Orissa High Court
M.D vs Prafulla Chandra Patnaik on 24 December, 2024
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.350 of 2017
M.D., Odisha State Co-
Operative Bank Ltd.,
Bhubaneswar ....... Petitioner
-Versus-
Prafulla Chandra Patnaik
& ors. ....... Opposite Parties
For Petitioner : Mr. K.P. Nanda
Advocate
For Opposite Parties : Mr. R.N. Prusty
Advocate
...................
CORAM: JUSTICE SANJAY KUMAR MISHRA
Date of Hearing : 21.11.2024 &12.12.2024 and
Date of Judgment : 24.12.2024
_____________________________________________________________
S.K. MISHRA, J.
1. This writ petition has been preferred by the
Petitioner-Bank challenging the order dated 11.11.2016 passed
by the Appellate Authority under P.G. Act-cum-Joint Labour
Commissioner (O.P. No.3) in P.G. Appeal Case No.3 (JLC)/2016,
vide which the Opposite Party No.3 confirmed the order dated
06.12.2014 and 13.03.2015 passed in P.G. Case No.22 of 2012
by the Controlling Authority under the Payment of Gratuity Act,
1972, shortly, “P.G. Act”.
2. The contesting private Opposite Party No.1, who was
the applicant in P.G. Case No.22 of 2012, has filed a Counter
Affidavit opposing to the said prayer made in the writ petition.
3. Though the confirming order passed by the Appellate
Authority has been challenged on various grounds, during
hearing, relying on the order dated 01.05.2019 passed by the
coordinate Bench in W.P.(C) No.23834 of 2013 (Paradip Port
Trust Vs. Gagan Bihari Prusty & ors.) so also confirming the
order dated 18.11.2021 passed by the division Bench in W.A.
No.322 of 2019 (Gagan Bihari Prusty Vs. Paradip Port Trust
& ors.), learned Counsel for the Petitioner submitted that the
Petitioner-Bank would like to challenge the impugned order
passed by the Appellate Authority confining it to the rate of
interest of 10% awarded by the Controlling Authority, which was
also erroneously confirmed by the Appellate Authority.
4. The said submission of the learned Counsel for the
Petitioner was also duly recorded vide order dated 21.11.2024.
Page 2 of 31
Paragraph Nos.3 & 4 of the said order dated 21.11.2024, being
relevant, are reproduced below:-
“3. During hearing, learned Counsel for the
Petitioner submits, though the Petitioner Bank
has challenged the order dated 11.11.2016
passed by the Appellate Authority under the
P.G. Act & Joint Labour Commissioner,
Bhubaneswar so also order dated 06.12.2014
passed by the Controlling Authority under the
P.G. Act-Cum- Assistant Labour Commissioner,
Cuttack but he would like to confine the prayer
made in the Writ Petition with regard to 10%
interest awarded by the Controlling Authority,
which was also incorrectly confirmed by the
Appellate Authority.
4. Learned Counsel for the Petitioner files
photocopy of the order dated 01.05.2019
passed by the coordinate Bench in W.P.(C)
No.23834 of 2013 (Paradip Port Trust Vs.
Gagan Bihari Prusty and others) and the
confirming order passed by the first Division
Bench dated 18.11.2021 in W.A. No.322 of
2019 (Gagan Bihari Prusty Vs. Paradip Port
Trust and others). The said orders be kept on
record”.
5. In response to the said submission made by the
learned Counsel for the Petitioner, since the Counsel for the
Opposite Party No.1 cited recent judgments of this Court, as has
been detailed in the said order dated 21.11.2024, learned
Counsel for the Petitioner prayed for an adjournment to examine
the said judgments delivered by this Court to have his further
say in the said regard. However, on the adjourned date i.e. on
12.12.2024, learned Counsel for the Petitioner, instead of
Page 3 of 31
arguing further with regard to the judgments cited by the
Counsel for the Opposite Party No.1, produced the photocopy of
order dated 21.03.2022 passed by the Supreme Court in SLP(C)
No.4468 of 2022 and made a submission to dispose of the writ
petition directing the Controlling Authority (O.P.No.2) to release
the principal amount deposited by the Petitioner-Bank in favour
of the present Opposite Party No.1, giving liberty to the parties
to move before this Court to pass appropriate order regarding
release of interest after disposal of SLP(C) No.4468 of 2022.
6. Paragraph No.3 of the order dated 12.12.2024, being
relevant, is reproduced below:-
“3. Learned Counsel for the Petitioner files
photocopy of order dated 21.03.2022 passed
by the Supreme Court in SLP(C). 4468 of 2022
so also order dated 24.09.2022 passed by the
coordinate Bench in W.P.(C) No. 18632 of 2022
in (M.D., Odisha State Co- operative Bank
Ltd, BBSR Vs. Appellate Authority under
Payment of Gratuity Act, BBSR & ors.) and
submits, the writ petition be disposed of
directing the Controlling Authority (O.P. No.2)
under Payment of Gratuity Act to release the
principal amount deposited by the Bank before
it. So far as interest is concerned, since the
issue regarding rate of interest is sub-judice
before the Supreme Court in SLP(C).4468 of
2022 in another case, which is arising out of
order dated 18.11.2021 passed in W.A. No.322
of 2019, liberty be given to the parties to move
before this Court to pass appropriate order
regarding release of the interest, as will bePage 4 of 31
decided by the Supreme Court in SLP(C)
No.4468 of 2022″.
7. In response to such submission made by the learned
Counsel for the Petitioner-Bank, learned Counsel for the
Opposite Party No.1 submitted that the coordinate Bench in
W.P.(C) No.23834 of 2013 passed an incorrect order that the
concerned employee is entitled to interest at the rate of 6%
applying the provisions of Interest Act, even though there is a
specific provision under sub section (3A) of section 7 of the P.G.
