IN THE SUPREME COURT OF INDIA

             CIVIL APPELLATE JURISDICTION

     CIVIL APPEAL NO.5118 OF 2009            (Arising out of S.L.P.(C) 15635 of 2008)

Kerala State Cashew Dev. Corp. Ltd. & Anr.           … Appellants   

Versus  

N. Asokan                     …Respondent

O R D E R   

1. Leave granted.   

2. We are not inclined to interfere with the order impugned in this appeal, by which  

the High Court has affirmed an order of a learned Single Judge of the High Court  

of  Kerala  at  Ernakulam,  directing  the  Kerala  State  Cashew  Development  

Corporation Ltd.  (hereinafter  referred  to as  “the Corporation”),  the appellant  

herein, to pay gratuity with interest to the respondent.   

3. It is now an admitted position that during the pendency of the appeal, the amount  

of gratuity, directed by the High Court to be paid to the respondent, has already  

been paid.  Since the gratuity amount has already been paid, the only question  

that remains to be considered for us is whether interest on such delayed payment  

of gratuity amount should also be directed to be paid to the respondent.   

4. Section 7 of the Payment of Gratuity Act, 1972 (in short, “the Act”) deals with  

determination of the payment of gratuity.  Since the gratuity amount has already  

been  paid,  Section  7  (3A),  which  deals  with  payment  of  interest  for  delayed  

payment of gratuity, would be necessary only to be dealt with in this appeal and to  

consider whether interest on delayed payment of gratuity can be directed to be  

paid by the appellant to the respondent in compliance with Section 7 (3A) of the  

Act.    

5. For this  reason, we like  to reproduce Section 7(3A) of  the Act,  which runs as  

under :-

“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: Provided  that  no  such  interest  shall  be  payable  if  the  delay  in  the   payment  is  due  to  the  fault  of  the  employee  and  the  employer  has   obtained permission in writing from the controlling authority  for the  delay payment on this ground.”  

6. On a plain reading of this provision, as noted hereinabove, it is absolutely clear  

that if any amount of gratuity, which is payable under Section 7 is not paid by the  

employer within the period specified in sub-section (3), the employer is liable to  

pay interest 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 but on  

those delayed payment, where the employer has obtained permission in writing  

from the Controlling authority for delayed payment, in that case, no such interest  

shall be payable to the employee.   

7. So far as the present case is concerned, no such permission was obtained by the  

employer  in writing from the Controlling authority  and,  therefore,  sub-section  

(3A) and its term would be squarely applicable in the facts of this case.  In the  

present case, eight years had passed after the retirement of the respondent but  

gratuity amount was not paid and, therefore, there was a delay of eight years in  

payment of gratuity amount, which is payable with interest at the rate specified in  

Section 7(3A) of the Act.   

8. The Corporation sought to explain the delay of eight years before the Court saying  

that its financial condition was such that it was not in a position to pay gratuity  

amount  to  the  respondent.   However,  considering  the  aforesaid  mandatory

provision of Section 7(3A) of the Act and considering the fact that more than eight  

years have elapsed since the retirement of the respondent, we are of the view that  

the High Court was perfectly justified in dismissing the appeal and affirming the  

judgment of the learned Single Judge, which also directed payment of interest to  

the respondent.   

9. For the reasons aforesaid, the appeal is dismissed.  We, however, grant six weeks’  

time  to  the  appellant-Corporation  to  pay  interest  on  the  delayed  payment  of  

gratuity in compliance with Section 7(3A) of the Act.  There will be no order as to  

costs.   

10. We further make it clear that this order shall not be treated as precedent in other  

similar cases.       

……….…………………J. [TARUN CHATTERJEE]

            ………………………J.            [R. M. LODHA]

New Delhi. July 27, 2009