Entitlement to Interest on Retiral Benefits Delayed Without Justifiable Disciplinary or Departmental Inquiry

The petitioner retired as the Director of the Animal Husbandry Department on 31/08/2019 after 36 years of service.

At the time of retirement, no disciplinary proceedings were pending.

However, the State withheld his retirement benefits, citing a private complaint regarding alleged irregularities.

An internal inquiry report dated 05/11/2019 cleared the petitioner of these allegations.

Despite this, the State only released the terminal benefits in September 2020, over a year after his retirement.

The petitioner approached the Court seeking interest on the delayed payment.

1. Whether the State is liable to pay interest to a retired employee for the delayed disbursement of pensionary and retirement benefits in the absence of pending judicial or departmental proceedings.

2. Whether an internal inquiry initiated based on a third-party complaint serves as a justifiable ground for withholding legitimate retirement dues.

The Court applied the principle that retirement benefits are not a bounty but a right to property under the Constitution, and any delay in payment must be compensated with interest.

It relied on *Vijay L. Mehrotra v. State of Uttar Pradesh* (2001) 9 SCC 687, which mandates that retirement benefits must be paid on the date of retirement or soon thereafter.

The Court further cited *D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Ltd.* (2014) 8 SCC 894, establishing that pensioners are entitled to interest for late service benefits if the delay lacks justifiable reasons.

The Court observed that the petitioner had a clean record at the time of retirement and was not subject to any formal disciplinary actions.

The State’s defense—that delay occurred due to an inquiry into a private complaint—was dismissed as a "bald defense," especially since the internal inquiry had exonerated the petitioner as early as November 2019.

The Court reasoned that once the exoneration report was received, there was no "good reason" to withhold funds until September 2020.

Since the petitioner was deprived of the use of his legitimate funds for no fault of his own, the imposition of interest was necessary not as a penalty, but as compensation.

The Court directed the respondent State to pay interest @ 7.5% p.a. on the retirement benefits from 01/09/2019 until the actual date of payment in September 2020.

The State was ordered to provide a detailed calculation sheet and complete the payment by 31/03/2026, failing which an additional cost of ₹10,000/- would be imposed.