Mandatory interest on delayed gratuity payment is a statutory right, with no discretion to deny it absent the proviso's conditions.

Interest on delayed payment of gratuity under the Payment of Gratuity Act, 1972 is a statutory entitlement when gratuity is not paid within the prescribed time. Section 7(3A) requires simple interest on delayed payment unless the delay is attributable to the employee and written permission for delayed payment has been obtained from the controlling authority; Section 8 also contemplates recovery with compound interest. The statutory scheme leaves no discretion to deny interest where the proviso is not satisfied, so refusal of interest on discretionary grounds was incorrect.

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Issues: Whether interest on delayed payment of gratuity is mandatory under the Payment of Gratuity Act, 1972, and whether the High Court could deny such interest on the ground of discretion.

Analysis: Gratuity becomes payable on retirement and the employer is required to determine and pay it within the prescribed time. Section 7(3A) mandates simple interest on delayed payment of gratuity unless the delay is attributable to the employee and permission for delayed payment has been obtained in writing from the controlling authority. Section 8 further provides for recovery of gratuity with compound interest. The statutory scheme leaves no scope for discretionary denial of interest where the conditions of the proviso are not satisfied.

Conclusion: Interest on delayed payment of gratuity was payable as a matter of statutory right, and denial of interest on the supposed exercise of discretion was incorrect.

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