APHC011031902017 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3504] FRIDAY, THE TWENTY THIRD DAY OF JANUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE MAHESWARA RAO KUNCHEAM WRIT PETITION NO: 44756/2017 Between: 1. M. VENKATA RAMANA,, S/O SIMHACHALAM, AGED.63 YEARS, OCC.STAFF ASSISTNAT (RETD.), DISTRICT COOPERATIVE CENTRAL BANK LIMITED, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT. 2. V. NAGESWARA RAO,, AGED 64 YEARS, OCC.STAFF ASSISTANT (RETD.), DISTRICT COOPERATIVE CENTRAL BANK LIMITED VISAKHAPATNAM, VISAKHAPATNAM DISTRICT. 3. A. SREERAMULU,, AGED. 62 YEARS, OCC. STAFF ASSISTNAT (RETD.), DISTRICT COOPERATIVE CENTRAL BANK LIMITED, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT. 4. R. VEERA SWAMY,, AGED. 64 YEARS, OCC. ASSISTANT MANAGER (RETD.), DISTRICT COOPERATIVE CENTRAL BANK LIMITED, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT. 5. S. NAGESWARA RAO,, AGED.63 YEARS, OCC. ASSISTANT MANAGER (RETD.), DISTRICT COOPERATIVE CENTRAL BANK LIMITED, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT. ...PETITIONER(S) AND 1. PRL SECY COOPERATIVE DEPT, THE STATE OF ANDHRA PRADESH. REPRESENTED BY ITS PRINCIPAL SECRETARY, COOPERATIVE DEPARTMENT, A.P. SECRETARIAT, AMARAVATI, GUNTUR DISTRICT. 2. THE COMMISSIONER, FOR COOPERATION AND REGISTRAR OF COOPERATIVE SOCIETIES GOVERNMENT OF ANDHRA PRADESH, OLD MIRCH YARD, BESIDE RYTH BAZAR, CHUTUGUNTA, GUNTUR DISTRICT. 3. NATIONAL BANK FOR AGRL AND RURAL DELNABARD, REGIONAL OFFICE AT 1-1-61, RTC X ROADS, MUSHEERABAD, HYDERABAD REPRESENTED BY ITS CHIEF GENERAL MANAGER 2 4. THE DISTRICT COOPERATIVE CENTRAL BANK LTD, VISAKHAPATNAM, VISAKHAPATNAM DISTRICT REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER. 5. THE MADUGULA PRIMARY AGRICULTURE COOPERATIVE SOCIETY LTD, MADUGULA VILLAGE, MADUGULA. MANDAL, VISAKHAPATNAM DISTRICT REPRESENTED BY ITS PRESIDENT. 6. THE PENUGOLLU PRIMARY AGRL CO SOCIETY LTD, PENUGOLLU VILLAGE, S. RAYAVARAM MANDAL, VISAKHAPATNAM DISTRICT. REPRESENTED BY ITS PRESIDENT. 7. P K GUDEM PRIMARY AGRL CO SOCIETY LTD, P. K. GUDEM VILLAGE, KOTAURATLA MANDAL, VISAKHAPATNAM DISTRICT, REPRESENTED BY ITS PRESIDENT. 8. GODICHERLA PRIMARY AGRL CO SOCIETY LTD, GODICHDERLA VILLAGE, PAYAKARAOPETA MANDAL, VISAKHAPATNAM DISTRICT, REPRESENTED BY ITS PRESIDENT. 9. CHINAPACHILA PRIMARY AGRL CO SOCIETY LTD, CHINAPACHILA VILLAGE, RAVIKAMATHAM MANDAL, VISAKHAPATNAM DISTRICT, REPRESENTED BY ITS PRESIDENT. ...RESPONDENT(S): Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased toto issue an appropriate Writ, Order or Direction more particularly one in the nature of writ of mandamus to declare the action of the respondents more particularly the 5th to 9th respondents in not paying the Gratuity and Leave Encashment to the petitioners in-spite of the Reminder dated 03-06-2014 and letter of Communication dated 01-10-2014 of the 4th respondent Bank and to declare the same as illegal, arbitrary and unconstitutional and contrary to the Provisions of the A.P. Cooperative Societies Act and Rules made there under and consequential direct the 3th to 9th respondents to pay the Gratuity and Leave Encashment as per the Reminder dated 03-06-2014 and letter of Communication dated 01-10-2014 of the 4th respondent Bank along with interest Counsel for the Petitioner(S): 1. L V S NAGARAJU Counsel for the Respondent(S): 1. GP FOR COOPERATION (AP) 2. V UMA DEVI 3 The court made the following ORDER:- The instant writ petition under Article 226 of Constitution of India is filed, seeking the following main prayer:- “……to declare the action of the respondents more particularly the 5th to 9th respondents in not paying the Gratuity and Leave Encashment to the petitioners in-spite of the Reminder dated 03-06-2014 and letter of Communication dated 01-10-2014 of the 4th respondent Bank and to declare the same as illegal, arbitrary and unconstitutional and contrary to the Provisions of the A.P. Cooperative Societies Act and Rules made there under and consequential direct the 3th to 9th respondents to pay the Gratuity and Leave Encashment as per the Reminder dated 03-06-2014 and letter of Communication dated 01-10-2014 of the 4th respondent Bank along with interest……” 2. Heard Sri L.V.S. Nagaraju, learned counsel for the petitioners, as well as Smt. Sandhya Deepthi, learned Assistant Government Pleader for Cooperation appearing for respondent Nos.1 & 2. Respondent No.4 DCCB is represented by Smt. V. Uma Devi, learned Standing Counsel. In spite of service of notice, none appeared for respondent Nos.5 to 9. 