Sri Subhas S/O Tirakappa Mule Vs the Management of Nwkrtc

SRI SUBHAS S/O. TIRAKAPPA MULE, AGE: 63 YEARS, OCCUPATION: RETIRED TECHNICAL ASSISTANT, R/O: H NO 67 R M LOHIYA NAGAR, GOKUL ROAD, HUBBALLI 580 030. TALUK: HUBBALLINAGAR, DIST: DHARWAD.

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…PETITIONER

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(BY SRI RAVI HEGDE, ADVOCATE)

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Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka, Dharwad Bench, Dharwad

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AND:

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THE MANAGEMENT OF NWKRTC, REGIONAL WORK SHOP, REPRESENTED BY ITS WORK MANAGER GOKUL ROAD, HUBBALLI, DIST: DHARWAD – 580 030.

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…RESPONDENT

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(BY SRI PRASHANT HOSAMANI, ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO, WRIT OF

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MANDAMUS IN POSITIVE NATURE, DIRECTING THE RESPONDENT TO PAY THE INTEREST AT 12% P.A. ON THE BELATED PAYMENT OF LEAVE ENCASHMENT BENEFIT, BY FIXING OUTER LIMIT AND ETC.,

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IN W.P.NO.100427/2025: BETWEEN:

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SRI UMESH S/O. MAHADEVBHAT AIRSANGH, AGE: 63 YEARS, OCCUPATION: RETIRED CONDUCTOR, R/O: DESHPANDENAGAR, HUBBALLI – 580 029, TALUK: HUBBALLI, DIST: DHARWAD.

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…PETITIONER

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(BY SRI RAVI HEGDE, ADVOCATE)

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AND: THE MANAGEMENT OF NWKRTC, HUBBALLI RURAL DIVISION, REPRESENTED BY ITS DIVISIONAL CONTROLLER, 4^TH FLOOR CITY BUS TERMINAL, C.B.T. HUBBALLI – 580 020, TQ: HUBBALLINAGAR, DIST: DARWAD.

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…RESPONDENT

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(BY SRI PRASHANT HOSAMANI, ADVOCATE)

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

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THESE WRIT PETITIONS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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ORAL ORDER

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(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)

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The petitioner in both these petitions are before this Court seeking a direction by issuance of a writ in the nature of mandamus directing the respondents to pay interest at 12% p.a. on the delayed payment of terminal benefits, which were leave encashment.

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Learned counsel for the petitioners submits that the Coordinate Benches of this Court had passed the orders directing payment of 6% p.a. and 9% p.a. to be the interest on delayed payment. Therefore, it would suffice for this Court to quote those orders and pass necessary orders qua the prayers of the present petitioners. The Coordinate Bench in Writ Petition No.101519/2024 and connected cases, disposed on 24^th June 2024 has held as follows:

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“7. Learned counsel relies upon the following judgments:

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1) The Hon’ble Apex Court in the case of Vijay L Mehrotra Vs. State of U.P. and Others reported in 2000 II LLJ 253,

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2) The Co-ordinate Bench of this Court in the case of Bhalachandra Krishnaji Kale Vs. Karnataka State Road Transport Corporation and Others reported in 1999 (81) Karnataka High Court 330.

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3) The Division Bench of this Court in the case of Shankaragouda Vs. The President and Others in W.A.No.100420/2023 (S-R) dated 07.12.2022.

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8. Thus, relying upon the aforesaid judgments, learned counsel for the petitioners submits that the respondent-corporation be directed to pay the interest on delayed payment of amount towards leave encashment.

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9. In response, learned counsel for the respondent-corporation submits that the delay in payment of amount was on account of intervening Covid-19 pandemic period. He submits that most of the petitioners retired in and around the Covid-19 pandemic period when there was nation-wide lock down and the respondent- corporation was also undergoing financial constraints. Therefore, he submits that though the respondent- corporation has manage to pay the leave encashment amount, the delay in payment of the same was for bona-fide and justifiable reason which has to be kept in mind while interest being claimed by the petitioners.

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10. Learned counsel for the respondentcorporation relies upon the Government Order No.AE 211 PEN 2021, Bengaluru dated 22.02.2022 passed by the State Government providing revision payment of interest on the delayed payment of Dearness allowance, gratuity and the leave encashment. He submits that by virtue of the said Government Order the interest that was payable on the delayed payment of the aforesaid amount at 8% per annum has been revised and reduced to 5.4%. Thus, he

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submits that in the instant case as well the interest be paid at 5.4% per annum, instead of 12% per annum as claimed.

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11. Heard and perused the records.

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12. Since there is no dispute with regard to the entitlement of the petitioners for amounts towards leave encashment and also there is no dispute that the respondent-corporation having been paid the leave encashment amount, the only issue require to be considered is the claim of the petitioners for payment of interest at the rate of 12% per annum for delayed payment.

