Jammu & Kashmir High Court
Complex Jammu vs A/P Extension Trikuta Nagar Jammu on 27 July, 2026
2026:JKLHC-JMU:2339
Serial No.126
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
WP (C) No. 2298/2026
CM No. 4966/2026
Date of Pronouncement:- 27.07.2026
Uploaded on: 29.07.2026
The Jammu & Kashmir Central Cooperative
Bank Ltd
Through its Managing Director Sh. Des Raj
Head Office Sehkari Bhawan, Rail Head
Complex Jammu.
.....Appellant(s)/Petitioner(s)
Through: Mr. Pawan Dev Singh, Advocate.
V/s
Anil Kishore Gupta S/o Sh. Hans Raj Gupta
R/o Govind Pura Jammu Cant, Satwari
A/P Extension Trikuta Nagar Jammu. ..... Respondent(s)
Through: Mr. Nischal Sharma, Advocate.
CORAM: HON'BLE MR. JUSTICE SANJAY PARIHAR, JUDGE
ORDER (ORAL)
27.07.2026
1. The instant petition is directed against the order dated 14.02.2026
passed by the Appellate Authority under the Payment of Gratuity Act,
1972 (Deputy Labour Commissioner), Jammu, impugned herein,
whereby the application for restoration of the appeal against the order
dated 14.08.2025 passed by the Controlling Authority has been made
conditional upon the deposit of interest @ 10% per annum with effect
from 03.03.2023, along with the production of a certificate evidencing
the deposit of the said interest component. It has further been provided
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that failure on the part of the petitioner to comply with the said
condition would result in the automatic dismissal of the restoration
application.
2. It is the case of the petitioner that, in terms of the order dated
14.08.2025 passed by the Controlling Authority, the petitioner was held
liable to pay an amount of ₹20,00,000/- along with interest @ 10% per
annum with effect from 03.03.2023. Aggrieved thereof, the petitioner
preferred an appeal before the Appellate Authority under the provisions
of the Payment of Gratuity Act, 1972. However, the appeal came to be
dismissed on account of the petitioner’s inability to comply with the
requirement of pre-deposit under Section 7 of the Act. Thereafter, the
petitioner-Bank deposited an amount of ₹20,00,000/-, being the
maximum liability determined under the order dated 14.08.2025 passed
by the Controlling Authority, and sought restoration of the appeal. The
grievance of the petitioner is that the Appellate Authority has made it
clear that the appeal would be restored and heard only upon deposit of
the entire interest amount as well.
3. Learned counsel for the petitioner submits that the impugned order is
contrary to law inasmuch as it erroneously directs the petitioner to
deposit the interest component as a pre-condition for restoration of the
appeal. It is contended that the liability to pay interest is merely
consequential in nature and does not form part of the jurisdictional pre-
condition prescribed under the statute. It is further submitted that the
interest sought to be pre-deposited cannot be treated as part of the
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gratuity amount, particularly when the liability to pay interest may
depend upon the facts and circumstances of each case. Accordingly, it
is urged that the impugned order warrants interference and deserves to
be set aside.
4. Notice. Mr. Nischal Sharma, learned counsel, waives notice on behalf
of the respondents. He submits that the requirement of pre-deposit of
the gratuity amount necessarily includes the interest accrued thereon
and that mere deposit of the principal amount does not satisfy the
mandate of Section 7 of the Payment of Gratuity Act, 1972.
5. Learned counsel for the petitioner has placed reliance upon authority of
Punjab and Haryana High Court in case titled, “M/s Napa Auto Forge
Pvt. Ltd Vs. Appellate Authority under the Payment of Gratuity Act–
cum-Deputy Labour Commissioner, Faridabad (Haryana) & Ors” in
CWP No. 6957/2014 (O&M). Learned counsel for the respondent on
the other hand has placed reliance upon the judgment passed by the
Division Bench of this Court in case titled, “Badri Nath Koul Vs. U.T
of Jammu and Kashmir & Ors” in LPA No. 235/2022 to take a view
that interest component is held liable to be deposited as well.
6. I have heard both the learned counsels and seen the record.
7. Section 7(7) of the Payment of Gratuity Act provides that any person
aggrieved by an order passed by the Controlling Authority under sub-
section (4) may, within sixty days from the date of receipt of such
order, prefer an appeal before the appropriate Government or such
other authority as may be specified. The Appellate Authority, upon
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being satisfied that sufficient cause prevented the appellant from
preferring the appeal within the prescribed period, may extend the
limitation by a further period of sixty days. The second proviso to
Section 7(7), however, stipulates that no appeal preferred by an
employer shall be entertained unless, at the time of filing the appeal,
the appellant either produces a certificate issued by the Controlling
Authority certifying that an amount equal to the gratuity determined
under sub-section (4) has been deposited with it, or deposits such
amount before the Appellate Authority.
