Shri. Manohar Narayan Pawar Vs the Divisional… — Writ and Judicial Review | Karnataka HC (2025)

Shri. Manohar Narayan Pawar Vs the Divisional… — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Writ of mandamus directing the respondent-Corporation to pay interest at 9% per annum on the belated payment towards leave encashment benefit from the date of retirement till the actual date of payment; the amount to be paid within six weeks from receipt of a copy of the order, failing which interest thereafter at 12% per annum.

Issue for consideration

Whether the retired petitioner-conductors, whose leave encashment benefit was paid belatedly without interest, are entitled to interest on the delayed payment, and if so at what rate (12% per annum sought in the petition; 6% and 9% per annum awarded in coordinate-bench judgments). +1 more

Court's answer

Leave encashment, terminal and pensionary benefits are amounts legally entitled to the employee and ought to be released and disbursed as on the date of retirement; where payment is delayed, the interest earned by the respondent-Corporation on the withheld amount necessarily goes to the benefit of the employee and cannot be denied to the petitioners.

Ratio / Principle

The COVID-19 pandemic ended in early 2022 whereas the matter arises in 2025; there was accordingly no harm, restraint or constraint preventing the respondent-Corporation from paying interest for the delayed period, and since it neither paid interest nor availed the coordinate-bench concession of 6% per annum, it cannot claim the benefit of that reduced rate.

Key takeaways

Interest on the delayed payment of leave encashment is payable at 9% per annum from the date of retirement till the actual date of payment, consistent with the coordinate-bench judgment in W.P.No.100157/2024 (upheld in W.A.No.100193/2024 and on dismissal of SLP No.25445/2024) and with the escalation rate in W.P.No.101519/2024, because the respondent failed to pay even the 6% per annum awarded there.ratio¶97

Detailed headnote1 paragraphs

High Court of Karnataka, Dharwad Bench (Pradeep Singh Yerur, J.), W.P. No. 101338 of 2025 (S-KSRTC), decided 13-06-2025. Twenty-four retired conductors of the respondent-NWKRTC, Chikkodi Division, whose leave encashment was paid belatedly (by cheque) without interest despite representations dated 18.11.2024 to 06.12.2024, sought a writ of mandamus for interest. Held: (i) leave encashment/terminal/pensionary benefits are legally entitled amounts of the employee which ought to be disbursed on the date of retirement, and interest earned by the Corporation on the withheld amount belongs to the employee; (ii) the COVID-19 financial-crunch plea fails — the pandemic ended in early 2022 and the Corporation neither paid interest nor availed a coordinate bench's earlier 6% concession, so it cannot claim the benefit of that reduction; (iii) following the coordinate-bench course (9% in W.P. No. 100157/2024, upheld in W.A. No. 100193/2024 and on dismissal of SLP No. 25445/2024; 6% with 9% escalation in W.P. No. 101519/2024), interest is awarded at 9% per annum from the date of retirement till actual payment, payable within six weeks, rising to 12% per annum thereafter. Petition partly allowed. Apex Court decisions on interest for delayed leave encashment (State of Kerala v. M.Padmanabhan Nair — 12%; Sashilata Verma v. State of Bihar — 12%; Jagdish Prasad Saini v. State of Rajasthan — 10%) relied upon.

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 13^TH DAY OF JUNE 2025

BEFORE

THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR WRIT PETITION NO. 101338 OF 2025 (S-KSRTC)

BETWEEN:

SHRI. MANOHAR NARAYAN PAWAR, AGE: 64 YEARS, OCC: RETIRED, R/O. DHARMATTI, YAMAKANAMARADAI, HUKKERI, BELAGAVI-591246.

SHRI. RAJASHEKAR BHIMAPPA SHIRAGAVI AGE: 63 YEARS, OCC: RETIRED R/O: BAMBALWAD VILLAGE CHIKKODI - 591201.

SHRI. SURESH SHIVANAPPA HUDDAR AGE: 64 YEARS, OCC: RETIRED R/O: AT: KAMATENATTI, YADAGUD, CHIKKODI - 591201.

Digitally signed by VIJAYALAKSHMI M KANKUPPI Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.06.19 16:00:58 +0530

SHRI. BABU APPA KHOT AGE: 63 YEARS, OCC: RETIRED R/O: 4119, ANKALI ROAD, SANKESHWARA, HUKKERI - 591313.

SHRI. PRAKASH TERADAL AGE: 63 YEARS, OCC: RETIRED R/O: BELLAD BAGEWADI, BELAGAVI - 591305.

SHRI. SHIVAJI GONDHALI, AGE: 62 YEARS, OCC: RETIRED R/O: KABBUR, CHIKKODI, BELAGAVI - 591201.

