Lawstreet Journal

Gratuity : 6% Or 10% Interest For Delayed Payment Of Gratuity? Supreme Court To Consider

Lawstreet Journal 29 Mar 2022 7:56am

Image courtesy: Lawstreet Journal Judiciary Gratuity : 6% Or 10% Interest For Delayed Payment Of Gratuity? Supreme Court To Consider

The Supreme Court has given notice on a petition contesting a judgement by the Orissa High Court reducing interest on delayed gratuity payments from 10% to 6% under the Interest Act rather than the Payment of Gratuity Act.

A bench consisting of Justice DY Chandrachud and Justice Surya Kant has issued a notice with a 12-week deadline for filing reply affidavits, as well as a 6-week deadline for filing counter affidavits.

During the hearing, counsel for the petitioner, Advocate Madhusmita Bora, made the following submissions:

  1. Simple interest became obliged to be paid for the delay in disbursing gratuity with the addition of sub-section 3(a) to Section 7 of the Payment of Gratuity Act 1972.
  2. On October 1, 1987, the Union Ministry of Labour issued a notification setting the rate of interest at 10% per annum.
  3. As a result, the Single Judge made an error by decreasing the interest payable to the petitioner on the late payment of gratuity from 10% to 6% per year.

The current Special Leave Petition was filed in response to the Division Bench's ruling dismissing the writ appeal and confirming the Single Judge's order directing interest on the delayed payment of gratuity at 6% per year rather than the claimed 10% per year.

In the impugned Order, the High Court found that the Payment of Gratuity Act makes no provision for a mandatory minimum rate of interest on late payments.

The Court went on to say that the Single Judge had directed, after reviewing the… Continue Reading...

Tagged: Gratuity      Supreme Court of India  
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