Interest is payable as restitution for service benefits wrongfully withheld under illegal punishment orders.

The applicant, a retired Assistant In-charge of the Delhi Transport Corporation (DTC), was subjected to a punishment order on July 13, 1994, which stopped two increments with cumulative effect

The Industrial Tribunal set aside this punishment on April 6, 2005, and directed the payment of arrears

The respondents challenged this award before the Delhi High Court, which dismissed their petition on January 23, 2020

While the respondents eventually paid the arrears on July 20, 2020, they refused the applicant's request for interest on the delayed payment

After a civil suit was disposed of on jurisdictional grounds in 2022, the applicant filed the present Original Application seeking interest at 12% per annum for the period between 1994 and 2020

1. Whether the applicant's claim for interest is barred by the principle of res judicata or the provisions of Order II Rule 2 of the Code of Civil Procedure (CPC)

2. Whether an employee is entitled to interest as a matter of restitution when salary arrears are wrongfully withheld for an inordinate period

The Tribunal applied the principles of res judicata and Order II Rule 2 of the CPC, which prevent the splitting of claims and re-litigation of decided issues

It specifically relied on the Supreme Court precedent in Gurbux Singh v. Bhooralal (1964), holding that a technical bar under Order II Rule 2 requires the defendant to prove the identity of the cause of action by placing previous pleadings on record

Additionally, the Tribunal applied the equitable principle of restitution, which dictates that interest on withheld dues is not a penalty but a means to neutralize the financial loss suffered by an employee due to the deprivation of the use of their money

The Tribunal rejected the respondents' technical objections regarding res judicata and Order II Rule 2, noting that the respondents failed to produce pleadings from the earlier Labour Court proceedings to prove that the claim for interest was available or consciously omitted at that time

It observed that the cause of action for interest arose primarily from the prolonged non-payment of dues following the quashing of the punishment

On the merits, the Tribunal reasoned that because the 1994 punishment was ultimately declared illegal, the applicant must be restored to the financial position she would have occupied had the increments not been stopped

The Tribunal found that the respondents had retained the applicant's monetary benefits for over two decades and held that denying interest would allow the employer to profit from its own wrongful actions

It held that the applicant is entitled to interest on the arrears of pay and consequential benefits at the rates applicable to General Provident Fund (GPF) deposits for the period from July 13, 1994, to July 20, 2020

The respondents were directed to calculate and release the amount within eight weeks of receiving the order