have earned
interest on a certain sum of money if that sum of money had been paid to
that person on time. The element of compensation also arises from the
possible gain made by the person who withheld the amount of money for a
certain period of time on the premise that the person thus deprived may
have earned interest on the amount invested. The equitable consideration
is therefore not only to pay the principal amount to the person who has
been deprived but also the amount which that person could have earned by
way of interest on the principal amount for the period when the principal
amount had been with the concerned authority. In S.K. Dua v. State ofSignature Not Verified
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Haryana reported in (2008) 3 SCC 44, the issue before the Supreme Court
was whether the appellant was entitled to interest on his retirement
benefits which were kept pending due to certain charges pending against
the appellant. The retirement benefits in that case were paid to the
appellant four years after his superannuation. The emphatic words used by
the Supreme Court are set out below;
“14. In the circumstances, prima facie, we are of the view that the
grievance voiced by the appellant appears to be well founded that he
would be entitled to interest on such benefits. If there are statutory
rules occupying the field, the appellant could claim payment of
interest relying on such rules. If there are administrative instructions,
guidelines or norms prescribed for the purpose, the appellant may
claim benefit of interest on that basis. But even in absence of statutory
rules, administrative instructions or guidelines, an employee can
claim interest under Part III of the Constitution relying on Articles 14,
19 and 21 of the Constitution. The submission of the learned counsel
for the appellant, that retiral benefits are not in the nature of
“bounty” is, in our opinion, well founded and needs no authority in
support thereof. In that view of the matter, in our considered opinion,
the High Court was not right in dismissing the petition in limine even
without issuing notice to the respondents.”
xxx xxx xxx
11. That the right of writ petitioner to get his retiral dues on the date of
attaining superannuation is a valuable right and a legal duty is hence cast
upon the concerned authorities to ensure that such a right is not
defeated; Satya Ranjan Das v. The State of West Bengal reported in (2007)
3 CLT 531.”
13. In Dr. A. Selvaraj v. C.B.M. College and Others, (2022) 4 SCC 627,
the Supreme Court observed that a retired employee is entitled to interest on
delayed payment of retiral benefits, if he is not at fault for the delay. Earlier,
a Division Bench of this Court in K.L. Manhas v. Union of India and Ors.,
2015 SCC OnLine Del 12258 and Single Benches in R.P. Tak v. Secretary,
Ministry of Heavy Industries & Public Enterprises and Anr., 2017 SCC
OnLine Del 10760 and H.N. Sharma and Anr. v. Govt. of NCT of Delhi
and Ors., W.P. (C) 1724/2017, decided on 21.08.2020 have allowed interest
on retiral benefits.
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14. There is thus no doubt that Petitioner is entitled to interest on gratuity
in view of the aforementioned judgments and this law would apply with a
greater vigour in the present case, where Section 7 (3-A) itself provides that
if the amount of gratuity payable under sub-Section (3) is not paid within 30
days from the date it becomes payable, employer shall pay, from the date the
gratuity becomes payable to the date on which it is paid, simple interest at
the rate not exceeding the rate notified by the Central Government from time
to time. As per the notification the rate of interest is 10% per annum and
therefore, in my view, University is liable to pay interest at the said rate to
the Petitioner.
15. Accordingly, this writ petition is allowed to the limited extent that the
University shall pay to the Petitioner statutory rate of interest as envisaged
under 7(3-A) of 1972 Act from the date retirement gratuity became payable
till the date of actual payment. The needful shall be done within 4 weeks
from the date of receipt of this order.
16. Writ petition stands disposed of in the aforesaid terms.
JYOTI SINGH, J
NOVEMBER 4, 2024
mk
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