- Case
- NARAYAN PUNDALIK PATHADE v. MUNICIPAL CORPORATION OF GREATER MUMBAI THROUGH ITS COMMISSIONER (Bombay High Court, 11-03-2025)
- Law
- Constitution of India, Payment of Gratuity Act.
Facts: The petitioner, a retired employee of the Municipal Corporation of Greater Mumbai, filed a writ petition seeking interest on the delayed payment of his retiral benefits. A departmental inquiry was initiated against him just before his superannuation, alleging irregularities in a recruitment process. Consequently, his retirement benefits were withheld. The National Commission for Scheduled Castes recommended setting aside the inquiry and favorably considering his case, leading to his eventual exoneration. The petitioner received his gratuity, pension commutation, and leave encashment amounts with delay.
Procedural Posture: The petitioner approached the Bombay High Court under Article 226 of the Constitution of India after the Municipal Corporation rejected his request for interest on the delayed retiral benefits. The respondents did not file a reply.
Issue: Is the petitioner entitled to interest on the delayed payment of his retiral benefits, which were withheld pending a departmental inquiry, despite his subsequent exoneration? If so, what is the quantum of interest?
Holding: Yes, the petitioner is entitled to interest on the delayed payment of his retiral benefits. The court directed the respondents to pay interest at 10% per annum on the delayed amounts.
Reasoning: The court analyzed Rule 55A(1) and 55A(7) of the Pension Rules, 1953 of the Municipal Corporation of Greater Mumbai. It held that Rule 55A(7) allows withholding gratuity during a pending inquiry, but upon exoneration, the payment is deemed due from the date immediately following retirement. The court rejected the respondent's argument that they had a three-month interest-free period after the exoneration date to make the payment. The court emphasized that pensionary benefits are welfare provisions and that interest is not a penalty but compensation for being deprived of the use of one's money. Citing Supreme Court precedents, the court affirmed that delayed disbursement of retirement benefits must be compensated with interest, applying the doctrine of restitution.
