CHARAN SINGH versus BIRLA TEXTILES & ANR.

Citation: [1988] SUPP. 2 S.C.R. 742 · Decided: 31-08-1988 · Supreme Court of India · Bench: RANGANATH MISRA · Disposal: Dismissed
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Judgment (excerpt)

CHARAN SINGH 
• 
v . 
BIRLA TEXTILES & ANR. 
AUGUST 31, 1988 
8 
[RANGANATH MISRA AND M.N. VENKATACHALIAH, JJ.] 
Payment of Gratuity Act, 1972-Sections 7 and 8-Payment of 
interest on gratuity-When and in wliat circumstances admissible. 
The appellant was in the service of Respondent firm from April, 
1944 till he resigned on 24.5.83. The employer did not determine the 
C amount of gratuity payable to the appellant. Appellant furnished the 
necessary application for payment of gratuity and since no action was 
taken by the employer, the appellant approached the statutory control· 
ling authority for gratuity and interest thereon. The employer contes-
ted. The controlling authority determined the amount of gratuity at 
D Rs.16,380 and directed the employer to pay the same along with com-
pound interest at 9%. 
On appeal by the employer, the appellate authority confirmed the 
determination of gratuity but set aside the order for payment of 
interest. 
This appeal by special leave is in regard to payability of interest 
on gratuity. The appellant relied on the provisions of the Interest Act 
and section 34 of the Code of Civil Procedure, also. 
Dismissing the appeal, 
HELD: 1.1 It is only when the Collector issue a certificate for 
recovery of the dues as a public demand that interest as provided under 
Section.8 is admissible. [745Hl 
1.2 In the instant case the appellant is not entitled to interest on 
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the amount of gratuity found due to him. The controlling authority had 
directed interest as provided in Section 8 to be paid, which the Appellate 
Authority had vacated. From the facts of this case, it is clear that 
the stage for action under section 8 had not been reached inasmuch 
the appellant had not applied for recovery of gratuity to the 
Collector. [745G-H] 
H 
742 
CHARAN SINGH v. BIRLA TEXTILES [MISRA, J.] 
743 
2. There was no provision in the Act for payment of interest when 
the same was quantified hy the controlling authority and before the 
Collector was approached for its realisation. In fact, it is on the accep· 
lance of the lacuna in the law that Act 22 of 1987 brought about the 
incorporation of sub-section (3A) in Section 7. But that provision has 
prospective, and not retrospective application. [746A-B] 
3. The provisions uf the Interest Act and the provisions of Section 
34 of the Code of Civil Procedure would he of no avail to the appellant 
since no notice was given demanding interest and 1the controlling 
authority is not a court for falling back on section 34 of the 
Code. ["i46C] 
· 
CIVIL APPELLATE JVRISDICTION: Civil. Appeal No. 2659 
of 1986. 
From the Judgment and Order dated 14.6.1985 of the Appellate 
Authority Delhi in Appeal No. 2 of 1985. 
Anil Kumar Gupta and B.N. Singhvi for the Appellant. 
Raja Ram Agarwal, Parveen Kumar and Vivek Gambhir for the 
Respondents. 
· 
The Judgment of the Court was delivered by 
RANGANATH MISRA, J. The short question in this appeal by 
special leave is whether the appellaut-workman was entitled to interest 
on the gratuity due to him under the provisions of the Payment of 
Gratuity Act, 1972 (39 of 1972). 
Appellant joined service under Respondent No. 1 in April 1944 
and was relieved from service on his resignation with ~ifect from 
24. 5. 1983. The employer did not determine the amoum ;if gratuity 
payable to the appellant as required under Section 7(2) of the Act. On 
7 .6.1983, the appellant furnished an application in Form-I for payment 
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B 
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of gratuity but no action was taken by the employer; then appellant 
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approached the >tatutory controlling authority for determination of the 
amount of gratuity and requested that on the sum due interest may be 
paid. The employer contested the claim both in regard to gratuity as 
also interst. On 3.12.1984, the controlling authority determined the 
amount of gratuity at Rs.16,380 and directed the Respondent No. 1 to 
pay the same along with compound interest of 9 per cent. Thereupon 
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744 
SUPREME COURT REPORTS 
[1988] Supp. 2 S.C.R. 
A 
Respondent No. 1 challenged the order before the appellate Autho-
rity. The appellate Authority affirmed the determination of gratuity 
but set aside the ordi!r for payment of interest. 
We have heard learned counsel for both parties in regard to 
payability of interest. Relevant portions of section 7 of the Act, as it 
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stood in 1983, when the cause of action arose, may now be extracted: 
c 
D 
E 
F 
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"7: Determination of the amount of gratuity:
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