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(2006) 6 Supreme Court Cases 455
(BEFORE RUMA PAL, B.N. SRIKRISHNA AND DALVEER BHANDARI, JJ.)
UNION OF INDIA AND ANOTHER - Petitioners
Versus
M.S. ABDULLA - Respondent
Civil Appeal No. 2362 of 2006,
Decided on April 27, 2006
Interest Calculation - Retiral Benefits - The court held that interest on retiral benefits should be calculated from six months after the Fifth Pay Commission Report, based on the principle applied to payment of retiral benefits in case of delay.
Fact of the Case:
The only controversy raised in this appeal is whether the respondent is entitled to payment of interest on retiral benefits at the rate of 12% per annum for the period beyond six months from the retirement or with effect from three months after the Fifth Pay Commission Report.
Finding of the Court:
The court allowed the appeal to the extent that the payment of interest shall be made for the period of delay after six months from the date of the Fifth Pay Commission Report.
Issues: Controversy over the entitlement to payment of interest on retiral benefits beyond six months from retirement or with effect from three months after the Fifth Pay Commission Report.
Ratio Decidendi: The court applied the principle that payment of interest on retiral benefits should be calculated from six months after the Fifth Pay Commission Report, based on the principle applied to payment of retiral benefits in case of delay.
Final Decision: The appeal is allowed to the extent that the payment of interest shall be made for the period of delay after six months from the date of the Fifth Pay Commission Report. No order as to costs.
ORDER
1. Leave granted.
2. The only controversy raised in this appeal is whether the respondent is entitled to payment of interest on retiral benefits at the rate of 12% per annum for the period beyond six months from the retirement or with effect from three months after the Fifth Pay Commission Report.
3. The Tribunals view, which was accepted by the High Court, was that payment of interest should be calculated with effect from three months after the Fifth Pay Commission Report. Our attention had been drawn to a circular dated 6 - 5 - 1991 which lays down that normally with regard to payment of retiral benefits, payment of interest is to be made in case there is delay of more than six months. In our opinion, the same principle should also be applied in case of payment of interest on retiral benefits by reason of voluntary retirement on the basis of the Fifth Pay Commission Report.
4. The appeal is allowed to that extent and the payment of interest shall be made for the period of delay after six months from the date of the Fifth Pay Commission Report. No order as to costs.
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