K.M. Thaker, J.
1. Heard Mr. K.M. Patel, learned Senior Counsel with Mr. J. M. Patel, learned Advocates for the petitioners and Ms. Vinita Vinayak and Mrs. Sangeeta N. Pahwa, learned Advocates for the respondents. Having regard to the submissions, Rule.
1.1. In view of the fact that in all the petitions, a common order has been impugned which relates to controversy concerning gratuity, Rule is made returnable forthwith and at the request and with the consent of all concerned, the petitions are taken upon for final hearing. Mrs. Sangeeta N. Pahwa and Ms. Vinita Vinayak, learned Advocates for the respondents have waived service of notice of Rule. Since, the original order of adjudicating authority is a common order for all applications and as all the petitions raise common issues, they all are decided by this common judgment and order.
1.2. In the captioned group of petitions, the petitioners have challenged a common order dated 29th October, 2007, in Gratuity Application Nos. 20 to 68 of 2007, passed by the Controlling Authority constituted under the Payment of Gratuity Act, 1972 (hereinafter be referred to as 'the Act') whereby the Controlling Authority has directed the petitioner-Company to pay amount towards gratuity to the respondent-workmen along with simple interest at the rate of 6% till 31st December, 2007 and for the period from 1st January, 2008 until the date of actual payment @ 10%. The Controlling Authority has also directed that the interest at the rate of 10% should be calculated on the composite amount by taking into account the principal amount and interest at the rate of 6% until 31st December, 2007. The Controlling Authority has also held the Managing Director i.e. the petitioner No. 2 personally liable to pay the dues to the respondent-workmen.
1.3. Aggrieved by the said order of the Controlling Authority, the petitioners preferred appeals under Section 7(7) of the Act. By communication dated 10th March, 2008, the petitioners were conveyed that in view of non-compliance with the condition precedent requiring pre-deposit of the decreed amount, the appeals cannot be entertained, and therefore, appeals were returned/rejected. It appears that review applications were also preferred, however, by the same communication dated 10th March, 2008, the petitioners have been informed that in view of scope of Section 11(4) the applications are not maintainable. Aggrieved by the said orders, the petitioners are before this Court.
2. The facts leading to the filing of the present petitions are in narrow compass. They are:
2.1. The respondents approached the Controlling Authority alleging nonpayment of the amount payable towards gratuity. Some of the applications, out of the total 49 applications before the Controlling Authority, were filed by persons claiming to be the heirs of the employees who had expired either during their employment or after their retirement.
2.2. All the applications were registered by the Controlling Authority and notices for hearing were issued in response to which the petitioners appeared and opposed the applications on various grounds which are summarized by the Controlling Authority in Paragraph No. 6 of the impugned order.
2.3. After considering the contentions of contesting parties, the Controlling Authority came to the conclusion that the gratuity amount had become payable and the applicants were entitled to claim and receive the amounts towards gratuity in accordance with the Act. Consequently, on the basis of the relevant details (such as respective dates of appointment, dates of retirement/death, last drawn wage and total number of years of the service put in by the workman), as was available on record the Controlling Authority passed the order holding inter alia that the petitioner-Company was liable to pay gratuity to the claimants and that in view of the delay being caused by, the petitioner-Company was also liable to pay interest. Consequently, the Controlling Authority passed the order dated 29-10-2007 directing the payment of gratuity to the respondents/applicants, with interest at the rates specified in the order.
2.4. It deserves to be mentioned that so far as the basic details like date of birth, age, date of joining, length of service, last drawn wages are concerned, there does not appear to be any dispute and no issue or contention on that ground has been raised, though, of course, it is claimed that for the period after cessation of operations, gratuity should not have been allowed.
2.5. While passing the impugned order, the Controlling Authority has also directed that the petitioner No. 2, the Managing Director of the petitioner-Company will be personally liable for making the payment.
2.6. The petitioner-Company, being aggrieved by the order, preferred appeals before the Appellate Authority under the Act. However, while presenting the appeals, the petitioner-Company did not deposit the decreed amount along with the interest. The deposit of the decreed amount is a condition precedent for maintaining an appeal. Since, the amount as ordered by the Controlling Authority was not deposited, the order on 10th March, 2008 conveying the petitioner-Company that the appeals cannot be entertained, came to be passed. As aforesaid, the review applications also came to be disallowed on the ground of maintainability. The petitioners, therefore, are before this Court.
