- 1 - NC: 2025:KHC:1449 WP No. 40267 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 40267 OF 2014 (L-KSRTC) BETWEEN: KARNATAKA STATE ROAD TRANSPORT CORPORATION, TUMKUR DIVISION, TUMKUR, REP. BY ITS DIVISIONAL CONTROLLER, REP. BY ITS CHIEF LAW OFFICER. …PETITIONER (BY SMT H R RENUKA, ADVOCATE) AND: 1. THE DEPUTY LABOUR COMMISSIONER AND APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT REGION-2, "KARMIKARA BHAVANA" BANERGHATTA ROAD, BANGALORE-560029. 2. THE ASSISTANT LABOUR COMMISSIONER AND CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT DIVISION-II, "KARMIKARA BHAVANA" BANNERGHATTA ROAD, BANGALORE-560029. 3. ZAHEER S/O RAHAMAN SAB,MAJOR, SINCE DECEASED, BY HIS LR'S 3(A). BIBIJAN, W/O ZAHEER, ADULT, Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:1449 WP No. 40267 of 2014 NO.11, INDIRANAGAR, OPP. TO RAILWAY STATION ROAD, CHOLUR ROAD, GUBBI TALUK. (AMENDED VIDE ORDER DT: 10.01.2023) …RESPONDENTS (BY SMT RASHMI RAO, HCGP FOR R1 AND R2, SMT S B LAKSHMI, ADVOCATE FOR R3(A)) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER OF THE R-2 DTD 19.04.2010 VIDE ANNX- C.QUASH THE ORDER OF THE R-1 DTD 31.07.2013 VIDE ANNX-E. THIS PETITION, COMING ON FOR HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE ORAL ORDER This petition is filed challenging the order passed by the Assistant Labour Commissioner as well as the order passed by Deputy Labour Commissioner/Appellate Authority. In terms of the order dated 19.04.2010 passed by the Assistant Labour Commissioner, the petitioner of this petition is directed to pay Rs.98,152/- towards arrears of gratuity along with 10% interest on the said amount within 30 days from the date of the receipt of the copy of the order. - 3 - NC: 2025:KHC:1449 WP No. 40267 of 2014 2. This order passed by the Assistant Labour Commissioner was called in question before the Deputy Labour Commissioner/Appellate Authority. In terms of the order dated 31.07.2013, the appeal is allowed in part. The Appellate Authority has confirmed the order to pay Rs.98,152/- towards the gratuity. However, the rate of interest is reduced to 6% from 10%. 3. Aggrieved by the aforementioned order, the petitioner/Corporation is before this Court. The respondent employee accepted the order passed by the Deputy Labour Commissioner/Appellate Authority. 4. Learned counsel appearing for the petitioner would contend that petitioner was dismissed from service on 03.12.2001 and on his dismissal, Rs.52,800/- was paid to the dismissed employee towards gratuity and said payment is made on 17.01.2002. Order of dismissal was called in question by the employee before the Labour Court. The said reference was allowed and employee was - 4 - NC: 2025:KHC:1449 WP No. 40267 of 2014 ordered to be reinstated and accordingly, he was reinstated on 25.07.2006. On 08.12.2006, the employee voluntarily retired from service. However, on reinstatement he has not repaid the gratuity amount paid to him on 17.01.2002. For this reason, the employer withheld the service benefits payable to the employee. Employee raised a dispute before the Assistant Labour Commissioner. In terms of the order dated 19.04.2010, the Assistant Labour Commissioner passed an order to pay Rs.98,152/- towards gratuity along with interest @ 10% p.a. Said order was called in question by the employer/KSRTC. The appeal allowed in part as indicated above reducing the rate of interest from 10% to 6%. 5. Learned counsel appearing for the petitioner would contend that in terms of the circular issued by the petitioner/Corporation, in case of reinstatement, the employee is required to redeposit the gratuity amount with the employer along with interest @14% per annum. Since the employee did not deposit the amount on - 5 - NC: 2025:KHC:1449 WP No. 40267 of 2014 reinstatement, the employer is justified in making a demand for the said amount along with interest @ 14% per annum. Thus, it is the contention that the impugned orders are unsustainable to the said extent. 6. Learned counsel appearing for the respondent would contend that the petitioner has made untenable claims. The rate of interest in the interest component of Rs.43,112/- mentioned in paragraph No.3 of the writ petition is not forthcoming. The interest claim on Rs.2,25,548/- is totally unjustifiable as such, would urge that the petition to be dismissed. 7. Learned counsel for the respondent would also contend that the petitioner is not entitled to 14% interest on the delayed redeposit of the gratuity amount in view of the judgment in W.P. No.36549/2011. 8. This Court has considered the contentions raised at the bar and perused the records. - 6 - NC: 2025:KHC:1449 WP No. 40267 of 2014 9. There is no dispute that there is a circular dated 13.03.2000 which enables the employer to claim 14% interest in case there is a delay in depositing the gratuity amount on reinstatement. There is no dispute that on termination from the service, the employer has paid Rs.52,800/- to the employee on 17.01.2002. There is no dispute that on 25.07.2006, the employee was reinstated. In view of the circular dated 13.03.2000 referred to above, the employee is required to deposit the gratuity amount which was retained by him after the payment made to him consequent to his dismissal as he was reinstated later. Since the amount is not deposited, the circular would mandate that the employee has to redeposit the amount with 14% interest. 10. Though the learned counsel appearing for the respondent would contend that the employer at the most can charge 11% interest in view of the judgment in W.P. No.36549/2011, what is required to be noticed is that in the said case, the Court has not adjudicated on the - 7 - NC: 2025:KHC:1449 WP No. 40267 of 2014 interest chargeable by the employer in all the cases. That was the case where the Court was considering the interest payable for a period from 30.10.1999 to 04.10.2006 and has rightly contended by the learned counsel for the petitioner in page 10 of the said judgment, the Court has noticed that instead of charging 14% per annum as per the circular, the employer has chosen to charge only 11% per annum. The concession given in one case if it is an erroneous concession cannot be made applicable in all the cases when the circular itself would state that 14% is the interest chargeable. 11. It is also noticed that rate of interest is reduced from 14% to 11% in the year 2007. In this case, this Court is concerned with the interest payable for the period between 2002 to 2006. As per the circular dated 13.03.2000 as already noticed in the W.P. No.36549/2011, the interest payable would be 14% per annum. Hence, the employer is entitled to claim interest on Rs.52,800/- @14% per annum for the relevant period. On calculation, - 8 - NC: 2025:KHC:1449 WP No. 40267 of 2014 the said amount comes to Rs.36,960/-. Under these circumstances, the impugned orders to the said extent are unsustainable and set-aside. 12. It is submitted by the learned counsel appearing for the petitioner that the amount is already deposited before the Authority and it is further stated that the amount is kept in bank deposit. Hence, the following:- ORDER i) Writ petition is allowed-in-part. ii) Out of the amount in deposit, Rs.36,960/- shall be released in favour of the petitioner. ii) Rs.65,192/- along with interest @ 6% per annum from 20.03.2008 till 06.07.2010 be released in favour of the 3rd respondent. iii) It is further made clear that in case the amount is kept in bank, the proportionate interest on Rs.65,192/- earned from the bank deposit shall - 9 - NC: 2025:KHC:1449 WP No. 40267 of 2014 go to the 3rd respondent and interest earned on Rs.36,960/- shall go to the petitioner. Sd/- (ANANT RAMANATH HEGDE) JUDGE CHS List No.: 1 Sl No.: 41