Employer can’t deny Interest on Delayed Gratuity Payments : Calcutta High Court

Key Ruling: Interest on delayed gratuity is statutory and automatic under Section 7(3A) of the Payment of Gratuity Act, 1972. No express demand by the employee is required – Court

In a landmark ruling reinforcing employee rights, the Calcutta High Court has held that interest cannot be denied on delayed gratuity payments, even if the employee did not explicitly demand it. The judgment was delivered by Justice Shampa Dutt (Paul) in the case of Himangshu Karmakar v. Food Corporation of India & Ors. (WPA 8398/2025).

Case Background

The petitioner, Himangshu Karmakar, retired in 2018 after decades of service with the Food Corporation of India (FCI). Despite multiple court orders confirming his status as a regular employee, FCI delayed the disbursement of his gratuity until 2023. The Controlling Authority rejected his claim for interest, citing the absence of a specific prayer for it.

Court’s Findings

The High Court decisively ruled that:

Section 7(3A) of the Payment of Gratuity Act, 1972 mandates the payment of simple interest on delayed gratuity beyond 30 days of it becoming due.
The right to interest is statutory, not discretionary, and does not require a specific request from the employee.
The delay in this case was entirely employer-driven, and no exemption under the Act applied.

Justice Dutt emphasized that administrative authorities cannot override statutory mandates and that denying interest on technical grounds undermines the purpose of the legislation.

Judgment Highlights

The Court set aside the Controlling Authority’s refusal to grant interest.
FCI was directed to pay interest from 2018 to 2023 on the delayed gratuity amount.
A warning was issued that further delay would attract penal interest at 18% per annum.

Legal Significance

This ruling strengthens the jurisprudence around gratuity as a statutory and enforceable right, not a discretionary benefit. It also clarifies that interest is an automatic consequence of delay, reinforcing accountability among employers—especially public sector undertakings. Read & Dowload full Judgment.

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