Madras HC Orders TNSTC To Pay 6% Interest On Retirement Benefits Paid Nine Months Late

The petitioner retired as an Assistant Manager (Non-Technical) on 31 May 2025. His retirement benefits—including provident fund, earned leave and medical leave salary, and gratuity—were paid on 11 March 2026.

After his representation seeking interest on the delayed payment received no response, he filed a writ petition under Article 226 seeking interest at 18% per annum; relying on similar cases, he also submitted that 6% per annum had been awarded in comparable matters.

The respondents confirmed that the terminal benefits were paid in March 2026.

Under Article 226, an employee may claim interest on delayed retirement benefits even in the absence of a specific statutory rule or administrative instruction, as recognised in S.K. Dua v. State of Haryana, (2008) 3 SCC 44.

The Court also relied on the Division Bench’s common order in W.A.(MD) No. 403 of 2010 and connected matters, dated 4 July 2014, which held that a Transport Corporation’s obligation to make prompt payment could require interest for delay and fixed the rate at 6% per annum.

The petitioner’s retirement benefits were paid only in March 2026, after his retirement in May 2025.

Applying S.K. Dua and the Division Bench’s ruling concerning delayed Transport Corporation retirement benefits, the Court held that the delay warranted compensation by way of interest, notwithstanding the absence of a provision in the relevant pension fund rules.

It applied the 6% rate established in the Division Bench ruling rather than the 18% sought in the prayer.

No costs were awarded.