SHRI. GURUSIDDAYYA SHIVAPUTRAYYA HIREMATH, AGE: 64 YEARS, OCC: RETIRED R/O: SOLLAPUR, H. NO.343, HUKKERI, BELAGAVI – 591309.

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SHRI. MOINUDDEN MEERASAB MOMIN AGE: 64 YEARS, OCC: RETIRED R/O: GANDHI NAGAR, NEAR GOLGUMBAJ, HUKKERI - 591309.

SHRI. BASAVANTH MALLAPPA KAMBLE AGE: 64 YEARS, OCC: RETIRED R/O: KAMATENUR, HUKKERI, BELAGAVI - 591309.

SHRI. PARASHURAM GURULINGAPPA KAIPALLE AGE: 64 YEARS, OCC: RETIRED R/O: M.G. MARKET ROAD, BUTTER MARKET ATHANI, BELAGAVI - 591304.

SHRI. A.H. HEBBAL, AGE: 64 YEARS, OCC: RETIRED R/O: BEHIND CHANDBI HOSPITAL, HAKIM CHOUK, VIJAYAPUR, DHARWAD, PO: DHARWAD R.S.

SHRI. SHANTINATH MUDHOL, AGE: 62 YEARS, OCC: RETIRED R/O: S.NO.1358/5B PLOT NO.43, BHAVANI NAGAR, VIKRAMPUR, ATHANI, VIJAYAPUR.

SHRI. PARAGOUDA GURAPPA BIRADAR, AGE: 64 YEARS, OCC: RETIRED R/O: PLOT NO.27, BASAV NILAYA, SHANKAR NAGAR, ATHANI, BELAGAVI -591304.

SHRI. GAJANAN KALLAPPA KOLI, AGE: 64 YEARS, OCC: RETIRED R/O: SHANKAR HATTI, ATHANI, BELAGAVI - 591304.

SHRI. CHANDRAHAS SHIVAMURTHY PATIL, AGE: 64 YEARS, OCC: RETIRED, R/O: AT AND PO: KERUR, CHIKKODI, BELAGAVI - 591201.

SHRI. SHRIMANT CHANDRAPPA MUNNOLLI AGE: 63 YEARS, OCC: RETIRED R/O: AT: BELLADA BAGEWADI, HUKKERI, BELAGAVI - 591309.

SHRI. B.S. SHIRAGAVI, AGE: 64 YEARS, OCC: RETIRED

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R/O: AT AND PO: CHIKKODI, BELAGAVI - 591201.

SHRI. TAMMANNA SIDDAPPA YADRAVI AGE: 62 YEARS, OCC: RETIRED, R/O: UMARANI, CHIKKODI, BELAGAVI - 591201.

SHRI. SHASHIKANTH KALLAPPA MANE, AGE: 64YEARS, OCC: RETIRED, R/O: BIRESHWARA NAGAR, SANKESHWARA, BELAGAVI - 591313.

SHRI. BHARAT BHEEM KORE AGE: 64 YEARS, OCC: RETIRED, R/O: AT POST KHADAPUR, CHIKKODI, BELAGAVI - 591201.

SHRI. SUBHASH NAGAPPA KOTHARE AGE: 64 YEARS, OCC: RETIRED R/O: NEAR BANASHANKARI TEMPLE, CHIKKODI, BELAGAVI - 591201.

SHRI. G.B. MAJJAGI. AGE: 64 YEARS, OCC: RETIRED, R/O: CHIKKODI, BELAGAVI – 591201.

SHRI. MARUTI PUNDALIK DHALE AGE: 63 YEARS, OCC: RETIRED R/O: HANUMAN TEMPLE INDIRA NAGAR, CHIKKODI, BELAGAVI -591201.

SHRI. SIDDAPPA SANGAPPA HOSAKOTE AGE: 61 YEARS, OCC: RETIRED R/O: LIG 59, RAJIVNAGAR CHIKKODI, BELAGAVI - 591201.

…PETITIONERS

(BY SRI. SOURABH HEGDE, ADVOCATE)

AND:

THE DIVISION CONTROLLER, NWKRTC, CHIKKODI DIVISION, CHIKKODI, DIST: BELAGAVI-591201.

