Kerala State Road Transport Corporation v. Thulasi J.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** **THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN** **WEDNESDAY, THE 25[TH] DAY OF JANUARY 2023 / 5TH MAGHA, 1944 WP(C) NO. 39978 OF 2022** ## **PETITIONER:** **KERALA STATE ROAD TRANSPORT CORPORATION (KSRTC) TRANSPORT BHAVAN, EAST FORT, THIRUVANANTHAPURAM - 695 023, REPRESENTED BY ITS CHIEF LAW OFFICER (IN CHARGE), HENA P.N.** **BY ADVS. DEEPU THANKAN UMMUL FIDA LAKSHMI SREEDHAR** ## **RESPONDENT:** **THULASI J., THERIVILA PUTHEN VEEDU, SUNITHA BHAVAN, MUKKAMPALAMOODU, MOONGODE, PEYAD P. O., THIRUVANANTHAPURAM – 695 573.** **MS.THULASI J.(PARTY) (BY ORDER)** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.39978 of 2022 2 ## **JUDGMENT** **MURALI PURUSHOTHAMAN, J.** The Kerala State Road Transport Corporation (hereinafter referred to as the 'KSRTC', for short) has filed this writ petition challenging Ext.P11 report of the Kerala Lok Ayukta (hereinafter referred to as 'Lok Ayukta') under Section 12 (1) of the Kerala Lok Ayukta Act, 1999 (for brevity, 'Lok Ayukta Act') recommending payment of interest at the rate of 6% p.a. on the Death cum Retirement Gratuity (DCRG) amount of Rs.1,81,305/- due to the respondent for the period from 10.8.2019 to 14.11.2022. 2. The short facts necessary for the disposal of the writ petition are as follows:- The respondent was a Sweeper in the KSRTC. She retired from service on superannuation on 31.12.2014. She filed Ext. P6 complaint dated 30.07.2019 before the Lok Ayukta for disbursement of her retirement benefits including DCRG with 10% interest. Ext. P7 Statement was W.P.(C) No.39978 of 2022 3 filed by the KSRTC contending that there is no maladministration on their part and it was on the basis of Ext. P2 letter submitted by the respondent requesting the KSRTC not to forward her pension papers to the head office till she clears her liabilities to two Co-operative Societies, the DCRG was not disbursed. They further stated that it was only on 08.02.2019 vide Ext. P3 that she made request for releasing the DCRG. The Lok Ayukta passed Ext. P10 interim order directing the KSRTC to disburse the DCRG amount of Rs.1,81,305/- to the respondent within a period of one month from the date of the order. In Ext. P10, it was observed that the question regarding payment of interest by the KSRTC will be considered on the next date of hearing. Pursuant to Ext. P10, the DCRG was paid on 11.04.2022 and Ext.P8 additional Statement was filed by the KSRTC explaining the reasons for not disbursing the DCRG. The Lok Ayukta, in Ext. P11 report, observed that, since the KSRTC was not concerned about the loan amounts of the respondent with the Service Co-operative Banks, W.P.(C) No.39978 of 2022 4 there was no justification for withholding the DCRG of the respondent on the basis of the said loan accounts. The Lok Ayukta found that the action of the KSRTC in withholding DCRG even after receipt of Ext. P3 letter amounts to maladministration and held that the respondent is entitled to interest at the rate of 6% p.a on the amount of DCRG from 10.08.2019, _ie_ ; one month after the receipt of Ext.P3 up to 11.04.2022, the date of disbursal. The KSRTC was directed to pay the said amount within two months from the date of Ext. P11 report, failing which the KSRTC will be liable to pay interest at the rate of 10% p.a for the period from 15.12.2022 to the date of payment. 3. Ext. P11 report is impugned on the ground that the Lok Ayukta has no power under the Lok Ayukta Act to order payment of interest and that the DCRG was withheld on the request of the respondent herself and it was incumbent on the KSRTC to recover the amounts due to the Societies from her terminal benefits and there is no negligence or maladministration on the part of the KSRTC. W.P.(C) No.39978 of 2022 5 4. Heard Sri. Deepu Thankan, the learned counsel for the petitioner. Though notice was served on the respondent by special messenger, she has not entered appearance. 5. The KSRTC follows the provisions of Part III of Kerala Service Rules (KSR) for the purpose of payment of pension to its employees. Ruling 1 of Rule 3 of Part III KSR provides that the amount due from a government employee or pensioner to Co-operative Societies may be recovered from DCRG payable to him with his consent in writing. The respondent stood surety for the loan availed by her coworkers. The KSRTC does not have a case that the respondent has given consent in writing to recover the amounts due from her to Co-operative Societies from the DCRG payable to her. By Ext.P2 letter, she only requested KSRTC not to forward her pension papers to the head office till she clears her liabilities to two Co-operative Societies. By Ext.P3 letter dated 08.02.2019, she made request for releasing the DCRG. Even then, the DCRG was not W.P.(C) No.39978 of 2022 6 disbursed. The Lok Ayukta found that the KSRTC was not justified in denying DCRG to the respondent even after the receipt of Ext.P2 letter dated 08.07.2019 ( _sic._ 08.02.2019). 6. In **Director, Economics and Statistics** _**v**_ **. Subramania Pillai and another** [2007 (3) KHC 73: ILR 2007 (3) Ker. 170: 2007 (3) KLT 366], a single Bench of this Court considered the question as to whether the Lok Ayukta could adjudicate upon claim for interest on delayed payment of DCRG. The Court held that a claim by way of compensation or interest on account of delayed payment of retiral benefits would fall within the sweep of the second limb of Clause (d) of the Second Schedule read with Section 8(1) of the Lok Ayukta Act and therefore, the Lok Ayukta has the authority to decide such issue. Paragraphs 5 and 6 of the decision read as follows:- “5. S.8(1) of the Act provides that the Lok Ayukta shall not conduct any investigation under the Act in the case of a complaint involving a grievance in respect of any action, if such action relates to any matter specified in the Second Schedule. Clause (d) in the Second Schedule reads as follows: W.P.(C) No.39978 of 2022 7 "(d) Action taken in respect of appointment, removal, pay, discipline, superannuation or other matters relating to conditions of service of public servants but, not including actions relating to claims for pension, gratuity, provident fund or to any claims which arises on retirement, removal or termination of service." 