3. Mr. K.M. Patel, learned Senior Advocate has appeared with Mr. J. M. Patel, learned Advocate for the petitioners. He submitted that the Controlling Authority has passed the common order in respect of the forty-nine applications filed against the petitioner-Company. He submitted that the impugned order of the Controlling Authority suffers from errors of facts and law. He further submitted that the petitioner-Company is an unit which has approached B.I.F.R, and the B.I.F.R has passed order rejecting the application of the petitioner-Company against which the petitioner has preferred an appeal before the Appellate Board and the order passed by the B.I.F.R has been stayed. Mr. Patel, learned senior Advocate submitted that the production in the petitioner-Company has been suspended since October, 1999. He, however, fairly admitted that the service of the concerned workmen were not/have not been terminated in accordance with law by the petitioner-Company before they reached age of retirement or expired, as the case may be. He submitted that despite such factual position, the workmen or other claimants on their behalf made the claim on the basis of their respective dates of retirement and in the cases where the employees had expired, the persons claiming to be their heirs had made applications on the basis of the date of death of the concerned employee. He submitted that in absence of nomination, the authority could not have passed orders in favour of the applicants. Mr. Patel, learned Senior Advocate assailed the order also on the ground that the Controlling Authority could not have made the Managing Director personally liable to make the payment and that the Controlling Authority could not have issued any directions to pay interest over interest. Mr. Patel, learned Senior Advocate submitted that though the order recites that the delay caused by the applicants i.e. present respondents was condoned, the record does not contain such order and that the delay cannot be said to have been condoned. While assailing the impugned orders, the learned Senior Advocate also submitted that the Controlling Authority could not have passed the direction for interest for the period, for which the delay was caused by the concerned persons. Mr. Patel, learned Senior Advocate lastly submitted that there are certain persons also (who claim that they are the heirs of the employees) who have retained the quarters of the Company and have not vacated the quarters, and therefore, in such cases, the Controlling Authority ought not to have passed the impugned orders in respect of the persons who are in occupation of quarters. He reiterated the contentions raised by the petitioner-Company before the Controlling Authority which have been mentioned in the impugned order in Para 6. No other contention is raised.
3.1. Mr. Patel, submitted that out of the 49 applications, 16 applications have been filed by persons other than the workmen viz. by the persons claiming that they are heirs of deceased workmen and that the said applications are the P.G. Application Nos. 30, 31, 34, 35, 37, 56, 57, 60, 62, 63, 32, 33, 36, 39, 40 and 47 of 2007 and the corresponding petitions are Special Civil Application Nos. 12889, 12890, 12895, 12896, 12892, 12910, 12911, 12914, 12905, 12904, 12893, 12894, 12891, 12898, 12928 and 12927 of 2008, respectively. He also submitted that 9 workmen, who are in occupation of quarters of the Company, have filed Application Nos. 20, 22, 24, 29, 41, 42, 44, 50 and 55 of 2007 and the corresponding petitions are Special Civil Application Nos. 12879, 12881, 12882, 12887, 12926, 12925, 12924, 12920 and 12909 of 2008, respectively.
3.2. Ms. Vinayak, learned Advocate for Mrs. Pahwa, learned Advocate for the respondents has supported the orders and vehemently opposed the contentions on behalf of the petitioners. She submitted that the delay was condoned by the authority, and rightly so. She also submitted that alleged pendency of appeals after the order of B.I.F.R. is no ground to set aside the order granting retiral benefits. Ms. Vinayak, learned Advocate for Mrs. Pahwa, learned Advocate for the respondents submitted that even the alleged ground about the occupation of quarters is not a reason to withhold gratuity. She actually disputed that the persons are occupying the quarters of the Company. She, however, could not defend the directions against the Managing Director making him personally liable for payment and regarding payment of interest over interest. She submitted that in the facts of the case, the said directions are justified. She urged that the petitions be rejected. No other submissions are made.
4. So far as the contention regarding condonation of delay is concerned, it is required to be mentioned that the Controlling Authority has, in Para 5 of the impugned order dated 29th October, 2007, categorically observed that by order dated 30th July, 2007, the Controlling Authority had accepted/condoned the delay, and thereafter, the applications were heard and decided on merits. Except raising the contention in the memo of petition/s against the said observations made by the Controlling Authority, the petitioner-Company has not produced any cogent material which could convince this Court that the said observation in Para 5 made by the Controlling Authority is incorrect and contrary to record. This Court would, rather go by the specific observation mention made by the Controlling Authority in the impugned order instead of taking into account bear contention by the petitioner-Company which has not been supported by any cogent material. Thus, the said contention is not found acceptable by this Court.
