Allowed

Sri Nisar Ahmed S/O Maktumhussain Chandshawale v. the Management of Nwkrtc

Karnataka HC23 Nov 2024WP/103275/2024

Case brief

AI extract

What is this about?

The High Court allowed a writ petition seeking interest on belated leave encashment benefit. Directing the respondent to pay 9% annual interest from retirement until payment, the Court held that failure to pay within eight weeks would attract 12% interest, rejecting arguments for lower rates due to the pandemic.

What did the court decide?

Writ of mandamus to pay interest at 9% p.a. on belated leave encashment benefit from retirement date; rate increases to 12% p.a. if not paid within 8 weeks.

Sri Nisar Ahmed S/O Maktumhussain… — Pension and Retirement Benefits | Karnataka HC (2024)

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NC: 2024:KHC-D:17123 WP No. 103275 of 2024

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IN THE HIGH COURT OF KARNATAKA

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DHARWAD BENCH

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DATED THIS THE 23^RD DAY OF NOVEMBER, 2024

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BEFORE

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THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR

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WRIT PETITION NO.103275 OF 2024 (S-KSRTC)

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BETWEEN:

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SRI. NISAR AHMED S/O. MAKTUMHUSSAIN CHANDSHAWALE, AGE: 61 YEARS, OCC: RETIRED ASSISTANT ARTISAN, R/O. TIMMASAGAR ROAD, DHARWAD COLONY, OPP. MASJID, OLD HUBBALLI-580024, HUBBALLI, TALUK: HUBBALLI NAGAR, DIST: DHARWAD.

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…PETITIONER (BY SRI RAVI HEGDE AND SRI VINAYAK BHAT, ADVOCATES.)

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AND:

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THE MANAGEMENT OF NWKRTC, REGIONAL WORK SHOP, REPRESENTED BY ITS THE WORKS MANAGER, GOKUL ROAD, HUBBALLI-580030. DIST: DHARWAD.

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Digitally signed by MALLIKARJUN RUDRAYYA KALMATH Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2024.12.20 16:16:33 +0530

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…RESPONDENT (BY SRI PRASHANTH HOSAMANI, ADVOCATE.)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO, ISSUE WRIT OF MANDAMUS OF POSITIVE NATURE, DIRECTING THE RESPONDENT TO PAY THE INTEREST AT THE RATE OF 12% P.A. ON THE BELATED PAYMENT OF TERMINAL BENEFIT I.E., LEAVE ENCASHMENT BENEFIT, BY FIXING OUTER LIMIT & ETC.,.

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THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:

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ORAL ORDER

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(PER: THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR)

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This petition is filed by the petitioner seeking a writ of mandamus for a direction to the respondent to pay interest at the rate of 12% per annum on the belated payment of leave encashment benefit as per the request made in the representation dated 06.05.2024.

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2. Petitioner was appointed as a Helper-B in the respondent corporation in the year 1990. After serving the corporation for more than 36 years, he retired from service with effect from 31.05.2023. Immediately after the retirement, the terminal benefits i.e., leave encashment benefit was not paid. The respondent belatedly paid leave encashment benefit by way of cheque dated 03.04.2024 after lapse of 10 months and no interest was paid on the said amount. It is contended by learned counsel for the petitioner that as per the Circular No.58 dated 09.07.1998, the terminal benefits and all other benefits are required to be paid as on date of retirement itself and the same does not

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indicate the consequences for non payment of the said benefits belatedly.

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3. This being the state of affairs, the petitioner approached the respondent corporation requesting for payment of interest for the delayed period with regard to leave encashment benefit. The representation came to be made on 06.05.2024 claiming interest at the rate of 12% per annum. The representation was served on the respondent, however, no reply was given and no payment was made towards interest on the belated leave encashment benefit. Hence, being aggrieved by the non payment of interest for the delayed period, petitioner is before this Court.

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4. It is the contention of learned counsel for the petitioner that the question of the petitioner having been employed in the respondent Corporation, having put in 36 years of service and having retired from service on the date mentioned hereinabove are all not disputed, so also the payment of terminal benefits i.e., leave encashment benefit paid by the respondent Corporation. It is the vehement contention of learned counsel for the petitioner that it is the

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onerous duty of the respondent corporation to bid farewell to the employee having served for more than 36 years in the organization in a respectful manner by relieving him by making payment of all benefits pension, salary, terminal benefits, other benefits including leave encashment as on the date of his retirement. But in the present case, no doubt the other benefits of salary, gratuity and other benefits have been paid, but the leave encashment benefit was paid belatedly but the interest for delayed payment has not been paid till date despite giving representation to the respondent corporation.

