State Of Punjab And Others vs Gurpal Singh

1 CM-11346-C-2026 in/and RSA-3118-2026


160
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

CM-11346-C-2026 in/and RSA-3118-2026
Date of Decision: AUGUST 26, 2026

STATE OF PUNJAB AND OTHERS ......Appellants
Versus

GURPAL SINGH ........Respondent

CORAM: HON'BLE MR. JUSTICE HARKESH MANUJA

Present: Mr. Gunjan Mehta, Addl. A.G. Punjab.


HARKESH MANUJA, J. (ORAL)
CM-11346-C-2026
This is an application filed under Section 5 of Limitation Act,
1963 for condonation of delay of 239 days in filing the present appeal.
Having heard learned counsel for the parties and gone
through the contents of the application, which is supported by an affidavit,
the same is allowed and delay of 239 days in filing the present appeal is
hereby condoned.
MAIN CASE
1 . Present Regular Second Appeal has been preferred by the
State of Punjab and others assailing the judgment and decree dated
26.09.2025 passed by the learned Additional District Judge, Jalandhar,
whereby Civil Appeal No.717 of 2019 preferred by the appellants was
dismissed and the judgment and decree dated 30.09.2019 passed by the
learned Civil Judge (Junior Division), Jalandhar was affirmed. The
respondent-Gurpal Singh (hereinafter referred to as ‘the respondent-
plaintiff’) had instituted the suit seeking interest on delayed release of his
retiral benefits.
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2 CM-11346-C-2026 in/and RSA-3118-2026


2. Brief facts necessary for adjudication of the present appeal
are that respondent-plaintiff joined the services of the defendant on
25.08.1983 and retired on attaining the age of superannuation on
31.10.2015. According to the plaintiff, he had completed the requisite
qualifying service and had duly complied with all formalities for release of
his retiral benefits. His retirement was unconditional; no departmental
proceedings were pending or contemplated against him, and he claimed
to have an unblemished service record. Consequently, he asserted his
entitlement to pension, gratuity, GPF, Group Insurance and leave
encashment immediately upon retirement. The plaintiff's grievance was
that, despite there being no impediment to release of his retiral dues, the
same were not disbursed within the prescribed time. Pension was
released on 02.04.2016 with arrears from 01.11.2015, whereas leave
encashment of Rs.3,05,020/- was paid on 14.03.2016, GPF of
Rs.6,56,069/- on 08.03.2016, Group Insurance of Rs.23,295/- on
21.05.2016 and gratuity of Rs.4,87,344/- on 05.07.2016. The plaintiff,
therefore, instituted the present suit seeking interest @ 18% per annum
on the delayed payment of his retiral benefits, after serving the
defendants with a legal notice dated 23.08.2016 under Section 80 CPC.
3. The defendants No. 1 to 3 filed their joint written statement
raising preliminary objections regarding maintainability and legality and
validity of notice under Section 80 CPC. With regard to interest on
delayed payment of Gratuity, reliance was placed upon Rule 9.13 as per
which interest @ 5% per annum is payable for the period of delay beyond
three months, where such delay is attributable to administrative lapse
and not to the employee. It was pleaded that the requisite bill was
submitted online to the Treasury Office, Jalandhar on 29.01.2016, after
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3 CM-11346-C-2026 in/and RSA-3118-2026


