Karnataka High Court

Sri Jagadish S/O Balasaheb Padaki vs The Management Of Nwkrtc on 22 July, 2025

Author: Pradeep Singh Yerur

Bench: Pradeep Singh Yerur

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                                                        WP No. 104809 of 2025


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                               IN THE HIGH COURT OF KARNATAKA,
                                       DHARWAD BENCH
                             DATED THIS THE 22ND DAY OF JULY 2025
                                           BEFORE
                        THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
                          WRIT PETITION NO. 104809 OF 2025 (S-KSRTC)


                 BETWEEN:

                 SRI. JAGADISH S/O. BALASAHEB PADAKI,
                 AGE: 65 YEARS, OCC: RETIRED DRIVER,
                 R/O. "GURU NILAYA", SHETTAR COLONY,
                 PURANDARA LAYOUT, DHARWAD-580004,
                 TALUK AND DIST: DHARWAD.
                                                                  ...PETITIONER
                 (BY SRI. RAVI HEGDE, ADVOCATE)

                 AND:

                 THE MANAGEMENT OF NWKRTC,
                 BELAGAVI DIVISION,
                 REPRESENTED BY ITS DIVISIONAL CONTROLLER,
VIJAYALAKSHMI    BELAGAVI DIVISION, BELAGAVI-590016,
M KANKUPPI
                 DIST: BELAGAVI.
Location: HIGH                                                   ...RESPONDENT
COURT OF
KARNATAKA        (BY SRI. PRASHANT S. HOSAMANI, ADVOCATE)
DHARWAD
BENCH


                       THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
                 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
                 MANDAMUS OF POSITIVE NATURE, DIRECTING THE RESPONDENT TO
                 PAY THE INTEREST AT THE RATE OF 12% P.A. ON THE BELATED
                 PAYMENT OF TERMINAL BENEFIT I.E., LEAVE ENCASHMENT BENEFIT,
                 BY FIXING OUTER LIMIT AND ETC.

                       THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING
                 THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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                                        WP No. 104809 of 2025


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                          ORAL ORDER

(PER: THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR)

This petition is filed by the petitioner seeking a writ

of mandamus for a direction to the respondents to pay

interest at the rate of 12% per annum on the belated

payment of leave encashment benefit as per the request

made in the representation dated 01.07.2025.

2. Petitioner was appointed as a Conductor in the

respondent corporation in the year 1989. After serving the

corporation for more than 31 years, he retired from

service with effect from 31.07.2020. Immediately after the

retirement, the terminal benefits i.e., leave encashment

benefit was not paid. The respondent belatedly paid leave

encashment benefit in two installments by way of cheque

dated 03.04.2023 and 22.12.2024 after lapse of 32 and 53

months respectively and no interest was paid on the said

amount. It is contended by learned counsel for the

petitioner that as per the Circular No.58 dated

09.07.1998, the terminal benefits and all other benefits

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are required to be paid as on date of retirement itself and

the same does not indicate the consequences for

non-payment of the said benefits belatedly.

3. This being the state of affairs, the petitioner

approached the respondent-corporation requesting for

payment of interest for the delayed period with regard to

leave encashment benefit. The representation came to be

made on the 01.07.2025 claiming interest at the rate of

12% per annum. The representation was served on the

respondents, however, no reply was given and no

payment was made towards interest on the belated leave

encashment benefit. Hence, being aggrieved by the

non-payment of interest for the delayed period, petitioner

is before this Court.

4. It is the contention of learned counsel for the

petitioner that the question of the petitioner having been

employed in the respondent-Corporation, having put in 31

years of service and having retired from service on the

date mentioned hereinabove are all not disputed, so also

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the payment of terminal benefits i.e., leave encashment

benefit paid by the respondent Corporation. It is the

vehement contention of learned counsel for the petitioner

that it is the onerous duty of the respondent corporation to

bid farewell to the employee having served for more than

31 years in the organization in a respectful manner by

relieving him by making payment of all benefits pension,

salary, terminal benefits, other benefits including leave

encashment as on the date of his retirement. But in the

present case, no doubt the other benefits of salary,

gratuity and other benefits have been paid, but the leave

encashment benefit was paid belatedly but the interest for

delayed payment has not been paid till date despite giving

representation to the respondent corporation.

5. He further contends that there is no justifiable

grounds on behalf of respondent-corporation to withhold

the interest on leave encashment benefit which is

rightfully entitled to the petitioner. It is further contended

that this amount of leave encashment, though it is paid

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belatedly, the interest amount towards the said leave

encashment has not been paid. Therefore, the amount

which was due to the petitioner and liable to be paid as on

the date of retirement was admittedly lying with the

respondent-corporation fetching interest which has gone

to the benefit of the corporation. Therefore, the interest

component would have to be paid for the delayed payment

of the leave encashment to the petitioner.

