Madras HC Orders 6% Interest For Retired Transport Employee Over Delayed Benefits, Excluding Earned-Leave Salary

The petitioner, a retired Checking Inspector of the Tamil Nadu State Transport Corporation, retired on 31 May 2025.

His retirement benefits were disbursed on 11 March 2026. After his representation seeking interest for the delay received no response, he filed a writ petition under Article 226 seeking interest at 6% per annum on delayed retirement benefits, including earned leave salary.

The respondents confirmed that the benefits had been paid but disputed the claim for interest on earned leave salary.

In S.K. Dua v. State of Haryana, (2008) 3 SCC 44, the Supreme Court held that an employee may claim interest on delayed retiral benefits under applicable statutory rules or administrative instructions and, even in their absence, may rely on Articles 14, 19 and 21 of the Constitution; retiral benefits are not a bounty.

The Court also followed the Madras High Court Division Bench’s common order dated 4 July 2014 in W.A.(MD) No. 403 of 2010 and connected matters, which held that a Transport Corporation’s obligation to pay retirement benefits promptly may entail liability to pay interest for delay, notwithstanding the absence of an express interest provision.

The Court found that the petitioner’s retirement benefits had been settled belatedly and applied the principle that such delay must be compensated by interest.

Relying on S.K. Dua and the Division Bench ruling concerning the Corporation’s pension arrangements, it fixed the applicable rate at 6% per annum.

It excluded earned leave salary from the interest award, consistent with the respondent’s objection.

Payment was directed within three months of receipt of a copy of the order; no costs were awarded.