…RESPONDENT

(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 ISSUE WRIT OF MANDAMUS OF POSITIVE NATURE, DIRECTING THE RESPONDENT TO PAY THE TERMINAL BENEFITS I.E., LEAVE ENCASHMENT BENEFIT, INTERESTS AFTER CONSIDERING THE REPRESENTATION MADE BY THE PETITIONER DATED 06-12-2024, 04-12-2024, 02-12-2024, 0512-2024, 05.12.2024 AND 18.11.2024 (TOTALLY 25) WHICH ARE MARKED AS ANNEXURE-B TO B23 AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

ORAL ORDER

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

This petition is filed by the petitioners seeking a writ of mandamus for a direction to the respondent to pay interest at the rate of 10% per annum on the belated payment of leave encashment benefit as per the request made in the representations dated 18.11.2024 02.12.2024, 04.12.2024, 05.12.2024 and 06.12.2024.

2. Petitioners were appointed as conductors in the respondent-Corporation. After serving the Corporation for more than 25 to 30 years, they all retired from service on the dates mentioned in the petition. Immediately after the retirement, the terminal benefits i.e., leave encashment benefits were not paid. The respondent belatedly paid leave

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encashment benefit by way of cheque and no interest was paid on the said amount. It is contended by learned counsel for the petitioners 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 indicate the consequences for non-payment of the said benefits belatedly.

3. This being the state of affairs, the petitioners approached the respondent-Corporation requesting for payment of interest for the delayed period with regard to leave encashment benefit. The representations came to be made on the dates mentioned hereinabove claiming interest at the rate of 10% per annum. The representations were 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 nonpayment of interest for the delayed period, petitioners are before this Court.

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4. It is the contention of learned counsel for the

petitioners that the question of the petitioners having been employed in the respondent-Corporation, having put in more than 25 to 30 years of service and having retired from service on the dates 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 petitioners that it is the onerous duty of the respondentCorporation to bid farewell to the employee having served for more than 25 to 30 years in the organization in a respectful manner by relieving them by making payment of all benefits pension, salary, terminal benefits, other benefits including leave encashment as on the date of their 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 representations to the respondentCorporation.

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5. He further contends that there is no justifiable grounds on behalf of respondent-Corporation to withhold the interest on leave encashment benefit which is rightfully entitled to the petitioners. 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 petitioners and liable to be paid as on the dates of retirement was admittedly lying with the respondent-Corporation 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 petitioners.

6. Learned counsel for the petitioners relies on the

following judgments in support of his case.

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

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

iii) Judgment of Hon’ble Supreme Court in the case of Vijay L. Mehrotra and State of U.P.

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and others in C.A.No.689/2000 dated 31.01.2000;

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;

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

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

7. Learned counsel vehemently contends that in the judgment of a Co-ordinate Bench of this Court in 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

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came to be dismissed on 04.11.2024. Therefore, it is the contention of learned counsel for the petitioners that in the present case the respondent having not paid interest for the delayed payment of leave encashment even till date, despite giving the representations, the petitioners are entitled to interest at the rate of 10% per annum. Hence he seeks to allow his petition.

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

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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 petitioners in this petition for the reason that the Corporation was in severe financial crisis.

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 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 constraint was incurred by the respondentCorporation, 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

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the petitioners 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.

10. Learned counsel for the petitioners 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 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

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liable to be paid at 9% per annum for the delay instead of 6% per annum.

11. Having heard learned counsel for the petitioners and learned counsel for the respondent as stated earlier, it is not in dispute that the petitioners were employed in the respondent-Corporation, put in his hard work and service of more than 25 to 30 years, honorably retired on the dates mentioned hereinabove. Thereafter the leave encashment benefit was paid and no interest was paid for the delayed period even as on date. The only ground sought for reduction of 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 respondentCorporation fell into financial constraint and crunch due to which the payment could not be made on time.

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

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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 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 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 respondent and interest at the rate of 6%

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per annum has not been paid, thereby the interest would now have to be paid at 9% per annum.

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.

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

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encashment benefit ordered 10% interest from the date of their entitlement till the date of payment.

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 respondentCorporation 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 petitioners/employees. 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 petitioners 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 year 2025. Therefore there was no harm or restraint or constraint for the respondentCorporation 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.

16. It is also relevant to mention that even after the petitioners having made representations to the respondentCorporation on 18.11.2024 02.12.2024, 04.12.2024, 05.12.2024 and 06.12.2024, interest on belated leave encashment has not been paid, be it whatever percentage,

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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:

ORDER

i) The petition is partly allowed.

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 representations submitted by the petitioners from the date of retirement till the actual date of payment made to the respondent- Corporation.

iii) This amount shall be paid within a period of six weeks from the 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

six weeks at the rate of 9% per annum, the interest would have to be paid at 12% per

annum thereafter.

Sd/(PRADEEP SINGH YERUR) JUDGE

KGK CT-MCK List No.: 1 Sl No.: 94