Act to pay interest and the Central Government, exercising its
power conferred under sub section (3A) of section 7 of the P.G.
Act, has notified on 01.10.1987 to pay interest @ 10%, which is
still in vogue.
8. Learned Counsel for the Opposite Party No.1 further
submitted that the said erroneous order was also incorrectly
confirmed by the division Bench vide order dated 18.11.2021 in
W.A. No.322 of 2019. Hence, the Supreme Court, taking note of
the notification made by the Ministry of Law dated 01.10.1987,
has rightly issued notice to the employer in the said SLP(C)
No.4468 of 2022.
Page 5 of 31
9. Learned Counsel for the Opposite Party No.1 further
submitted that since the statute under the P.G. Act provides
payment of interest and the judgment passed by this Court so
also the Supreme Court on the said issue is very clear, it would
not be appropriate and justified to keep the said point open with
regard to rate of interest payable to the Opposite Party No.1 till
disposal of the said SLP.
10. So far as the order dated 01.05.2019 passed by the
coordinate Bench in W.P.(C) No.23834 of 2013, the concluding
para of the said order, being relevant, is extracted below:-
“Considering the contention raised by
learned counsel for the parties, it appears that
the factual matrix of the case which has been
discussed above, are not disputed and, as
such, the delay neither attributable to the
petitioner-employer nor to the employee. But,
question is if the benefit of Payment of Gratuity
Act is made applicable to the employee by
virtue of the order passed by this Court while
resolving dispute with regard to applicability of
Payment of Gratuity Act and accordingly the
same implemented by paying the amount by
the employer, namely, the petitioner herein,
with regard to delayed payment so far as
interest is concerned, the employer is obliged
under law to pay the same. Therefore, if the
employer is obliged under law to pay the
interest for delayed payment, the question
of rate of interest would be calculated for
payment of such interest amount.
Therefore, applying the provisions of
Interest Act, this Court is of the considered
view, instead of 10% interest on the
delayed payment on gratuity amount, thePage 6 of 31
petitioner is directed to pay the interest at
the rate of 6% to its employees. Accordingly,
the order so passed by the controlling authority
confirmed by the appellate authority dismissing
the appeal is modified to the extent the opposite
party- employee is entitled to get the interest at
the rate of 6% on the gratuity amount already
received. It is also clarified that the gratuity
amount of some employee are not paid by the
employer for other reasons, the same can also
be released after adjusting the amount due to
the petitioner along with the interest as stated
above in accordance with law”.
(Emphasis Supplied)
11. The said order passed by the coordinate Bench,
being challenged by the employee concerned in W.A. No.322 of
2019, the division Bench also incorrectly confirmed the said
order passed by the coordinate Bench vide order dated
18.11.2021. The said order, being relevant, is extracted below:-
“1. The short point that arises for
consideration in the present appeal is whether
the learned Single Judge was justified in
directing interest on the delayed payment of
gratuity at 6% per annum instead of 10% per
annum as claimed by the Petitioner?
2. It is seen that there is no provision
as such in the Payment of Gratuity Act
prescribing any mandatory minimum rate
of interest on delayed payment. In that
view of the matter, the learned Single
Judge has, after examining the provisions
of the Interest Act, directed that instead of
10% interest on delayed payment of
gratuity amount as claimed by the
Petitioner, it would be appropriate in the
interest of justice, if interest for the
delayed period is at the rate of 6% per
annum.
Page 7 of 31
3. No error has been committed by the
learned Single Judge that warrants interference
by this Court.
4. Accordingly, the appeal is dismissed.”
(Emphasis Supplied)
12. The said order passed by the division Bench, being
challenged by the employee concerned in SLP(C) No.4468 of
2022, the Supreme Court was inclined to issue notice to the
employer vide order dated 21.03.2022. Paragraph 1 of the said
order, being relevant, is extracted below:-
“1. Ms Madhusmita Bora, counsel
appearing on behalf of the petitioner submits
that:
(i) Following the amendment to Section 7 of
the Payment of Gratuity Act 1972 by the
insertion of sub-section 3(a), simple interest
became liable to be paid for the delay in
disbursing gratuity:
(ii) A notification has been issued by the
Union Ministry of Labour on 1 October
1987 (Annexure P-1) by which the rate of
interest has been prescribed at 10% per
annum; and
(iii) Hence, the Single Judge erred in
reducing the interest payable to the
petitioner on the delayed payment of
gratuity from 10% to 6% per annum”.
(Emphasis Supplied)
Page 8 of 31
13. Admittedly, in view of the provision enshrined under
subsection 3(A) of section 7 of the P.G. Act, 1972, followed by
notification made by the Central Government dated 01.10.1987,
the rate of interest payable to an employee, in the case of default
in payment of gratuity, is to be 10% from the date the gratuity
becomes payable till the date of actual payment.
14. Much prior to the said judgment of this Court, the
coordinate Bench in Mohan Dakua & ors. Vs. Steel Authority
of India Ltd & ors., reported in 2015 (II) ILR-CUT 178 : 2015
(I) OLR 386 : 120 (2015) CLT 1096 held as follows:-
“5. Reading of Sub-section (3) of Section 7
gives a clear indication for release of the
gratuity within a period of thirty days from the
date it becomes payable to the person to
whom the gratuity is payable. Similarly in
Sub-section (3-A) of Section 7, there is a
statutory mandate that in case the gratuity is
not released within the time framed, the
employer is required to pay the simple interest
at such rate not exceeding the rate notified in
the notification by the Central Government
from time to time for repayment of long term
deposit as the Government may be certified by
such notification.
