Retired employees are entitled to interest on delayed leave encashment payments, and the court can enforce reasonable interest rates despite the employer's financial constraints.

ORDER :

PRADEEP SINGH YERUR, J.

This petition is filed by the petitioners seeking a writ of mandamus for a direction to the respondent to pay interest at the rate of 10% per annum on the belated payment of leave encashment benefit as per the request made in the representations dated 18.11.2024 02.12.2024, 04.12.2024, 05.12.2024 and 06.12.2024.

2. Petitioners were appointed as conductors in the respondent-Corporation. After serving the Corporation for more than 25 to 30 years, they all retired from service on the dates mentioned in the petition. Immediately after the retirement, the terminal benefits i.e., leave encashment benefits were not paid. The respondent belatedly paid leave encashment benefit by way of cheque and no interest was paid on the said amount. It is contended by learned counsel for the petitioners that as per the Circular No.58 dated 09.07.1998, the terminal benefits and all other benefits are required to be paid as on date of retirement itself and the same does not indicate the consequences for non-payment of the said benefits belatedly.

3. This being the state of affairs, the petitioners approached the respondent-Corporation requesting for payment of interest for the delayed period with regard to leave encashment benefit. The representations came to be made on the dates mentioned hereinabove claiming interest at the rate of 10% per annum. The representations were served on the respondent, however, no reply was given and no payment was made towards interest on the belated leave encashment benefit. Hence, being aggrieved by the non- payment of interest for the delayed period, petitioners are before this Court.

4. It is the contention of learned counsel for the petitioners that the question of the petitioners having been employed in the respondent-Corporation, having put in more than 25 to 30 years of service and having retired from service on the dates mentioned hereinabove are all not disputed, so also the payment of terminal benefits i.e., leave encashment benefit paid by the respondent-Corporation. It is the vehement contention of learned counsel for the petitioners that it is the onerous duty of the respondent- Corporation to bid farewell to the employee having served for more than 25 to 30 years in the organization in a respectful manner by relieving them by making payment of all benefits pension, salary, terminal benefits, other benefits including leave encashment as on the date of their retirement. But in the present case, no doubt the other benefits of salary, gratuity and other benefits have been paid, but the leave encashment benefit was paid belatedly but the interest for delayed payment has not been paid till date despite giving representations to the respondent- Corporation.

5. He further contends that there is no justifiable grounds on behalf of respondent-Corporation to withhold the interest on leave encashment benefit which is rightfully entitled to the petitioners. It is further contended that this amount of leave encashment, though it is paid belatedly, the interest amount towards the said leave encashment has not been paid. Therefore, the amount which was due to the petitioners and liable to be paid as on the dates of retirement was admittedly lying with the respondent-Corporation fetching interest which has gone to the benefit of the Corporation. Therefore, the interest component would have to be paid for the delayed payment of the leave encashment to the petitioners.

6. Learned counsel for the petitioners relies on the following judgments in support of his case.

i) Judgment of this Court in W.A.No.5022/1998 decided on 27.01.1999;

ii) Order of this Court in W.P.No.100157/2024