5. So far as the contention against the direction making Managing Director personally liable to make the payment of amounts of gratuity to the respondents is concerned, Ms. Vinita Vinayak, learned Advocate on behalf of Ms. Sangeeta N. Pahwa, learned Advocate for the respondent has not been able to justify the said direction, except submitting that there is nothing wrong in the said direction.
5.1. The Act does not provide for such eventuality nor does it contain such provision and/or does not cast such obligation, and that therefore, the Managing Director cannot be made personally liable to pay the amount of gratuity to the concerned persons, and hence, the said direction is not sustainable and the same deserves to be set aside and accordingly, it is set aside, though, of course, with a rider that the petitioner No. 2-Managing Director would be responsible, for ensuring payment of gratuity in accordance with law and that too from the assets and property of the Company in his official capacity, being the Managing Director, as 'employer' unless the affairs of the Company and the control thereof have been entrusted to any other person. In this regard, reference needs to be made to the provision under Sections 7(2), 7(3) and 7(3A) as per which an 'employer' has to determine the amount and it is the 'employer' who shall arrange to pay gratuity, from the date when it becomes payable and if it is not paid by the 'employer' within the prescribed period then 'employer' will pay interest'. The said provisions read thus:
7. Determination of the amount of gratuity.- (1) xxx xxx xxx
(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 gratuity so 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.
(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.]
Thus, it is the 'employer' who, as per the Act, is liable and responsible to make the payment in accordance with and within time prescribed by the Act. The said term 'employer' is defined under Section 2(f), and it reads thus:
2. Definitions :- In this Act, unless the context otherwise requires:
(a) xxx xxx xxx
(b) xxx xxx xxx
(c) xxx xxx xxx
(d) xxx xxx xxx
(f) 'employer' means, in relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop:
(i) belonging to, or under the control of, the Central Government or a State Government a person or authority appointed by the appropriate Government a person or authority appointed by the appropriate Government for the supervision and control of employees, or where no person or authority has been so appointed, the head of the Ministry or Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed by such authority for the supervision and control of employees or where no person has been so appointed, the chief executive officer of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop, and where the said affairs are entrusted to any other person, whether called a Manager, Managing Director or by any other name, such person;
Hence, if the ultimate control of the affairs of the establishment/factory was vested in the Managing Director in the petitioner-Company and such affairs were not entrusted to any other person, then Managing Director would be responsible for payment, but if such affairs were entrusted to any other person e.g. Manager then such other person would be responsible and not the Managing Director. However, even in the former situation the Managing Director would be responsible to discharge the obligation only in his official position/capacity i.e. as 'employer', but he would not, in such case also, be personally liable to discharge the obligation from his personal property, assets or sources. Thus, when in present case, the petitioner No. 2-Managing Director is held personally liable without any material on record to show that no one else was assigned the affairs and that he was in ultimate charge and when the order has been passed without even examining the matter in light of this provision and without addressing the issue and without recording any finding, the order, to that extent, deserves to be set aside, and is set accordingly aside to the said extent. However, unless any other person e.g. Manager was entrusted with the ultimate affairs and control, the petitioner No. 2 may be responsible as 'employer' to discharge the obligation, however that would be only from the Company's assets and properties. But, without determining the said aspect, the Controlling Authority could not have issued such direction, and since the impugned order and direction are issued without determining the said vital aspect order, to that extent deserves to be set aside.
5.2. The view that the liability for such payment cannot be fastened upon the Managing Director in his personal capacity finds support from the judgment of the Hon'ble Punjab & Haryana High Court in case of Kundan Singh v. Moga Transport Co. (P) Ltd. and Ors. reported in 1987 (62) Comp. Cases 600 wherein it has been held:
Mr. Ramesh Kumar, Counsel for the petitioner, has sought to sustain the aforementioned ground from the ratio of a Division Bench decision, of this Court in Surinder Nath Khosla v. Excise and Taxation Commissioner, Punjab : 1964 (15) STC 838 (P&H;). This Court in Surinder Nath Khosla's case held that unless the Statute in question made the Managing Director of a Company personally liable for the dues recoverable from the Company, he could not be held personally responsible.