8. Under Section 7(4) of the Act, where any dispute arises regarding the
amount of gratuity payable, the employer is required to deposit with the
Controlling Authority the amount admittedly payable as gratuity. Upon
adjudication of the dispute, the Controlling Authority shall determine
the amount payable and direct the employer to pay the balance amount,
after giving credit for the amount already deposited.
9. A plain reading of the aforesaid provisions makes it evident that the
employer is under a statutory obligation to deposit the amount of
gratuity admittedly payable. Where the quantum of gratuity is disputed,
the Controlling Authority is required to determine the amount legally
payable and direct payment after adjusting the amount already
deposited. Any person aggrieved by such determination is entitled to
avail the statutory remedy of appeal. However, the maintainability of
an appeal by an employer is conditional upon compliance with the pre-
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deposit requirement prescribed under the second proviso to Section
7(7).
10. Learned counsel for the respondent has placed reliance upon the
judgment of the Division Bench of this Court in “Badri Nath Koul v.
Union Territory of Jammu & Kashmir & Other“, in LPA No.
235/2022, wherein Section 7 of the Act came up for consideration. In
the said case, the writ petition was dismissed on the ground of
availability of an efficacious alternative remedy of appeal. The
Division Bench affirmed the order of the learned Single Judge and
observed that the appellant ought to avail the statutory remedy under
Section 7(7) of the Act. Since the writ petition itself was held to be not
maintainable, the Division Bench consciously refrained from
expressing any opinion on the merits of the controversy. The
observations regarding the pre-deposit requirement were made only in
the context of safeguarding the amount ultimately payable to the
employee during the pendency of the appeal. The judgment, therefore,
cannot be construed as laying down any authoritative interpretation of
the scope or ambit of Section 7(7).
11. Reliance has also been placed upon the judgment of the Division
Bench of the Jharkhand High Court in “Chairman-cum-Managing
Director, M/s Heavy Engineering Corporation Ltd. v. Union of India
& Others” in LPA No. 757/2019. In the said decision, the Court held
that the expression “amount found to be payable” would include not
only the principal gratuity amount but also the interest awarded
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thereon. Consequently, it was held that an appeal would be
maintainable only upon deposit of the entire amount comprising both
gratuity and interest.
12. Learned counsel has further referred the judgment of the Kerala High
Court in case titled, “The Managing Director, Kerala State Financial
Enterprises Ltd Vs. Sri. Mathew P. Babu & Ors” in WP(C) No.
11384/2025, reported as 2025(6) KLT 729, wherein it was held that the
deposit contemplated under the second proviso to Section 7(7) includes
the gratuity amount together with the interest awarded thereon. A
contrary view, however, has been expressed by the Punjab and Haryana
High Court in M/s Napa Auto Forge Pvt. Ltd. v. Appellate Authority
under the Payment of Gratuity Act-cum-Deputy Labour
Commissioner, Faridabad & Others” in CWP No. 6957/2014, wherein
it was held that the statutory pre-deposit envisaged under Section 7(7)
pertains only to the gratuity amount and does not extend to the interest
component. Accordingly, it was observed that insistence upon deposit
of interest as a condition precedent for entertaining the appeal is
contrary to the statutory scheme.
13. In view of the divergent judicial opinions on the interpretation of
Section 7(7), the present matter requires determination on its own
merits in the light of the statutory provisions.
14. In the present case, the Controlling Authority, by order dated
14.08.2025, determined the gratuity payable at ₹20,00,000/- and further
directed payment of interest at the rate of 10% per annum with effect
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from 03.03.2023 till the date of actual realization. The employer
preferred an appeal against the said order. However, as the appeal was
not accompanied by the statutory pre-deposit contemplated under
Section 7(7), it came to be dismissed on 13.12.2025. Subsequently, the
appellant deposited the principal gratuity amount of ₹20,00,000/- on
01.01.2026, explaining that the delay in making the deposit was
occasioned by administrative and procedural constraints.
15. The Appellate Authority, while acknowledging that the appellant had
deposited a sum of ₹20,00,000/-, proceeded to reject the application
seeking restoration of the appeal on the ground that only the principal
gratuity amount had been deposited, whereas the interest component
remained unpaid. It, therefore, concluded that there was no complete
compliance with the statutory requirement and held that failure to
deposit the interest amount rendered the restoration application liable to
automatic dismissal. There can be no quarrel with the settled
proposition that gratuity is not a bounty to be distributed at the
discretion of the employer but a valuable statutory right vested in an
employee. Equally well settled is the principle that culpable delay in
disbursement of gratuity attracts liability to pay interest, as reiterated by
the Hon’ble Supreme Court in case titled, “State of Uttar Pradesh &
Ors Vs. Dhirendra Pal Singh“, reported as (2017) 1 SCC 49.