6. Learned counsel for the petitioner relies on the

following judgments in support of his case.

i) Judgment of this Court in W.A.No.5022/1998 decided on 27.01.1999;

ii) Order of this Court in W.P.No.100157/2024 decided on 22.02.2024;

iii) Judgment of Hon'ble Supreme Court in the case of Vijay L. Mehrotra and State of U.P. and others in C.A.No.689/2000 dated 31.01.2000;

iv) Judgment of Hon'ble Supreme Court in the case of Workmen of Hindustan Steel Ltd., and Hindustan Steel Ltd., and others, in C.A.No.1137(NL) of 1981 dated 12.12.1984;


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     v)    Judgment     of    this     Court         in

W.P.No.35513/1993 dated 16.09.1998;

vi) Order of this Court in W.P.No.101519/2024 connected with batch of petitions dated 24.06.2024.

7. Learned counsel vehemently contends that in

the judgment of a Co-ordinate Bench of this Court in

W.P.No.100157/2024, this Court allowed the petition and

granted interest at the rate of 9% per annum from the

date of their retirement till the date it was paid. The said

judgment was challenged before the Hon'ble Division

Bench in Writ Appeal No.100193/2024. The said writ

appeal came to be dismissed on 29.07.2024 upholding the

order passed by the Co-ordinate Bench of this Court

awarding interest at the rate of 9% per annum till actual

date of payment. The order of the Division Bench came to

be challenged again before the Hon'ble Apex Court in SLP

No.25445/2024, which came to be dismissed on

04.11.2024. Therefore, it is the contention of learned

counsel for the petitioner that in the present case the

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respondents having not paid interest for the delayed

payment of leave encashment even till date, despite giving

the representation, the petitioner is entitled to interest at

the rate of 12% per annum. Hence he seeks to allow his

petition.

8. Per contra, learned counsel Sri.Prashant

Hosmani, representing the respondent corporation

vehemently contends that the payment of retirement

benefits, salary, pension, gratuity and all other benefits

have been paid to the practitioner/retired employee on

time. There may have been a slight delay in payment of

the leave encashment. The reason for such delayed

payment is due to the intervening COVID-2019 pandemic

that had arisen across the world which affected the entire

world and to a large extent India, which affected each and

every individual, corporation and organizations including

the respondent corporation, thereby undergoing severe

financial constraint and crunch. However, despite all these

hiccups and financial constraints, respondent corporation

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was able to make the payment of retirement benefits,

gratuity and leave encashment, though there may have

been a little delay in making the payment. But the interest

on delayed payment may not be sustainable as sought for

by the petitioner in this petition for the reason that the

corporation was in severe financial crisis.

9. Learned counsel for the respondents further

contends that the Government vide order bearing

No.AE 211 PEN 2021, Bengaluru, dated 22.02.2022,

provided a provision for payment of interest on the

delayed payment of dearness allowance, gratuity and

leave encashment, whereby the Government passed an

order that interest was payable on delayed payment of the

aforesaid amount at 8% per annum came to be revised

and reduced to 5.4% per annum. Thus it is his contention

that taking into consideration the COVID-2019 pandemic

period where financial constraints was incurred by the

respondent corporation, the Government has reduced

interest on delayed payment to 5.4% per annum as

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against 8% per annum. Under the circumstances the

interest so claimed by the petitioner in this petition would

not be the correct proposal for granting interest and since

the Government has reduced it to 5.4% per annum, the

same may be the correct percentage to grant interest.

10. Learned counsel for the petitioner relies on the

judgment of a Co-ordinate Bench of this Court in the case

of Sri Prakash vs. the Works Manager, NWKRTC, Regional

Workshop, Gokul Road, Hubballi, in a batch of petitions in

W.P.No.101519/2024 connected with several other

matters, considering the contentions put forth by the

learned counsel for the respondents, the Co-ordinate

Bench of this Court in the above mentioned batch of writ

petitions considered the submissions with regard to

COVID-2019 pandemic period and the lockdown and

financial constraint and crunch of the respondent

corporation and also the Government order reducing

interest rate from 8% to 5.4% per annum awarded

interest on delayed payment of leave encashment at 6%

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per annum to be paid within a period of eight weeks from

the date of receipt of copy of the order and on non

payment of the said amount within the said period, the

interest was liable to be paid at 9% per annum for the

delay instead of 6% per annum.

11. Having heard learned counsel for the petitioner

and learned counsel for the respondents as stated earlier,

it is not in dispute that the petitioner was employed in the

respondent corporation, put in his hard work and service

of more than 31 years, honorably retired on 31.07.2020.

