High Court of Gujarat Partly Allows Writ Petition for Interest on Delayed Retiral Benefits and Differential Pay. Denies Interest on Differential Pay as Delay Was Not Deliberate Due to Prior Stay, but Grants 6% Interest on Pension, Gratuity, Leave Encashment from Retirement Date, Following D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Ltd., (2014) 8 SCC 894.

Writ petition under Article 226 seeking interest on delayed payment of retiral benefits and differential pay awarded by Labour Court

Direction to calculate and pay all dues with interest at 9% or 12% as per prayers; subsequently, during pendency, the main retiral dues were paid, leaving only the claim for interest on delayed payments

The original petitioner retired on 28.02.2019 but his retiral benefits were not paid on time, and the differential pay of Rs.13,52,829 awarded by Labour Court was paid only in March 2019 after significant delay, prompting the petition for interest.

Labour Court award dated 02.01.2009 in LCR No.23 of 1995 directing grant of benefits under G.R. dated 17.10.1988; High Court judgment dated 19.04.2017 in Special Civil Application No.1368 of 2010 dismissing the State's challenge to the award; order dated 01.04.2019 in MCA No.1314 of 2018 recording compliance of payment of differential pay

Whether the legal heirs of the deceased petitioner are entitled to interest on the delayed payment of retiral benefits (pension/family pension, gratuity, leave encashment) Whether the petitioners are entitled to interest on the delayed payment of the differential pay of Rs.13,52,829 awarded by the Labour Court

Petitioners' counsel argued that the original petitioner retired on 28.02.2019 but retiral benefits were paid only in February 2026, thus interest is payable for the delay. He further contended that the differential pay of Rs.13,52,829 was paid in 2019 despite the Labour Court award in 2009, and therefore interest should be granted for that delay. Respondent's counsel submitted that for the differential pay, the award was stayed during the State's petition, and the State had no reason to pay earlier; also, the petitioner never sought interest when the High Court directed implementation. For retiral benefits, the delay was due to calculation time and not intentional, hence no interest should be granted.

A government employer must pay interest for delay in payment of retiral benefits if the delay is without justifiable reason, as settled in D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Ltd. However, when the delay in paying differential salary arose from a stay of the Labour Court award and the employee never previously claimed interest, no interest is payable on that amount.

It is settled position of law that without any justifiable reason, if the retiral benefits have not been paid by the State and / or withheld, it is liable to pay interest on such amount. there is no deliberate delay on the part of the State in making payment of the differential amount of salary to the petitioner.

The original petitioner, a daily wager, raised a claim for regularization through LCR No.23 of 1995. The Labour Court passed an award on 02.01.2009 directing the State to grant benefits of G.R. dated 17.10.1988 instead of regularization. The State challenged the award before the High Court in Special Civil Application No.1368 of 2010, which was dismissed on 19.04.2017 with directions to implement the award in six weeks. The differential pay of Rs.13,52,829 was paid in March 2019, as recorded in contempt proceedings MCA No.1314 of 2018. The petitioner retired on 28.02.2019. He filed this writ petition in 2019 seeking interest on delayed retiral dues and the differential pay. During the pendency, the original petitioner died and his legal heirs were substituted. Retiral benefits (pension, gratuity, leave encashment) were paid to the heirs in February 2026. The court passed the present judgment on 24.03.2026.

• Constitution of India: Article 226