A division bench of the Delhi High Court, consisting of Justices C Hari Shankar and Sudhir Kumar Jain, recently dismissed a petition that challenged a ruling by the Central Administrative Tribunal (CAT). The petitioners, who were responsible for paying the retiral benefits, had been directed by the CAT to pay interest on the delayed payment, including interest on the interest amount, at a rate of 10%. The court upheld the Tribunal’s decision, stating that the rules governing the payment of interest did not apply in this case.
Background of the Case
The dispute began when Surendra Singh, the respondent, approached the Central Administrative Tribunal in 2011. He sought the re-fixation of his pay and pension, along with the differential amount that would be owed to him based on the revised pay. Additionally, he requested that the amount be paid with interest.
While the petitioners, the CI Directorate of Training and Technical Education, agreed to grant these benefits, they excluded interest and costs. The Tribunal, in its ruling, directed the petitioners to grant the relief without including interest and costs. However, the Tribunal also stated that if the payment was not made within a specific time period, the respondent would be entitled to interest at the rate of 10% annually.
The order was passed on 12th July 2011, and the retiral benefits were to be paid within four weeks. However, the petitioners only made the payment on 21st June 2013, and no interest was paid for the delay. Only a small amount of Rs. 86 was paid to the respondent for the delay.
Tribunal’s Follow-Up Order
Dissatisfied with the delay in payment, the respondent returned to the Tribunal. The Tribunal once again directed the petitioners to pay the interest at the rate of 10% per annum for the period of delay, from the expiry of the four-week deadline. The Tribunal also ordered the petitioners to pay interest on the unpaid amount, specifically for the delay from 10th August 2011 to 21st June 2013. Additionally, the Tribunal ordered the petitioners to pay interest on the interest for the period from 22nd June 2013 until the actual payment of the interest.
Petitioners Challenge the Tribunal’s Ruling
The petitioners were unhappy with the Tribunal’s decision and filed a petition in the Delhi High Court, arguing that according to Section 3(3)(c) of the Interest Act, paying interest on interest is not allowed. They claimed that since the Tribunal had directed the payment of interest under Section 3 of the Interest Act, this prohibition applied in their case.
The Court’s Ruling
The High Court disagreed with the petitioners’ argument. It clarified that Section 3(3)(c) of the Interest Act only applies when the interest is ordered under Section 3 of the Act. In this case, the Tribunal had not issued the direction under Section 3 of the Interest Act. Therefore, the prohibition on paying interest on interest did not apply.
The Court also noted that the Tribunal’s original order in 2011 had directed the petitioners to pay not just the retiral benefits but also interest as an integral part of the payment. Since the petitioners only made a partial payment in 2013, the Court found no issue with the Tribunal’s decision to order interest on the unpaid amount until full payment was made.
Furthermore, the Court rejected the petitioners’ attempt to apply a previous judgment in a different case, National Projects Construction Corporation Ltd v. Interstate Construction, as the context of that case was unrelated to the present one.
Conclusion
The High Court reaffirmed the Tribunal’s decision to require the petitioners to pay interest from 12th July 2011, when the initial order was made, until 21st June 2013, when the retiral benefits were finally paid. The Court dismissed the petition and upheld the Tribunal’s order, reinforcing the idea that the petitioners were obligated to pay both the principal amount and the interest due to the delay.
In conclusion, the Court’s ruling emphasizes the importance of adhering to legal timelines and ensuring that payments are made promptly, along with any required interest, to prevent financial losses to individuals entitled to such benefits.