6. Therefore, the Lok Ayukta cannot take any action in respect of appointment, removal, pay, discipline, superannuation or other matters relating to conditions of service of public servants. But, that prohibition does not extend to take any action in respect of actions relating to claim for pension, gratuity, provident fund or to any claims which arise on retirement, removal or termination of service. Therefore, the Lok Ayukta has jurisdiction to take action in relation to a grievance in respect of any action relating to claims for pension, gratuity, provident fund as also any claim which arise on retirement, removal or termination of service. The entitlement to pension, gratuity and PF arises on retirement. The delay in paying pension, gratuity or PF as the case may be, if found to be objectionable or culpable, would give rise to a claim for compensation for the delay which would be determinable applying the yardsticks of a rate of interest or otherwise. That is the concept of awarding interest for delayed payment of retiral benefits. Therefore, a claim for interest on account of delay in disbursing the retiral benefits is a claim which arise out of retirement. Similarly, the entitlement to pension, gratuity and PF, if not satisfied W.P.(C) No.39978 of 2022 8 within the time fixed by the Rules, would attract the legal liability of the Government as the employer to compensate for the delay. As a necessary corollary, that will give rise to an actionable claim in favour of the employee, who suffers out of the delay. This is the jurisdictional equation which works in the later part of Clause (d) of the Second Schedule, thereby generating appropriate cause of action in favour of the employee, like the first respondent to agitate a claim by way of compensation or interest on account of delayed payment of retiral benefits. Such a claim would therefore necessarily fall within the sweep of the second limb of Clause (d) of the Second Schedule. Therefore, the Lok Ayukta has the authority to decide such issue.” 7. In Writ Petition (c) No. 19040/07, a learned Single Judge of this Court held that the Lok Ayukta has no jurisdiction to entertain claims regarding terminal benefits of the employees of the KSRTC. In view of the conflicting views in **Director, Economics and Statistics** (supra) and the judgment in W.P(c) No. 19040/07, certain Writ Petitions were referred to the Division Bench and considering the facts and circumstances, the Division Bench in **Managing Director, KSRTC** _**v**_ **. T. Padmavathy** [2008 (1) KHC 662:ILR 2008 (1) KER 378: 2008 (1) KLT 584] held that the W.P.(C) No.39978 of 2022 9 decision in **Director, Economics and Statistics** (supra) lays down the correct legal position. 8. The Division Bench of this Court in **Sreekumar N.** _v._ **Kerala Lok Ayukta and others** [2022 (4) KHC 495: 2022 (4) KLT 290], to which one of us (S.Manikumar, C.J) was a member, held that claims for pension, gratuity, provident fund or to any claims which arises on retirement, removal or termination of service are matters that could be considered by the Lok Ayukta by virtue of the powers conferred on it under the second limb of Clause (d) of the Second Schedule read with Section 8(1) of the Lok Ayukta Act. This Court further held that, it is not only wilful negligence, but undue delay in taking action or the administrative procedure or practice adopted in such action can also be treated as maladministration, and therefore the Lok Ayukta is vested with powers to adjudicate the complaint filed before it seeking retiral benefits with interest for delayed payments of retiral benefits. In Paragraphs 8 and 9 of the said decision, this Court held as under:- W.P.(C) No.39978 of 2022 10 “8. It is clear from the facts and circumstances that there was a delay of 32 months in issuing the L.P.C. to the complainant. It is an admitted fact that the petitioner herein has taken charge as the Taluk Supply Officer, Devikulam on 01.05.2019, who was duty bound to issue the L.P.C. to the complainant. That duty conferred on the petitioner is not dependent on the actions initiated by the complainant, and therefore irrespective of any inaction on the part of the complainant, the petitioner had to discharge his duty within a reasonable time. Having not done so, the petitioner cannot justify the unpardonable delay contending that the complainant has not contacted him to secure the L.P.C. That said, when a duty is cast upon an officer to do something, that burden will not shift merely because there was no action from the part of the aggrieved, if the aggrieved has played his part by submitting the required papers on time. Moreover, a pensioner is entitled to get his retrial benefits immediately after his retirement; and it is with the intention to achieve the said noble objective that the definition of maladministration is couched in such a manner in the Act 1999 creating liability on any officer even for causing undue delay. Even though various contentions are raised on facts, it was found out by the LokAyukta that it was due to the recalcitrant attitude of the petitioner that the delay had occurred. It was accordingly that interest @ 6%, default interest @ 9% against the pensionary benefits and interest @ 10% for DCRG was ordered; and it was after identifying the undue delay occurred on the part of the petitioner that liberty was granted to the State and it's officials to recover the interest amounts from the petitioner. 9. After assimilating the factual and legal situations, we are of the clear opinion that the liability fixed up by the Upa LokAyukta against the writ petitioner cannot be said to be arbitrary or illegal in any manner as alleged in the writ petition, susceptible to be interfered exercising the power of judicial review.” However, this Court reduced the rate of interest to 7% p.a. W.P.(C) No.39978 of 2022 11 9. On the aspect of awarding interest on belated disbursement of DCRG benefits, a Division Bench of this Court in **University of Kerala v. Dr. V. Sobha and Another** [ILR 2020 (2) Ker. 363], held as under: “22. The next question to be decided is whether this Court in exercise of powers under Article 226 of the Constitution of India can award interest on the belated payment of DCRG benefits. On the said aspect, let us consider a few decisions. (I) In the case of **State of Kerala and others v. M. Padmanabhan Nair** [(1985) 1 SCC 429], it was held that: “Prompt payment of retirement benefits is the duty of the Government and any failure in that direction will entail the Government liable to pay penal interest to the government servant. It was further held that gratuity should be paid on the date of retirement or on the following day and pension should be paid at the expiry of the following month. In that case, the Supreme Court, finding that there was delay in