6. From the pleadings of the parties, it
appears that there is no latches on the part of
the petitioners in the matter of release of the
gratuity. I find force in the submissions of
the petitioners which is not only
supported by the statutory provisions as
at Sub-section (3), (3-A) of Section 7 but
also covered by a decision decided by
Hon’ble Apex Court in case of H.
Gangahanume Gowda Versus Karnataka
Agro Industries Corporation Ltd. ByPage 9 of 31
deciding similar matter, the Hon’ble Apex
Court was pleased to grant interest for
the delayed period @ 10% as available in
para-9 and 10 of the said decision. The
petitioner’s case is squarely covered
under the above decision of the Hon’ble
Apex Court.
7. Further, the petitioners have also
referred to the statutory provisions as
recorded to hereinabove and they are entitled
to interest for delayed payment of Gratuity
under the statute also.
8. Under the circumstances, I allow the
writ petition directing the opposite party
(S.A.I.L.) to calculate the interest @ 10% to be
paid to each of petitioners independently.
Calculation as directed be made within a
period of four weeks from the date of
communication of the order and payment as
calculated be released in favour of each of the
petitioner within a period of two weeks
thereafter”.
(Emphasis Supplied)
15. The coordinate Bench, on who’s order the learned
Counsel for the Petitioner intended to rely to oppose the grant of
10% interest on the gratuity amount, in the General Manager
(P & EEL), Mahanadi Coalfields Ltd. Vs. Asim Kumar
Chatterjee reported in 122 (2016) CLT 260: 2016 LabIC 2302 :
2016 (149) FLR 497: 2016 (II) CLR 212 upheld the orders
passed by the Controlling Authority as well as confirmed order
passed by the Appellate Authority for payment of gratuity along
with 10% interest per annum. Paragraph Nos.1 and 8 to 13 of
the said judgment, being relevant, are extracted below:-
Page 10 of 31
“1. The General Manager (P/EEL),
Mohanadi Coal Fields Limited, Burla,
Sambalpur, being the petitioner, has filed this
petition seeking to quash the order dated
23.04.2015 passed by the Controlling
Authority under the Payment of Gratuity Act,
1972 and Regional Labour Commission
(Central), Rourkela in Application No.
36(2)/2014-RKL-R vide Annexure-8 by which
direction has been given to the petitioner to
pay the gratuity amount of Rs. 10,00,000/-
along with interest @ 10% per annum
calculated at Rs. 3,22,192/- within a period of
30 days from the date of receipt of the order.
8. In Mohan Dakua (Supra) referred
to by the learned counsel for opposite
party No. 1, this Court has held that
payment of gratuity is to be released
within a period of 30 days from the date
it becomes payable and as such, for the
delay in payment of gratuity since no
latches having been found on the part of
the employer and the employer having not
obtained prior permission from the
controlling authority for such delayed
payment, it is liable to pay interest @
10%.
9. In H. Gangahanume Gowda(supra),
the apex Court has held that in view of
the clear mandate under the provisions of
Section 7 to employer for payment of
gratuity within time and to pay interest
on the delayed payment of gratuity and
there is also provision to recover the
amount of gratuity with compounded
interest in case the amount of gratuity
payable was not paid by the employer in
terms of Section-8 of the Act, since the
employer did not satisfy the mandatory
requirements of the proviso to Section 7(3-
A), no discretion was left to deny interest
to the employee on belated payment of
gratuity and directed to pay interest
@10%.
10. Similarly in Kerala State Cashew
(supra) the apex Court has held that in case
the employer has obtained permission in
writing from the Controlling Authority forPage 11 of 31
delayed payment in that case no interest shall
be payable to the employee. In the present
case such permission having not been
obtained, the employer is liable to pay interest
on the gratuity amount.
11. In Y.K. Singla (supra) the apex Court
has held that Sub-section (3-A) of section 7 of
the Act, 1972 is a most relevant provision for
determination of interest to the employee and
perusal of Sub-section (3-A) of section 7 of the
Act, 1972 leaves no room for any doubt that in
case gratuity is not released to an employee
within 30 days from the date it becomes
payable under Sub-section (3) of Section 7, the
employee would be entitled to simple interest
at such rate not exceeding the rate notified by
the Central Government from time to time for
repayment of long term loans, as the
Government may, by notification specify.
12. In D.D. Tewari (D) Thr. LRs. (supra) the
apex Court has held that if pensionary
benefits on gratuity amount is erroneously
withheld by the employer, the employee is
entitled to interest from the date of entitlement
till the date of actual payment. Similar view
has also been taken in Rajnagar Textile
Mills(supra).
13. For the forgoing reasons and keeping
in view the judgments cited above, it is no
more res integra that the opposite party No. 1
is entitled to get interest on the gratuity
amount payable to him and therefore, the
impugned order passed in Annexure-8 dated
23.04.2015 by opposite party No. 2 is wholly
and fully justified”.
(Emphasis Supplied)
16. In a recent judgment in Manager Director, Odisha
Small Industries Corporation Ltd. Vs. Abhay Kumar
Samantray reported in 2022 (III) ILR-CUT 639, this Court held
as follows:-
Page 12 of 31
“20. So far as awarding 10% simple interest
on the determined amount, it may not be out of
place to mention that the Central Government,
in exercise of the powers conferred by Sub-
Section (3-A) of Section 7 of the P.G. Act, 1972,
vide Notification dated 01.10.1987, notified as
follows:
“TO BE PUBLISHED IN PART II, SECTION 3,
SUB-SECTION (II) OF THE GAZETTE OF INDIA-
EXTRAORINARY) PUBLISED ON 01.10.1987New Delhi, the 1st October, 87
NOTIFICATION
S.O. 874(E), In exercise of the powers
conferred by sub-section (3A) of section 7 of
the Payment of Gratuity Act, 1972 (39 of
1972), the Central hereby specifies ten percent
per annum as the rate of simple interest
payable for the time being by the employer to
his employee in cases where the gratuity is
not paid within the specified period.
