In a significant ruling, the Bombay High Court emphasized the mandatory nature of timely gratuity payments to retired employees, underscoring that any delay beyond one month from the retirement date attracts a 10% interest penalty. This decision reinforces the protective framework of the Payment of Gratuity Act, 1972, ensuring that retirees receive their rightful dues promptly.
The case centered around Dr. Chetana Rajput, a dedicated educator who served at Nowrosjee Wadia College for 25 years. Initially appointed as a part-time teacher, she later transitioned to a full-time Assistant Teacher role in 2019, a position sanctioned by the Regional Deputy Director of Education. Upon her retirement in 2023, Dr. Rajput anticipated the release of her gratuity and pension benefits. However, despite her repeated representations, the college failed to disburse her gratuity within the stipulated one-month period post-retirement.
Aggrieved by the delay, Dr. Rajput approached the Bombay High Court, seeking redress. The college defended its inaction by citing complications in calculating her pension due to her combined part-time and full-time service. They argued that these complexities necessitated additional time to finalize the pension calculations. However, the court found this justification insufficient, noting that the college had ample opportunity to address these issues prior to her retirement.
The division bench, comprising Justices Ravindra V. Ghuge and Ashwin D. Bhobe, held that the college's failure to release the gratuity within one month of Dr. Rajput's retirement was unjustified. They emphasized that the Payment of Gratuity Act mandates the disbursement of gratuity within 30 days of it becoming due, and any delay beyond this period, without valid justification, attracts interest at the rate of 10% per annum. The court further clarified that administrative or procedural delays on the part of the employer do not constitute valid grounds for withholding gratuity payments.
In its judgment, the court directed Nowrosjee Wadia College to pay Dr. Rajput her due gratuity along with 10% interest from the date it became payable until the actual date of payment. This ruling serves as a stern reminder to employers about their obligations under the Payment of Gratuity Act and the consequences of non-compliance. It underscores the judiciary's commitment to upholding the rights of retired employees and ensuring they receive their rightful benefits without undue delay.
This decision aligns with similar judgments from other High Courts across India, reinforcing the principle that interest on delayed gratuity payments is mandatory, not discretionary. For instance, the Gujarat High Court, in the case of Ashvinkumar Ramniklal Jani v. State of Gujarat, reiterated that interest on delayed gratuity is obligatory, referencing the Supreme Court's decision in H. Gangahanume Gowda v. Karnataka Agro Industries Corpn. Ltd. Similarly, the Jharkhand High Court held that employers are liable to pay 10% interest on delayed gratuity payments, as per the notification issued by the Central Government under Section 7(3-A) of the Payment of Gratuity Act.
These consistent judicial pronouncements highlight the judiciary's unwavering stance on protecting the financial rights of retirees. They serve as a cautionary tale for employers, emphasizing the importance of adhering to statutory timelines for disbursing gratuity payments. Failure to comply not only results in financial penalties but also tarnishes the employer's reputation and could lead to further legal complications.
In conclusion, the Bombay High Court's ruling in favor of Dr. Rajput reinforces the legal obligation of employers to ensure timely payment of gratuity to retired employees. It underscores the judiciary's role in safeguarding the rights of retirees and serves as a precedent for similar cases, ensuring that the provisions of the Payment of Gratuity Act are upheld in letter and spirit.
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