Delayed terminal benefits attract 6% annual interest from the employee’s death until payment.

The petitioner’s husband, a Conductor employed by the respondent Transport Corporation from 20 December 1988, died in service on 4 January 2021.

His terminal benefits were paid to the petitioner on 6 December 2022. After representing for interest on the delayed payment, the petitioner sought a writ of mandamus directing payment of interest at 6% per annum from the date of death until actual disbursement.

The respondents reported that the benefits had been paid on 6 December 2022.

Whether the petitioner was entitled to interest on her deceased husband’s terminal benefits because they were paid belatedly.

If so, whether interest should be paid at 6% per annum from the date of death until actual disbursement.

In S.K. Dua v. State of Haryana, (2008) 3 SCC 44, the Supreme Court recognised that an employee may claim interest on delayed retiral benefits under applicable statutory rules or administrative instructions, and that a claim may also be grounded in Articles 14, 19 and 21 of the Constitution even in their absence.

A Division Bench of the Madras High Court, in W.A.(MD) No. 403 of 2010 and connected matters, held that where the rules contemplate prompt payment of retirement benefits, the Corporation is obliged to compensate for delayed payment by interest, notwithstanding the absence of an express interest provision; it fixed the rate at 6% per annum.

The Court accepted that the terminal benefits were disbursed only on 6 December 2022, nearly twenty-three months after the employee’s death on 4 January 2021.

Applying S.K. Dua and the Division Bench decision, it held that terminal benefits should be settled without delay and that belated payment warrants interest, even where the applicable rules do not expressly provide for it.

It therefore applied the 6% rate established by the Division Bench and calculated the interest period from the date of death to actual disbursement.

Payment was ordered within six months from receipt of a copy of the order; there was no order as to costs.