obtaining approval from the Accountant General, Punjab vide
communication dated 28.12.2015. The said bill was returned by the
Treasury Office on 27.04.2016 on account of the close of the financial
year and was thereafter resubmitted on 13.05.2016, pursuant to which
the gratuity was released. The defendants, therefore, maintained that any
delay in payment was attributable to the Treasury Office and not to the
department. Similarly, in respect of GPF, the defendants stated that the
plaintiff had submitted the requisite PF-10 form on 20.11.2015. The final
payment order was issued on 14.12.2015 and the bill was thereafter
submitted online to the Treasury Office on 28.12.2015. The bill was
returned with certain objections, which were duly removed, and it was
resubmitted to the Treasury Office on 08.01.2016 for release of payment.
As regards leave encashment, the payment order had been passed on
04.11.2015 and the bill was submitted online to the Treasury Office on
27.11.2015, whereas the actual payment was made on 14.03.2016.
Thus, the defendants asserted that all necessary orders and bills had
been processed and forwarded within time and that the intervening delay
at the level of the Treasury Office could not be fastened upon the
department.
4. Defendant number 4 filed separate written statement
contending that on 13.11.2015, the pension case of plaintiff was received
from defendant number 3 for releasing benefits of pension, gratuity with
commutation, and same was authorized by defendant number 4 on
28.12.2015 without any delay. So far as payment of leave encashment,
GPF, GIS were concerned, the administrative department of plaintiff was
liable for the same. With these pleadings, defendant number 4 prayed for
dismissal of suit.
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5. Replication was filed by the plaintiff denying the averments
made in the written statement and reiterating those made in the plaint.
6. From the pleadings, following issues were framed:

“1. Whether the plaintiff is entitled to the declaration as prayed for?
OPP
2. Whether the plaintiff is entitled to the mandatory injunction as
prayed for? OPP
3. Whether the suit is not maintainable? OPD
4. Whether the legality and the validity of notice under Section 80
CPC can be challenged?OPD
5. Whether the plaintiff is not entitled to interest of delayed
payment ?OPD
6. Relief.”

7. After appreciating the evidence, the learned trial Court vide
judgment and decree dated 30.09.2019 partly decreed the suit and
awarded interest @ 9% per annum on the delayed retiral benefits. .
8. Aggrieved thereof, the defendants preferred a first appeal, which
came to be dismissed vide judgment and decree dated 26.09.2025,
thereby affirming the findings recorded by the learned Trial Court, albeit
with a clarification regarding the period for which interest was payable.
Hence, the appellants-defendants have preferred the present regular
second appeal assailing the concurrent findings recorded by the learned
Courts below.
CONTENTIONS
9. Learned counsel for the appellant-State contends that the
learned First Appellate Court erred in law in directing payment of interest
on gratuity from December, 2015, ignoring the statutory period prescribed
under Rule 9.13(1) of the Punjab Civil Services Rules, Volume II. It is
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submitted that the respondent retired on 31.10.2015 and, under the said
provision, a period of three months is available for processing and
disbursement of gratuity; consequently, interest, if otherwise payable,
could commence only from 01.02.2016. Learned counsel further submits
that the courts below have failed to consider the specific plea of the
appellant that the respondent had submitted Form PF-10 belatedly and
that the delay attributable to him, particularly in relation to the release of
GPF, could not have been fastened upon the State. It is further submitted
that the courts below have failed to appreciate the administrative
circumstances which occasioned the delay, particularly when the parent
department had processed and forwarded the pension papers to the
Treasury, Jalandhar, within time, but the same were returned on account
of closure of the financial year. Learned counsel also submits that the
direction to pay interest on leave encashment and GIS from 01.11.2015
is unsustainable and liable to be set aside. No other argument has been
raised.
10. No-one has appeared on behalf of the respondent.
DISCUSSION AND RESONING
11. I have heard learned state counsel and perused the paper-
book.
12. In the present case, the respondent-plaintiff served the
defendant-department from 25.08.1983 till 31.10.2015, when he retired
on attaining the age of superannuation. It is not in dispute that his retiral
benefits were not released contemporaneously with his retirement. The
relevant dates of accrual and disbursement of the retiral benefits are
tabulated below for ease of reference:
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Delay from Date of
Benefit Amount Date of payment
Retirement (31.10.2015)
Pension - 02.04.2016 (with arrears
5 months 2 days
from 01.11.2015)
Leave
encashment
Rs.3,05,020/- 14.03.2016 4 months 14 days
GPF Rs.6,56,069/- 08.03.2016 4 months 8 days
GIS Rs.23,295/- 21.05.2016 6 months 21 days
Gratuity Rs.4,87,344/- 05.07.2016 8 months 5 days

