Retired Transport Corporation Driver To Get 6% Annual Interest On Delayed Benefits, Except Earned-Leave Salary: Madras HC

The petitioner, a Special Grade Driver with the respondent Transport Corporation, retired on 31 March 2025.

His retirement benefits were disbursed on 11 March 2026.

After his representation seeking interest for the delay received no response, he filed this writ petition seeking interest at 6% per annum on his terminal benefits, including earned leave salary.

The respondents confirmed the payment date and opposed 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 invoke Articles 14, 19 and 21 of the Constitution; retiral benefits are not a bounty.

Following that principle, a Division Bench of the Madras High Court in W.A.(MD) No. 403 of 2010 and connected matters (common order dated 4 July 2014) held that a Transport Corporation must compensate employees for delayed payment of retirement benefits, notwithstanding the absence of a specific interest provision, and fixed interest at 6% per annum.

The Court applied the principle that retirement benefits should be paid promptly and that an employee may be compensated by interest when payment is delayed.

The petitioner’s benefits were paid only on 11 March 2026, after his retirement on 31 March 2025; applying the cited Supreme Court and Division Bench decisions, the Court ordered 6% interest on eligible retirement benefits.

It excluded earned leave salary from the interest award.

Payment was to be made within three months of receipt of the order.

No costs were awarded.