Neither in the Company law nor in the Industrial Disputes Act does any provision making the Managing Director personally liable for recovery of dues against the limited Company exist.
In view of the above, I hold that the direction contained in annexure P-4 is clearly illegal and the same is, therefore, quashed. The writ petition is allowed, but with no order as to costs.
5.3. Also in the judgment in the case between Tikam Chand Jain v. State Government of Haryana and Anr. reported in 1987 (62) Comp. Cas 601, it has been held that:
Learned Counsel for the respondents could not point out any provision of law either in the Companies Act or in the Sales Tax Act which made the director liable personally for the amount due from the Company nor has been able to cite any authority.
Learned Counsel for the petitioners, on the other hand, relied on the judgment of D.S. Tewatia, J. in Civil Writ No. 2010 of 1976 (Kundan Singh v. Moga Transport Co. P. Ltd.) decided on April 5, 1983, : 1987 (62) Comp. Case 600 (P&H;), wherein it was held that neither in the Company Law nor in the Industrial Disputes Act is there any provision making the Managing Director personally liable for recovery of the dues against the limited Company. It is, therefore, apparent that both the Courts below because of misconception of law acted illegally in exercise of their jurisdiction in declining the prayer for issue of ad interim injunction. This petition is accordingly allowed and the impugned order reversed. No costs.
6. So far as the contention regarding direction for payment of interest is concerned, the directions which are contrary to the provision in the Act regarding interest, cannot be sustained. As per the provisions under Section 7(3)(A), the Statute prescribes for payment of 'simple interest' at the rate notified by the Central Government. Under the Rules, the rate of interest fixed by the Government is 10%. However, the Act and/or Rules do not provide for payment of interest on interest or 'compound interest' i.e. at the compounding rate. The Statute provides for 'simple interest'. The impugned directions would amount to granting interest over interest or 'compound interest' which is not provided for in the Act/Rules or contemplated under the Act/Rules. Hence, the said direction also deserves to be set aside, and accordingly, it is hereby set aside. However, it is clarified that the principal amount would carry interest at the rate prescribed by the Act/Rules and in accordance with the provisions of the Act and the petitioner-Company shall be liable to pay interest in accordance with the provisions of the Rules under the Act i.e. at the simple rate of 10% for the period for which delay in payment is caused.
7. The other contention raised by the petitioner is regarding certain applications which have been filed by the persons claiming to be the heirs of the deceased employees. The contention which has been raised is to the effect that in certain cases out of the total number of applications, Company does not have on its record 'nominations' duly made by the employees, and therefore, in absence of nominations it is not possible to consider the cases of the persons who have filed the applications as the 'nominees' of the deceased employees, and hence direction to make payment to such persons could not have been passed.
7.1. The said contention cannot be accepted in view of the provisions of the Act. The petitioner is overlooking the second proviso of Sub-section (1) of Section 4. The said proviso reads thus:
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.
(Emphasis supplied)
7.2. In this context reference should be made of Sub-rule (3) of Rule 5 of the Payment of Gratuity (Central) Rules, 1972 which reads thus:
5. Application for gratuity:
(1) xxx xxx xxx
(2) xxx xxx xxx
(3) A legal heir of an employee who is eligible for payment of gratuity shall apply, ordinarily within one year from the date the gratuity became payable to him, to the employer. [Rule 7(3)].
(Emphasis supplied)
7.3. The said Sub-rule (3) of Rule 5 deserves to be read, in view of petitioner's contention, in juxtaposition with Sub-rule (2) of Rule 5. The Sub-rule (2) of Rule 5 reads thus:
5. Application for gratuity:
(1) xxx xxx xxx
(2) A nominee of an employee who is eligible for payment of gratuity shall apply, ordinarily within thirty days from the date the gratuity became payable to him, to the employer. [Rule 7(2)].
(Emphasis supplied)
7.4. Thus, the Rules also provide for application by heirs while prescribing separate application form for nominees.
8. It follows that in absence of nomination, payment of gratuity cannot be delayed or denied and has to be made to the 'heirs'.
