Delhi, February 26, 2021: The Supreme Court on Thursday said salaries and pensions are “rightful entitlements” of government employees and in case of delay, they should be paid with interest.

A Bench headed by Justice DY Chandrachud observed that the government which has delayed the payment of salaries and pensions should be directed to pay interest at an appropriate rate.

“The direction for the payment of the deferred portions of the salaries and pensions is unexceptionable”.
Salaries are due to the employees of the State for services rendered. Salaries in other words constitute the rightful entitlement of the employees and are payable in accordance with law. Likewise, it is well settled that the payment of pension is for years of past service rendered by the pensioners to the State. Pensions are hence a matter of a rightful entitlement recognised by the applicable rules and regulations which govern the service of the employees of the State,” the Bench noted in its order.

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The Andhra Pradesh High Court had allowed a Public Interest Litigation filed by a former District and Sessions Judge and directed the payment of the deferred salary for the months of March-April 2020 together with interest at the rate of 12 per cent per annum and payment of deferred pension for the month of March 2020 with a similar rate of interest.

The Andhra Pradesh government approached the top court contending only the component of interest part of the High Court judgement.

The state government stated that the decision to defer the payment of salaries and pensions was taken due to the precarious financial position in which the State found itself as a consequence of the COVID-19 pandemic.

It added that the State had acted bona fide and there would be no reason to saddle it with the liability to pay interest.

While disposing of the appeal, the apex court directed in substitution of the interest rate of 12 per cent per annum which has been awarded by the High Court, the government of Andhra Pradesh shall pay simple interest computed at the rate of 6 per cent per annum on account of deferred salaries and pensions within a period of 30 days.

“There can be no gainsaying the fact that the government which has delayed the payment of salaries and pensions should be directed to pay interest at an appropriate rate,” the Bench said.