SC Orders Salary Arrears and 8% Interest on Gratuity

Case Details: Jalim Singh vs. Nand Kishore [2026] 185 taxmann.com 145 (SC)

Judiciary and Counsel Details

• Vikram Nath & Sandeep Mehta, JJ.
• Raghavendra S. Srivatsa, Sr. Adv., Ms Komal Mundhra, AOR, Hari Vishnu Tiwari, Ashutosh Singh Rana & Ms Laxita Upadhyay, Advs. for the Appellant.
• Anil Kumar Mishra, Mrs Rachna Gupta, AORs, Anurag Singh, Rajiv Kumar, Ms Neelakshi, Ms Shradha Narayan & Anil Kumar Sinha, Advs. for the Respondent.

Facts of the Case

In the instant case, the appellant was appointed as a Cooperative Supervisor in the respondent Bank in 1971, was suspended in January 1977, and was reinstated in July 1991. He filed a writ petition seeking full salary and emoluments for the suspension period, which the High Court allowed on 17 January 2006; the respondent Bank’s special leave petition was dismissed. He retired on 31 October 2009, but the respondent Bank did not release his retirement benefits.

In 2018, over the non-release of retirement benefits, the respondent, Bank, by order dated 10 July 2018, rejected the appellant’s representation, citing the absence of a substantive post of Cooperative Supervisor and lack of absorption in a Class-III post. On 19 July 2018, the High Court directed the appellant to file a fresh representation, which was again rejected, leading to Writ Petition No. 18568 of 2018.

On 21 January 2019, the High Court allowed the writ petition, set aside the order dated 10 July 2018, and directed the calculation of retirement dues treating the appellant to be absorbed in a Class-III post w.e.f. 16 August 1991.

In an intra-court appeal, by order dated 1 March 2019, the High Court partly allowed the appeal and directed payment within one month of arrears of salary and emoluments due up to retirement, along with all post-retiral dues/benefits of the post of Cooperative Supervisor or an equivalent post, without going into the controversy regarding the existence of the post; it also recorded that the appellant did not possess Intermediate qualification and therefore could not be treated as a Class-III employee. This order formed the basis of the contempt proceedings.

The alleged non-compliance with the order dated 1 March 2019, filed Contempt Application (Civil) No. 1975 of 2019. By judgment dated 7 May 2024, the High Court dismissed the contempt petition, proceeding on the premises that the appellant’s services were not regularised or absorbed in a Class-III post, that he lacked the requisite Intermediate qualification, and that no contribution had been deducted towards gratuity or insurance.

Thereafter, an appeal was made before the Supreme Court.

It was noted that the High Court, in contempt proceedings, ought to have confined its inquiry to compliance with the operative directions contained in the order dated 1 March 2019, which had unequivocally directed the respondent bank to pay to the appellant all arrears of salary and emoluments due up to the date of his retirement, along with all consequential post-retiral benefits.

Further, it was noted that the High Court fell in error in entering into questions relating to regularisation or absorption of the appellant in a Class-III post, instead of enforcing its own directions requiring the respondent bank to pay arrears of salary and emoluments due to the appellant up to date of his retirement, together with all post-retiral dues and benefits attached to post of Cooperative Supervisor or an equivalent post.

Supreme Court Held

The Supreme Court held that the order passed by the High Court dismissing contempt petition was to be set aside and the appellant was entitled to gratuity, which became payable upon his retirement on 31 October 2009, with interest at rate of 8 per cent per annum from 1 November 2009 till date of actual payment and a sum of Rs. 1 lakh towards compensation for prolonged and unnecessary litigation undertaken by the respondent bank.

List of Cases Reviewed

• High Court of Judicature at Allahabad in Contempt Application (Civil) No. 1975 of 2019 Order dated 07-05-2024 (para 15) set aside