9. True, it is that the Statute requires a workman to make 'nomination' at the time of entry into the employment. However, if the applicants have not produced before the Controlling Authority, the proof that they are the 'nominees' of the deceased and/or if no 'nomination' is made by the deceased employees then the employer would, upon proper identification, be required to pay the amount of gratuity to the 'heirs' of concerned deceased employee and in the event of employer's default, it would be legal and within the jurisdiction for the authority to direct the employer to pay gratuity to an 'heir'. In absence of any nomination, the amount can be paid by the Controlling Authority to the heirs of the deceased employees. The Controlling Authority may issue direction to make such payment either on the basis of the succession certificate or other legal basis/manner, but that would not, in any manner, permit an employer not to pay gratuity and/or to delay the payment and/or to withhold the payment and it would also not invalidate the order of the Controlling Authority but the heirs would eligible to receive the payment upon producing evidence acceptable in law. However, the order cannot be set aside on the ground that on the record of the Company duly made nomination is not available or that the applicants did not produce any evidence to establish that they are the heirs of the deceased employees. Further, such evidence will be necessary at the time of actual payment and not at the time of adjudication. Therefore, also the order cannot be faulted.
10. It can be seen that as per the aforesaid provisions, in the event, nomination is not made, gratuity amount has to be paid to heirs. Thus, with the clarification that the employer shall deposit the amount with the Controlling Authority in those cases of deceased employee where legally tenable and acceptable evidence, that the claimant is heir, is not made available to the employer and the Controlling Authority shall, in that case, make the disbursement after identification of the heirs and on the basis of succession certificate or other evidence and modes as provided by law. Thus, the said the objection against the order is not accepted.
11. The last contention is with respect to the allegations that some of the employees i.e. the applicants in Application Nos. 20, 22, 24, 29, 41, 42, 44, 50 and 55 of 2007 have retained the quarters and have not vacated the quarters of the Company's ownership even after retirement or death, as the case may be. Of course, the respondents' Advocate has disputed the allegation that the employees and/or heirs are holding possession of the Company's quarters.
11.1. Assuming that the Company's allegation is true, then in such cases, it is open for the Company to take out action in accordance with law and as per appropriate and applicable provision, however, it is not open, and permissible or justified to withhold the payment of gratuity amount on such ground in the facts of the present case. Even any provision, acceptable and sustainable in law, is not pointed out.
11.2. This view is fortified by the judgment of Delhi High Court in the case of Texmaco Limited v. Roshan Singh and Anr., wherein the Hon'ble Court has held that:
36. We have carefully considered the provisions of the Payment of Gratuity Act, its aims and objects and cases cited at Bar. From the aims and objects of the Gratuity Act, it is abundantly clear that the Legislature did not want that the gratuity amount should be withheld for any reason except for the reasons specifically incorporated in the Act. The Courts have to translate the intention of the Legislature. This Act has been enacted as a Welfare legislation. There are some cases where the Courts have taken the view that the amount of gratuity can be withheld even for non-vacation of the quarter. But in view of the number of direct and categoric judgment of the Apex Court that the Payment of Gratuity Act is a Welfare legislation, the amount of payment of gratuity cannot be withheld for non-vacation of the quarter. It may be pertinent to mention that the appellant has taken separate proceedings of eviction in this case and in other connected cases and those cases are pending in various Courts.
(Emphasis supplied)
11.3. In this regard, reference can be made to the judgment of the Hon'ble Supreme Court in the case between Jaswant Singh Gill v. Bharat Coking Coal Ltd. and Ors. reported in 2007 (1) SCC 663 wherein, the Hon'ble Apex Court has held that,
13. Act provides for a close-knit scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for a gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the conditions on which he may be denied therefrom. As noticed hereinbefore, Sub-section (6) of Section 4 of the Act contains a non-obstante clause vis-a-vis Sub-section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must, therefore, be scrupulously observed. Clause (a) of Sub-section (6) of Section 4 of the Act speaks of termination of service of an employee for any act, willful omission or negligence causing any damage. However, the amount liable to be forfeited would be only to the extent of damage or loss caused. The disciplinary authority has not quantified the loss or damage. It was not found that the damages or loss caused to respondent No. 1 was more than the amount of gratuity payable to the appellant. Clause (b) of Sub-section (6) of Section 4 of the Act also provides for forfeiture of the whole amount of gratuity or part in the event his services had been terminated for his riotous or disorderly conduct or any other act of violence on his part or if he has been convicted for an offence involving moral turpitude. Conditions laid down therein are also not satisfied.
