Order Merely Directs Payment Of Interest On Balance Unpaid Amount Till Date Of Its Payment: Delhi HC Confirms CAT’s Order Directing Payment Of Interest On Interest

The High Court was considering a petition filed by the Delhi Government and the Directorate of Training and Technical Education whereby the Authorities were asked to make payment of interest to an employee on the balance unpaid amount (which included interest already ordered to be paid in previous litigation), till the date of its payment.

The Division Bench of Justice C. Hari Shankar and Justice Sudhir Kumar Jain asserted, “The decision cannot be said to be infirm on the ground that it illegally directs payment of interest on interest.”

Advocate Nitesh Kumar Singh represented the Petitioner while Advocate Ashok Agarwal represented the Respondent.

The respondent had instituted proceedings before the Central Administrative Tribunal as he was aggrieved by the fact that his retiral benefits had not been paid to him. The respondent sought re-fixation of his pay and pension and consequent payment of the differential amount which would become payable to the respondent on the re-fixed pay and pension with interest thereon. When the matter came up for hearing before the Tribunal, it was ordered that the Applicant would be granted the relief except interest and costs. It was also held that if the payments towards various heads are not made over to the applicant within the time period, he would be entitled to interest worked out at the rate of 10% per annum from the said date.

However, while making the payment of the arrears of retiral benefits, the petitioners except for a paltry amount of Rs. 86 did not pay the interest for the delay in payment of the retiral benefits despite directions to that effect. The respondent re-approached the Tribunal by way of an application which came to be disposed of by the judgment under challenge. The Tribunal had directed the respondents to pay the interest on arrears payable to the applicant from August 10, 2011 to June, 21, 2013 after deducting an amount of Rs. 86. Further, an interest on interest was also ordered to be paid for the period from June 22, 2013 till the date of payment of such interest on interest at the rate of 10 percent.

For the petitioners, Singh submitted that the provisions of the Interest Act, 1978, prohibited awarding interest on interest. Referring to Section 3 (3) of the Interest Act which is a caveat on the power of the Court to award interest under Section 3 of the Interest Act, the Bench said, “Section 3 (3) (c) ordains that the power of the Court to award interest under Section 3 of the Interest Act, would not extend to awarding interest on interest.”

The Bench was of the view that a direction to pay interest was not passed under Section 3 of the Interest Act and thus the proscription on awarding interest on interest, as contained in Section 3 (3) (c) of the Interest Act would not apply.

It was also noted that the order of the Tribunal, directing payment by the petitioner, to the respondent was of an amount of which interest was an integrated and homogeneous part. The petitioner paid only part of the said amount to the respondent on June 21, 2023. “The impugned order of the learned Tribunal merely directs payment of interest on the balance unpaid amount, till the date of its payment. The decision cannot be said to be infirm on the ground that it illegally directs payment of interest on interest”, it added.

The order passed by the Tribunal specifically directed that, in the event of any delay in payment of the retiral benefits of the respondent, the petitioners would also be required to pay interest from the expiry of four weeks from July 12, 2011 till the date when the retiral benefits were paid. Noting that the retiral benefits came to be paid only on June 21, 2013, the Bench held, “The petitioners were therefore required suo motu on 21 June 2013 not only pay the retiral benefits but also interest thereon computed from 12 July 2011 till 21 June 2013 at the rate of 10% p.a.”

Considering the fact that this amount was not paid and the respondent had been denied the use of the said amount, the Bench held that there is no infirmity in the direction of the Tribunal to the petitioners to pay interest on the said amount till the date when it was actually disbursed.

The Bench concluded the matter by upholding the impugned judgment of the Tribunal and asking the petitioner to pay interest on the said amount of interest which was paid to the respondent from June 21, 2013 till April 13, 2018, when it was paid. Further directing that the amount deposited by the petitioner be released to the legal heirs of the respondent, the Court disposed of the petition.

Cause Title: Govt NCT of Delhi vs Surendra Singh [Neutral Citation: 2024: DHC: 8438-DB]

Appearance:

Petitioner: Advocates Nitesh Kumar Singh, Laavanya Kaushik, Aliza Alam, Avnish Ahlawat, Standing Counsel for GNCTD, Advocate B.S. Rawat

Respondent: Advocates Ashok Agarwal, Kumar Utkarsh, Manoj Kumar, Ashna Khan

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