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5. He further contends that there are no justifiable grounds on behalf of respondent corporation to withhold the interest on leave encashment benefit which is rightfully entitled to the petitioner. It is further contended that this amount of leave encashment, though it is paid belatedly, the interest amount towards the said leave encashment has not been paid. Therefore, the amount which was due to the petitioner and liable to be paid as on the date of retirement was admittedly lying with the respondent corporation

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fetching interest which has gone to the benefit of the corporation. Therefore, the interest component would have to be paid for the delayed payment of the leave encashment to the petitioner.

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6. Learned counsel for the petitioner relies on the

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following judgments in support of his case.

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i) Judgment of this Court in W.A.No.5022/1998 decided on 27.01.1999;

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ii) Order of this Court in W.P.No.100157/2024 decided on 22.02.2024;

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iii) Judgment of Hon’ble Supreme Court in the case of Vijay L. Mehrotra and State of U.P. and others in C.A.No.689/2000 dated 31.01.2000;

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iv) Judgment of Hon’ble Supreme Court in the case of Workmen of Hindustan Steel Ltd., and Hindustan Steel Ltd., and others, in C.A.No.1137(NL) of 1981 dated 12.12.1984;

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v) Judgment of this Court in W.P.No.35513/1993 dated 16.09.1998;

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vi) Order of this Court in W.P.No.101519/2024 connected with batch of petitions dated 24.06.2024.

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7. Learned counsel vehemently contends that in the

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judgment of a Co-ordinate Bench of this Court in

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W.P.No.100157/2024, this Court allowed the petition and granted interest at the rate of 9% per annum from the date of their retirement till the date it was paid. The said judgment was challenged before the Hon’ble Division Bench in Writ Appeal No.100193/2024. The said writ appeal came to be dismissed on 29.07.2024 upholding the order passed by the Co-ordinate Bench of this Court awarding interest at the rate of 9% per annum till actual date of payment. The order of the Division Bench came to be challenged again before the Hon’ble Apex Court in SLP No.25445/2024, which came to be dismissed on 04.11.2024. Therefore, it is the contention of learned counsel for the petitioner that in the present case the respondents having not paid interest for the delayed payment of leave encashment even till date, despite giving the representation, the petitioner is entitled to interest at the rate of 12% per annum. Hence he seeks to allow his petition.

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8. Per contra, learned counsel Sri Prashant Hosmani, representing the respondent corporation vehemently contends that the payment of retirement benefits, salary,

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pension, gratuity and all other benefits have been paid to the practitioner/retired employee on time. There may have been a slight delay in payment of the leave encashment. The reason for such delayed payment is due to the intervening COVID-2019 pandemic that had arisen across the world which affected the entire world and to a large extent India, which affected each and every individual, corporation and organizations including the respondent corporation, thereby undergoing severe financial constraint and crunch. However, despite all these hiccups and financial constraints, respondent corporation was able to make the payment of retirement benefits, gratuity and leave encashment, though there may have been a little delay in making the payment. But the interest on delayed payment may not be sustainable as sought for by the petitioner in this petition for the reason that the corporation was in severe financial crisis.

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9. Learned counsel for the respondent further contends that the Government vide order bearing No.AE 211 PEN 2021, Bengaluru, dated 22.02.2022, provided a provision for payment of interest on the delayed payment of

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dearness allowance, gratuity and leave encashment, whereby the Government passed an order that interest was payable on delayed payment of the aforesaid amount at 8% per annum came to be revised and reduced to 5.4% per annum. Thus it is his contention that taking into consideration the COVID-2019 pandemic period where financial constraints were incurred by the respondent corporation, the Government has reduced interest on delayed payment to 5.4% per annum as against 8% per annum. Under the circumstances the interest so claimed by the petitioner in this petition would not be the correct proposal for granting interest and since the Government has reduced it to 5.4% per annum, the same may be the correct percentage to grant interest.

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10. Learned counsel for the petitioner relies on the judgment of a Co-ordinate Bench of this Court in the case of Sri Prakash vs. the Works Manager, NWKRTC, Regional Workshop, Gokul Road, Hubballi, in a batch of petitions in W.P.No.101519/2024 connected with several other matters, considering the contentions put forth by the learned counsel

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for the respondents, the Co-ordinate Bench of this Court in the above mentioned batch of writ petitions considered the submissions with regard to COVID-2019 pandemic period and the lockdown and financial constraint and crunch of the respondent corporation and also the Government order reducing interest rate from 8% to 5.4% per annum awarded interest on delayed payment of leave encashment at 6% per annum to be paid within a period of eight weeks from the date of receipt of copy of the order and on non payment of the said amount within the said period, the interest was liable to be paid at 9% per annum for the delay instead of 6% per annum.

