Employee entitled for interest if retiral dues paid beyond two months: HC
The high court bench of justice Jagmohan Bansal said that petitioner in question is entitled to interest at the rate of 6% per annum on delayed payment of commutation of pension, gratuity and leave encashment.
The Punjab and Haryana high court has held that if retiral dues of an employee is released beyond two months from the date of retirement, the employee is entitled for interest on the same.
The high court bench of justice Jagmohan Bansal said that petitioner in question is entitled to interest at the rate of 6% per annum on delayed payment of commutation of pension, gratuity and leave encashment.
The court was hearing a plea from one, Vinod Kumar Yadav from Faridabad, who on attaining the age of superannuation retired from the post of sub-divisional engineer on March 31, 2021. As per the plea he was entitled to GPF, leave encashment, gratuity and commutation of pension. However, the government delayed payment of retiral dues as well as commencement of monthly pension. He was paid arrears towards pension in July 2022. In his case, GPF amount was released in June 2021, leave encashment and gratuity amount in December 2021, commutation of pension amount in May 2022 and arrears of monthly pension from April 2021 to June 2022 in July 2022. He had made representations before the government to release the retiral benefits with interest, which were rejected on two occasions, in May 2022 and December 2024. He had challenged these orders last month.
“...an employee is entitled to interest if payment of retiral dues is made beyond two months from the date of retirement,” the bench observed directing that needful be done within three months. The court, however, said that there would be no interest on GPF because it automatically carries interest.
The government counsel could not controvert the facts and had admitted to some delay in making retiral dues. The delay was unintentional, and length of delay is small, thus, petitioner is not entitled to interest. The delay was not on the part of respondent, the government counsel had argued.
However, the court took note of an apex court judgment in which it was held that an employee can claim interest in terms of Part III of Constitution of India, which deals with the fundamental rights to Indian citizens. It also took note of a full court judgment with an identical issue and held that an employee normally would be paid retiral benefits within two months and in case of payment beyond two months, he shall be entitled to interest.