disbursement of the terminal benefits, directed the respondents therein to disburse the pensionary benefits with interest at the rate of 6% per annum. Applying the ratio laid down by the Honourable Supreme Court in the above cases to the facts of this case, there is a delay of around 16 years in settling the terminal benefits payable to the petitioner. Such a delay is not attributable on the part of the respondents. It is contended by the respondents that the delay has occurred due to an audit objection. Such a contention on the part of the respondents cannot be countenanced. This Court is of the view that the delay on the part of the respondents in settling the withheld portion of the DCRG and pension payable to the petitioner for about 16 years purportedly due to audit objection cannot be accepted. Further, Rule 45-A of the Tamil Nadu Pension Rules as amended from 20th February 1995 provides for granting interest at the rate of 12% per annum if the terminal benefits are delayed. W.P.(C) No.39978 of 2022 12 Therefore, I am of the view that the petitioner is entitled for payment of interest for the belated disbursement of the terminal benefits at the rate of 12% per annum. In the result, the writ petition is allowed and a Mandamus is issued to the respondents directing them to pay interest at the rate of 12% per annum for the belated disbursement of 25% of DCRG and Pension payable to the petitioner from the date of his retirement till 17.11.2014, the date on which the amount thereof have been disbursed to the petitioner. No costs. Having regard to the fact that the petitioner is aged 75 years, the respondents are directed to pay the interest as indicated above to the petitioner within a period of two months from the date of receipt of a copy of this order." (II) The Hon'ble Supreme Court in **O.P.Gupta v. Union of India and Others** [(1987) 4 SCC 328], after taking note of the 20 years of protracted departmental enquiry, in paragraph 15, held as follows: "... It is clear principle of natural justice that the delinquent officer when placed under suspension is entitled to represent that the departmental proceedings should be concluded with reasonable diligence and within a reasonable period of time. If such a principle were not to be recognised, it would imply that the executive is being vested with a totally arbitrary and unfettered power of placing its officers under disability and distress for an indefinite duration." In the said case, the Supreme Court awarded 12% interest in favour of the appellant for the delayed payment of pension.” (III) The Hon'ble Apex Court in the case of **Dr. Uma Agarwal v. State of U.P. and Another** [(1999) 3 SCC 438], held that, when there is delay in disbursement of pensionary benefits, the department is liable to pay interest thereof. In Para Nos.5 to 7 of the said case, it was held as follows: "5. If rules/instructions which prescribe time schedule for settling of retirement dues, are followed strictly, much of litigation can be avoided and retired government servants would not feel harassed. Pension is not a bounty but right of a government servant. Government is obliged to follow rules. Delay in settling retiral benefits is frustrating and must be avoided at all costs. Such delays are occurring W.P.(C) No.39978 of 2022 13 even in regard to family pensions for which too, there is a prescribed procedure. This indeed is unfortunate. In cases where a retired government servant claims interest for delayed payment, the Court can certainly keep in mind time schedule prescribed in the rules/instructions, apart from other relevant factors applicable to a case. 6. The present case is a clear example of inexcusable department delay. Respondents contend that letters were sent to the petitioner after her retirement seeking some information for settling her retirement dues but this is denied by the petitioner. Even if it is assumed that such letters were sent, this cannot be an excuse for lethargy of the department because rules/instructions provide for initiation of process much before retirement. The exercise which was to be completed much before retirement was in fact started long after petitioner's retirement. 7. This is a fit case for awarding interest to the petitioner. It is however not necessary that the matter should go back to the Government for computation of interest. Instead, on the facts of this case, interest is quantified at Rs.1 lakh. The same shall be paid to the petitioner within two months." (IV) In **Dr. Uma Agarwal v. State of U.P.** , reported in (1999) 3 SCC 438, the Hon'ble Supreme Court held as under: "....grant of pension is not a bounty but a right of the government servant. The Government is obliged to follow the Rules mentioned in the earlier part of this order in letter and in spirit. Delay in settlement of retiral benefits is frustrating and must be avoided at all costs. Such delays are occurring even in regard to family pensions for which too there is a prescribed procedure. This is indeed unfortunate. In cases where a retired government servant claims interest for delayed payment, the Court can certainly keep in mind the time-schedule prescribed in the Rules/Instructions apart from other relevant factors applicable to each case." (V) In **Vijay L. Mehrotra v. State of U.P. and Others** , [2000 (2) SLR 686], the Hon'ble Apex Court held as under: “the appellant therein retired from service on 31[st] August, 1997. The retiral benefits, such as, GPF, GIS, Encashment of Leave, Arrears of pay, Gratuity and Commuted value of Pension, were paid long after she retired. Observing that in W.P.