2. This notification shall come into force on
the date of its publication in the Official
Gazette.”
(No. S-70012/6/87.SS-II)
(A.K. Bhattarai)
Under Secretary”
21. Admittedly, the said Notification dated
01.10.1987 is still in force not being
superseded by any fresh Notification varying
the rate of interest as was notified by the
Government of India on 01.10.1987.
22. Hence, this Court is of the view that the
Controlling Authority under P.G. Act-
Cum Divisional Labour Commissioner,
Cuttack, was justified to take into
consideration the total period of service of the
Opposite Party from the date of his initial
engagement (14.11.1991) till the date of his
superannuation (31.03.2018), so also award
10% simple interest on the awarded amountPage 13 of 31
for the delayed period, so also ordering to pay
further simple interest @ 10% per annum till
the payment is made, if the
Petitioner Corporation fails to deposit the said
ordered amount within 30 days from the date
of pronouncement of the judgment”.
17. The Supreme Court in H. Gangahanume Gowda Vs.
Kanataka Agro Industries Corpn. Ltd reported in (2003)3
SCC 40: AIR 2003 SC 1526, held as follows:-
“7. It is evident from Section 7(2) that as soon
as gratuity becomes payable, the employer,
whether any application has been made or
not, is obliged to 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. Under Section 7(3), the
employer shall arrange to pay the
amount of gratuity within 30 days from
the date it becomes payable. Under sub-
section (3-A) of Section 7, if the amount of
gratuity is not paid by the employer
within the period specified in sub-section
(3), he 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;
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 that ground. From the provisions made in
Section 7, a clear command can be seen
mandating the employer to pay the gratuity
within the specified time and to pay interest
on the delayed payment of gratuity. No
discretion is available to exempt or relieve the
employer from payment of gratuity with or
without interest as the case may be. However,
Page 14 of 31
under the proviso to Section 7(3-A), no interest
shall be payable if delay in payment of
gratuity is due to the fault of the employee and
further condition that the employer has
obtained permission in writing from the
controlling authority for the delayed payment
on that ground. Under Section 8, provision is
made for recovery of gratuity payable under
the Act, if not paid by the employer within the
prescribed time. The Collector shall recover the
amount of gratuity with compound interest
thereon as arrears of land revenue and pay
the same to the person entitled. A penal
provision is also made in Section 9 for non-
payment of gratuity. Payment of gratuity with
or without interest, as the case may be, does
not lie in the domain of discretion but it is a
statutory compulsion. Specific benefits
expressly given in a social beneficial
legislation cannot be ordinarily denied.
Employees on retirement have valuable rights
to get gratuity and any culpable delay in
payment of gratuity must be visited with the
penalty of payment of interest was the view
taken in State of Kerala v. M. Padmanabhan
Nair. Earlier there was no provision for
payment of interest on the delayed
payment of gratuity. Sub-section (3-A) was
added to Section 7 by an amendment,
which came into force with effect from 1-
10-1987. In the case of Charan Singh v. Birla
Textiles this aspect was noticed in the
following words.
“4. There was no provision in the Act
for payment of interest when the same
was quantified by the controlling
authority and before the Collector was
approached for its realization. In fact, it
is on the acceptance of the position
that there was a lacuna in the law that
Act 22 of 1987 brought about the
incorporation of sub-section (3-A) in
Section 7. That provision has
prospective application”.
9. It is clear from what is extracted above from
the order of the learned Single Judge that
interest on delayed payment of gratuity was
denied only on the ground that there was
Page 15 of 31
doubt whether the appellant was entitled to
gratuity, cash equivalent to leave etc., in view
of divergent opinion of the courts during the
pendency of enquiry. The learned Single
Judge having held that the appellant was
entitled to payment of gratuity was not right in
denying the interest on the delayed payment
of gratuity having due regard to Section 7(3-A)
of the Act. It was not the case of the
respondent that the delay in the payment of
gratuity was due to the fault of the employee
and that it had obtained permission in writing
from the controlling authority for the delayed
payment on that ground. As noticed above,
there is a clear mandate in the provisions of
Section 7 to the employer for payment of
gratuity within time and to pay interest on the
delayed payment of gratuity. There is also
provision to recover the amount of gratuity
with compound interest in case the amount of
gratuity payable was not paid by the
employer in terms of Section 8 of the Act. Since
the employer did not satisfy the mandatory
requirements of the proviso to Section 7(3-A),
no discretion was left to deny the interest to
the appellant on belated payment of gratuity.
Unfortunately, the Division Bench of the High
Court, having found that the appellant was
entitled to interest, declined to interfere with
the order of the learned Single Judge as
regards the claim of interest on delayed
payment of gratuity only on the ground that
the discretion exercised by the learned Single
Judge could not be said to be arbitrary. In the
first place in the light of what is stated above,
the learned Single Judge could not refuse the
grant of interest exercising discretion as
against the mandatory provisions contained in
Section 7 of the Act. The Division Bench, in our
opinion, committed an error in assuming that
the learned Single Judge could exercise the
discretion in the matter of awarding interest
and that such a discretion exercised was not
arbitrary”.
10. In the light of the facts stated and for
the reasons aforementioned, the impugned
order cannot be sustained. Consequently, it is
set aside. The respondent is directed to
Page 16 of 31
pay interest @ 10% on the amount of
gratuity to which the appellant is
entitled from the date it became payable
till the date of payment of the gratuity
amount. The appeal is allowed
accordingly with cost quantified at Rs.
