Wrongful Withholding of Post-Retirement Benefits

In Pakistan International Airlines Corporation Limited vs. Muhammad Saleem Sherwani (R.F.A. No. 215 of 2016), the Islamabad High Court addressed an appeal filed by Pakistan International Airlines Corporation (PIA) against a judgment of the Civil Court. The Civil Court had decreed in favor of Muhammad Saleem Sherwani, a retired PIA employee, for the recovery of provident fund, gratuity, pension, and damages for wrongful withholding of post-retirement benefits.

Background:

Muhammad Saleem Sherwani, a former PIA employee with 37.5 years of service, sought premature retirement and filed a suit claiming unpaid retirement benefits. He alleged that his retirement benefits were withheld due to an inquiry initiated by PIA regarding his conduct during his posting at Manchester. The inquiry ended without findings of wrongdoing, yet his benefits remained unpaid. The Civil Court ruled in Sherwani's favor, awarding him provident fund dues, gratuity, pension, and Rs. 3 million in damages for mental agony. PIA appealed the decision, arguing that damages were unwarranted as there was no evidence of the alleged mental suffering.

Key Issues:

Right to Post-Retirement Benefits: Whether the withholding of Sherwani's retirement benefits was justified under PIA's service rules and whether the inquiry against a retired employee was lawful.

Award of General Damages: Whether Sherwani was entitled to Rs. 3 million in damages for mental torture and suffering despite leading no specific evidence of loss.

Interest on Withheld Benefits: Whether Sherwani was entitled to interest on the amounts wrongfully withheld.

Court’s Analysis:

Unlawful Withholding of Benefits: The Court found that PIA wrongfully withheld Sherwani's post-retirement benefits without any valid basis. The inquiry against him, initiated after retirement, was found to be unlawful as PIA’s service rules did not allow for an inquiry after retirement without established grounds during service. Moreover, PIA had already released the benefits of other employees involved in the same inquiry.

General Damages for Mental Suffering: The Court upheld the award of Rs. 3 million as general damages for mental suffering. It recognized that mental suffering caused by the delay in receiving retirement benefits does not require specific proof and falls under the category of general damages. The Court referenced several precedents where general damages were awarded in cases of wrongful withholding of payments by employers.

Interest on Withheld Amounts: The Court ruled that Sherwani was entitled to interest on the amounts wrongfully withheld. It ordered PIA to pay interest at the rate of 10% from the date of the Civil Court's decree until the full amount, including damages, is paid. This rate was set considering the State Bank of Pakistan's policy rate during the relevant period.

Court’s Conclusion: The Islamabad High Court dismissed PIA's appeal, upholding the Civil Court's judgment. The Court affirmed that the withholding of Sherwani's post-retirement benefits was wrongful, and the damages awarded for mental suffering were justified. PIA was ordered to pay Rs. 3 million in damages along with interest on the withheld amounts. Additionally, PIA was directed to pay Rs. 500,000 in litigation costs.

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