3. All the petitioners were appointed as Paid Secretaries in the respondent Nos.5 to 9-PACS and discharged duties without any blemish. Due to the administrative exigencies, the petitioners’ services were merged into the 4th respondent-DCCB, wherein, the petitioners served in different branches across Visakhapatnam District. At last, the petitioners were retired on different dates on attaining the age of superannuation. For the sake of comprehensive view, the particulars of the petitioners are given in the tabular format below:- 4 Sl.No. Name of the petitioners Name of the PACS (Society) Year of initial appointment Year of entry in the DCCB Date of retirement Retirement amount to be paid by the PACS(Society) 1. M.Venkata Ramana Madugula PACS 1984 1999 31.03.2011 Rs.1,76,000/- 2. V.Nageswara Rao Penugollu PACS 1977 1999 30.04.2010 Rs.1,59,000/- 3. A.Sreeramulu P.K.Gudem PACS 1984 1999 31.03.2012 Rs.1,25,000/- 4. R. Veera Swamy Godicherla PACS 1979 1999 31.07.2011 Rs.1,52,000/- 5. S. Nageswara Rao Chinapachi PACS 1984 1999 30.09.2013 Rs.1,03,000/- 4. Learned counsel for the petitioners submits that after superannuation of the petitioners from their service in the capacity of Staff Assistants, the 4th respondent DCCB had paid its share of amounts towards gratuity and leave encashment benefits to the petitioners. He submits that, though the 5th respondent PACS extracted service from the petitioners’ from the initial appointment until the merger with the 4th respondent DCCB, till today, the 5th respondent PACS has not paid its share towards gratuity and leave encashment of the petitioners to the 4th respondent DCCB. To that effect, the learned counsel also drawn the attention of this Court to the reminder dated 03.06.2014 (Ex.P.1), wherein the 4th respondent DCCB addressed a letter to the 5th respondent PACS asking to disburse their share towards gratuity and leave encashment, but the same was not fructified. He referred to the letter of communication dated 01.10.2014 (Ex.P.2). 5 5. The learned counsel also submits that the petitioners are senior citizens, who are suffering with old-age ailments, depriving them of their retirement benefits, would cause serious prejudice and irreparable loss to them. Hence, he seeks appropriate directions. 6. On the other hand, learned Assistant Government Pleader for Cooperation representing respondent Nos.1 & 2, reiterates the averments made in the counter affidavit filed by the 2nd respondent, has not disputed about the appointment of the petitioners and the services extended by them in the 4th respondent DCCB or respondent Nos.5 to 9-PACS, without any stigmatising orders. The counter affidavit also reveals that the 4th respondent DCCB addressed Reminder dated 03.06.2014 to the 6th respondent PACS requesting to pay its share towards gratuity and leave encashment due to petitioner No.2. 7. This Court has considered the submissions made by both the counsel and perused the material available on record. 8. Admittedly, it is not disputed by the 2nd respondent in his counter affidavit with regard to the appointment of the petitioners, their retirement dates without any remarks and their entitlement to gratuity and leave encashment amounts. It is also incontrovertibly true that the petitioners extended the service and attained the age of superannuation without any stigma or legal impediment. Therefore, the petitioners are certainly entitled to the terminal benefits for their livelihood immediately after retirement. 6 9. Indisputably, the respondents are liable to pay the statutory and mandatory entitlement i.e., terminal benefits, leave encashment, gratuity, etc., of the employee in terms of the statutory frame work and also provisions of Payment of Gratuity Act, 1972, (hereinafter referred to as ‘Act’) which is a legislation enacted with a laudable object of ensuring social security to the working class. The relevant portion of Section 4 of the Act is extracted hereunder: “4. Payment of gratuity.-(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease: Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement: [Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.]…………” (2)………………” (3)………………” (4)………………” (5)………………” (6) Notwithstanding anything contained in sub-section (1), (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused; b) the gratuity payable to an employee [may be wholly or partially forfeited]— (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or 7 (i) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment……..” 10. A close reading of Section 4 (1) of the Act would ascertain that once an employee has rendered continuous services for not less than five years on his superannuation or retirement, he/she shall be entitled to get gratuity except in the circumstances enunciated in Section 4 (1) (a) of the Act. Coming to the case on hand, admittedly even as per the version of the respondents also, the petitioner was superannuated without any legal impediments or stigma. In other words, the action of the respondents' withholding of gratuity is not permissible under any circumstances. In fact, the right to receive gratuity is a statutory right; the respondent authorities cannot take it away except through the procedure enunciated under the law. 11. It is pertinent to extract the relevant portion of Section 7 of the Act, which reads as under:- 7. Determination of the amount of gratuity.-(1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. (2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub-section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuityso determined. [(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. 8 (3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub- section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long- term deposits, as that Government may, by notification specify: Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground.] 