IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : February 17, 2026 Union of India and others .. Petitioners Versus Manmohan Singh and another .. Respondents CORAM: HON'BLE MR. JUSTICE HARSIMRAN SINGH SETHI HON'BLE MR. JUSTICE VIKAS SURI Present: Mr. Vinish Singla, Senior Panel Counsel, for the petitioners.

HARSIMRAN SINGH SETHI J. (ORAL)

1. Present writ petition has been filed challenging the order dated 03.11.2025 (Annexure P-1) passed by respondent No.2- Central Administrative Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as ‘the Tribunal’) by which, on the delayed retiral benefits i.e.

the payment of leave encashment, the benefit of interest has been granted.

2. Learned counsel appearing on behalf of the petitioners argues that though, no disciplinary proceedings were pending against respondent No.1 but as certain complaints had been received against him, which were under consideration, the pensionary benefits/retiral dues were not extended to him hence, the grant of interest on such withheld benefits is not permissible but without appreciating the said fact, the benefit of interest has been granted which order passed by the Tribunal is liable to be set aside.

3. We have heard learned counsel for the petitioners and have gone through the record with his able assistance.

4. On being asked as to whether, in the absence of any disciplinary proceedings pending, any retiral benefits due to personnel concerned can be withheld, learned counsel for the petitioners has not been able to show any Rule which stipulates that even during the pendency of any complaint filed against an employee concerned, the retiral benefits due to such employee can be withheld, which shows that the action of the petitioners in not releasing the retiral benefits due to respondent No.1 was not within their jurisdiction.

5. Once, the benefits admissible to respondent No.1 were not released in due time and were wrongly withheld and the said amount was used by the petitioners to their advantage, the grant of interest by way of compensation to respondent No.1 cannot be treated as arbitrary and illegal.

6. Said aspect has already been dealt by the Full Bench of this Court in A.S. Randhawa Vs. State of Punjab and others, 1997(3) SCT 468 whereby, it has been held that once the retiral benefits admissible to employee concerned were withheld without jurisdiction and the same were released after a delay, in order to compensate such an employee whose dues have been wrongly withheld, the grant of interest by the Tribunal is perfectly valid and illegal. The relevant paragraph of said judgment is as under:-

“Since a government employee on his retirement becomes immediately entitled to pension and other benefits in terms of the Pension Rules, a duty is simultaneously cast on the State to ensure the disbursement of pension and other benefits to the retirer in proper time. As to what is proper time will depend on the facts and circumstances of each case but normally it would not exceed two months front the date of retirement which time limit has been laid down by the Apex Court in M. Padmanabhan Nair's case (supra). If the State commits any default in the performance of its duty thereby denying to the retiree the benefit of the immediate use of his money, there is no gainsaying the fact that he gets a right to be compensated and, in our opinion, the only way to compensate him is to pay him interest for the period of delay on the amount as was due to him on the date of his retirement.”

7. Apart from this, a Coordinate Bench of this Court in J.S. Cheema Vs. State of Haryana, 2014(13) RCR (Civil) 355, had held that an employee will be entitled for the benefit of interest on an amount which has been retained by the employer without any valid justification. The relevant paragraph of J.S. Cheema's case (supra) is as under: -

“The jurisprudential basis for grant of interest is the fact that one person's money has been used by somebody else. It is in