The Himachal Pradesh High Court upholds the established principle that all remaining retiral benefits, including gratuity and leave encashment, must be paid to retirees within six months, failing which interest at 9% per annum becomes payable. This ruling follows and clarifies previous binding precedent for public sector undertakings and government employees, confirming its authority for future cases.
Summary
| Category | Data |
|---|---|
| Case Name | CWP/16814/2025 of UMESH DUTT Vs THE HRTC AND ANOTHER |
| CNR | HPHC010654412025 |
| Date of Registration | 28-10-2025 |
| Decision Date | 30-10-2025 |
| Disposal Nature | Disposed Off |
| Judgment Author | Hon’ble Ms. Justice Jyotsna Rewal Dua |
| Court | High Court of Himachal Pradesh |
| Bench | Single Judge (Hon’ble Ms. Justice Jyotsna Rewal Dua) |
| Precedent Value | Binding within Himachal Pradesh; follows consistent line of authority |
| Overrules / Affirms | Affirms Division Bench and previous Single Judge decisions of the High Court |
| Type of Law | Service Law; Retiral Benefits; Payment of Gratuity |
| Questions of Law |
|
| Ratio Decidendi | The State and its instrumentalities are obligated to pay all retiral dues, including gratuity and leave encashment, within six months of retirement. If such payment is delayed beyond six months, the retiree is entitled to interest at 9% per annum from the date after six months until actual payment. This is in line with binding precedents of the Himachal Pradesh High Court and covers all types of retiral benefits, not just gratuity. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Prior Division Bench and Single Judge rulings of the High Court specifying the right to retiral dues within a reasonable period (six months), failure of which attracts interest; reference to Payment of Gratuity Act for interest component; interest rate fixed at 9% p.a. beyond six months; consistent application in similar cases. |
| Facts as Summarised by the Court | The petitioner, a retired employee of HRTC, sought release of his remaining retiral benefits along with interest due to delay. The Court noted that similar relief had already been consistently granted by previous judgments in analogous circumstances against public sector employers, including HRTC. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Himachal Pradesh; Public sector undertakings and State entities in HP |
| Persuasive For | Other High Courts and similar tribunals considering delayed retiral benefit payments |
| Follows |
|
What’s New / What Lawyers Should Note
- Reinforces that payment of retiral benefits (including gratuity and leave encashment) must occur within six months of retirement.
- If payment is delayed, the retiree is entitled to interest at the rate of 9% per annum from the date following the six-month period until the actual date of payment.
- The principle is binding precedent within Himachal Pradesh and follows a consistent series of Division Bench and Single Judge judgments.
- The ruling is directly applicable to cases involving Himachal Pradesh public sector units and government employees, especially where retiral dues are delayed.
- Lawyers acting for retirees can rely on the 9% interest rate as established precedent, supported by direct citations to earlier decisions expressly affirmed by the Court.
Summary of Legal Reasoning
- The Court observed that the petitioner’s case was squarely covered by earlier Division Bench and Single Judge decisions of the High Court, specifically those involving delayed payment of retiral benefits by State entities and public sector undertakings.
- Reliance was placed on CWP No. 3050 of 2014 (Nek Ram v. State of HP), CWP No. 4377 of 2021 (Subhash Chand v. HRTC & Ors.), and CWP No. 6034 of 2021 (Ram Lal v. HPTDC Ltd.), all of which mandated payment of retiral dues within six months, and in case of delay, interest at 9% per annum for the overdue period.
- The Court also cited Review Petition No.110 of 2021, clarifying liability for the full range of retiral dues (gratuity, leave encashment, commuted pension) inclusive of interest.
- The legal rationale follows the statutory right under the Payment of Gratuity Act for interest on delayed payments and extends it to the full spectrum of retiral benefits, using 9% p.a. as a standard rate for delay.
- The direction issued was to make the payment within six months from the date of order, with failure to do so attracting interest at 9% per annum beyond the six-month period.
Arguments by the Parties
Petitioner
- Sought direction for release of all remaining retiral benefits along with interest for delayed payment.
- Relied on previous decisions granting such relief to similarly situated retirees, particularly in cases against HRTC and other public undertakings.
Respondent
- Learned counsel appeared, waived notice, and the matter was heard on merits with the consent of both parties.
- No counter-arguments recorded; matter disposed in line with established precedent.
Factual Background
The petitioner retired from service with the Himachal Road Transport Corporation (HRTC). After retirement, certain retiral benefits remained unpaid. The petitioner approached the High Court against HRTC, seeking a direction for the release of these pending retiral benefits, together with interest for the period of delay. The Court noted that similar cases had already been decided in favour of retirees, and the facts were on all fours with those precedents.
Statutory Analysis
- Refers to the Payment of Gratuity Act for the statutory basis of interest on delayed gratuity payments.
- The Court applied this regime to all retiral benefits, not just gratuity, setting a unified period of six months for payment.
- Interest at the rate of 9% per annum was ordered for amounts remaining unpaid after the expiry of the six-month period.
Alert Indicators
- ✔ Precedent Followed – When existing law is affirmed.