Retired Employee Made To Suffer – SC Directs For Payment Of Interest On Delayed Payment Of Pension

Further, the Court directed that the College – Employer is liable to the interest on the delayed payment retirement benefits to the Appellant, subject to the final decision taken by the Government, after hearing the Management and the former Secretary.

Senior Counsel Mr. P. Wilson appeared for the First Respondent – CBM College, Coimbatore before the Apex Court.

An appeal was preferred by the Appellant before the Supreme Court who was a retired Associate Professor of Chemistry and retired from CBM College, Coimbatore (Aided College). It was alleged that there was a delay in paying the retirement/pensionary benefits.

The Appellant thereafter filed a Writ Petition before the Madras High Court. However, at the time of hearing of the petition, the entire terminal benefits of the Appellant were settled. Hence, the only issue was in respect of the interest on the delayed payment of pensionary benefits.

The Single Judge disposed of the petition by directing the Appellant – Petitioner to make a representation before the Director of Collegiate Education to pass appropriate order in accordance with law after hearing the aggrieved parties. However, no order was passed.

Aggrieved, the Appellant – Petitioner preferred an appeal before the Division Bench. The DB had directed the third Respondent – Regional Director, Collegiate Education, Coimbatore after making an inspection file a report before the Court as to the person who was liable to pay the interest on the belated payment to the Appellant-Petitioner.

Thereafter, the Government conducted an enquiry and observed that the former Secretary of the college was responsible for making the delayed payment of the pension to the Appellant. The DB accordingly, disposed of the appeal by observing that it is ultimately for the Government to take an appropriate decision based on the enquiry report.

However, the High Court also held that the Appellant – Petitioner was entitled to the interest on delayed payment but the Court did not pass any further order.

Aggrieved, the Appellant approached the Supreme Court.

The Apex Court noted that there was a delay in making the payment of retirement benefits and settling the dues for which the Appellant – Employee was not responsible, he was entitled to the interest on the delayed payment.

The Court held that subject to the final order that may be passed by the Government, the College/Management was first liable to pay the interest on the delayed payment of retirement dues subject to the final decision, which may be taken by the Government, after hearing the Management, Secretary.

Further, the Bench opined, "However, because of the inter se dispute between the Management, Secretary and the Government on who is responsible for the delay in making the payment and/or settling the dues, the retired employee should not be made to suffer for no fault of his."

Accordingly, the Court allowed the appeal. The impugned judgment of the High Court denying interest on delayed payment of retirement benefits to the Appellant was quashed and set aside. Further, the Court directed the Management / Trustees / College to pay the interest on the delayed payment of retirement benefits to the Appellant.

The Court also directed the Government to pass a final order on the enquiry report after giving an opportunity to the College / Management / Former Secretary and it would be open to the aggrieved party in challenging the said decision before the appropriate forum.