#Leave Encashment

ITAT Jaipur ruled the 2023 notification raising the Section 10(10AA) leave encashment limit to ₹25 lakh applies retrospectively to non-government employees retiring before its issuance, treating it as a remedial statutory discharge. The assessee retiring in AY 2020-21 secured full exemption on ₹13.81 lakh encashment. The decision benefits retirees whose payouts exceeded the old ₹3 lakh cap but fall within the revised limit.

The Jaipur ITAT approved condonation of a 1038-day filing delay and granted a complete exemption of Rs 9,95,670 leave encashment under Sec 10(10AA). Taxpayers with delayed appeals can thus retain full leave-encashment benefits when the tribunal condones the delay.

Bombay High Court set aside a punishment order under Regulation 90 of MSEDCL, ruling that quashing the order reinstates the employee’s right to full gratuity and leave encashment. The court directed payment within six weeks of claim submission, emphasizing employer obligations under service law.

The Allahabad High Court has ruled that cooperative employees are entitled to full leave encashment upon superannuation, regardless of pending disciplinary proceedings, as no provision under the 1975 Regulations permits such withholding. This reinforces earned benefits as non-negotiable rights, protecting thousands of cooperative sector workers from arbitrary financial delays by employers.

The Allahabad High Court has ruled that delayed payment of leave encashment - even when not mandated by statute - attracts 7% interest as a natural consequence of delayed capital, reinforcing the principle that administrative delays cannot deprive employees of fair compensation. This sets a critical precedent for all government and public sector employees awaiting delayed service benefits, aligning them with the equity-based logic of natural justice.

The ITAT Delhi has ruled that employees of Indian Institutes of Technology, even as autonomous bodies, qualify for tax-free leave encashment under Section 10(10AA) if governed by Central Government service rules. This clarifies that employer status alone cannot override statutory eligibility when service conditions align with central rules, impacting thousands of academic and technical staff across IITs and similar institutions.

CAT Principal Bench ruled that arbitrary withholding of retiral dues, including leave encashment, without statutory backing constitutes a violation of Article 300-A. The Tribunal directed the respondent corporation to release the withheld amount along with GPF interest, reinforcing constitutional protections for retired employees' property rights.

The Allahabad High Court has ruled that public employers cannot delay payment of gratuity, leave encashment, or pending salary to retired employees due to financial constraints. The order mandates full payment within three months, with interest at bank rate if no specific provision exists, reinforcing that statutory benefits are non-negotiable rights, not discretionary payouts.

The Himachal Pradesh High Court applied the Supreme Court's Rafiq Masih ruling to shield a retired Class-IV employee from recovery of Rs. 1,00,528, reinforcing that low-grade public servants and retirees cannot be subjected to retrospective financial clawbacks. The judgment underscores equity in administrative law, protecting vulnerable employees from undue hardship.

Madhya Pradesh High Court rules that conviction under the Prevention of Corruption Act does not automatically forfeit gratuity, leave encashment, or insurance dues. Authorities must decide on forfeiture within 45 days, failing which the amounts must be released with 6% interest, ensuring procedural fairness in service law.

Himachal Pradesh High Court reinforces binding precedent, directing HRTC to pay full retiral benefits with 9% interest from the date of retirement. The ruling underscores that denial of statutory dues violates service law principles, setting a clear mandate for public sector employers to comply with judicial directions in similar cases.

The Madhya Pradesh High Court has ruled that public employees are entitled to 6% interest on delayed retiral dues, including leave encashment, purely as a constitutional remedy under Articles 14, 19, and 21 - irrespective of whether any rule or policy mandates it. This sets a precedent for all state and municipal employees facing unjustified delays in final settlements, reinforcing that delay itself violates the right to fair treatment and livelihood.

J&K and Ladakh High Court reinforces that parent organizations must pay gratuity while borrowing organizations are liable for leave encashment for deputed government servants. Reimbursement under J&K Civil Service Regulations is mandatory, with 10% interest on delayed gratuity and 6% on leave salary from petition filing. The ruling impacts financial liability distribution in deputation cases across public employment.

Rajasthan High Court rules that the Central Co-Operative Bank, as the entity issuing retirement orders and maintaining service records, remains statutorily liable for gratuity and leave encashment payments-irrespective of internal arrangements assigning liability to cooperative societies. The judgment reinforces that employer obligations under service law cannot be contractually delegated to avoid statutory benefits.

Rajasthan High Court rules that the Central Co-Operative Bank remains statutorily liable for gratuity and leave encashment payments to retired employees, even if internal arrangements shift liability to affiliated cooperatives. The judgment reinforces that retiral benefits cannot be evaded through administrative reallocations, directly impacting employer obligations under service law.