Vijay L. Mehrotra v. State Of U.P And Others, Supreme Court Of India, Judgment, Law, casemine.com

Factual and Procedural Background

The appellant retired from government service on 31 August 1997. After retirement, various components of her retiral benefits—including provident fund, gratuity, leave encashment, arrears of pay, and commuted pension—were disbursed piecemeal over a period stretching from November 1997 to November 1999. Dissatisfied with the delay, the appellant pursued legal remedies. The Supreme Court granted special leave, expressly limiting the scope of the appeal to the question of whether the appellant was entitled to interest on these delayed payments.

Court's Reasoning and Analysis

The Court observed that an employee who retires after years of service is ordinarily entitled to receive all retiral benefits on the date of retirement, or at the very least, within a short time thereafter. In the present case, payments were made months—and in some instances more than two years—after the appellant's retirement without any “reason or justification.” The Court concluded that such delay warranted compensation in the form of interest. Applying this principle, the Court fixed simple interest at 18% per annum, calculable from the date of retirement (31 August 1997) until the dates on which each delayed payment was actually made.

Holding and Implications

APPEAL ALLOWED TO THE EXTENT OF GRANTING INTEREST.

The respondent is directed to pay simple interest at 18% per annum on all delayed retiral benefits within 12 weeks of the judgment. The ruling provides monetary relief to the appellant but does not establish a new legal precedent; it reinforces the established expectation that retiral dues must be settled promptly or attract compensatory interest.

Vijay L. Mehrotra v. State Of U.P And Others

Order

1. Special leave granted, limited to the question of granting of interest.

2. The appellant retired from service on 31-8-1997. From the response filed by the respondent, it is clear that most of the payments of the retiral benefits to her were made a long after she retired on 31-8-1997. The details of the payments so made are as under:

Sl. No. Particulars Amount paid Date (i) GPF 90% Rs 1,80,899.00 27-11-1997 (ii) GPF 10% Rs 20,751.00 25-4-1998 (iii) GIS Rs 13,379.00 27-2-1998 (iv) Encashment of leave Rs 41,358.00 27-9-1998 (v) Arrears of pay Rs 15,495.00 27-9-1998 (vi) Gratuity Rs 1,09,753.00 5-12-1998 (vii) Commuted pension Rs 20,484.00 5-12-1998 (viii) Detained amount Rs 45,000.00 5-11-1999

3. In case of an employee retiring after having rendered service, it is expected that all the payment of the retiral benefits should be paid on the date of retirement or soon thereafter if for some unforeseen circumstances the payments could not be made on the date of retirement.

4. In this case, there is absolutely no reason or justification for not making the payments for months together. We, therefore, direct the respondent to pay to the appellant within 12 weeks from today simple interest at the rate of 18 per cent with effect from the date of her retirement, i.e, 31-8-1997 till the date of payments.

5. The appeal is allowed to the above extent.

Civil Appeal No. 689 of 2000, decided on January 31, 2000

Vijay L. Mehrotra v. State Of U.P And Others

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Vijay L. Mehrotra v. State Of U.P And Others

Comments