The Madhya Pradesh High Court on 29 January 2026 allowed former rural-bank employee Kailash Chandra Arya’s challenge to the denial of leave encashment following compulsory retirement. The Court set aside the bank’s refusal orders and directed payment of his leave-encashment entitlement with interest at 6% per annum until actual payment.
The judgment and its limited scope
In Kailash Chandra Arya v. Madhya Pradesh Gramin Bank and Others, Writ Petition No. 5519 of 2025, the Indore bench of the Madhya Pradesh High Court allowed an employee’s claim concerning accumulated leave after compulsory retirement. Justice Vishal Dhagat delivered the order on 29 January 2026. The Court directed the bank to release leave encashment with 6% annual interest from the date the employee became entitled until actual payment.
This is a recovered earlier service-law judgment, not a new 9 November 2026 court order. The record establishes a direction to pay; it does not independently prove that payment has already been made.
What was the dispute?
The petitioner had been compulsorily retired after disciplinary proceedings. The bank refused his claim for leave encashment through orders dated 7 January 2024 and 18 February 2025. The employee challenged both refusals under Article 226 of the Constitution, arguing that compulsory retirement did not, without more, erase the monetary value of qualifying leave earned during service.
The bank opposed the claim by relying on Regulations 61(4) and 67 of the Narmada Malwa Gramin Bank Officers and Employees Service Regulations, 2010. These provisions and their relationship to accumulated privilege leave were at the centre of the dispute. The available order does not specify the employee’s total eligible leave days or the eventual rupee amount payable.
How the earlier Deepak Mulankar decision mattered
The High Court relied on its judgment dated 15 March 2024 in Deepak Mulankar v. Central Madhya Pradesh Gramin Bank, Writ Petition No. 10681 of 2022. The earlier reasoning distinguished future availability of leave after service ends from the monetary encashment of qualifying privilege leave already earned in service. It explained why Regulation 67 should be read with Regulation 61(4), rather than treating every outstanding leave balance as necessarily wiped out by compulsory retirement.
In the Arya case, the judge found the employee’s case covered by that earlier decision. The court did not reopen every factual aspect of the underlying disciplinary proceedings. Its order addressed the refusal of leave-encashment benefits.
What the High Court ordered
| Issue | Outcome recorded in the judgment |
|---|---|
| Writ petition | Allowed on 29 January 2026. |
| Refusal dated 7 January 2024 | Quashed. |
| Refusal dated 18 February 2025 | Quashed. |
| Accumulated leave encashment | Bank directed to release the entitlement. |
| Interest | 6% per annum from the date of entitlement to the date of actual payment. |
The judgment does not state a fixed total compensation figure, a uniform leave balance or a payment deadline applicable to every former RRB employee. It also does not decide whether any later appellate order has altered the position; none was independently confirmed for this report.
What this means for RRB employees and retirees
- Compulsory retirement is not the whole analysis: The nature of the penalty and the exact service-rule wording matter when leave encashment is denied.
- Keep entitlement evidence: Leave ledger, retirement/disciplinary orders, relevant circulars and written benefit-rejection decisions can be decisive.
- Distinguish benefits: Leave encashment, gratuity and pension arise under potentially different rules. This order is specifically about leave encashment.
- Do not generalise the 6% rate: It was ordered in this particular case and is not a standalone nationwide interest rule for all banks.
What remains unverified
The reproduced High Court order confirms the petition’s outcome and the direction to pay with interest. The full original claim calculation, actual payment status, any later stay or appeal, and the original online first-publication timestamp have not been independently verified. The decision date itself is clearly recorded as 29 January 2026.
Sources and References
- Kailash Chandra Arya v. Madhya Pradesh Gramin Bank, WP-5519/2025 (29 January 2026) — Madhya Pradesh High Court (judgment text reproduced by Indian Kanoon)
Please consult the cited sources and check the exact applicability of any legal or employment change. Corrections are welcomed.
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