Leave encashment forms part of retiral dues and attracts interest for delayed payment.

The respondent had instituted OA 423/2022 before the Central Administrative Tribunal (CAT) concerning refixation of pay and revision of pension and retiral dues.

By order dated 4 October 2023, the CAT directed the Union of India to refix the respondent’s pay on the basis of the last basic pay drawn, revise the pension and other retiral dues, and pay simple interest at GPF rates on amounts found payable for the relevant period.

The respondent subsequently initiated contempt proceedings in CP 818/2023, alleging non-compliance, particularly the failure to pay interest on delayed leave encashment.

On 20 April 2026, the CAT held that leave encashment formed part of retiral dues and directed the petitioners to comply with the earlier order, including payment of applicable interest, failing which costs would be imposed.

The Union of India challenged the CAT’s order before the Delhi High Court, although it had not challenged either the original order dated 4 October 2023 or the CAT’s order dated 20 April 2026.

Whether leave encashment constitutes “retiral dues” for the purposes of the CAT’s direction to pay interest at GPF rates on delayed retiral benefits

Whether the High Court should interfere with the CAT’s direction requiring the petitioners to comply with the earlier order and pay interest on delayed leave encashment

The Court applied the principle that retiral dues include amounts payable to an employee upon retirement, including leave encashment.

It further applied the compensatory-interest principle that inordinate delay in releasing retiral benefits may justify payment of interest, even in the absence of an express statutory provision specifically authorising interest on leave encashment.

The Court relied on Union of India v. Vijay Kumar Gupta, W.P. (C) 5537/2025, decided on 6 August 2025, for the proposition that delayed payment of leave encashment warrants interest.

It also applied the rule that an unchallenged and operative judicial direction must be complied with in its letter and spirit.

The Court treated leave encashment as a payment accruing to the employee at retirement in respect of unavailed leave standing to the employee’s credit; it therefore fell squarely within the ordinary meaning of “retiral dues”.

Since the CAT’s order dated 4 October 2023 directed revision of pension and other retiral dues with interest at GPF rates, the direction necessarily extended to delayed leave encashment.

The petitioners had neither challenged that order nor the CAT’s subsequent clarification dated 20 April 2026, and could not resist compliance by contending that the applicable rules contained no express provision for interest on leave encashment.

The High Court also noted that the CAT had not yet punished the petitioners for contempt; it had merely granted a final opportunity to comply with the existing direction.

Accordingly, no ground for writ interference was made out.

Finding no reason to interfere with the CAT’s order requiring compliance, the Court dismissed the writ petition.