Employers must pay 6% interest on delayed retirement benefits from retirement until disbursement.

The petitioner, a Special Grade Driver employed by the respondent Transport Corporation from 25 May 1995, retired on 30 June 2025.

He alleged that his terminal benefits were paid belatedly and sought interest at 6% per annum from retirement until payment.

His petition stated that the benefits were paid on 11 March 2026; the respondents reported that they had been settled on 8 September 2026.

The petitioner’s representation dated 8 September 2026 seeking interest received no response, prompting this writ petition.

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

2. If so, whether interest at 6% per annum was appropriate and for what period.

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, even in their absence, may claim it under Articles 14, 19 and 21 of the Constitution; retiral benefits are not a bounty.

The Court also followed the Division Bench’s common order dated 4 July 2014 in W.A.(MD) No. 403 of 2010 and connected matters, which fixed interest at 6% per annum for delayed payment by the Transport Corporation, notwithstanding the absence of an express interest provision in the Pension Fund Rules.

The Court accepted that the respondents had paid the petitioner’s retirement benefits after his retirement and treated the delay as giving rise to a claim for compensation by way of interest.

Applying S.K. Dua, it held that the absence of a specific interest provision did not defeat the claim.

It followed the Division Bench’s 2014 ruling on the applicable rate and granted interest at 6% per annum on the eligible benefits from retirement until actual disbursement.

Payment was to be made within six months of receipt of a copy of the order.

No costs were awarded.