Introduction
The Bombay High Court ruled that MCGM must pay interest on delayed retirement benefits to a retired employee. If benefits are withheld due to a pending inquiry and the employee is later exonerated, interest must be paid from the day after retirement. It applied the doctrine of restitution, ensuring compensation for financial deprivation.
Case Background
Narayan Pundalik Pathade joined MCGM as a clerk and later became a Municipal Secretary. He retired on May 31, 2017. However, MCGM withheld his retirement benefits due to an inquiry into alleged irregularities in a 2013 recruitment process.
Pathade approached the National Commission for Scheduled Castes in 2018. The Commission recommended quashing the inquiry and releasing his dues. MCGM challenged the Commission’s jurisdiction but later exonerated Pathade, finding no charges against him. His benefits were paid in late 2019.
In 2020, Pathade demanded interest on the delayed payments. MCGM did not respond, leading him to file a writ petition.
Petitioner’s Stance
Pathade’s lawyer, C.K. Bhangoji, argued that retirement benefits were due the day after retirement. Since Pathade was exonerated, he was entitled to interest under Rule 55A(7) of the MCGM Pension Rules, 1953. He sought 18% interest.
Court’s Ruling
The court analyzed Rules 55A(1) and 55A(7). It found Rule 55A(7) specifically addressed delayed payments due to pending inquiries. It ruled that upon exoneration, benefits must be considered due from the retirement date.
Rejecting MCGM’s argument, the court stated that allowing a three-month grace period post-exoneration would let employers withhold benefits unfairly. It cited Supreme Court precedents, emphasizing that pensionary benefits are compensatory and interest is a rightful accrual, not a penalty.
Final Verdict
The court allowed the petition. It ordered MCGM to pay interest at 10% per annum and complete the payment within four weeks.
