An employee is entitled to be compensated for the delay in payment of salary, and the court's power to grant interest is circumscribed by the provisions of the Interest Act, 1978 and Section 34 of the Code of Civil Procedure, 1908.

ORDER :

Hemant Gupta, CJ.

The challenge in the present appeal is to an order passed by the learned Single Bench on 06.01.2017 in W.P. No.18392/2013 (Ramlal Mahobia v. State of M.P. & others) whereby the writ petition filed by the writ-petitioner (respondent herein) claiming interest @12% per annum on the delayed payment of salary for a period of 13 months i.e. from 01.09.1997 to 10.09.1998, paid after seven years and four months, was allowed.

2. The learned Single Bench referred to a judgment of the Supreme Court rendered in Union of India etc. v. Justice S.S. Sandhawalia (Retd.) & others etc. (1994) 2 SCC 240 to hold that when reason for delayed payment is attributable to the department, therefore, an employee cannot be deprived of the benefit of interest.

3. Learned counsel for the appellants refers to an order dated 29.06.2013 passed by the Chief Conservator of Forest, officiating Conservator of Forest, Central Forest Circle, Jabalpur in pursuance of a direction of this Court to consider the grant of interest on delayed payment of salary. In the order passed, it is mentioned that the writ-petitioner was sent on deputation to Panchayat and Rural Development Department for a period of two years in the year 1996. He was reverted back to the parent department on 30.07.1997 inter alia on the ground that he is not taking interest, putting political pressure and remaining absent from duty and misbehaving with the officials. He was posted on 11.09.1997 against his original post as Deputy Forest Ranger in Production Forest Division, Dindori but he abstained from duty. It was on 11.08.1998, he was posted as Forest Ranger in Forest Range, Dindori by recalling of earlier order dated 11.09.1997. Since he has not worked for the period 11.09.1997 to 10.09.1998, vide order dated 16.09.2004 a decision was taken to pay him wages for the said period on compassionate basis and accordingly payment was made to him in the month of December, 2004. However, it was held that he is not entitled to interest on the salary for the period he remained absent from duty.

4. During the course of hearing on 10.11.2017, this Court framed the following question for consideration:-

“Whether delay in payment of arrears of salary entitles an employee to interest and if yes, at what rate?

5. Learned counsel for the appellants-State pointed out that since the writ-petitioner has remained absent from duty and he has been paid salary as a concession, therefore, he is not entitled to interest on account of delayed payment of salary.

6. We find that in the context in which the writ-petitioner was reverted to the parent department and the fact that he has not joined the place of posting to which he was posted, disentitles the writ-petitioner to claim interest on the salary, which was granted as a concession without working on the post.

7. However, the larger question: as to whether delay in payment of arrears of salary without any fault of the employee entitles him to interest, is required to be examined.

8. Shri Shroti, learned Amicus Curiae, referred to the Interest Act, 1978 (for short “the Act”) to contend that salary is a debt on which interest would be payable in terms of Section 3 of the Act and the interest at a rate not exceeding the current rate of interest for whole or part of the period can be awarded. Shri Shroti also referred to a judgment of the Supreme Court in Secretary, Irrigation Department, Government of Orissa and others etc. v. G.C. Roy etc., AIR 1992 SC 732, to contend that a person deprived of the use of money to which he is legitimately entitled, is entitled to be compensated for the deprivation, call it by any name. The relevant extract from the said judgment, reads as under:-

“43. The question still remains whether arbitrator has the power to award interest pendente lite, and if so on what principle. We must reiterate that we are dealing with the situation where the agreement does not provide for grant of such interest nor does it prohibit such grant. In