10,000/-.”
(Emphasis Supplied)
18. The Supreme Court also in Director (Thrisul Project)
DRDO, Andhra Pradesh Vs. P.B. Varalakshmi and Others
reported in (2015) 15 SCC 398 held as follows:-
“2. The learned Additional Solicitor General
submits that in terms of the Rules the amount
can be disbursed only to the nominee, who is
the widow. Now that the inter se dispute
between the wife and the daughter has been
settled, we dispose of this appeal with the
direction to the appellant to disburse the eligible
benefits to the widow nominee who shall
distribute the benefits in terms of the
compromise between her and her daughter.
The dues shall be disbursed with interest
@ 10% which is the statutory rate fixed
under the Payment of Gratuity Act, 1972“.
(Emphasis Supplied)
The Supreme Court in State of U.P. & ors. Vs. Synthetic
& Chemicals Ltd. & ors., reported in (1991)4 SCC 139 held as
follows:-
“46. But the problem has arisen due to the
conclusion in the case of Synthetic and
Chemicals (supra). The question was if the
State legislature could levy vend fee or excise
duty on industrial alcohol. The Bench
answered the question in the negative asPage 17 of 31
industrial alcohol being unfit for human
consumption the State legislation was
incompetent to levy any duty of excise either
under Entry 51 or Entry 8 of List II of the VIIth
Schedule. While doing so the Bench recorded
the conclusion extracted earlier. It was not
preceded by any discussion. No reason or
rationale could be found in the order. This
gives rise to an important question if the
conclusion is law declared Under Article
141 of the Constitution or it is per
incurium and is liable to be ignored:
‘Incuria’ literally means
‘carelessness’. In practice per incurium
appears to mean per ignoratium.’ English
Courts have developed this principle in
relaxation of the Rule of stare decisis.
The ‘quotable in law’ is avoided and
ignored if it is rendered, ‘in ignoratium of
a statute or other binding authority’.
(1944 IKB 718 Young v. Bristol Aeroplane Ltd.
Same has been accepted, approved and
adopted by this Court while interpreting
Article 141 of the Constitution which embodies
the doctrine of precedents as a matter of law.
In Jaisri Sahu v. Rajdewan Dubey,
MANU/SC/0371/1961 : 1961:INSC:198 :
[1962] 2 SCR 558 this Court while pointing out
the procedure to be followed when conflicting
decisions are placed before a Bench extracted
a passage from Halsbury Laws of England
incorprating one of the exceptions when the
decision of an Appellate Court is not binding.
47. Does this principle extend and apply to
a conclusion of law, which was neither raised
nor preceded by any consideration. In other
words can such conclusions be considered as
declaration of law? Here again the English
Courts and jurists have carved out an
exception to the Rule of precedents. It has
been explained as Rule of sub silentio. A
decision passed sub-silentio, in the technical
sense that has come to be attached to that
phrase, when the particular’ point of law
involved in the decision is not perceived by the
Court or present to its mind’ (Salmond 12thPage 18 of 31
Edition). In Lancaster Motor Company
(London) Ltd. v. Bremith Ltd.,[1941] IKB 675
the Court did not feel bound by earlier
decision as it was rendered ‘without any
argument, without reference to the crucial
words of the Rule and without any citation of
the authority’. It was approved by this Court in
Municipal Corporation of Delhi v. Gurnam
Kaur, MANU/SC/0323/1988 : 1988:INSC:267
: [1989] 1 SCC 101. The Bench held that,
‘precedents sub-silentio and without argument
are of no moment’. The Courts thus have taken
recourse to this principle for relieving from
injustice perperated by unjust precedents. A
decision which is not express and is not
founded on reasons nor it proceeds on
consideration of issue cannot be deemed to be
a law declared to have a binding effect as is
contemplated by Article 141. Uniformity and
consistency are core of judicial discipline.
But that which escapes in the judgment
without any occasion is not ratio decedendi. In
Shama Rao v. State of Pondicherry, AIR 1967
SC 1680 it was observed, ‘it is trite to say that
a decision is binding not because of its
conclusions but in regard to its ratio and the
principles, laid down therein’. Any declaration
or conclusion arrived without application of
mind or preceded without any reason cannot
be deemed to be declaration of law or
authority of a general nature binding as a
precedent. Restraint in dissenting or
overruling is for sake of stability and
uniformity but rigidity beyond reasonable
limits is inimical to the growth of law”.
(Emphasis Supplied)
The Supreme Court in V. Kishan Rao Vs. Nikhil Super
Speciality Hospital & anr., reported in (2010)5 SCC 513 held
as follows:-
“54. When a judgment is rendered by
ignoring the provisions of the governing
statute and earlier larger Bench decisionPage 19 of 31
on the point such decisions are rendered
per incuriam. This concept of per incuriam
has been explained in many decisions of this
Court. Sabyasachi Mukharji, J. (as his
Lordship then was) speaking for the majority
in A.R. Antulay v. R.S. Nayak [(1988) 2 SCC
602 : 1988 SCC (Cri) 372] explained the
concept in the following words : (SCC p. 652,
para 42)
“42. … ‘Per incuriam’ are those
decisions given in ignorance or
forgetfulness of some
inconsistent statutory provision
or of some authority binding on
the court concerned, so that in
such cases some part of the
decision or some step in the
reasoning on which it is based,
is found, on that account to be
demonstrably wrong.”
Subsequently also in the Constitution Bench
judgment of this Court in Punjab Land
Development and Reclamation Corpn.
