‘Constitution protects retirement benefits’: Orissa High Court directs state to pay 12% interest to former government worker

“Pension is no longer a bounty, but a constitutional guarantee; pension is defined under Article 366(17) of the Constitution of India, as a consideration for the past services rendered by the employee. Further, the terminal benefits constitute property of the retiree and therefore, are protected under Article 300A of the Constitution of India (right to property),” the April 22 order read.

Observations

• The Orissa High Court stated that it hardly needs to be stated that an employee, who retires from service, has to be paid the terminal benefits, including the pension, within a reasonable time, and that cannot be beyond three months in any circumstance not attributable to his guilt.
• It found that the petitioner retired from service on April 30, 2015, and the terminal benefits were settled only on May 12, 2022.
• The court held that this constituted a delay of more than seven years and was therefore liable to carry interest at a reasonable rate.
• The Orissa High Court also noted that the pendency of disciplinary proceedings, which were ultimately quashed by the tribunal and affirmed by the co-ordinate bench, would not constitute any justification for denying interest on the delayed settlement of terminal benefits and litigation costs.
• The court directed that interest at the rate of 12 per cent per annum be paid from the date of retirement on the delayed settlement of terminal benefits, holding that such a direction would do justice.
• It further observed that the tribunal had failed to properly consider the material aspects of the case, resulting in a gross error apparent on the face of the record.
• The petitioner is entitled to costs of Rs 50,000 towards the legal battles, which he was avoidably made to fight, albeit successfully, the Orissa High Court ruled.

Arguments

Appearing for the petitioner, advocate K Mohanty argued that a pension is not a bounty and whenever there is an unjustifiable delay in settling the terminal benefits, the employer has to pay interest.

He also took the court through certain other proceedings that the petitioner had successfully launched earlier for the quashment of unfounded disciplinary proceedings.

Representing the state, senior panel counsel B S Rayaguru mentioned the charges in the disciplinary proceedings. He pointed out that the proceedings were later quashed by the tribunal, and a challenge to the same before a co-ordinate bench of this court ended in vain.

He fairly conceded before the Orissa High Court that some interest was payable in law.