It, therefore, follows that for any other reason and/or in any other manner than the one provided under Section 4(6), gratuity cannot be withheld and/or forfeited.
11.4. A reference also can be made to the judgment of the Hon'ble High Court of Kerala, in the case between Travancore Plywood Industries Ltd. v. Regional Joint Labour Commissioner and Ors. reported in : 1996 (2) LLJ 85 wherein the Hon'ble Court of Kerala has held that:
4. That apart, the main question is whether the petitioner-Company will be justified in withholding the gratuity amount due to the third respondent on the specious plea that the third respondent failed to surrender that land which is in occupation by him. The eligibility of the third respondent's gratuity has to be decided on the basis of the provisions contained in the Act, under which the amount by way of gratuity due to an employee cannot be withheld otherwise than by fulfilling the conditions contained in Sections 4(6), 13 and 14 of the Act. Under the Act, the employer is entitled to withhold the gratuity of an employee only if the termination of the employee is under Section 4(6) of the Act. Here the employer has no case that the employer has terminated the service of the employee on any of the grounds mentioned in Section 4(6) of the Act. The petitioner-Company therefore, is not entitled to withhold the gratuity on the pretext that the third respondent is in occupation of the land belonging to the petitioner-company. That apart, it has to be noted that the legislature itself has granted statutory protection for payment of gratuity to an employee by enacting Section 13 under which no gratuity payable under the Act is liable to attachment in execution of any decree or order of any civil, revenue or criminal Court. Section 14 of the Act and Rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Act or any instrument or contract having effect by virtue of any enactment other than the Act. Section 4(6) read with Sections 13 and 14 is a complete answer to the petitioner's action in withholding the terminal benefit by way of gratuity due to third respondent employee. In other words, amount of gratuity due to an employee can be withheld only on any of the grounds mentioned in the Act and not otherwise and at any rate refusal of the employee to surrender the land in his occupation in violation of the directive issued by the petitioner-Company-employer, even if it is assumed that the land belongs to the employer cannot be treated as failure to settle the account by the employee thereby forming a basis for withholding disperal of arrears of gratuity.
11.5. Thus, what follows is that the gratuity can be withheld or forfeited only for the reasons mentioned in and in accordance and consonance with Sub-section (6) of Section 4.
11.6. The action of withholding gratuity on the ground that the retired or terminated employee(s) has/have not vacated the quarter(s) allotted to him while he was in service, has not been approved by the Hon'ble Supreme Court, in the judgment in the case between Gorakhpur University and Ors. v. Dr. Shitla Prasad Nagendra and Ors. reported in : 2001 (6) SCC 591, the Hon'ble Apex Court has held that:
5. We have carefully considered the submission on behalf of the respective parties before us. The earlier decision pertaining to this very University, reported in S.N. Mathur is that of a Division Bench, rendered after considering the principles laid down and also placing reliance upon the decisions of this Court reported in R. Kapur, which in turn, relied upon earlier decisions in State of Kerala v. M. Padmanabhan Nair and Som Prakash. This Court has been repeatedly emphasizing the position that pension and gratuity are no longer matters of any bounty to be distributed by the Government but are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest. Withholding of quarters allotted, while in service, even after retirement without vacating the same has been viewed to be not a valid ground to withhold the disbursement of the terminal benefits. Such is the position with reference to amounts due towards provident fund, which is rendered immune from attachment and deduction or adjustment as against any other dues from the employee. In the context of this, mere reliance on behalf of the appellant upon yet another decision of a different Division Bench of the very High Court rendered without taking note of any of the earlier decisions of this Court but merely proceeding to decide the issue upon equitable considerations of balancing conflicting claims of respective parties before it does not improve the case of the appellant any further....
(Emphasis supplied)
12. Thus, with the clarification that the Managing Director, subject to the rider referred to hereinabove earlier, cannot be said to be personally liable to make the payment of gratuity unless he was in charge and control of the affairs and any other person was not assigned such affairs and there cannot be direction of payment of interest on interest amount and that in cases where the concerned employees have expired, but there is no nomination the amount can be paid to their heirs on proper identification and on the basis of legally tenable evidence or other mode as provided by law, the objections and contentions against other directions by the order of the Controlling Authority are not accepted. As regards other objections, petitions are rejected and the same are not accepted. Rule discharged. In facts of case, no costs.