13. It is the case of the respondent-plaintiff that well before his
retirement, he had completed all the necessary formalities, including
submission of the requisite documents for release of his retiral benefits.
The cross-examination of DW-1 makes it clear that neither was there any
delay in submission of the documents nor was any inquiry pending
against the plaintiff at the time of his retirement. He further admitted that
the retiral benefits were not released to the plaintiff on the due date and
were ultimately paid without interest for the period of delay.
13.1 Significantly, DW-1 also admitted that the delay in disbursement of
gratuity was on account of non-release of payment by the Treasury Office
who was bound to release the payment to a retiree upon receipt of the
requisite documents from the department. He further admitted that
whenever any objection is raised by the Accountant General and the
same is communicated to the department, it is for the department to
remove such objection and resubmit the papers to the Accountant
General. An employee has no role in the removal of such objections.
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Thus, the cross-examination of DW-1 clearly establishes that the delay in
release of the retiral benefits occurred through no fault of the plaintiff.
14. The contention of learned counsel for the appellants-defendants
that the delay in release of the GPF amount was attributable to the
plaintiff on account of delayed submission of Form PF-10 is also without
merit. The learned Courts below have rightly recorded that it was the duty
of the defendants to inform the plaintiff that he was required to submit
Form PF-10. The defendants failed to inform him in this regard and, as
soon as he was apprised of the requirement, the plaintiff submitted the
requisite form. Thus, the delay in submission of Form PF-10 cannot be
attributed to the plaintiff either.
15. Learned counsel for the appellants, however, while relying
upon Rule 9.13 of the Punjab Civil Services Rules, Volume II, contended
that the said rule expressly grants a statutory grace period of three
months to process and disburse gratuity before any interest liability
triggers and that, interest on delayed payment of gratuity has to be
calculated at the prevailing General Provident Fund (GPF) interest rates.
Rule 9.13 is reproduced hereunder for ready reference:
“9.13. Interest on delayed payment of gratuity.-(1) If the payment
of gratuity has been authorised after three months from the date
when its payment became due, and it is clearly established that
the delay in payment was due to administrative lapse, then an
interest at the rates applicable to deposits in General Provident
Fund at the time payment of gratuity became due, shall be paid to
the Government employee in respect of the period beyond three
months:
Provided that the delay in the payment was not caused on account
of failure on the part of the Government employee to comply with
the procedure laid down in this Chapter.”

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8 CM-11346-C-2026 in/and RSA-3118-2026