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As already noted above, admittedly there is delay in payment of leave encashment amount to the petitioners which even according to the circular issued by the respondent-corporation in the year 1998 ought to have been paid on the date of retirement. The judgments relied upon by the counsel for the petitioners consistently hold that the employer is liable to pay interest on the amounts payable to the employees on their retirement and the said judgments also specifically refer to the liability to pay the interest on the delayed payment of leave encashment amount.

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Learned counsel for the petitioner insist that in the case of Vijay L Mehrotra (supra), the Hon’ble Apex Court has awarded interest at the rate of 18% and in the case of Bhalachandra Krishnaji Kale (supra), the Co- ordinate Bench of this Court has awarded interest at the rate of 14% and in the case of Shankaragouda (supra), the Division Bench of this Court has awarded interest at the rate of 9%. Therefore, he submits that the interest payable is to be considered on these lines.

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There is no dispute of the fact that though the petitioners are entitle for the payment of interest, there is no specific provision provided with regard to rate of interest. The aforesaid judgments also do not refer to any provision based on which

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these interest rates at 18%, 14% and 9% have been fixed and paid. The Government Order relied upon by the learned counsel for the respondent-corporation refers to revision of interest rate from 8% and 5.4% payable on the delayed payment of retirement benefits.

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The reasons assigned by the learned counsel for the respondent-corporation for delayed payment also should be born in mind which is Covid19 pandemic period where there was nation - wide lockdown. The said reason appears to be acceptable and in the light of the Government Order referred to above, this Court is inclined to accept the submission made by the learned counsel for the respondentcorporation with regard to rate of interest.

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This Court is therefore of the considered view that the respondent-corporation be directed to pay the interest at the rate of 6% per annum for the delayed period of payment of leave encashment amount.

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It is made clear that the respondentcorporation shall pay the said interest at 6% per annum within a period of eight week from the date of receipt of certified copy of this order.

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It is further made clear that if in the event of any further delay on the part of respondentcorporation in paying the interest as directed above, in such an event respondent-corporation shall be liable to pay interest at the rate of 9% instead of 6% per annum for the delayed period.”

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The Coordinate Bench directs payment of 6%

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p.a. interest on delayed payment on terminal benefits which

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was leave encashment in the said case as well. In the

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subsequent judgment, another Coordinate Bench in Writ Petition No.107292/2024 had passed the following order:

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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 14% 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 Coordinate 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 Coordinate Bench judgments have held 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 Government circular and considering the submissions with regard to COVID2019 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

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the leave encashment and on retiremental benefits and pension benefits. The Hon’ble Apex Court in the case of Sashilata Verma vs. State of Bihar and others, reported in (2005) 12 SC 197, dealt with a similar matter with regard to interest on 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 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, 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

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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 11.11.2024, 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 partly allowed.

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ii) A writ of mandamus is issued directing the respondentcorporation 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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iii) This amount shall be paid within a period of eight weeks from the

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date of receipt of a copy of this order.

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iv) If the said amount is not paid within a period of eight weeks at the rate of 9% per annum, the interest would have to be paid at 12% per annum thereafter.”

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The Coordinate Bench in Writ Petition

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No.101519/2024 and connected cases directs payment of 6% p.a. as interest towards delayed payment of leave encashment. The subsequent Coordinate Bench in W.P. No.107292/2024 noticing the fact that, the Corporation is not even paid the said amount imposes 9% p.a. interest. Therefore, learned counsel for the petitioners submits that the interest in the cases at hand should be at 12% p.a.

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In the light of the order passed by the Coordinate Bench granting interest at 9% p.a., I deem it appropriate to follow the suit, the petitions deserve to succeed with the following directions:

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(i) Interest on delayed payment at 9% p.a. be paid to the present petitioners in both these cases from the date it fell due till the date

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of payment within eight weeks from the date of receipt of a copy of this order.

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(ii) In the event the Corporation would not pay the amount within eight weeks from the date of receipt of a copy of this order, the petitioners would become entitled to interest at 12% p.a. from the date it fell due till the date of payment.

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(iii) Even then, if the Corporation would not comply with the order of 12% p.a., the interest would be at 18% p.a. from the date it fell due till the date of payment apart from Rs.1,000/- as cost, day on day basis till the interest reaches the doors of the petitioners in both the cases.

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Ordered accordingly.

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Sd/(M.NAGAPRASANNA) JUDGE

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VNP/CT-ASC

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List No.: 1 Sl No.: 87

Sri Subhas S/O Tirakappa Mule v. the Management of Nwkrtc

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Sri Subhas S/O Tirakappa Mule v. the Management of Nwkrtc

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