S.S.Mohammed Quadri, ACJ - (1.) Sub-section (3-A) of Section 7 of Payment of Gratuity Act, 1972 enjoins that if the amount of gratuity payable under subsection (3) of that section is not paid by the employer within the period of thirty days, 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 by notification specify. The exception to this Rule is where the delay is attributable to the fault of the employee and in such a situation the employer has to obtain permission in writing from the controlling authority for the delayed payment on that ground. Admittedly in this case, the action of the respondent does not fall in the exception to the sub-clause referred to above. There is a delay of eight months in payment of the gratuity to the petitioner. The learned single Judge in the order under appeal dated 17-4-1997 in WP No.5140 of 1997, taking note of the fact that the respondent-Company is in difficulties, awarded interest at 8% per annum. It is with regard to the rate of interest awarded that the order under appeal is questioned.
(2.) The learned Counsel for the appellant-petitioner has brought to our notice the judgment of the Hon'ble Supreme Court in R. Kapoor v. Director of Inspection (Painting and Publication), Income Tax, 1994 (6) SCC 589. It was laid down therein that award of 18% interest was justifiable, but that was having regard to the fact that the respondents had taken unjustifiable stand for nonpayment of gratuity viz., that the employee was in occupation of the quarter. In this case, there is no such unjustifiable stand. Therefore, in our view, having regard to the circumstances of the case, it would be just and appropriate to order payment of 12% interest per annum.
(3.) The order under appeal is accordingly modified.;