Y.K. SINGLA versus PUNJAB NATIONAL BANK & ORS.

Citation: [2012] 13 S.C.R. 1189 · Decided: 14-12-2012 · Supreme Court of India · Bench: B.S. CHAUHAN · Disposal: Disposed off

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Judgment (excerpt)

[2012] 13 S.C.R. 1189 
Y.K. SINGLA 
v. 
PUNJAB NATIONAL BANK & ORS. 
(Civil Appeal No. 9087 of 2012) 
DECEMBER 14, 2012 
[DR. _a,s. CHAUHAN AND JAGDISH SINGH 
KHEHAR, JJ.] 
Payment of Gratuity Act, 1972 - ss. 7 (3A), 4(5) and 14 
A 
B 
- Withheld gratuity - Interest on - Entitlement - Criminal c 
proceedings pending against Bank employee -
In the 
meantime retirement of the employee on superannuation -
Gratuity withheld -, Subsequently acquittal of the employee -
Gratuity released - Interest thereon granted from the date of 
the judgment of acquittal@ 5.5% - Employee's claim for the 
0 
interest from the date of his retirement - Held: Interest on 
withheld gratuity is permissible uls. 7(3A) - The Pension 
Regulations, 1995 which were adopted by the employer, 
whereby interest on account of delayed payment was debarred 
would be inconsequential - In view of ss. 4(5) and 14 benefit E 
u/s. 7(3A) cannot be denied to an employee whose gratuity 
is regulated by some other instrument - Direction to pay the 
interest on gratuity when it became due to the employee on 
his retirement at the rate as provided u/s. 7(3A) - Punjab 
National Bank (Employees) Pension Regulations, 1995. 
Criminal proceedings were initiated against the 
appellant alleging that at the relevant time when he was 
posted as a Manager with the respondent-Bank, he 
entered into a conspiracy with the Regional manager of 
F 
the Bank and an officer of Indian Administrative Service, 
G 
which caused pecuniary loss to the Bank. In the 
meantime, the accused retired on 31.10.1996 attaining the 
age of superannuation. On account of pendency of the 
criminal case, his gratuity, leave encashment and 
commutation of permissible portion of pension were 
H 
1189 
1190 
SUPREME COURT REPORTS 
[2012] 13 S.C.R. 
A withheld. The appellant was informed that eventual 
release of the retiral benefits would depend on the 
outcome of the pending criminal case. On 31.10.2009, the 
accused was acquitted in the criminal proceedings. On 
the basis of acquittal, the appellant sought for the retiral 
B benefits with interest from the date they became due to 
him (i.e. from the date of his retirement) till the actual 
payment. The Bank released the retiral benefits with 
interest on the Leave Encashment and Gratuity amount 
from the date on which he was acquitted in the criminal 
c proceedings i.e. on 31.10.2009 at the rate of 5.5. %. 
The appellant filed writ petition. The High Court 
allowing the petition, directed the Bank to pay the 
appellant interest at the rate of 8% from the date the retiral 
benefits become due to him till the actual payment 
D thereof. Writ appeal was partly allowed by Division Bench 
of High Court holding that the appellant was not entitled 
to any interest on delayed payment of Gratuity in view of 
Regulation 46 of Punjab National Bank (Employees) 
E 
Pension Regulations, 1995. Hence the present appeal. 
Disposing of the appeal, the Court 
HELD: 1. Sub-Section (3A) of Section 7 of the Gratuity 
Act provides that in case gratuity is not released to an 
employee within 30 days from the date the same becomes 
F payable under sub-Section (3) of Section 7, the employee 
in que~tion would be entitled to " ... simple interest at 
such rate, not exceeding the rate notified by the Central 
Government from time to time for repayment of long term 
loans, as the Government may, by notification specify ... " 
There is, however, one exception to the payment of 
G interest envisaged under sub-Section (3A) of Section 7 
of the Gratuity Act, provided for in the proviso under sub-
section (3A). The said proviso reveals, that no interest 
would be payable " ... if the delay in the payment is due 
to the fault of the employee, and the employer has 
H obtained permission in writing from the controlling 
Y.K .. SINGLA v: PUNJAB NATIONAL BANK & ORS. 1191 
authority for the delayed payment on this ground ... ". The 
A 
second ingredient expressed in the proviso under sub-
section (3A) of Section 7 of the Gratuity Act was clearly 
satisfied, when the competent authority approved the 
action of withholding the appellant's gratuity. The 
communication dated 13.5.2000, by which his gratuity 
B 
was withheld, had been issued at the instance of the 
concerned controlling authority. Consequent upon the 
acquittal of the appellant, it would be erroneous to 
conclude, that the gratuity payable to the appellant on 
attaining the age of superannuation was withheld on c 
account of some fa

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