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11. Having heard learned counsel for the petitioner and learned counsel for the respondent as stated earlier, it is not in dispute that the petitioner was employed in the respondent corporation, put in his hard work and service of more than 36 years, honorably retired on 31.05.2023. Thereafter the leave encashment benefit was paid on 03.04.2024 and no interest was paid for the delayed period even as on date. The only ground sought for reduction of

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interest by the learned counsel for respondent is for the reason of COVID-2019 pandemic affecting the entire world which crippled the financial flow and the respondent corporation fell into financial constraint and crunch due to which the payment could not be made on time.

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12. I have given my thoughtful consideration to the submissions put forth by learned counsel for both parties. This Court is concerned with only the interest for the delayed payment of leave encashment benefit whether the interest has to be paid at 12% per annum as sought for by the petitioner in the petition and whether it requires to be reduced to 6% per annum as awarded by the Co-ordinate Bench of this Court and 9% per annum as awarded by the Co-ordinate Bench of this Court in other petition hereinabove stated supra. Two Co-ordinate Bench judgments have held

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9% per annum in the earlier judgment in W.P.No.100157/2024 and 6% per annum in the case of W.P.No.101519/2024 and connected matters in the later judgment of my esteemed brother, the interest component came to be reduced to 6% per annum based on the

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Government circular and considering the submissions with regard to COVID-2019 pandemic and financial crunch and constraint. However, in the said judgment it was ordered that interest to be paid at 6% per annum within a period of eight weeks, failing which the interest would be incurred at 9% per annum for the delayed period. It is now brought to the notice of this Court that the said order has not been complied by the respondents and interest at the rate of 6% per annum has not been paid, thereby the interest would now have to be paid at 9% per annum.

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13. The aspect of interest on the delayed payment has been a subject matter which has been discussed way back by the Hon’ble Apex Court in the case of State of Kerala vs. M.Padmanabhan Nair by the Hon’ble Apex Court on 17.12.1984, whereby the interest was awarded at 12% per annum and that was also on the leave encashment and on retiremental benefits and pension benefits. The Hon’ble Apex Court in the case of Sashilata Verma vs.

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State of Bihar and others, reported in (2005) 12 SC

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197 , dealt with a similar matter with regard to interest on

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delayed payment on leave encashment benefit. While dealing with the same, the Hon’ble Apex Court ordered 12% interest on the delayed payment of amount on leave encashment to be paid subsequently. In another judgment reported in the case of Jagdish Prasad Saini and others vs. State of

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Rajasthan and others, reported in 2022 SCC Online 1298 , the Hon’ble Apex Court dealing with a similar situation, on interest on the delayed payment of leave encashment benefit ordered 10% interest from the date of their entitlement till the date of payment.

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14. Therefore, in my humble opinion the leave encashment or terminal benefits or pensionary benefits are the amount which is the legally entitled amount of the employee which ought to have been released and disbursed as on date of the retirement and if there is any delayed payment, the same having remained with the respondent corporation and having earned interest which had accrued to the interest of the respondent corporation, necessarily should go to the benefit of the employee and cannot be denied to the petitioner/employee. Under the circumstances,

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keeping in mind the judgment rendered by my esteemed brother, stated supra and judgments of a Co-ordinate Bench of this Court, it would be in the interest of the party, namely the petitioner to be legally entitled to a reasonable interest stipulated hereinabove by the Hon’ble Apex Court.

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15. Coming to the aspect of the ground urged by learned counsel for respondent corporation with regard to COVID-2019 pandemic and the financial crunch, I am of the opinion that the COVID-2019 pandemic came to an end in the early 2022. We are in the end of 2024. Therefore there was no harm or restraint or constraint for the respondent corporation to have paid the interest for the delayed period towards leave encashment pursuant to the year 2022. Admittedly, in this case interest is not paid, so also in the judgment rendered by the Co-ordinate Bench of this Court, wherein the benefit was given to the petitioner by reducing interest to 6% per annum, taking into consideration the order of the State Government on the basis of COVID-2019 pandemic, has also not been availed and made use of by the respondent corporation.

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16. It is also relevant to mention that even after the petitioner having made a representation to the respondent corporation on 06.05.2024, interest on belated leave encashment has not been paid, be it whatever percentage, which by itself shows the conduct and intent of the respondent corporation. Under the circumstances, having not availed the benefit which was granted by the Co-ordinate Bench of this Court, I do not find any need to extend the same benefit to the respondent corporation. Under the circumstances I pass the following:

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ORDER

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i) The petition is allowed.

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ii) A writ of mandamus is issued directing the respondent corporation to pay interest at the rate of 9% per annum on the belated payment towards leave encashment benefit on the basis of the representation submitted by the petitioner from the date of retirement till the actual date of payment made by the respondent corporation.

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