Employees are entitled to 6% interest on belatedly paid retirement benefits.

The petitioner, a Special Grade Conductor, retired from the respondent Transport Corporation on 31 December 2018 after 27 years of service.

His retirement benefits were paid on 23 September 2019.

After a representation seeking interest for the delay went unanswered, he filed a writ petition under Article 226 seeking interest at 6% per annum on the delayed payment of gratuity, provident fund, pension commutation, leave-encashment and leave salary.

The respondents confirmed that the benefits had been paid on 23 September 2019.

1. Whether the petitioner was entitled to interest on retirement benefits disbursed after his retirement.

2. If so, whether interest at 6% per annum should be paid, and for what period.

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

The Court also relied on the Division Bench decision in W.A.(MD) No. 403 of 2010 and connected matters, dated 4 July 2014, which 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, when paid belatedly, the delay may be compensated by interest.

The petitioner’s retirement benefits were not paid until 23 September 2019, although he retired on 31 December 2018.

Applying S.K. Dua and the Division Bench ruling, the Court held that delayed payment of eligible retirement benefits warrants interest even without an express provision in the Pension Fund Rules.

It accordingly applied the established rate of 6% per annum and set the interest period to begin on 1 January 2019.

No costs were awarded.