Ltd. v. Labour Court [(1990) 3 SCC 682 : 1991
SCC (L&S) 71] , similar views were expressed
in para 40 at p. 705 of the report”.
(Emphasis Supplied)
The Supreme Court in Siddharam Satlingappa Mhetre Vs.
State of Maharashtra & ors. reported in (2011) 1 SCC 694
held as follows:-
“139. Now we deem it imperative to examine
the issue of per incuriam raised by the learned
Counsel for the parties. In Young v. Bristol
Aeroplane Company Limited (1994) All ER 293
the House of Lords observed that ‘Incuria’
literally means ‘carelessness’. In practice per
incuriam appears to mean per ignoratium.
English courts have developed this principle in
relaxation of the rule of stare decisis. The
‘quotable in law’ is avoided and ignored if it isPage 20 of 31
rendered, ‘in ignoratium of a statute or other
binding authority. The same has been
accepted, approved and adopted by this Court
while interpreting Article 141of the
Constitution which embodies the doctrine of
precedents as a matter of law.
…In Halsbury’s Laws of England (4th Edn.)
Vol. 26: Judgment and Orders: Judicial
Decisions as Authorities (pp. 297-98, para
578) per incuriam has been elucidated as
under:
A decision is given per incuriam
when the court has acted in ignorance of
a previous decision of its own or of a
court of coordinate jurisdiction which
covered the case before it, in which case
it must decide which case to follow
(Young v. Bristol Aeroplane Co. Ltd. 1944
KB 718 : (1944) 2 All ER 293 .
In Huddersfield Police Authority v. Watson
1947 KB 842: (1947) 2 All ER 193.; or when it
has acted in ignorance of a House of Lords
decision, in which case it must follow that
decision; or when the decision is given in
ignorance of the terms of a statute or rule
having statutory force.
140. Lord Godard, C.J. in Huddersfield
Police Authority v. Watson (1947) 2 All ER 193
observed that where a case or statute had not
been brought to the court’s attention and the
court gave the decision in ignorance or
forgetfulness of the existence of the case or
statute, it would be a decision rendered in per
incuriam.
141. This Court in Government of A.P. and
Anr. v. B. Satyanarayana Rao (dead) by LRs.
and Ors. MANU/SC/0275/2000 : (2000) 4
SCC 262 observed as under: The rule of per
incuriam can be applied where a court
omits to consider a binding precedent of
the same court or the superior court
rendered on the same issue or where a
court omits to consider any statute while
deciding that issue”.
(Emphasis Supplied)
Page 21 of 31
The Supreme Court in Madhya Pradesh Rural Road
Development Authority Vs. L.G. Chaudhary Engineers &
Contractors, reported in (2012) 3 SCC 495 held as follows:-
“26. It is clear, therefore, that in view of the
aforesaid finding of a coordinate Bench of this
Court on the distinct features of an Arbitral
Tribunal under the said M.P. Act in Anshuman
Shukla case [(2008) 7 SCC 487] the provisions
of the M.P. Act are saved under Section 2(4) of
the AC Act, 1996. This Court while
rendering the decision in Va Tech [(2011)
13 SCC 261] has not either noticed the
previous decision of the coordinate Bench
of this Court in Anshuman Shukla [(2008)
7 SCC 487] or the provisions of Section
2(4) of the AC Act, 1996. Therefore, we
are constrained to hold that the decision
of this Court in Va Tech [(2011) 13 SCC
261] was rendered per incuriam.
27. This was the only point argued before us
by the learned counsel for the appellant.
28. The principle of per incuriam has been
very succinctly formulated by the Court of
Appeal in Young v. Bristol Aeroplane Co.
Ltd. [1944 KB 718 (CA)] Lord Greene, Master
of Rolls formulated the principles on the basis
of which a decision can be said to have been
rendered “per incuriam”. The principles are:
(KB p. 729)
“… Where the court has construed a statute
or a rule having the force of a statute its
decision stands on the same footing as any
other decision on a question of law, but
where the court is satisfied that an
earlier decision was given in ignorance of
the terms of a statute or a rule having the
force of a statute the position is very
different. It cannot, in our opinion, be
right to say that in such a case the court
is entitled to disregard the statutory
provision and is bound to follow aPage 22 of 31
decision of its own given when that
provision was not present to its mind.
Cases of this description are examples of
decisions given per incuriam.”
29. The decision in Young was subsequently
approved by the House of Lords
in Young v. Bristol Aeroplane Co. Ltd. Lord
Viscount Simon in the House of Lords
expressed His Lordship’s agreement with the
views expressed by Lord Greene, the Master
of Rolls in the Court of Appeal on the principle
of per incuriam (see the speech of Lord
Viscount Simon in Bristol Aeroplane Co. Ltd.
case
30. Those principles have been followed by
the Constitution Bench of this Court in Bengal
Immunity Co. Ltd. v. State of Bihar (see the
discussion in SCR at pp. 622 and 623 of the
Report).
31. The same principle has been reiterated by
Lord Evershed, Master of Rolls, in Morelle
Ld. v. Wakeling .The principle has been stated
as follows:
“… As a general rule the only cases in which
decisions should be held to have been given
per incuriam are those of decisions given in
ignorance or forgetfulness of some inconsistent
statutory provision or of some authority
binding on the court concerned; so that in such
cases some part of the decision or some step
in the reasoning on which it is based is found,
on that account, to be demonstrably wrong.”