(C) No.39978 of 2022 14 case of an employee, retiring after having rendered service, it is expected that all the payments 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, the Hon'ble Supreme Court directed the respondent therein to pay to the retired employee, interest at the rate of 18% on the belated payment from the date of retirement, till the actual payment was made.” (VI) In **Gorakhpur University and Others v. Dr. Shitla Prasad Nagendra and Others** reported in [(2001) 6 SCC 591], the Hon'ble Supreme Court held as under: “The retiral benefits of the respondent therein were withhold to adjust certain disputed amounts from a Professor for overstaying in the University, during his appointment as Vice-Chancellor in another University. After completion of his tenure as Vice Chancellor, he assumed his original post, ie., as Professor in the University, in which, he had worked earlier and continued to service till 11.1.90, the date, on which he attained the age of superannuation. During his overstay, nominal rent was accepted from him and no legal action was taken to recover possession of the quarters. No notice was issued, fixing his liability for payment of penal rent. When disbursement of retiral benefits, including fixation and disbursment of pension, was delayed, a writ petition was filed before the Allahabad High Court and that the same was opposed by Gorakhpur University, the appellant before the Apex Court. It was the contention of the appellant that the professor had not vacated the quarters held by him, when he retired and within the permissible extended period and therefore, he was liable for payment of penal rent in respect of such accommodation and as a matter of fact, the Finance Controller, Officer of Directorate of Higher Education, U.P., who examined his pension papers, ordered on the recommendation of the universityauthorities, adjustment of Rs.3,20,638.04 from the amounts due, towards the retiral benefits. Applying the principles of Some Prakash v. Union of India reported in 1981 (I) LLJ 79 (SC) and R.Kapur v. Director of Inspector (Painting and Publication) Income Tax and Another reported in (1995) I LLJ 884 (SC), the High Court overruled the objections of the University, holding that the pension and other retiral benefits cannot be withheld or adjusted or appropriated W.P.(C) No.39978 of 2022 15 for the satisfaction of any other dues outstanding against the retired employee. It was further held that the action of the university authorities was illegal and while allowing the claim of the first respondent-Professor, a direction was also issued to pay the entire pension and Provident Fund etc., due to him, with penal interest @ 18% within two months from the date of the order. While testing the correctness of the order, the Hon'ble Supreme Court, at Paragraph 5, held as follows: "5. We have carefully considered the submissions on behalf of the respective parties before us. The earlier decision pertaining to this very university reported in S.N.Mathur is that of a Division Bench rendered after considering the principles laid down and also placing reliance upon the decisions of this R.Kapur which, in turn, relied upon earlier decisions in State of Kerala v. M.Padmanabhan Nari and Som Prakash. This court has been repeatedly emphasizing the position that pension and gratuity are no longer matters of any bounty to be distributed by Government but are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest. Withholding of quarters allotted, while in service, even after retirement without vacating the same has been viewed to be not a valid ground to withhold the disbursement of the terminal benefits. Such is the position with reference to amounts due towards Provident fund, which is rendered immune from attachment and deduction or adjustment as against any other dues from the employee. In the context of this, mere reliance on behalf of the appellant upon yet another decision of a different Division Bench of the very High Court rendered without taking note of any of the earlier decisions of this court but merely proceeding to decide the issue upon equitable considerations of balancing conflicting claims of respective parties before it does not improve the case of the appellant any further. Reliance placed for the appellant university on the decision reported in Wazir Chand does not also sound well on the facts and circumstances of this case. It is not clear from the facts relating to the said decision as to whether the person concerned was allowed to remain in occupation on receipt of the normal rent as in the present case. As noticed earlier, the case of the contesting respondent in this case is that the university authorities regularly accepted the rent at normal rates every month from the petitioner till the quarters was vacated and that in spite of W.P.(C) No.39978 of 2022 16 request made for the allotment of the said quarters in favour of the son of the respondent, who is in the service of the university, no decision seems to have been taken and communicated though it is now claimed in the Court proceedings that he is not entitled to this type of accommodation. Further, the facts disclosed such as the resolutions of the university resolving to waive penal rent from all Teachers as well as that of the Executive Council dated 18.7.1994 and the actual such waiver made in the case of several others cannot be easily ignored. The lethargy shown by the authorities in not taking any action according to law to enforce their right to recover possession of the quarters from the respondents or fix liability or determine the so-called penal rent after giving prior show-cause notice or any opportunity to him before ever even proceeding to recover the same from the respondents renders the claims for penal rent not only a seriously disputed or contested claim but the university cannot be allowed to recover summarily the alleged dues according to its whims in a vindictive manner by adopting different and discriminatory standards. The facts disclosed also show that it is almost one year after the vacation of the quarter and that too on the basis of certain subsequent orders increasing the rates of penal rent, the applicability of which to the respondent itself was again seriously disputed and to some extent justifiably too, the appellant cannot be held to be entitled to recover by way of adjustment such disputed sums or claims against the pension, gratuity and provident fund amounts indisputably due and unquestionably payable to the respondent before us. The claims of the university cannot be said to be in respect of an admitted or conceded claim or sum due. Therefore, we are of the view that no infirmity or illegality could be said to be vitiated the order, under challenge in this appeal, to call for our interference, apart from the further reason that the disbursements have already been said to have been made in this case as per the decision of the High Court." (VII) In **H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Limited** reported in (2003) 3 SCC 40 at paragraph 7, 8 and 10, the Hon'ble Supreme Court held as follows: “7. It is evident from Section 7(2) that as soon as gratuity becomes payable, the employer, whether any application has been made or not, is obliged to determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity. Under Section 7(3), the W.P.