Employees are entitled to interest on delayed retiral benefits caused by State default.

The petitioner, a medical officer, was denied promotion as Director and Professor, Institute of Otorhinolaryngology, Madras Medical College, in 2009.

He challenged the denial in W.P. No. 29391 of 2010.

After approximately ten years, the High Court directed the State to consider his notional promotion on comparative merit and grant all attendant benefits within twelve weeks.

The respondents implemented the order by granting notional promotion with effect from 07.12.2009 and settled the consequential monetary benefits on 29.04.2021, although the petitioner had retired in 2010.

During contempt proceedings, the petitioner was granted liberty to pursue his claim for interest before the appropriate forum.

He thereafter filed the present writ petition seeking interest at 12% per annum from the date of retirement until payment.

1. Whether the petitioner was entitled to interest on the delayed payment of retirement and consequential promotional benefits, notwithstanding the absence of an express direction to pay interest in the earlier writ petition.

2. Whether interest should be awarded at the rate of 12% per annum as claimed, or at another rate determined by the Court.

The Court relied principally on S.K. Dua v. State of Haryana, (2008) 3 SCC 44, which holds that retiral benefits are not a bounty and that an employee may claim interest on delayed retirement benefits under Articles 14, 19 and 21 of the Constitution even in the absence of statutory rules, administrative instructions or guidelines.

The Court further applied the principle that where the State defaults in performing its legal obligations and compels an employee to approach the courts to secure a legitimate entitlement, interest may be awarded as compensation for the resulting delay and hardship.

The Court found that the petitioner’s promotional rights had been wrongfully denied and that he had challenged the denial promptly in 2010, whereas the respondents contested the matter for nearly a decade.

Although the monetary benefits were ultimately settled after the earlier writ order, the Court held that the State’s prolonged failure to recognise and implement the petitioner’s entitlement caused compensable delay.

Applying S.K. Dua, the Court treated the delayed payment of the consequential retirement benefits as attracting interest, observing that protection of the public exchequer could not by itself justify denying compensation for the petitioner’s prolonged deprivation.

However, the Court considered 6% per annum appropriate rather than the 12% claimed.

The respondents were directed to pay interest at 6% per annum on the delayed benefits from the date of the petitioner’s retirement until 29.04.2021, the date of actual reimbursement.

The interest was directed to be paid within eight weeks of receiving the order.

In default, the respondents would be liable to pay interest at 12% per annum from the date of the judgment, with liberty to recover such default interest from the officials responsible for the delay.

No costs were awarded.