32. In State of U.P. v. Synthetics and
Chemicals Ltd. [(1991) 4 SCC 139] this Court
held (SCC p. 162, para 40) that the doctrine of
“per incuriam” in practice means “per
ignoratium” and noted that the English courts
have developed this principle in relaxation of
the rule of stare decisis and referred to the
decision in Bristol Aeroplane Co. Ltd. [1946 AC
163 (HL)] The learned Judges also made it
clear that the same principle has been
approved and adopted by this Court while
interpreting Article 141 of the Constitution
Page 23 of 31
(see Synthetics and Chemicals Ltd.
case [(1991) 4 SCC 139] , SCC para 41).
33. In MCD v. Gurnam Kaur [(1989) 1 SCC
101] a three-Judge Bench of this Court
explained this principle of per incuriam very
elaborately in SCC para 11 at p. 110 of the
Report and in explaining the principle of per
incuriam the learned Judges held:
“11. … A decision should be treated as given
per incuriam when it is given in ignorance of
the terms of a statute or of a rule having the
force of a statute.”
34. In para 12 the learned Judges observed
as follows: (Gurnam Kaur case [(1989) 1 SCC
101] , SCC p. 111)
“12. … One of the chief reasons for the
doctrine of precedent is that a matter that has
once been fully argued and decided should
not be allowed to be reopened. The weight
accorded to dicta varies with the type of
dictum. Mere casual expressions carry no
weight at all. Not every passing expression of
a Judge, however eminent, can be treated as
an ex cathedra statement, having the weight
of authority.”
(Emphasis Supplied)
The Supreme Court in Hyder Consulting (UK) Ltd. Vs.
Governor, State of Orissa, reported in (2015) 2 SCC 189 held
as follows:-
“13. Before I consider the correctness of the
aforementioned decisions, it would be
necessary to elaborate upon the concept of
“per incuriam”. The latin expression per
incuriam literally means ‘through
inadvertence’. A decision can be said to be
given per incuriam when the Court of
record has acted in ignorance of any
previous decision of its own, or a
subordinate court has acted in ignorance
of a decision of the Court of record. As
regards the judgments of this Court rendered
Page 24 of 31
per incuriam, it cannot be said that this Court
has “declared the law” on a given subject
matter, if the relevant law was not duly
considered by this Court in its decision. In this
regard, I refer to the case of State of U.P. v.
Synthetics and Chemicals Ltd.
MANU/SC/0616/1991 : (1991) 4 SCC 139,
wherein Justice R.M. Sahai, in his concurring
opinion stated as follows:
40. ‘Incuria’ literally means
‘carelessness’. In practice per
incuriam appears to mean per
ignoratium. English courts have
developed this principle in relaxation
of the rule of stare decisis. The
‘quotable in law’ is avoided and
ignored if it is rendered, ‘in ignoratium
of a statute or other binding
authority’….
14. Therefore, I am of the considered view
that a prior decision of this Court on identical
facts and law binds the Court on the same
points of law in a later case. In exceptional
circumstances, where owing to obvious
inadvertence or oversight, a judgment
fails to notice a plain statutory provision
or obligatory authority running counter
to the reasoning and result reached, the
principle of per incuriam may apply. The
said principle was also noticed in the case of
Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.
(Emphasis Supplied)
19. Admittedly, there is a specific provision under the
P.G. Act, 1972, so far as payment of interest is concerned. That
apart, the coordinate Bench, while passing the order dated
01.05.2019 in W.P.(C) No.23834 of 2013, did not take note of
the earlier judgment of this Court in Mohan Dakua (supra) so
Page 25 of 31
also its own judgment in the General Manager (P & EEL),
Mahanadi Coalfield Ltd. (Supra) and the judgments of the
Supreme Court in H. Gangahanume Gowda (supra) and
Director (Thrisul Project) (supra). All the aforementioned
judgments are prior to the order dated 01.05.2019 passed by
the coordinate Bench in W.P.(C) No.23834 of 2013.
20. Admittedly, the coordinate Bench has passed the
order in Paradip Port Trust (supra) in ignorance of a previous
decision of its own in General Manager (P & EEL), Mahanadi
Coalfield Ltd. (Supra) so also in Mohan Dakua (supra) passed
by another coordinate Bench of this Court. Perhaps such an
incorrect order was passed by the coordinate Bench as because
the parties to the said lis failed to bring to the notice of the
learned coordinate Bench regarding the legal provisions under
the P.G. Act, 1972, notification made by the Central
Government in terms of Section 7 (3-A) of the P.G. Act, 1972 so
also earlier judgments of this Court and Supreme Court on the
said issue regarding rate of interest. For the self same reason,
the division Bench also incorrectly confirmed the said erroneous
order passed in W.P.(C) No.23834 of 2013, in W.A. No.322 of
2019.
Page 26 of 31
21. Admittedly while issuing notice in SLP(C) No.4468 of
2022, the Supreme Court, taking note of the said provisions
under sub-section 3-A of section 7 of the P.G. Act, 1972 so also
notification made by the Central Government in the said regard,
consciously has issued notice to the employer.
22. This Court is of the view that unless and until leave is
granted by the Supreme Court, mere issuance of notice in a SLP
cannot be held that the issue regarding rate of interest under
the P.G. Act is sub-judice before the Supreme Court, more
particularly, when such an issue has already been dealt with
and decided by the Supreme Court in H. Gangahanume
Gowda (supra) and Director (Thrisul Project) (supra) much
prior to issuing notice to the employer in SLP(C) No.4468 of
2022.
23. Law is well settled that any judgment or order passed
contrary to the statute is a nullity. That apart, law is also well
settled that any judgment passed without taking note of the
earlier judgment of the same Court so also Supreme Court is per
inqurium.
