Employee entitled for interest on delayed disbursement of retirement benefits by the state government, holds a Division Bench of the High Court of Kerala

The High Court of Kerala in a significant judgment has held that employees are entitled to receive interest on delayed payment of retirement benefits from the state Government. 

The ruling was handed down by a Division Bench comprising of Justice Antony Dominic and Justice Anil K Narendran who were considering an appeal filed by one R. Vilasini of Kuttoor in Thiruvalla, through advocate S Subhash Chand.

High Court of Kerala

The appellant's husband P S Bhasurangan, who was working as head warden at the central prison in Thiruvananthapuram died in harness on October 26, 2006. A total of Rs1.20 lakh was owed to the deceased's wife and minor children towards death-cum-retirement gratuity (DCRG).

In November 2007, the accountant general's office issued a gratuity payment order asking Thiruvalla sub-treasury to pay the DCRG. But the benefits were not disbursed, citing the reason that the deceased had stood as a surety for a loan availed from Pathanamthitta district co-operative bank. The bank, in October 2008, sought recovery of Rs 3,000 per month from his salary.

When his widow approached the High Court of Kerala by filing a writ petition for reliefs, a single Judge of the High directed the disbursement of DCRG in November 2010, which was complied with in December 2010. However, no interest was ordered to be paid on the delayed payment of the DCRG by the Single Judge.

Aggrieved by the judgment of the single Judge, the widow of the deceased  P S Bhasurangan carried the matter in appeal, where  she sought the payment of interest by the state. 

The Division Bench agreed with the contentions of Adv: S. Subash Chand who advanced arguments on behalf of the appellant, set aside the single judge’s judgment, and directed  payment interest by the state Government to the appellant at the rate of 10% per annum for the period from November 2007, when the accountant general's office issued the order for payment, till December 2010, when the DCRG was paid. Nothing prevented the sub-treasury office from disbursing the DCRG immediately after receiving the order from the accountant general's office, the Division Bench pointed out.