IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction APPELLATE SIDE Present: The Hon’ble Justice Shampa Dutt (Paul) WPA 17299 of 2026 Kanknarrah Jute Pvt. Ltd. & Anr. Vs State of West Bengal & Ors. For the Petitioners : Mr. Sujit Banerjee, Mr. Nilay Sengupta. For the State : Mr. Samrat Mukherjee. For the Private Respondent : Mr. Uddipan Banerjee, Mr. Subhrakanti Samanta. Judgment reserved on : 19.08.2026 Judgment delivered on : 28.09.2026 Shampa Dutt (Paul), J.: 1. The writ application has been preferred praying for (i) quashing of the attachment orders of the Respondent no. 3 dated 27.11.2025 & 03.07.2026 (ii) modifying the simple interest rate at 10% granted by the Appellate authorities in the orders dated 28.04.2025 to simple interest rate at 8%, in light of the ratio laid down under the judgment passed on 28th August 2025 in WPA No. 4620 of 2025. 2 2. The petitioner has paid an amount of Rs. 33,33,608/ out of Rs. 39,54,980.65, within the stipulated time period of 08.08.2025, as directed vide order dated 08.05.2025 passed in WPA No. 23272 of 2024. The petitioner has paid the total principal amount of gratuity. Only some portion of the simple interest @ 10% was left unpaid. 3. It is stated that due to expenses of a running mill, shortage of workers and payments of wages to the existing workers on the payroll, the entire sum of Rs. 39,54,980.65, could not be disbursed within the stipulated time period fixed by this Hon'ble High Court. 4. The petitioners pray for consideration of reduction of the compound interest @ 15 per cent per annum imposed. The compound interest rate of 15% is levied on simple interest amount due. The total gratuity amount was granted by the Appellate Authority as Principal Gratuity + 10% Simple Interest. Thus, now the certificate officer is levying compound interest upon the simple interest amount due, which is bad in law and not permissible to do so u/s. 8 of the Payment of Gratuity Act, 1972. 5. It is stated that the compound interest rate of 15%, cannot be levied by the respondent no.3, over the due amount of Rs. 6,21,372/- which existed at the end of the timeline set by this Hon'ble High Court, i.e., on 08.08.2025 as the entire amount has generated from simple interest over the principal gratuity amount. 6. Under Section 8 of the Payment of Gratuity Act, 1972, compound interest can be levied, but it has to be levied on the remaining gratuity amount, it does not say the same shall be levied upon the simple 3 interest part of the gratuity amount also. The certificate officer is not empowered to change the interpretation of Section 8 of the Payment of Gratuity Act, 1972. The entire 85% of the dues was paid within the stipulated timeline and some form of mercy be shown to the petitioners, for delay in payment of the remaining 15%, and a reasonable rate of interest should be levied. 7. The petitioners state that compound Interest upon Simple Interest cannot be imposed by Certificate officer, as the same is bad in law and impermissible under the Payment of Gratuity Act, 1972. Section 8 of the Payment of Gratuity Act, 1972 has to be read as a whole and the same does not say that the compound interest can be levied over the interest amount due. 8. Interest on interest cannot be granted unless it has been specifically provided under the relevant statute. 9. The petitioners relies upon the following judgments:- i. Calcutta Jute Manufacturing Company Limited- Vs- Beleswar Shaw & Ors. reported in 2024 SCC Online Cal 11546 (Paragraphs 3, 8, 13, 14, 15 & 16. ii. D. Khosla & Company Vs. Union of India reported in 2024 9 SCC 476 (Paragraphs 20 to 24). 10. The respondent nos. 4 to 15 on filing their written notes have argued that the Company’s challenge to the 15% compound interest overlooks the distinction between Section 7(3A) and Section 8 of the Payment of Gratuity Act. Section 7(3A) deals with the employer's statutory liability to pay simple interest on delayed gratuity. Section 8, however, deals 4 with recovery of gratuity when the employer fails to make payment within the prescribed time. Section 8 expressly provides that the amount shall be recovered through the Collector as arrears of land revenue together with compound interest at such rate as may be specified by the Central Government. The Central Government has specified 15% per annum as the rate of compound interest under Section 8. Therefore, once the matter has entered the recovery/certificate stage owing to the Company's continued failure to pay, the Company cannot contend that the Certificate Officer had no authority to apply the statutory rate applicable to recovery proceedings. The demand for 15% compound interest is thus not an arbitrary or penal demand invented by the Certificate Officer; it flows from the statutory recovery mechanism under Section 8. 11. The petitioners cannot equate the interest contemplated under Section 7(3A) with the compound interest contemplated under Section 8. Section 7(3A) creates the substantive liability of the employer for delayed payment. Section 8 provides the machinery and financial consequence where the employer fails to pay the amount and recovery proceedings become necessary. The present case has reached the latter stage solely because the Company failed to comply with the orders directing payment. The statutory scheme therefore cannot be defeated by permitting an employer, who has allowed the matter to proceed to recovery, to claim that only the ordinary interest under Section 7(3A) should apply. 5 12. The petitioners seek reduction of interest on the ground of financial hardship. Such grounds cannot override a statutory liability, particularly when the Company has repeatedly failed to comply with orders passed by competent authorities and this Hon'ble Court. There is no material demonstrating that the delay occurred because of any act or omission on the part of the employees. The Company has repeatedly defaulted despite opportunities granted by the statutory authorities and this Hon'ble Court. 13. The petitioners have relied upon a judgment passed in WPA No. 4620 of 2025 and based on the said ratio seeks to reduce the simple interest rate to 8% in comparison to the rate prescribe @ 10% but the same is very much distinguishable from the present case. In the said case the interest rate has been reduced on account of a misconduct committed by the employee but herein there was no such issue and as such the said ratio has no application in the present case. 14. Hence, it is stated that the writ petition is liable to be dismissed with cost. 15. The respondents rely upon the judgment of the Hon’ble Supreme Court in Civil Appeal No. 1024 of 2003 arising out of Special Leave Petition (C) No. 4114/2002 (H. Gangahanume Gowda Vs.Karnataka Agro Industries Corporation Ltd.). 16. Section 7(3A) of the Payment of Gratuity Act lays down:- “Section 7(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 6 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.]” 17. Section 8 of the Act provides:- “8. Recovery of gratuity.-If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon [at such rate as the Central Government may, by notification, specify] from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto: [Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate: Provided further that the amount of interest payable under this section shall, in no case exceed the amount of gratuity payable under this Act.]” 18. The petitioners sole contention is that compound interest on the principal amount is justified but submits that compound interest on the amount decided by the controlling authority, which includes simple interest, would cause severe prejudice to him, being compound interest on the principal amount with simple interest. 7 19. On perusal of the relevant provision of the Act, it appears that Section 8 of the Act is applicable when the controlling authority issues a certificate for the amount of gratuity payable. 20. The certificate to be executed is issued by the controlling authority as per his order directing payment of gratuity and the said amount includes simple interest on the principal amount. 21. Thus the provisions of the Act does not leave any scope for a different interpretation. 22. Accordingly, the orders impugned herein calls for no interference by this Court. 23. WPA 17299 of 2026 is thus dismissed. 24. Applications, if any, connected thereto stand disposed of consequently. 25. Interim order, if any, stands vacated. 26. Photostat certified copy of this Judgment, if applied for, be given to the parties on priority basis upon compliance of all formalities. (Shampa Dutt (Paul), J.)