16. The second proviso to Section 7(7) employs the expression that the
appellant shall either produce a certificate issued by the Controlling
Authority certifying that an amount equal to the gratuity required to be
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deposited under sub-section (4) has been deposited with it, or deposit
such amount before the Appellate Authority. A plain and literal
construction of the provision leaves little room for doubt that the
statutory requirement is satisfied once the employer deposits an amount
equivalent to the gratuity determined by the Controlling Authority. In
the present case, the gratuity determined was ₹20,00,000/-, which
admittedly stands deposited. The insistence by the Appellate Authority
that the employer was also required to deposit the interest component,
as a condition precedent for restoration of the appeal, travels beyond
the express language of the statute. The disjunctive expression “or”
employed in the proviso assumes significance. While the expression
“such amount” may, in an appropriate factual context, admit of a
broader construction, the essential statutory requirement remains the
deposit of the gratuity amount determined under sub-section (4),
evidenced by a certificate of the Controlling Authority or by deposit
before the Appellate Authority.
17. The submission advanced on behalf of the petitioner that the
requirement to deposit the interest component is merely consequential
and not jurisdictional deserves acceptance. Interest follows the
principal liability and cannot be equated with the statutory pre-
condition governing the maintainability of an appeal. The primary
obligation of the Controlling Authority under Section 7 is to determine
the entitlement of the employee to gratuity and quantify the amount
payable in accordance with law. The statutory scheme contemplates
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determination of gratuity as the principal issue, while the liability to
pay interest arises as a consequence of delayed payment.
18. Section 7(4)(a) specifically provides that where a dispute exists
regarding the amount of gratuity payable or the admissibility of any
claim, the employer shall deposit with the Controlling Authority such
amount as is admitted by it to be payable as gratuity. Sub-section (4)(c)
further empowers the Controlling Authority, upon adjudication, to
direct payment of the balance amount after adjusting the amount
already deposited. The statutory mandate, therefore, clearly indicates
that the admitted liability towards gratuity constitutes the subject matter
of the mandatory deposit, which is liable to be adjusted against the final
determination made by the Controlling Authority.
19. The Division Bench of the Jharkhand High Court, while interpreting
Section 7(7), did not specifically examine the significance of the
disjunctive expression “or” occurring in the second proviso.
Consequently, the said judgment cannot be regarded as conclusively
determining the issue arising in the present case. Once the gratuity
amount determined by the Controlling Authority had already been
deposited, insistence upon deposit of the interest component, as a
condition precedent for restoration of the appeal, resulted in serious
prejudice to the appellant’s statutory right of appeal. It is true that the
expression “such amount” occurring in the proviso may, in a broader
sense, refer to the amount determined by the Controlling Authority.
Equally, Section 7(4)(d) contemplates payment by the Controlling
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Authority of the amount deposited, including any excess amount, to the
person entitled thereto. Nevertheless, the determination of interest is
not free from dispute. The employer may legitimately challenge either
the rate of interest awarded or the very entitlement to interest. If the
employer is compelled to deposit the entire interest amount before the
appeal can even be entertained, the statutory right of appeal, insofar as
the interest component is concerned, would stand substantially diluted.
Such an interpretation would defeat the legislative intent underlying
Section 7(7) by rendering the appellate remedy illusory.
20. In the present case, the appellant has specifically questioned the award
of interest at the rate determined by the Controlling Authority. The
grievance raised in appeal extends not merely to the principal
determination but also to the interest awarded thereon. Consequently,
insisting upon prior deposit of the disputed interest amount, despite the
gratuity amount having already been deposited, would effectively
deprive the appellant of an efficacious opportunity to challenge the
correctness of the order before the Appellate Authority.
21. For the foregoing reasons, this Court is of the considered opinion that
the Appellate Authority committed a manifest error in insisting upon
deposit of the interest component as a condition precedent for
restoration of the appeal. The application before the Appellate
Authority was one seeking restoration of an appeal already dismissed
on account of non-compliance with the statutory requirement. Once the
gratuity amount stood deposited, the Appellate Authority ought to have
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examined whether sufficient grounds existed for restoration of the
appeal. Hyper-technical adherence to a requirement not expressly
contemplated by the statute has the effect of frustrating the valuable
statutory right of appeal and cannot be sustained in law.
22. Accordingly, the impugned order passed by the Appellate Authority is
set aside. Since the statutory requirement of depositing an amount
equivalent to the gratuity determined by the Controlling Authority,
namely ₹20,00,000/-, has admittedly been complied with, the appeal
preferred by the appellant shall stand restored to its original number.
The Appellate Authority shall proceed to decide the appeal afresh on its
own merits, strictly in accordance with law, after affording due
opportunity of hearing to all the parties concerned.
23. The writ petition is, accordingly, allowed in the aforesaid terms. All
connected application(s), if any, shall also stand disposed of.
(Sanjay Parihar)
Judge
Jammu
27.07.2026
Renu
Whether the order is speaking: Yes
Whether the order is reportable: Yes
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