(C) No.39978 of 2022 17 employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable. Under subsection 3(A) of Section 7, if the amount of gratuity is not paid by the employer within the period specified in subsection (3), he shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits; provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. From the provisions made in Section 7, a clear command can be seen mandating the employer to pay the gratuity within the specified time and to pay interest on the delayed payment of gratuity. No discretion is available to exempt or relieve the employer from payment of gratuity with or without interest as the case may be. However, under the proviso to Section 7(3A), no interest shall be payable if delay in payment of gratuity is due to the fault of the employee and further condition that the employer has obtained permission in writing from the controlling authority for the delayed payment on that ground. Under Section 8, provision is made for recovery of gratuity payable under the Act, if not paid by the employer within the prescribed time. The Collector shall recover the amount of gratuity with compound interest thereon as arrears of land revenue and pay the same to the person entitled. A penal provision is also made in Section 9 for non-payment of gratuity. Payment of gratuity with or without interest as the case may be does not lie in the domain of discretion but it is a statutory compulsion. Specific benefits expressly given in a social beneficial legislation cannot be ordinarily denied. Employees on retirement have valuable rights to get gratuity and any culpable delay in payment of gratuity must be visited with the penalty of payment of interest was the view taken in State of Kerala & Ors. vs. M.Padmanabhan Nayyar [1985 (50) FLR 145]. Earlier there was no provision for payment of interest on the delayed payment of gratuity. Sub-section (3A) was added to Section 7 by an amendment, which came into force with effect from 1st October, 1987. In the case of Charan Singh vs. M/s. Birla Textiles and Another [1988 (57) FLR 543 SC], this aspect was noticed in the following words: "There was no provision in the Act for payment of interest when the same was quantified by the Controlling W.P.(C) No.39978 of 2022 18 Authority and before the Collector was approached for its realization. In fact, it is on the acceptance of the position that there was a lacuna in the law that Act 22 of 1987 brought about the incorporation of sub-section 3(A) in Section 7. That provision has prospective application." 8. In the background of this legal position, now we turn to the facts of the present case. The appellant was under suspension from 15.3.1999 to 21.5.1999. On attaining the age of superannuation, he retired from services of the respondent-Corporation on 1.1.2000. The learned Single Judge, after considering the rival contentions, disposed of the writ petition issuing directions to the respondent Corporation to settle the full salary and allowances for the period of suspension, gratuity, cash equivalent to leave salary, deferred leave, concession amount etc. As regards the claim of interest on gratuity, the learned Single Judge held as under:- "Since there was a doubt as to whether the petitioner is entitled to the gratuity, cash equivalent of leave salary etc., in view of the divergent opinion of the Courts during the pendency of an enquiry proceeding of a retired employee, in my view, the petitioner is not entitled to the relief of interest for the belated payment of gratuity and other amounts." 10. In the light of what is stated above, the learned Single Judge could not refuse the grant of interest exercising discretion as against the mandatory provisions contained in Section 7 of the Act. The Division Bench, in our opinion, committed an error in assuming that the learned Single Judge could exercise the discretion in the matter of awarding interest and that such a discretion exercised was not arbitrary. In the light of the facts stated and for the reasons aforementioned, the impugned order cannot be sustained. Consequently, it is set aside. The respondent is directed to pay interest @ 10% on the amount of gratuity to which the appellant is entitled from the date it became payable till the date of payment of the gratuity amount. The appeal is allowed accordingly with cost quantified at Rs. 10,000/-. (VIII) In **S.K.Dua v. State of Haryana and Another** reported in (2008) 3 SCC 44, the Hon'ble Supreme Court held as follows: “13. Having heard the learned counsel for the parties, in our opinion, the appeal deserves to be partly allowed. It is W.P.(C) No.39978 of 2022 19 not in dispute by and between the parties that the appellant retired from service on June 30, 1998. It is also undisputed that at the time of retirement from service, the appellant had completed more than three decades in Government Service. Obviously, therefore, he was entitled to retiral benefits in accordance with law. True it is that certain charge-sheets/ show cause notices were issued against him and the appellant was called upon to show cause why disciplinary proceedings should not be initiated against him. It is, however, the case of the appellant that all those actions had been taken at the instance of Mr. Quraishi against whom serious allegations of malpractices and misconduct had been levelled by the appellant which resulted in removal of Mr. Quraishi from the post of Secretary, Irrigation. The said Mr. Quraishi then became Principal Secretary to the Chief Minister. Immediately thereafter charge-sheets were issued to the appellant and proceedings were initiated against him. The fact remains that proceedings were finally dropped and all retiral benefits were extended to the appellant. But it also cannot be denied that those benefits were given to the appellant after four years. 14. In the circumstances, prima facie, we are of the view that the grievance voiced by the appellant appears to be well-founded that he would be entitled to interest on such benefits. If there are Statutory Rules occupying the field, the appellant could claim payment of interest relying on such Rules. If there are Administrative Instructions, Guidelines or Norms prescribed for the purpose, the appellant may claim benefit of interest on that basis. But even in absence Statutory Rules, Administrative Instructions or Guidelines, an employee can claim interest under Part III of the Constitution relying on Articles 14, 19 and 21 of the Constitution. The submission of the learned counsel for the appellant, that retiral benefits are not in the nature of bounty is, in our opinion, well-founded and needs no authority in support thereof. In that view of the matter, in our considered opinion, the High Court was not right in dismissing the petition in limine even without issuing notice to the respondents.” (IX) In **Kerala State Cashew Development Corporation Ltd and Another v. N.Asokan** reported in [(2009) 16 SCC 758], the Hon'ble Apex Court held as follows: W.P.