The Allahabad High Court has clarified that interest is payable on delayed payment of retiral dues, even in the absence of an express denial in the counter affidavit. This judgment underscores the state's obligation to compensate retired employees for delayed disbursement of pensionary benefits, setting a precedent for similar claims.
Background & Facts
The Dispute
The petitioner, a retired government employee, filed a writ petition seeking payment of the correct full pension from 01.11.1999 and interest on delayed payment of retiral dues. The petitioner alleged that while his original pension was Rs. 2,250 per month, he was paid only Rs. 2,148. Additionally, he claimed interest at 18% on the delayed payment of retiral dues amounting to Rs. 12,90,081, which were paid to him on 04.09.2015.
Key Facts
- The petitioner retired from government service and was entitled to pensionary benefits
- The original pension was Rs. 2,250 per month, but he was paid Rs. 2,148
- Retiral dues of Rs. 12,90,081 were paid on 04.09.2015, with a delay of nearly 16 years
- The petitioner sought interest at 18% on the delayed payment from 01.11.1999 to 04.09.2015, and thereafter until actual payment
- The respondents did not contest the delay in payment or the claim for interest in their counter affidavit
Procedural History
- 2016: Writ Petition (Writ-A No. 31033 of 2016) filed before the Allahabad High Court, Lucknow Bench
- 14.07.2026: Judgment delivered by Hon'ble Pankaj Bhatia, J.
Relief Sought
The petitioner sought:
- Payment of the correct full pension of Rs. 2,250 per month from 01.11.1999
- Interest at 18% on the delayed payment of retiral dues of Rs. 12,90,081 from 01.11.1999 to 04.09.2015
- Additional interest at 18% from 04.09.2015 until the date of actual payment
The Legal Issue
The central question was whether the state is liable to pay interest on delayed payment of retiral dues, even in the absence of a specific denial in the counter affidavit, and if so, at what rate and for what period.
Arguments Presented
For the Petitioner
The petitioner's counsel pressed only the second prayer, arguing that:
- The state had delayed payment of retiral dues for nearly 16 years
- Interest at 18% was justified to compensate for the financial loss suffered due to the delay
- The absence of a denial in the counter affidavit implied admission of the claim
For the Respondent
The respondents, represented by the Standing Counsel and Sri Sanjay Misra, did not contest the delay in payment or the claim for interest in their counter affidavit.
The Court's Analysis
The Court observed that there was no denial of the fact that the arrears were paid to the petitioner on 04.09.2015, nor was there any contention regarding the claim for interest in the counter affidavit. The Court relied on the principle that delay in payment of retiral dues entitles the retired employee to interest, even if not expressly contested by the state.
The Court held that while the petitioner had claimed interest at 18%, a rate of 7% would be just and reasonable for the period of delay. The Court emphasized that the state cannot escape its liability to compensate retired employees for delayed disbursement of pensionary benefits, as such delays cause financial hardship.
"There is no denial of the fact that the arrears were not paid to the petitioner on 04.09.2015. There is no contention with regard to the claim of the petitioner for interest in the counter affidavit."
"In view thereof, the present writ petition is allowed in part directing the respondents to ensure that from 01.11.1999 to 04.09.2015, the petitioner shall be paid interest @ 7% on the amount of Rs.12,90,081/-, which was be paid to the petitioner as arrears of retiral dues."
The Verdict
The Court allowed the writ petition in part, directing the respondents to pay the petitioner interest at 7% on the retiral dues of Rs. 12,90,081 for the period from 01.11.1999 to 04.09.2015. The interest must be paid within four months from the date of receipt of a certified copy of the order.
What This Means For Similar Cases
Interest on Delayed Retiral Dues Is Non-Negotiable
- The judgment establishes that delayed payment of retiral dues automatically entitles the retired employee to interest, even if the state does not contest the claim
- Practitioners can argue that the absence of a denial in the counter affidavit implies admission of liability, strengthening the case for interest
- The rate of interest may vary, but the principle of compensation for delay is firmly upheld
The Burden of Proof Shifts to the State
- The state must proactively contest claims for interest on delayed payments; silence in the counter affidavit may be deemed as admission
- Retired employees can rely on this judgment to seek interest on delayed disbursement of pensionary benefits, even in the absence of a specific statutory provision
Compliance Timelines Are Strictly Enforced
- Courts may impose strict deadlines for compliance, as seen in this case where interest must be paid within four months
- Practitioners should ensure that clients seek certified copies of orders promptly to avoid delays in enforcement
