Delayed payment of gratuity carries interest

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In S.K. Dua vs the State of Haryana, the Supreme Court of India has directed the respondents to pay interest on the delayed payment of gratuity.

In this case, the appellant employee was working as an Engineer-in-Chief in the Department of Irrigation, Haryana. According to him, he joined the service in Irrigation Department of the then State of Punjab in August 1961 and was allocated to the Department of Irrigation and Power in the State of Haryana. He was promoted as Engineer-in-Chief on May 31, 1996, and worked in that capacity till he attained the age of superannuation in June 1998.

The appellant had a continuous record of service for 37 years. During the course of his duties as Head of the Department, he submitted reports in or about April-May, 1998 to the Government highlighting certain irregularities and malpractices said to have been committed by Mr S.Y. Quraishi, the then Secretary, Irrigation & Power and requested the Government to make enquiry through Central Bureau of Investigation (CBI). According to the appellant, in pursuance of the complaint made by him, the Government removed Mr Quraishi as Secretary, Irrigation allowing him to work only as Secretary, Department of Irrigation and Power.

After that, on a motivational grudge, Mr Qureshi managed to send the appellant on deputation to a lower and unimportant post just a few weeks before his retirement. In addition, three show because notices were also sent to him. He denied all the allegations and said that whatever he did was only in the public interest. The appellant retired on 30th June 1998 and been paid provisional pension only. Other retirement benefits including gratuity were not paid and withheld till finalisation of disciplinary proceedings.

So, the appellant filed a claim to the High Court of Punjab and Haryana and claimed 18% interest per annum on the delayed payment of retirement benefit amount which was rejected by the High Court. So, he preferred an appeal to the Supreme Court.

The Supreme Court after taking into account all the conditions held that an employee can claim interest on retirement benefit under Article 14, 21, 19 of the Constitution of India because retirement benefits are not in the nature of bounty. So, the High Courts decision to reject the writ petition was erred. Therefore, the Supreme Court ruled that the respondents would get the interested amount on the delayed payment of gratuity and directed the High Court t decide the matter expeditiously as possible.

Supreme Court Judgment on interest on Gratuity

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