Madras HC Orders 6% Interest For Transport Corporation Retiree Whose Benefits Were Paid 16 Months After Retirement

In brief

The question

Whether the petitioner was entitled to interest on retirement benefits disbursed after a delay, despite the absence of a specific provision for interest.

The court held

The writ petition was disposed of with a direction to the respondents to pay interest at 6% per annum on the eligible retirement benefits disbursed belatedly, for the period from 1 August 2024 until actual disbursement, within six months of receiving a copy of the order.

It also directed

No costs were awarded.

01Facts

The petitioner, a retired Foreman of the respondent Transport Corporation, retired on 31 July 2024 after 38 years of service.

pp. 1–2 · ¶ 2

His retirement benefits were disbursed on 2 December 2025. After his representations seeking interest for the delay received no response, he filed a writ petition under Article 226 seeking interest at 18% per annum on the delayed retirement benefits, including provident fund and earned-leave encashment.

pp. 1–2 · ¶ 2

The respondents confirmed that the benefits had been settled on 2 December 2025.

p. 3 · ¶ 4

02Issues

i.Whether the petitioner was entitled to interest on retirement benefits disbursed after a delay, despite the absence of a specific provision for interest.

pp. 3–5 · ¶ 7–9

ii.If so, what rate and period of interest should apply?

p. 5 · ¶ 9

03Law Applied

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 invoke Articles 14, 19 and 21 of the Constitution; retiral benefits are not a bounty.

pp. 3–4 · ¶ 7

Following that principle, a Division Bench of the Madras High Court in W.A.(MD) No. 403 of 2010 and connected matters, by order dated 4 July 2014, held that delayed payment of retirement benefits may attract interest even where the relevant pension-fund rules contain no express provision for it, and fixed the rate at 6% per annum.

pp. 4–5 · ¶ 8

04Reasoning

The Court accepted that the petitioner’s benefits had been paid belatedly and applied the principle that retirement benefits must be settled promptly and that delay may be compensated by interest.

pp. 3–5 · ¶ 4, 7–8

Following the Division Bench’s decision on the same issue, it rejected the petitioner’s claim for 18% interest in favour of the established rate of 6% per annum.

pp. 4–5 · ¶ 8–9

It directed that interest run from the day after retirement, 1 August 2024, until actual disbursement.

p. 5 · ¶ 9