Punjab & Haryana HC Upholds 18% Interest on Delayed Retiral Benefits; Slams State for 18-Year Ordeal, Imposes Rs. 5 Lakh Costs - 2025-05-25

Punjab & Haryana High Court Upholds 18% Interest on Delayed Pension , Imposes Rs. 5 Lakh Costs on State for Protracted Litigation and Non-Payment

Chandigarh: The Punjab and Haryana High Court, in a significant ruling, has dismissed an appeal filed by the State of Haryana, upholding an 18% per annum interest award on delayed retiral benefits to a deceased headmaster who endured an 18-year legal battle. Justice Deepinder SinghGrewal , presiding over the Regular Second Appeal (RSA 696 / 2002), also imposed costs of Rs. 5 lakhs on the State for the "unfortunate" delay and its failure to comply with previous court orders regarding interest payment. The judgment was delivered on May 16, 2014.

Case Background: A Long Wait for Dues

The case centered around Rajender Parsad , a Headmaster who retired from the Education Department on September 30, 1996. Due to a significant delay in the disbursement of his retiral benefits, Mr. Parsad was compelled to file a civil suit seeking interest on the delayed payments.

The trial court initially granted him interest at 12% per annum. On appeal, the learned District Judge, Rohtak, in a judgment dated August 2000 (as per para 11 of the High Court judgment), enhanced this interest to 18% per annum from the date after his retirement until the actual payment of all retiral benefits. The State of Haryana challenged this enhancement in the High Court through the present Regular Second Appeal, filed in 2002. Tragically , Mr. Parsad passed away on August 7, 2010, during the pendency of this appeal, and his legal heirs continued the fight for his rightful dues.

Arguments Before the High Court

The State of Haryana (appellant) contended that any delay in submitting the necessary paperwork for retiral benefits was attributable to the respondent, Mr. Parsad , himself. Therefore, they argued, both the lower courts had erred in holding him entitled to interest, and the first appellate court's decision to increase the interest rate to 18% was unjustified.

Conversely, the legal heirs of Rajender Parsad (respondent) submitted that the delay was on the part of the State. They highlighted a crucial aspect: while the High Court, in an interim order dated August 9, 2002, had stayed the payment of interest beyond 12% per annum, even this undisputed 12% interest was not paid to Mr. Parsad (or his heirs) throughout the protracted litigation.

Court's Reasoning: Justice Delayed and Denied

Justice Grewal , in his judgment, strongly criticized the State's conduct. The court noted with dismay that even the 12% interest, which was not stayed, had not been disbursed to the respondent, who unfortunately died waiting for justice.

The court observed: > "It is unfortunate that the respondent has expired on 07.08.2010 i.e. during the pendency of the present appeal and did not even receive 12% interest as per order dated 09.08.2002 passed by this Court."

Referring to the Supreme Court's precedent in S.K. Dua vs. State of Haryana and another, (2008) 3 SCC 44 , the High Court reiterated the principle that retired employees should not be made to suffer for administrative delays in the payment of their dues and are entitled to interest for such delays.

The High Court found no infirmity in the judgment and decree of the learned District Judge, Rohtak, which had awarded 18% interest per annum. The court emphasized the prolonged suffering of the litigant: > "The respondent filed civil suit for grant of interest which he was legally entitled to, after facing litigation for 18 years. This RSA is ultimately decided today i.e. 16.05.2014. Justice demands that no further delay is caused in the payment of interest to the legal heirs of the respondent since the respondent expired on 07.08.2010 waiting for the justice to be delivered."

The court initially proposed issuing a contempt notice to the appellant (State) and imposing costs of Rs. 10 lakhs for depriving the deceased respondent of his rightful interest. However, upon the assurance from the State's counsel that the District Judge's decree (awarding 18% interest) would be complied with, and a plea that the costs were high, the court reduced the costs.

Final Decision and Directions

The High Court delivered the following final orders:

Dismissal of Appeal: The Regular Second Appeal (RSA 696 / 2002) filed by the State of Haryana was dismissed as meritless, upholding the 18% interest awarded by the District Judge.

Imposition of Costs: Costs of Rs. 5 lakhs were imposed on the appellant (State of Haryana).

Payment Directions:

The appellant is directed to deposit the costs of Rs. 5 lakhs within two weeks.

The appellant is further directed to deposit the interest amount at the rate of 18% per annum, in compliance with the judgment and decree of the learned District Judge, Rohtak, within one month from the date of the order, for disbursement to the legal heirs of the deceased respondent.

Disbursement: The counsel for the respondent was directed to provide the account numbers of the legal representatives of the deceased respondent to facilitate the disbursal of the amounts.

All pending applications were also disposed of. The parties were left to bear their own costs regarding the appeal itself.