FCI Employees Get 9% Interest On Delayed DA Arrears From 2016, Not 2010, Madras HC Directs

In brief

The question

Whether the petitioners were entitled to interest on the delayed payment of the difference in Dearness Allowance, notwithstanding their failure to submit claims in response to the respondents’ notification.

The court held

The Court held that the petitioners were entitled to interest at 9% per annum on the amounts already paid towards the difference in Dearness Allowance, for the period from 1 January 2016 until actual disbursement.

It also directed

It directed the respondents to complete payment within eight weeks from receipt of the order and disposed of both writ petitions without costs.

01Facts

The petitioners, Food Corporation of India employees who had opted for the IDA pay scale, sought interest at 9% per annum on the delayed payment of the difference in Dearness Allowance.

In Union of India v. P.N. Natarajan, the Supreme Court directed payment to the respondents and similarly situated employees within three months, with interest at 9% per annum from the date of its order if payment was delayed.

p. 7

The petitioners received the amounts only on 28 November 2019.

The respondents relied on a 15 October 2010 notification inviting claims, which the petitioners had not answered, and on a later Division Bench ruling restricting interest to the period from 1 January 2016.

pp. 5–6, 8, 10

02Issues

i.Whether the petitioners were entitled to interest on the delayed payment of the difference in Dearness Allowance, notwithstanding their failure to submit claims in response to the respondents’ notification.

p. 9

ii.If so, whether interest was payable from the date of the Supreme Court’s order or only from 1 January 2016.

pp. 9–10

03Law Applied

Under Sections 12-A(4)(a) and (b), read with Section 12-A(4-C) of the Food Corporation of India Act, a settlement could not adversely affect employees’ statutory options.

p. 7

In Union of India v. P.N. Natarajan, (2010) 12 SCC 405, the Supreme Court directed payment to similarly situated employees within three months and stipulated interest at 9% per annum from the date of its order in the event of delay.

p. 7

The Madras High Court Division Bench in W.A. No. 219 of 2020, judgment dated 13 February 2024, affirmed that interest in the matter before it ran from 1 January 2016, having regard to the date of the employees’ claims.

p. 10

Provisions in the judgment · 1

Food Corporations Act, 1964 Section 12A

04Reasoning

The Court found that the petitioners were similarly situated to the employees covered by P.N. Natarajan and that their payments were not made within the Supreme Court’s three-month period.

pp. 6–7, 10

The respondents’ notification and the petitioners’ failure to respond did not, by themselves, nullify the Supreme Court’s direction; accordingly, the petitioners were entitled to interest.

p. 10

However, following the Division Bench’s decision, the Court limited the interest period to the period beginning 1 January 2016, rather than granting interest from the date of the Supreme Court’s order.

pp. 10–11