State must act as model employer, liable to pay interest on delayed salary arrears: HC

The Punjab and Haryana High Court has held that the State, as a model employer, is under a legal obligation not only to release the due payments of its employees on time but also to pay interest in case of unjustified delay. The court made it clear that the government could not take the position of a private financer and must bear responsibility for arrears withheld due to its own fault.

Justice N.S. Shekhawat passed the ruling while allowing a petition filed by Geeta Rani, a computer teacher seeking interest on her salary arrears released after several years of delay. The Bench directed the respondents to pay her interest at the rate of six per cent per annum on the arrears for the period between August 28, 2011, and February 22, 2018, within two months of receiving the order. Advocate Sunny Singla appeared for the petitioner.

“The State is always obliged to act as a model employer and cannot act a private financer. The State is always under a legal obligation to make the due payments to its employees on time and in the event of any unjustified delay in the disbursement of such payments, due to the fault of the employer, the State is legally bound to pay the arrears along with interest,” Justice Shekhawat observed in his order.

The case arose out of the petitioner’s regularisation claim. The Bench observed that Geeta Rani joined service on February 28, 2009. Under the State’s instructions, the services of computer teachers completing two-and-a-half years were to be regularised every four months from July 1, 2011. Accordingly, she became entitled to regularisation on August 28, 2011. The High Court, in earlier proceedings, recognised her right and granted regularisation with effect from that date instead of April 1, 2012, as claimed by the State.

Following the order, she was paid arrears of Rs 2,10,778 from August 28, 2011, to April 1, 2012. However, these arrears were released on February 28, 2018, as per memo dated February 22, 2018, after prolonged delay, and no interest was paid

Rejecting this hyper-technical stand, the High Court held that once the earlier order had granted all consequential benefits from the date of regularization, such benefits necessarily included interest on delayed payments.

“In fact, while allowing the claim of the petitioner, this Court had held that she was entitled to all consequential benefits emanating from the date of regularization to be reckoned from August 28, 2011. Such consequential benefits would include the interest on delayed payment,” the Bench noted, before ruling in her favour.