12. The above statutory provision clearly reveals that if the employer fails to pay the gratuity amount within thirty days from the date it becomes payable to the person, then the interest from that date would also become payable. However, such interest shall not exceed the rate notified by the Central Government from time to time. In the light of above statutory provisions, and taking into consideration the existing facts in the present case, this Court, without any hesitation, unequivocally rules that the petitioner’s right to interest on delayed payment is statutory in nature and not subject to the discretion of the respondent authorities. 13. It is relevant to note the dictum of the Hon’ble Supreme Court in H. Gangahanume Gowda Vs. Karnataka Agro Industries Corpn. Ltd.1, while interpreting Section 7 of the Act in its vivid terms, held that there is a clear mandate in the provisions of Section 7 to the employer for payment of gratuity within time and is entitled to the interest on the delayed payment of gratuity. 1(2003) 3 SCC 40 9 14. In the recent case between Gagan Bihari Pristy Vs. Pradip Port Trust & Ors2 (decided on 03.03.2025) by the Apex Court, while accessing the rate of interest on the delayed payment of gratuity, held that where an employee retires and has to receive gratuity amount belatedly, without having any excuse for delay, the interest would be payable as per the notification issued by the Central Government and accordingly, the Hon’ble Supreme Court has awarded interest @ 10% per annum on the delayed payment of the gratuity amount. 15. When the employees are entitled to the statutory entitlements, the same cannot be deprived, unless there is any legal impediment, especially in the event of lapse of time prescribed under the statutory framework. In D.S Nakara & Ors. Vs. Union of India, the Hon’ble Supreme Court, while referring to the Deokinandan Prasad case clearly held that pensionary rights and its entitlements by the employees, as a matter of right only. 16. Recently, the Apex Court in State of Uttar Pradesh Vs. Dinesh Kumar Sharma3, in its unequivocal words, stated that pension is not a charity or a bounty and an employee is entitled to receive his pension. Hence, in view of catena of judgments, the law is well settled without any iota of doubt. 17. Pertaining to the financial incapacity/poor financial conditions as stated by the 2nd respondent PACS for non-releasing of their share towards terminal benefits after utilising the services of the petitioner is not valid. A mere 2S.L.P. (C) No.20740 of 2022 3(2025) SCC OnLine SC 596 10 financial incapacity or paucity of funds cannot be a valid defense for non- fulfilment of such statutory obligations. 18. In Kapila Hingorani Vs. State of Bihar, the Hon’ble Supreme Court at para 34 held as under: “…….The State may not be liable in relation to the day to day functioning of the Companies, but its liability would arise on its failure to perform the constitutional duties and functions by the public sector undertakings, as in relation thereto the State's constitutional obligations The State acts in a fiduciary capacity. The failure on the part of the State in a case of this nature must also be viewed from the angle that the statutory authorities have failed and/or neglected to enforce the social welfare legislations enacted in this behalf e.g. Payment of Wages Act. Minimum Wages Act etc Such welfare activities as adumbrated in Part IV of the Constitution of India indisputably would cast a duty upon the State being a welfare State and its statutory authorities to do all things which they are statutorily obligated to perform…….” 19. Thus, in view of the above well settled legal position, the respondents are bound to release the terminal benefits to the petitioners without any further delay. 20. The Constitutional Benches of the Apex Court right from Deoki Nandan Prasad and D.S Nakara cases as also in catena of judgments delivered by this Court and other Hon’ble High Courts that the pension and terminal benefits payable to the employee upon superannuation age is a property under Article 300-A of the Constitution of India and it form an integral part of right to livelihood guaranteed under Article 21 of the Constitution of India. Any deprivation, even of a portion of such amount, cannot be countenanced, except in accordance with law. 11 21. In view of the aforesaid facts and circumstances, taking note of the assertion of the learned counsel for the petitioners that the 4th respondent DCCB has already paid its share towards gratuity amount and leave encashment due to the petitioners, the writ petition is allowed with the following directions: (i) The respondent Nos.5 to 9 PACS are hereby directed to release the terminal benefits, such as gratuity amount and leave encashment due to the petitioners, with interest @ 10 % from the date on which said amount became payable till the date of actual payment, within a period of ten (10) weeks, from the date of receipt of copy of this Order. 22. No costs. As a sequel, all pending applications shall stand closed. _______________________________ JUSTICE MAHESWARA RAO KUNCHEAM Date: 23.01.2026 GVK 12 174 THE HON’BLE SRI JUSTICE MAHESWARA RAO KUNCHEAM WRIT PETITION No.44756 of 2017 Date: 23.01.2026 GVK