Payment Of Gratuity Act | Statutory Remedy Of Appeal Against Award Can't Be Circumvented To Escape Pre-Deposit Requirement: J&K High Court

A bench of Justice Sanjeev Kumar clarified that the remedy of appeal against awards passed by Controlling Authorities, as prescribed under Section 7(7) of the Payment of Gratuity Act cannot be circumvented to avoid the essential pre-deposit requirement, crucial for the admission of appeals by the Appellate Authority.

Background:

The case involved an employer challenging an award passed by the Controlling Authority under the Payment of Gratuity Act, 1972 in terms of which it has directed the employer to pay the gratuity to an employee. The petitioner also challenged the order passed by the Controlling Authority, whereby the office of the petitioner-Society had been attached.

Assailing the award through the medium of a writ petition under Article 227 of the constitution the petitioner argued that these orders were passed without affording them an opportunity to be heard.

However, the respondent argued that the petitioner's recourse to the High Court was an attempt to sidestep the mandatory pre-deposit stipulated for appeals before the Appellate Authority.

Court's Observations:

After careful consideration of the arguments, Justice Kumar cited Section 7(7) of the Act and termed the same as statutory and mandatory in nature. It cannot be circumvented to avoid the pre-deposit requirement, which is essential for ensuring the timely payment of gratuity, the bench underscored.

“The remedy provided under Section 7(7) of the Act is statutory and cannot be bypassed to avoid making pre-deposit, which is sine qua non for admission of appeal by the Appellate Authority”, the court recorded.

To highlight the legislative intent behind the provision the bench found it worthwhile to record the observations of the court in Badri Nath Koul v UT of Jammu & Kashmir (2022) wherein it was observed,

“The pre-deposit provision contained in Section 7(7) of the Act is to ensure that, during the pendency of the appeal against an order of the Controlling Authority directing the payment of gratuity in favour of the employee, the amount which may be ultimately payable to the employee is secured and he may not have to file the execution proceedings even after the order passed by the controlling authority in his favour is affirmed by the Appellate Authority”.

Moreover, the bench also delved into the provisions of Section 8 of the Act which mandates the issuance of a recovery certificate by the Controlling Authority and a reasonable opportunity for the employer to show cause before attachment. It elucidated that while the Controlling Authority has the power to issue recovery certificates, it must afford employers a reasonable opportunity to contest such actions.

Commenting on the order of attachment in view of the legal position the bench stated,

“From a reading of the impugned order dated 27.08.2020 passed by the Controlling Authority, it clearly comes out that the order of attachment has not been passed by the Collector on the basis of the certificate issued in this behalf by the Controlling Authority nor any opportunity of being heard has been provided to the petitioner before issuing such certificate”

In light of these findings, the court concluded by allowing the petition to the extent of quashing the order of attachment passed by the Controlling Authority, while dismissing the challenge against the earlier award.

The petitioner was directed to pursue the statutory remedy of appeal, and the deposited amount with the Registry was to be released to the respondent upon verification.

Case Title: The Cooperative Market Society Limited Bishnah Vs Assistant Labour Commissioner

Citation: 2024 LiveLaw (JKL) 25

Counsel For Petitioner: Mr. Gagan Kohli, Advocate

Counsel For Respondents: Mr. Dewakar Sharma Dy. AG, Mr. Irfan Khan Advocate.

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