(C) No.39978 of 2022 20 “4. Section 7 of the Payment of Gratuity Act, 1972 (in short, “the Act”) deals with determination of the payment of gratuity. Since the gratuity amount has already been paid, Section 7 (3A), which deals with payment of interest for delayed payment of gratuity, would be necessary only to be dealt with in this appeal and to consider whether interest on delayed payment of gratuity can be directed to be paid by the appellant to the respondent in compliance with Section 7 (3A) of the Act. For this reason, we like to reproduce Section 7(3A) of the Act, which runs as under :- “If the amount of gratuity payable under subsection (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long-term deposits, as that Government may, by notification specify: Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delay payment on this ground.” 5. In the present case, eight years had passed after the retirement of the respondent but gratuity amount was not paid and, therefore, there was a delay of eight years in payment of gratuity amount, which is payable with interest at the rate specified in Section 7(3A) of the Act. The Corporation sought to explain the delay of eight years before the Court saying that its financial condition was such that it was not in a position to pay gratuity amount to the respondent. However, considering the aforesaid mandatory provision of Section 7(3A) of the Act and considering the fact that more than eight years have elapsed since the retirement of the respondent, we are of the view that the High Court was perfectly justified in dismissing the appeal and affirming the judgment of the learned Single Judge, which also directed payment of interest to the respondent.” (X) In **P. Nagarathna Pandian v. The Managing Director, Tamil Nadu Housing Board** , reported in 2010 (7) MLJ 577, it was held as under: “The issue which came up for consideration before this Court was whether the Government servant is entitled to W.P.(C) No.39978 of 2022 21 interest for belated payment of retirement benefits, after he was permitted to retire by dropping the charges. The reason stated by the respondents therein was that only due to the pendency of the charge against the petitioner therein, payment of terminal benefits was delayed. There was a delay of six years in disbursement of the retiral benefits. In the above reported case, when the petitioner therein was holding the post of General Manager (Technical) in Tamil Nadu Adi. Dravidar Housing Development Corporation on deputation, a charge memo was issued on 18.11.1998, alleging that he had rejected a tender submitted by the Government of India, during the process of prequalification bid. The petitioner therein submitted his explanation to the same. Enquiry was conducted and that a report was also submitted, holding that the charge levelled against him as not proved. The Housing Board accepted the Enquiry Officer's report and passed a resolution on 27.11.2003 to drop the charge framed against him and also resolved to allow him to retire from service with effect from 30.11.1998. The Board resolution was sent to the Government for its approval. After nearly six years, the Government granted approval through G.O.(1D)No.164 Housing and Urban Development Department, dated 14.4.2004. Thereafter, by proceedings, dated 25.5.2004, the Board passed final orders, allowing the petitioner to retire from service, with effect from 30.11.1998 and also ordered that the period of suspension would be treated as duty period. Subsequently, DCRG, Commutation of pension, Spl. Provident Fund, Provident Fund and Surrender of Earned Leave, were disbursed to the petitioner, even though the same were due from 30.11.1998, the date on which, he attained the superannuation. The request for sanction of interest for belated payment of Provident Fund was rejected and hence, the petitioner therein preferred a writ petition. The opposition of the respondent therein was that since the charge was dropped only on 25.05.2004, the petitioner's request for payment of interest for the belated retiral benefits, is not maintainable. After considering G.O.Ms.No.510, Finance Department, dated 27.06.1995 and the following decisions, viz., Vijay L. Mehrotra v. State of U.P., reported in 2000 (2) SLR 686, Gorakhpur University v. Dr.Shitla Prasad Nagendra reported in 2001 (6) SCC 591, Government of A.P., v. C.Purushotham reported in 2002 (7) SLR 760 (DB), H.Gangahanume Gowda v. Karnataka Agro W.P.(C) No.39978 of 2022 22 Industries Corporation Ltd., reported in 2003 (II) LLJ 1119, Union of India v. M.S.Abdulla reported in 2006 (6) SCC 455, R.Lakshmikanthan v. Government of Tamil Nadu reported in 2006 (III) LLJ 523, S.K.Dua v. State of Haryana reported in 2008 (3) SCC 44 and Govt., of T.N., v. M. Deivasigamani reported in 2009 (3) MLJ 1, a learned Single Judge, at Paragraphs 11 and 12, held as follows: "11. The reason stated by the respondents that only due to the pendency of the charge against the petitioner payment of terminal benefits was delayed, cannot be accepted as the charge, which was found not proved was ultimately dropped. The delay in completing the disciplinary proceeding has already caused mental agony to the petitioner after reaching the age of superannuation. The retirement benefits payable as on 30.11.1998 was delayed for about six years for which the petitioner cannot be blamed. It is not the case of the respondents that the disciplinary proceeding was delayed at the instance of the petitioner. From the perusal of the typed set of papers filed, it is evident that the enquiry officer submitted his report stating that the charge was not proved. The said Enquiry Officer's report was submitted as early as on 31.8.1999. Even assuming that the pendency of the charge was not the reason for not paying the terminal benefits, there was unreasonable delay in dropping the charge, though the delay is explained in the counter affidavit. For no fault on the part of the petitioner, petitioner cannot be penalised by denying interest for the belated payment of retirement benefits. 12. In view of the above findings and decisions of the Supreme Court and of this Court, the writ petition is allowed and the impugned order is set aside. The second respondent is directed to pay the statutory interest for the gratuity amount, provident fund, special provident fund. For commutation of pension and surrender of earned leave, the second respondent is bound to pay interest for the belated payment as per the Government Order referred above. The second respondent is directed to comply with this order within a period of six weeks from the date of W.P.