Retired Employee is Entitled to Interest on Delayed Payment of Pension

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November 5, 2018

“Pension is no more considered to be a bounty to be handed out by the State at its whim. An employee has a right to receive pension upon retirement. If payment of such pension is delayed, the retired employee is surely entitled to get some interest for such delayed payment.”

Case name: Purna Chandra Mondal vs State of West Bengal & Ors

In the case, under the ROPA Rules, 2009 there was revision of the pensionary and gratuity amount payable to the petitioner. The revised pension payment order was issued in 2012 and the arrear revised pension was disbursed in 2013 in terms of ROPA, 2009. Accordingly, the Petitioner claimed interest on delayed payment of revised pension.

The High Court of Calcutta while pronouncing its judgment in the case stated that it is a settled law that a retired employee is entitled to some amount of interest on delayed payment of pension.

The High Court in the case also took the opportunity to elaborate on the point of delay or limitation. While deliberating on this issue the Court was of the view that the Limitation Act does not apply to writ petitions. Reference in this context was also made to Supreme Court’s judgment in the case of Union of India v. Tarmen Singh[1], wherein it was observed that if the issue relates to payment or refixation of pay or pension, relief may be granted in spite of delay as it does not affect the rights of third parties.

“That the right of a retired employee to get his retiral dues on the date of attaining superannuation is a valuable right which accrues in his favour on the date of his attaining superannuation. Further, pension is no more considered to be a bounty to be handed out by the State at its whim. An employee has a right to receive pension upon retirement. If payment of such pension is delayed, the retired employee is surely entitled to get some interest for such delayed payment.

Pension and gratuity are aimed at maintaining the life of a retired employee and his/her dependents, these are welfare provisions and even if there is delay on the part of a retired employee to approach the Court claiming interest on delayed payment of pensionary benefits, the delay per se should not be the ground for rejection of the writ petition. No third party interest will be affected by a direction on the State to compensate the retired employee for delayed payment of pensionary benefits by paying interest at a reasonable rate.”

In view of the aforesaid observations, the High Court directed the Respondents to pay interest to the writ petitioner at the rate of nine per cent per annum on the arrear revised pension calculated on and from June 1, 2009 till actual date of payment.

The entire case can be accessed here.

[1] (2008) 8 SCC 648