Court rejects transport corporation financial crisis excuse, orders payout of earned leave salary to employee’s widow

5 min readNew DelhiJun 8, 2026 12:32 PM IST

The Madras High Court was dealing with a plea of widow claiming her husband's earned leave salary. (AI-generated Image)

The Madras High Court has directed the Tamil Nadu State Transport Corporation (TNSTC) to settle the pending surrender leave salary of the deceased employee and said that the entitlement of the petitioner’s husband to encash the available earned leave to his credit cannot be denied.

Justice Mummineni Sudheer Kumar was dealing with a plea of the widow of the deceased seeking direction to the transport corporation to settle the unpaid surrender leave salary of her deceased husband.

Justice Mummineni Sudheer Kumar said that petitioner is also entitled to receive amounts due and payable on encashment, together with interest at rate of 6 per cent per annum.

“The entitlement of the petitioner’s husband to encash the available earned leave to his credit cannot be denied. Further, as the petitioner’s husband was deprived of encashing the same at the relevant time, the petitioner is also entitled to receive the amounts due and payable on encashment, together with interest at the rate of 6 per cent per annum, the court said on June 5.

‘Financial crisis can’t be ground to deprive benefit of earned leave’

In the order dated April 2, 2018, this court held that it is not in dispute that there was a 12(3) settlement between the parties.

According to such a settlement, employees would be entitled to surrender earned leave of 15 days in one year or 30 days in two years, and the remaining 15 days or 30 days, as the case may be, shall be cumulatively accumulated as terminal earned leave benefit to the maximum of 240 days for the whole service.

When a similar issue has been raised by similarly placed employees before this court in the order A Sundararajan v The Tamil Nadu State transport corporation (Kumbakonam Limited) and another, the judge, after having considered these issues, has allowed the petition.

It held that the financial crisis cannot be the ground to deprive the benefit of earned leave surrender salary of the petitioners, especially when the claim of earned leave surrender salary for 15 days per year or 30 days once in two years has been admitted in the settlement effected under Section 12(3) of the Industrial Disputes Act, 1947.

Case of earned leave and denial to encash it

The petition was filed by the widow of the deceased seeking direction to the TNSTC to settle her deceased husband’s surrender leave salary (for the years 2011 to 2019) to her of a sum of Rs 90,349 together with interest at the rate of 6 per cent per annum payable from the date of death of the petitioner’s husband, i.e., on December 21, 2025 till the date of actual payment.

The case of the petitioner was that, in terms of the settlement arrived at under Section 12(3) of the Industrial Disputes Act, 1947, the employees of the respondent transport corporation are entitled to surrender earned leave of 15 days in one year or 30 days in 2 years and the remaining 15 days, or 30 days as the case may be, can be accumulated as terminal earned leave upto maximum of 240 days.

The petitioner’s husband, who died while he was in service, was allowed to encash 240 days of earned leave. However, the petitioner claims that her husband had earned leave, which was earned by him during the period 2011 to 2019. But, he was not allowed to encash the said earned Leave at the relevant point in time due to the financial crisis being faced by the respondent transport corporation. Hence, the petitioner claimed that he was entitled to encash the same, but the transport corporation was not allowing him to encash it.

Other rulings on salary dispute

Holding that salary slips and employment records cannot be brushed aside merely because taxable income shown in I-T returns is lower, the Madhya Pradesh High Court enhanced the compensation in a 2006 motor accident case from Rs 34.2 lakh to over Rs 1.42 crore for the family of a software engineer killed in a road crash.

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The court observed that the purpose of compensation law is to account for the “actual pecuniary loss” suffered by dependants.

Justice Binod Kumar Dwivedi was hearing an appeal filed by one Bhavana Kapoor and other legal heirs of the late Rupesh Kapoor against an award passed by the Motor Accident Claims Tribunal, Indore, in October 2008.

Directing the payment of regular salary to a clerk, the Allahabad High Court recently observed that non-payment of salary for work taken from an employee violates Article 21 of the Constitution and amounts to exploitation.

Justice Irshad Ali made the observation while dealing with a plea which alleged that despite rendering continuous service to the employer, no payment was made to the clerk.

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“Where the employer has taken work from an employee for long years, the State cannot deny salary on hyper-technical grounds. Non-payment of salary for work taken is violative of Articles 14 and 21 of the Constitution of India and amounts to exploitation,” the Allahabad High Court noted in its order dated April 23.

Jagriti Rai works with The Indian Express, where she writes from the vital intersection of law, gender, and society. Working on a dedicated legal desk, she focuses on translating complex legal frameworks into relatable narratives, exploring how the judiciary and legislative shifts empower and shape the consciousness of citizens in their daily lives.

Expertise

Socio-Legal Specialization: Jagriti brings a critical, human-centric perspective to modern social debates. Her work focuses on how legal developments impact gender rights, marginalized communities, and individual liberties.

Diverse Editorial Background: With over 4 years of experience in digital and mainstream media, she has developed a versatile reporting style. Her previous tenures at high-traffic platforms like The Lallantop and Dainik Bhaskar provided her with deep insights into the information needs of a diverse Indian audience.

Academic Foundations:

Post-Graduate in Journalism from the Indian Institute of Mass Communication (IIMC), India’s premier media training institute.

Master of Arts in Ancient History from Banaras Hindu University (BHU), providing her with the historical and cultural context necessary to analyze long-standing social structures and legal evolutions. ... Read More

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