(C) No.39978 of 2022 23 receipt of copy of this order. No costs. Connected miscellaneous petition is closed." (XI) In **D.D. Tewari v. Uttar Haryana Bijli Vitran Nigam Limited and Others** reported in (2014) 8 SCC 894, the Hon'ble Apex Court, at Paragraphs 5 to 7, held as follows: "5. The said legal principle laid down by this Court still holds good in so far as awarding the interest on the delayed payments to the appellant is concerned. This aspect of the matter was adverted to in the judgment of the learned single Judge without assigning any reason for not awarding the interest as claimed by the appellant. That is why that portion of the judgment of the learned single Judge was aggrieved of by the appellant and he had filed L.P.A. before Division Bench of the High Court. The Division Bench of the High Court has passed a cryptic order which is impugned in this appeal. It has adverted to the fact that there is no order passed by the learned single Judge with regard to the payment of interest and the appellant has not raised any plea which was rejected by him, therefore, the Division Bench did not find fault with the judgment of the learned single Judge in the appeal and the Letters Patent Appeal was dismissed. The correctness of the order is under challenge in this appeal before this Court urging various legal grounds. 6. It is an undisputed fact that the appellant retired from service on attaining the age of superannuation on 31.10.2006 and the order of the learned single Judge after adverting to the relevant facts and the legal position has given a direction to the employer-respondent to pay the erroneously withheld pensionary benefits and the gratuity amount to the legal representatives of the deceased employee without awarding interest for which the appellant is legally entitled, therefore, this Court has to exercise its appellate jurisdiction as there is a miscarriage of justice in denying the interest to be paid or payable by the employer from the date of the entitlement of the deceased employee till the date of payment as per the aforesaid legal principle laid down by this Court in the judgment referred to supra. We have to award interest at the rate of 9% per annum both on the amount of pension due and the gratuity amount which are to be paid by the respondent. 7. It is needless to mention that the respondents have W.P.(C) No.39978 of 2022 24 erroneously withheld payment of gratuity amount for which the appellants herein are entitled in law for payment of penal amount on the delayed payment of gratuity under the provisions of the Payment of Gratuity Act, 1972.” (XII) Similarly, in the case of **D.D. Tewari (dead) through legal representatives v. Uttar Haryana Bijli Vitran Nigam Limited and Others** [(2014) 8 SCC 894], the Hon'ble Supreme Court held as under : “Denial of interest from the date of entitlement till the date of actual disbursement would take away the valuable rights of the retired government servant. It was reiterated in that decision that pension and gratuity are not bounty to be distributed by Government to its employees on their retirement, but are valuable rights and property in its hands and any culpable delay in settlement and disbursement thereof is to be visited with penalty of payment of interest.” (XIII) In **M.R.Kokan v. The Secretary to the Government of Tamil Nadu, Health and Family Welfare Department and Others** reported in 2017 (2) WLR 392, a Hon'ble Division Bench of the Madras High Court, at paragraphs 13, 14, 18 and 19 held as under: "13. Then the question with regard to contribution to be made for the period of five years was examined by the Office of the Accountant General. As per Rule 115(a) of the Fundamental Rules, while a Government servant is in foreign service, contribution towards the cost of his pension must be paid to consolidated fund on his behalf, while Clause (b) thereof sets out that if the foreign service is in India, contribution must be paid on account of the cost of the leave salary also and Clause (c) sets out that contributions due under Clause (a) and (b) above were required to be paid by the Government servant himself unless the foreign employer consents to pay the same. Rule 116 of the Fundamental Rules prescribes the rate of contributions payable on account of pension and leave salary and furnishes the data in a tabulated form. The data has worked out separate percentages for Group 'A', Group 'B', Group 'C' and Group 'D' Officers. For Group 'A' Officers, for a period of four to five years, 9% has been prescribed as the rate of contribution in Rule 116 of the Fundamental W.P.(C) No.39978 of 2022 25 Rules. Therefore, in effect, the writ petitioner/ appellant before us, could have calculated, on his own, the contributions payable by him for the period of five years, for the period he was absent from the service of the State, but he has not made any such contributions on his own. The contributions were admittedly paid by him, as was noticed by the learned Single Judge, only on 22.09.1998 and that was the reason why the learned Single Judge ordered for payment of interest on delayed pension for the period beyond thereafter. 14. Though in principle, we are in agreement with the view taken by the learned Single Judge, but however, we are left wondering as to why, for the delay that was caused in forwarding the pension papers by the Office of the Dean, Government Mohan Kumaramangalam Medical College, Salem, one should not be awarded compensatory costs in the matter. While it may be true that the orders passed by the State Government contained in their G.O.Ms.No.517, Finance (Pension) Department, dated 12.06.1987 talk of payment of interest on delayed payment of Gratuity only and consequently, does not cover the event of any delayed payment of pension, but none-the-less, some amount ought to have been awarded as compensatory cost for the delay in setling the provisional pension, to begin with till July, 2000......... 18. Payment of pension is no act of grace or bounty on the part of anyone. That is a right earned by the Government servant, in recognition of his past services. That is the reason why payment of pension to the Government servants has come to be recognized as a event of deferred payment for the quality of services rendered by such men. Afterall, the State Government promises certain services to its citizens and secures delivery of such services to the citizens by employing Government servants. Therefore, in recognition of such services rendered to the citizens, the State undertakes to pay monthly pension to such retired Government servants, also as a measure of social security. Any delay in settling such terminal benefits has to be viewed seriously. 