24. In Director of Settlements, A.P. Vs. M.R. Apparao,
(2002) 4 SCC 638, the Supreme Court held as follows:-
Page 27 of 31
“7. So far as the first question is
concerned, Article 141 of the Constitution
unequivocally indicates that the law
declared by the Supreme Court shall be
binding on all courts within the territory
of India. The aforesaid Article empowers
the Supreme Court to declare the law. It is,
therefore, an essential function of the
Court to interpret alegislation. The
statements of the Court on matters other than
law like facts may have no binding force as the
facts of two cases may not be similar. But what
is binding is the ratio of the decision and not
any finding of facts. It is the principle found out
upon a reading of a judgment as a whole, in the
light of the questions before the Court that
forms the ratio and not any particular word or
sentence. To determine whether a decision has
“declared law” it cannot be said to be a law
when a point is disposed of on concession and
what is binding is the principle underlying a
decision. A judgment of the Court has to be
read in the context of questions which arose for
consideration in the case in which the judgment
was delivered. An “obiter dictum” as
distinguished from a ratio decidendi is an
observation by the Court on a legal question
suggested in a case before it but not arising in
such manner as to require a decision. Such an
obiter may not have a binding precedent as the
observation was unnecessary for the decision
pronounced, but even though an obiter may not
have a binding effect as a precedent, but it
cannot be denied that it is of considerable
weight. The law which will be binding under
Article 141 would, therefore, extend to all
observations of points raised and decided by
the Court in a given case. So far as
constitutional matters are concerned, it is a
practice of the Court not to make any
pronouncement on points not directly raised for
its decision. The decision in a judgment of the
Supreme Court cannot be assailed on the
ground that certain aspects were not
considered or the relevant provisions were not
brought to the notice of the Court
(see Ballabhadas Mathurdas Lakhani v.
Municipal Committee, Malkapur [(1970) 2 SCCPage 28 of 31
267 : AIR 1970 SC 1002] and AIR 1973 SC 794
[ (sic)] ). When the Supreme Court decides a
principle it would be the duty of the High
Court or a subordinate court to follow the
decision of the Supreme Court. A judgment
of the High Court which refuses to follow
the decision and directions of the Supreme
Court or seeks to revive a decision of the
High Court which had been set aside by
the Supreme Court is a nullity.
(See Narinder Singh v. Surjit Singh [(1984) 2
SCC 402] and Kausalya Devi Bogra v. Land
Acquisition Officer [(1984) 2 SCC 324] .) We
have to answer the first question bearing in
mind the aforesaid guiding principles. We may
refer to some of the decisions cited by Mr Rao in
elaborating his arguments contending that the
judgment of this Court dated 6-2-1986 [State of
A.P. v. Rajah of Venkatagiri, (2002) 4 SCC 660]
cannot be held to be a law declared by the
Court within the ambit of Article 141 of the
Constitution. Mr Rao relied upon the judgment
of this Court in the case of M.S.M. Sharma v. Sri
Krishna Sinha [AIR 1959 SC 395 : 1959 Supp
(1) SCR 806] wherein the power and privilege of
the State Legislature and the fundamental right
of freedom of speech and expression including
the freedom of the press was the subject –
matter of consideration. In the aforesaid
judgment it has been observed by the Court
that the decision in Gunupati Keshavram
Reddy v. Nafisul Hasan [(1952) 1 SCC 343 :
AIR 1954 SC 536 : 1954 Cri LJ 1704] relied
upon by the counsel for the petitioner which
entirely proceeded on a concession of the
counsel cannot be regarded as a considered
opinion on the subject. There is no dispute with
the aforesaid proposition of law”.
(Emphasis Supplied)
25. This Court is also of the view that order dated
01.05.2019 passed in W.P.(C) No. 23834 of 2013, so also the
confirmed order passed by the division Bench in W.A. No. 322 of
Page 29 of 31
2019, are hit by the principle of per incuriam as the Bench has
passed such an order contrary to the statute so also without
taking note of its own judgment in Mahanadi Coal fields Ltd.
(supra) so also the earlier judgment passed by this Court in
Mohan Dakua (Supra) and judgment passed by the Supreme
Court in H. Gangahanume Gowda (Supra) so also in Director
(Trisul Project) DRDO (Supra) pertaining to the said issue
regarding interest payable to an employee under the P.G. Act,
1972.
26. Following the aforesaid principles, this Court is
constrained to hold that the order passed by the coordinate
Bench so also the confirming order passed by the division
Bench, having been rendered per incurium, cannot be accepted
as a precedent to decide the controversy regarding the rate of
interest in this case and wait till disposal of SLP(C) No.4468 of
2022. Hence, this Court is of the view that the oral prayer made
by the learned Counsel for the Petitioner to dispose of the Writ
Petition directing the Controlling Authority to release the
principal amount giving liberty to the parties to move before this
Court for release of interest after disposal of SLP(C) No. 4468 of
2022 needs no consideration.
Page 30 of 31
27. Accordingly, the writ petition stands dismissed. No
order as to cost.
28. In view of the dismissal of the Writ Petition, the
Assistant Labour Commissioner, Cuttack, who is the Controlling
Authority under the P.G. Act, 1972, before whom the Petitioner-
Bank has deposited the entire awarded amount in terms of the
order passed in P.G. Case No. 22 of 2012, shall do well to
disburse the said amount with accrued interest, if any, in favour
of the Opposite Party No.1 within a period of two weeks’ from
the date of production of the certified copy of this judgment.
………………………….
S.K. MISHRA, J.
Orissa High Court, Cuttack.
Dated, 24th December, 2024/ Banita
Signature Not Verified
Digitally Signed
Signed by: BANITA PRIYADARSHINI PALEI
Designation: SR. STENOGRAPHER
Reason: AUTHENTICATION
Location: HIGH COURT OF ORISSA, CUTTACK
Date: 03-Jan-2025 18:09:09
Page 31 of 31