Thereafter the leave encashment benefit was paid on

03.04.2023 and 22.12.2024 respectively and no interest

was paid for the delayed period even as on date. The only

ground sought for reduction of interest by the learned

counsel for respondent is for the reason of COVID-2019

pandemic affecting the entire world which crippled the

financial flow and the respondent corporation fell into

financial constraint and crunch due to which the payment

could not be made on time.

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12. I have given my thoughtful consideration to the

submissions put forth by learned counsel for both parties.

This Court is concerned with only the interest for the

delayed payment of leave encashment benefit whether the

interest has to be paid at 12% per annum as sought for by

the petitioner in the petition and whether it requires to be

reduced to 6% per annum as awarded by the Co-ordinate

Bench of this Court and 9% per annum as awarded by the

Co-ordinate Bench of this Court in other petition

hereinabove stated supra. Two Co-ordinate Bench

judgments have held 9% per annum in the earlier

judgment in W.P.No.100157/2024 and 6% per annum in

the case of W.P.No.101519/2024 and connected matters

in the later judgment of my esteemed brother, the interest

component came to be reduced to 6% per annum based

on the Government circular and considering the

submissions with regard to COVID-2019 pandemic and

financial crunch and constraint. However, in the said

judgment it was ordered that interest to be paid at 6% per

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annum within a period of eight weeks, failing which the

interest would be incurred at 9% per annum for the

delayed period. It is now brought to the notice of this

Court that the said order has not been complied by the

respondents and interest at the rate of 6% per annum has

not been paid, thereby the interest would now have to be

paid at 9% per annum.

13. The aspect of interest on the delayed payment

has been a subject matter which has been discussed way

back by the Hon'ble Apex Court in the case of State of

Kerala vs. M.Padmanabhan Nair by the Hon'ble Apex

Court on 17.12.1984, whereby the interest was awarded

at 12% per annum and that was also on the leave

encashment and on retiremental benefits and pension

benefits. The Hon'ble Apex Court in the case of Sashilata

Verma vs. State of Bihar and others, reported in

(2005) 12 SC 197, dealt with a similar matter with

regard to interest on delayed payment on leave

encashment benefit. While dealing with the same, the

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Hon'ble Apex Court ordered 12% interest on the delayed

payment of amount on leave encashment to be paid

subsequently. In another judgment reported in the case of

Jagdish Prasad Saini and others vs. State of

Rajasthan and others, reported in 2022 SCC Online

1298, the Hon'ble Apex Court dealing with a similar

situation, on interest on the delayed payment of leave

encashment benefit ordered 10% interest from the date of

their entitlement till the date of payment.

14. Therefore, in my humble opinion the leave

encashment or terminal benefits or pensionary benefits

are the amount which is the legally entitled amount of the

employee which ought to have been released and

disbursed as on date of the retirement and if there is any

delayed payment, the same having remained with the

respondent corporation and having earned interest which

had accrued to the interest of the respondent-corporation,

necessarily should go to the benefit of the employee and

cannot be denied to the petitioner/employee. Under the

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circumstances, keeping in mind the judgment rendered by

my esteemed brother, stated supra and judgments of a

Co-ordinate Bench of this Court, it would be in the interest

of the party, namely the petitioner to be legally entitled to

a reasonable interest stipulated hereinabove by the

Hon'ble Apex Court.

15. Coming to the aspect of the ground urged by

learned counsel for respondent-corporation with regard to

COVID-2019 pandemic and the financial crunch, I am of

the opinion that the COVID-2019 pandemic came to an

end in the early 2022. We are in the year of 2025.

Therefore there was no harm or restraint or constraint for

the respondent-corporation to have paid the interest for

the delayed period towards leave encashment pursuant to

the year 2022. Admittedly, in this case interest is not paid,

so also in the judgment rendered by the Co-ordinate

Bench of this Court, wherein the benefit was given to the

petitioner by reducing interest to 6% per annum, taking

into consideration the order of the State Government on

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the basis of COVID-2019 pandemic, has also not been

availed and made use of by the respondent corporation.

16. It is also relevant to mention that even after

the petitioner having made a representation to the

respondent corporation on 01.07.2025, interest on belated

leave encashment has not been paid, be it whatever

percentage, which by itself shows the conduct and intent

of the respondent corporation. Under the circumstances,

having not availed the benefit which was granted by the

Co-ordinate Bench of this Court, I do not find any need to

extend the same benefit to the respondent-corporation.

Under the circumstances, I pass the following:

ORDER

i) The petition is partly allowed.

ii) A writ of mandamus is issued directing the

respondent-corporation to pay interest at the

rate of 9% per annum on the belated

payment towards leave encashment benefit