Taking note of huge debt of State public transport corporations, Karnataka HC awards lower interest for delayed payment of leave encashment to retired staff

Taking note that State public transport corporations were compelled to borrow around ₹2,000 crore only to meet its salary obligations, the High Court of Karnataka has ordered payment of lower interest to retired employees of the North West Karnataka Road Transport Corporation (NWKRTC) for delayed payment of leave encashment amount to them.

The court noted that the public transport corporations suffered financial losses owing to the pandemic, and this burden was compounded owing to strike by employees and the State government’s policy decision of giving tree bus travel for women.

Stating that a balance must be stuck between the right of employees to be compensated for delay and the financial realities confronting public transport corporations sustained by the public funds, Justice M. Nagaprasanna directed the NWKRTC to pay interest at 6% on leave encashment for the delayed period instead of 9-10% as demanded by retired employees.

The NWKRTC had not only delayed by 10 to 25 months after retirement in paying the leave encashment amount to the petitioners, Yallappa and others, who retired post the pandemic, but had also failed to pay interest to them on the amount for the delayed period as per norms. During the hearing, the NWKRTC said that it is willing to pay interest at 6% while pointing out that 5.58% was the rate of interest prevailing in the banks at the relevant period in which the petitioners had retired from the service.

While directing the NWKRTC to pay the interest to the petitioners within 12 weeks, the court said that it has to pay interest at 9% if the interest amount is not paid within 12 weeks.s