The Delhi High Court has upheld the CAT’s decision to require payment of interest on the unpaid balance until it is paid.
In a recent case about retirement benefits for an employee, the Delhi High Court supported a ruling from the Central Administrative Tribunal that required interest on interest at a rate of 10 percent. The High Court reviewed a petition from the Delhi Government and the Directorate of Training and Technical Education, which asked for interest payments to the employee on the unpaid balance, including previously ordered interest, until the payment was made. Justices C. Hari Shankar and Sudhir Kumar Jain stated, “The decision is not flawed for directing interest on interest.”
The employee had approached the Central Administrative Tribunal because his retirement benefits were not paid. He requested a re-evaluation of his salary and pension, along with the additional amount due based on the new calculations, plus interest. When the Tribunal heard the case, it decided to grant relief to the applicant but excluded interest and costs. It also ruled that if payments were not made on time, the applicant would receive interest at a rate of 10% per year from that date.
For the petitioners, Singh argued that the Interest Act of 1978 does not allow for interest to be charged on interest. The Bench referred to Section 3 (3) of the Act, which limits the Court’s ability to award interest under Section 3. They stated, “Section 3 (3) (c) clearly indicates that the Court cannot award interest on interest.” The Bench concluded that since the order to pay interest was not made under Section 3, the restriction on interest on interest in Section 3 (3) (c) does not apply.
Additionally, it was observed that the Tribunal’s order required the petitioner to pay an amount that included interest as a key component. The petitioner only paid part of this amount on June 21, 2023. The Tribunal’s order simply instructed the payment of interest on the remaining unpaid amount until it was settled. The Bench noted that this decision was not flawed for directing interest on interest. The Tribunal also specified that if there was any delay in paying the respondent’s retirement benefits, the petitioners would need to pay interest starting four weeks after July 12, 2011, until the benefits were paid. Since the retirement benefits were only paid on June 21, 2013, the Bench stated, “The petitioners were required to pay both the retirement benefits and interest from July 12, 2011, to June 21, 2013, at a rate of 10% per annum.”
The Bench noted that since the amount was not paid and the respondent could not use it, there was no issue with the Tribunal’s order for the petitioners to pay interest on that amount until it was actually given. The Bench supported the Tribunal’s decision and instructed the petitioner to pay interest on the amount from June 21, 2013, to April 13, 2018, when it was finally paid. Additionally, the Court ordered that the amount deposited by the petitioner be released to the legal heirs of the respondent, concluding the case.
Cause Title: Govt NCT of Delhi vs Surendra Singh [Neutral Citation: 2024: DHC: 8438-DB]
