Pay Interest on Delay in Pensionary Benefits

Every employee has a right to receive pension upon retirement. If payment of such person is delayed, the retired employee is surely entitled to get some interest for such delayed payment. Pension and even gratuity are aimed at maintaining the life of a retired employee and his dependents.

These are welfare provisions if there is delay on the part of a retired employee to approach the Court claiming interest on delayed payment of pensionary benefits, the delay in approaching the court should not be the ground for rejection of the writ petition. No third party interest will be affected by a direction on the State to compensate the retired employee for delayed payment of pensionary benefits by paying interest at a reasonable rate.

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RELATED CASE

 In a recent case, the Punjab and Haryana High Court held government liable to pay interest on delayed pensionary dues. The facts of the case are:-

• The Punjab and Haryana high court has held that the state government is liable to pay interest on delayed payment of pensionary benefits to its employees, even in the absence of any rules on this and even when there is financial crunch.
• Explaining the importance of timely release of pensionary benefits to employees, the court held that once the department knows that the employee is going to retire, all efforts should have been made to ensure that payments are made at the earliest.
• A retired employee, who has no other source of income, is totally dependent upon the benefits which the employee gets and in case those benefits are not released in time, the employee is unable to live with dignity.

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• On liability to pay interest in case of delay in such benefits, the HC observed that once the amount has been used by departments as the same was lying with them while they were trying to complete the process of release, the employee will be entitled to interest.
• The court held that financial crunch was no reason to hold back pensionary benefits meant for an employee.
• Justice Harsimran Singh Sethi passed these orders while deciding a brunch of petitions filed by retired employee against the Punjab government.
• The petitioners, in this case, were working in various departments of Punjab government.
•  They were, however, not given pensionary benefits after their superannuation for more than one or two years.

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• In some cases, benefits were released, but interest was not paid on the delayed amount.
• The state justified the delay by citing financial crunch.
• The counsel appearing for one of the petitioners, submitted before the high court that once there was delay in releasing the amount, the petitioner was entitled to interest on the delayed amount.
• The counsel argued that only objection taken by the state is that the delay was not intentional or willful but was procedural, which is not enough to save the interest.

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JUDGEMENT

After hearing all parties, the high court held that petitioners were entitled to interest at the rate of 9% per annum from the date the said amount became due to the actual date of disbursement. Directions were also issued to release the amount within a month of making calculations.

Do consult best/top/expert Service Lawyer Advocate in Chandigarh Panchkula Mohali practicing in Punjab and Haryana High Court, Central Administrative Tribunal (CAT), Armed Forces Tribunal (AFT), Education Tribunal Punjab etc for your pension related case and pension benefits thereafter.

This post is written by Dipti Prakash of Punjab University (2020 batch). For more info on subject, please dial 99888-17966.