19. The maximum period of six months is considered as a reasonable outer limit for sanction of pension and other terminal benefits. At any rate setling the pensionary benefits beyond a period of one year can never be appreciated and it must necessarily result in some kind of W.P.(C) No.39978 of 2022 26 compensation. Since the State Government has taken a Policy decision to award interest on delayed settlement of Gratuity - which in fact is in consonance with the provisions contained in Section 7(3-A) of Payment of Gratuity Act, 1978 - but at the same time, the State Government, as a Policy has not authorized any payment of interest on delayed pension. In the absence of any Policy decision on the part of the State Government, we are not denuded to come to the rescue of a hapless and helpless retired servant of the State. We can properly mould the relief and award compensatory cost which are capable of being recovered from the identified/identifiable persons responsible for the malady. The Government servants are accountable for both what they do and don't do." (XIV) In **State of U.P. and Others v. Dhirendra Pal Singh** reported in (2017) 1 SCC 49, the Hon'ble Apex Court held as follows: “In State of Kerala and others v. M. Padmanabhan Nair (1985) 1 SCC 429), this Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest. In said case the Court approved 6% per annum interest on the amount of pension decreed by the trial court and affirmed by the High Court. As to the rate of interest on amount of gratuity Section 7(3-A) of Payment of Gratuity Act, 1972, it is provided that if the amount of gratuity payable is not paid by the employer 1 (1985) 1 SCC 429 within the period specified in sub-section (3), the employer shall pay, from the date on which gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits, as that Government may by notification specify. It further provides that no such interest shall be payable if the delay in payment is due to the fault of the employee, and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. In the present case, there is no plea before us that the appellants had sought any permission in writing from the controlling authority. As to the delay on the part of employee, it has come on the record that he made representations, where-after he filed a suit in respect of withheld amount of gratuity and pension. W.P.(C) No.39978 of 2022 27 In Y.K. Singla v. Punjab National Bank and others, this Court, after discussing the issue relating to interest payable on the amount of gratuity not paid within time, directed that interest 2 (2013) 3 SCC 472 at the rate of 8% per annum shall be paid on the amount of gratuity.” Following the decisions relating to payment of interest on belated disbursement of DCRG, in exercise of the powers under Article 226 of the Constitution of India, we dispose of the writ petition directing the University of Kerala to disburse the DCRG amount of Rs.7,00,000/- with 9% interest to the 1st respondent from the date of her retirement (30.04.2011), within a period of one month from the date of receipt of certified copy of this judgment. The petitioner shall make the payment without giving room for further litigation.” 10. The Lok Ayukta found that the KSRTC was not justified in denying DCRG to the respondent even after the receipt of Ext.P3 letter. It was accordingly that interest at the rate of 6% p.a on the amount of DCRG from 10.08.2019 up to the date of payment was ordered by the Lok Ayukta. Any claim which arises on retirement can be considered by the Lok Ayukta in terms of the second limb of Clause (d) of the Second Schedule read with Section 8(1) of the Lok Ayukta Act. A claim for interest on account of delay in disbursal of retirement benefits is a claim which arises on W.P.(C) No.39978 of 2022 28 retirement and falls within the sweep of the second limb of Clause (d) of the Second Schedule read with Section 8(1) of the Lok Ayukta Act. We do not find any legal infirmity or jurisdictional error in the impugned order to interfere in exercise of the powers of judicial review. The writ petition fails and is, accordingly, dismissed. There will be no order as to costs. Sd/- **S.MANIKUMAR CHIEF JUSTICE** Sd/- **MURALI PURUSHOTHAMAN JUDGE** al/- xx W.P.(C) No.39978 of 2022 29 ## **APPENDIX** ## **' - PETITIONER S EXHIBITS:** |**EXHIBIT P1**||**TRUE COPY OF THE LAST PAY CERTIFICATE OF**| |---|---|---| |||**THE RESPONDENT DATED 04/10/2019.**| |**EXHIBIT P2**||**TRUE COPY OF THE LETTER OF THE**| |||**RESPONDENT DATED 31/12/2014.**| |**EXHIBIT P2**|**(a)**|**TRUE COPY OF THE TRANSLATION OF THE**| |||**LETTER OF THE RESPONDENT DATED**| |||**31/12/2014.**| |**EXHIBIT P3**||**TRUE COPY OF THE LETTER OF THE**| |||**RESPONDENT DATED 08/02/2019.**| |**EXHIBIT P3**|**(a)**|**TRUE COPY OF THE TRANSLATION OF THE**| |||**LETTER OF THE RESPONDENT DATED**| |||**08/02/2019.**| |**EXHIBIT P4**||**TRUE COPY OF THE NOTICE ISSUED BY THE**| |||**CORPORATION DATED 03/06/2019.**| |**EXHIBIT P5**||**TRUE COPY OF THE CONSENT LETTER DATED**| |||**03/06/2019 FORWARDED TO THE RESPONDENT.**| |**EXHIBIT P5**|**(a)**|**TRUE COPY OF THE TRANSLATION OF THE**| |||**CONSENT**<br>**LETTER**<br>**DATED**<br>**03/06/2019**| |||**FORWARDED TO THE RESPONDENT.**| |**EXHIBIT P6**||**TRUE COPY OF THE COMPLAINT NO. 237/2019**| |||**FILED BY THE RESPONDENT BEFORE THE**| |||**KERALA LOK AYUKTA DATED 30/07/2019.**| |**EXHIBIT P7**||**TRUE COPY OF THE STATEMENT FILED BY THE**| |||**PETITIONER IN COMPLAINT NO. 237/2019**| |||**BEFORE THE KERALA LOK AYUKTA DATED**| |||**25.11.2019.**| |**EXHIBIT P8**||**TRUE COPY OF THE ADDITIONAL STATEMENT**| |||**FILED BY THE PETITIONER IN COMPLAINT**| |||**NO.237/2019 BEFORE THE KERALA LOK AYUKTA**| |||**DATED 04/07/2022.**| |**EXHIBIT P9**||**TRUE COPY OF THE LETTER OF THE**| |||**RESPONDENT DATED 12/07/2021.**| |**EXHIBIT P9**|**(a)**|**TRUE COPY OF THE TRANSLATION OF THE**| |||**LETTER OF THE RESPONDENT DATED**| |||**12/07/2021.**| W.P.(C) No.39978 of 2022 30 **EXHIBIT P10 TRUE COPY OF THE INTERIM ORDER OF THE KERALA LOK AYUKTA DATED 11/03/2022 IN COMPLAINT NO.237/2019. EXHIBIT P11 TRUE COPY OF THE REPORT DATED 14/10/2022 OF THE KERALA LOK AYUKTA IN COMPLAINT NO.237/2019.** **RESPONDENT'S EXHIBITS: NIL.**