Is a Retired Employee Entitled to Interest for Delayed Payment of Provident Fund and Other Terminal Benefits? Calcutta High Court Reaffirms Right and Specifies Interest Rate (Binding Authority)

The Court confirmed that employees are entitled to claim interest for delayed disbursal of terminal benefits from the date of superannuation to the actual date of payment. The judgment upholds and further clarifies existing precedent, specifically setting the applicable interest rates for such delays and the consequences of non-compliance. This ruling holds binding authority within the State of West Bengal, directly guiding future service and employment law disputes involving delayed post-retirement benefits.

Summary

Practical Impact

What’s New / What Lawyers Should Note

• Clear mandate that delayed provident fund and other terminal benefit payments entail an interest liability.
• Interest at 6% per annum is specified for the period of delay.
• In case the directed payment is not made within a month, interest escalates to 9% per annum.
• Lawyers should reference this case for both rate of interest and default liability in service-related payment delay matters.
• The ruling is immediately actionable and provides a precise interest calculation methodology.

Summary of Legal Reasoning

• The Court noted the petitioner’s superannuation date and actual dates of receipt of various terminal benefits.
• It recognized the legitimacy of the petitioner’s claim for interest due to the delayed disbursal of his entitled benefits.
• The Court directed WBTCL to pay simple interest at 6% per annum for the period of delay on both provident fund and part payment towards leave encashment and gratuity.
• The order imposes a higher rate of 9% per annum if the amounts are not paid within one month, thereby acting as a deterrent against further delay.
• The reasoning aligns with the principle that retirement benefits should be paid promptly, and unjustified delays must be compensated appropriately.

Arguments by the Parties

Petitioner

• Claimed entitlement to interest for delayed payment of terminal (retirement) benefits.
• Detailed actual dates of payment vis-à-vis date of superannuation.

Respondent (WBTCL)

• Submissions, if any, regarding delay or its justifications are not captured in the judgment; the State was not represented at the hearing.

Factual Background

The petitioner retired from the West Bengal Transport Corporation Limited on 31 January 2024. Despite superannuation, the petitioner received his provident fund payment on 18 January 2025 and partial payment towards leave encashment and gratuity on 18 December 2024. The petitioner sought interest on the delayed payments for the period starting from the day after superannuation until the actual receipt of each component.

Statutory Analysis

• The Court addressed general principles relating to delayed payment of post-retirement benefits, but no specific statutory provision (such as the Employees’ Provident Funds Act or Payment of Gratuity Act) was interpreted in the judgment text.
• The Court specified interest rates and periods directly, without recourse to statutory maximums or minimums, indicating reliance on judicially accepted standards for such disputes.

Dissenting / Concurring Opinion Summary

No dissenting or concurring opinions are recorded in the judgment.

Procedural Innovations

None specified. The decision involves straightforward judicial directions in a writ petition context.

Alert Indicators

• ✔ Precedent Followed – The judgment upholds settled law that delayed payment of retirement dues must carry compensatory interest.