Liability to pay arrears with compound interest and the discretion of the court to determine the necessity of penal interest based on the facts and circumstances of the case.

Rakesh Tiwari, J.

Heard learned Counsel for the parties and perused the record.

2. The controversy involved in this writ petition is decided by the Division Bench judgment dated 23.2.2006 in Special Appeal No. 151 of 2006, Managing Director, U. P. State Handloom Corporation Ltd. v. Dinesh Maurya and others, wherein it has been held that the direction for payment of 6% penal interest was not necessary in the facts and circumstances of the case and no error has been committed by the learned single Judge in directing the Corporation to make the payment with compound interest at the rate of 10%. The order is reproduced as under:

Heard learned Counsel for the Appellant and the learned Counsel appearing for the Respondents.

This appeal has been filed against the judgment and order dated 16.1.2006 passed by a learned single Judge disposing of the writ petition directing the corporation to make payment of entire arrears to the writ Petitioners with 10% compound interest and 6% penal interest.

Learned Counsel for the Appellant submitted that the Corporation is suffering under the great financial stress and the amount, which is received by the State Government for disbursement of V.R.S. amount, has already been disbursed. He further contends that the State Government has not released the sufficient funds for making the payment of the dues.

Learned single Judge by the impugned judgment has directed the Corporation to make the payment. Learned Counsel for the Appellant has not disputed the liability of the Corporation to pay arrears to the writ Petitioners. The writ Petitioners are clearly entitled for the arrears of salary alongwith interest.

We are satisfied that no error has been committed by the learned single Judge in directing the Corporation to make the payment with compound interest. However, we are of the view that the direction for payment of 6% penal interest was not necessary in the facts and circumstances of the present case. Except the direction for payment of 6% penal interest, the judgment of the learned single Judge is affirmed. The appeal is dismissed.

We make it clear that the amount of pension to which the writ Petitioners are entitled may be paid as directed, but necessary steps be taken within the power of the Appellant as required under law.

Ajay Nath Ray, Ashok Bhushan, JJ.

3. Thus, in view of the aforesaid decision the application is liable to be rejected. Moreover, the application also suffers from laches as it has been filed beyond 187 days of the prescribed limit.

4. The application is accordingly rejected.