Belatedly paid retirement benefits must carry 6% annual interest, even absent an express rule.

The petitioner retired as Assistant Manager of the respondent Transport Corporation on 30 April 2025, after 35 years of service.

His retirement benefits were reportedly paid on 11 March 2026.

After his representation seeking interest for the delay received no response, he filed a writ petition seeking interest at 18% per annum on the delayed benefits.

The respondents confirmed that the benefits had been settled on 11 March 2026.

1. Whether the petitioner was entitled to interest on retirement benefits paid after a delay, notwithstanding the absence of a specific provision for interest.

2. If so, what rate and period of interest should apply?

In S.K. Dua v. State of Haryana, (2008) 3 SCC 44, the Supreme Court held that an employee may claim interest on delayed retiral benefits under applicable rules or administrative instructions and, even in their absence, may invoke Articles 14, 19 and 21 of the Constitution; retiral benefits are not a bounty.

A Division Bench of the Madras High Court, in W.A.(MD) No. 403 of 2010 and connected matters, held that the absence of an express interest provision in the Tamil Nadu State Transport Corporation Employees Pension Fund rules does not excuse delayed payment, and fixed interest at 6% per annum.

The governing principle is that retirement benefits should be paid promptly and delay may be compensated by interest.

The Court found that the petitioner’s retirement benefits had been paid belatedly and applied the principle that such benefits are not a bounty and must be settled promptly.

Following the Division Bench decision fixing interest at 6% per annum for delayed payment by the Transport Corporation, the Court awarded that rate rather than the 18% claimed.

No costs were awarded.