15.1. In the present case, it stands sufficiently established from the
cross-examination of DW-1 that the delay in release of the retiral benefits
occurred through no fault of the plaintiff. In such circumstances, and in
view of Rule 9.13, the plaintiff is entitled to interest on the delayed
payment of gratuity after the expiry of three months from the date of his
retirement. The said rule prescribes that such interest is to be paid at the
rate applicable to deposits in the General Provident Fund at the time the
gratuity became due; consequently, the applicable rate for the financial
year 2015-16 being 8.7% per annum, the plaintiff is entitled to interest at
the said rate from the expiry of three months from the date of retirement
till realization.
16. This Court also deems it apposite to notice the legal position
with regard to the issue in hand. A Full Bench of this Court in A.S.
Randhawa v. State of Punjab, 1997(3) SCT 468 , held that pension and
other retiral benefits are valuable rights of a retired employee and that
delayed disbursement thereof ordinarily entitles the employee to interest.
It was further held that such benefits are required to be released within a
reasonable period, which ordinarily should not exceed two months from
the date of retirement, failing which the employee becomes entitled to
interest for the period of delay attributable to the State. The relevant
observations are reproduced hereunder:
“4. It is by now well settled by a catena of judgments of the Apex
Court approving the view expressed by this court that pension
payable to a retired Government servant is no longer a bounty
which is payable on the sweet will and pleasure of the
government. It has been held to be a valuable right which flows to
such an employee by virtue of the rules which governed his
employment. Reference in this regard be made to Deokinandan
Prasad v. State of Bihar and others, AIR 1971 Supreme Court
1409 wherein their Lordships of the Supreme Court expressed this
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view. The learned Judges after referring to the material provisions
in the pension rules further held that the grant of pension did not
depend upon an order being passed by the authorities to that
effect. It may be that for the purposes of quantifying the amount
having regard to the period of service and other allied matters, it
may become necessary for the authorities to pass an order to that
effect but the right to receive pension flows to the Government
servant not because of the said order but by virtue of the rules
which have a statutory force. The same view was expressed by
the Supreme Court in State of Punjab v. Iqbal Singh - (sic) v. M.
Padmanabhan Nair, AIR 1985 Supreme Court 356 the Supreme
Court reiterated its earlier view and it will be of interest to quote
the following observations from this judgment :-
"Pension and gratuity are no longer any bounty to be
distributed by the Government to its employees on their
retirement but have become, under the decisions of this Court,
valuable rights and property in their hands and any culpable
delay in settlement and disbursement thereof must be visited
with the penalty of payment of interest at the current market
rate till actual payment."
Thus, a right to pension has been held to be a right in property
and till the Constitution (Forty Fourth Amendment) Act, 1978 was
brought into force, property right was a fundamental right under
Article 19(1)(f) of the Constitution. After the enforcement of the
said amendment, property right is no longer a part of fundamental
right and has been provided for as a constitutional right in Article
300-A and in terms thereof no person can be deprived of his
property save by authority of law.
5. A learned Single Judge of this Court in D.K. Yadav v. J.M.A.
Industries Limited, 1993(3) RSJ 696 : 1993(3) SCT 537
(SC) has held that the right to life as enshrined in Article 21 of the
Constitution is wide enough not only to include the right of
employment as part of right to life but also the incidental right to
pension.
…………………………………
8. Since a Government employee on his retirement becomes
immediately entitled to pension and other benefits in terms of the
Pension Rules, a duty is simultaneously cast on the State to
ensure the disbursement of pension and other benefits to the
retirer in proper time. As to what is proper time will depend on the
facts and circumstances of each case but normally it would not
exceed two months from the date of retirement which time limit
has been laid down by the Apex Court in M. Padmanabhan Nair's
case (supra). If the State commits any default in the performance
of its duty thereby denying to the retiree the benefit of the
immediate use of his money, there is no gainsaying the fact that
he gets a right to be compensated and, in our opinion, the only
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way to compensate him is to pay him interest for the period of
delay on the amount as was due to him on the date of his
retirement. Again, as to what should be the rate of interest, it
should, in our view, be generally 12% unless the circumstances of
a particular case warrant the payment of a higher rate which may
extend to even 18%.”

17. Likewise, this Court in J.S. Cheema v. State of Haryana and
others, 2014(13) RCR (Civil) 355, held that an employee is entitled to
interest on an amount retained by the respondents without any valid
justification. The relevant observations are reproduced hereunder:
“5. In my opinion, even if the assertion made in the written
statement is presumed to be correct it would not disentitle the
petitioner for claiming interest. The jurisprudential basis for grant of
interest is the fact that one person's money has been used by
somebody else. It is in that sense rent for the usage of money. If
the user is compounded by any negligence on the part of the
person with whom the money is laying it may result in higher rate
because then it can also include the component of damages (in the
form of interest). In the circumstances, even if there is no
negligence on the part of the State it cannot be denied that money
which rightly belonged to the petitioner was in the custody of the
State and was being used by it.”

18. Further, in Tahazhathe Purayi Sarabi v. Union of India, 2011(7)
RCR (Civil) 27 , the Hon'ble Supreme Court reiterated that interest is
compensatory in nature and is ordinarily payable where a person is deprived of
the use of money lawfully due to him. The relevant observations are
reproduced hereunder:
“17. The Courts are consistent in their view that normally when a
money decree is passed, it is most essential that interest be granted
for the period during which the money was due, but could not be 11
RSA-1359-2007 utilised by the person in whose favour an order of
recovery of money was passed. As has been frequently explained by
this Court and various High Courts, interest is essentially a
compensation payable on account of denial of the right to utilise the
money due, which has been, in fact, utilised by the person
withholding the same. Accordingly, payment of interest follows as a
matter of course when a money decree is passed. The only question
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to be decided is since when is such interest payable on such a
decree. Though, there are two divergent views, one indicating that
interest is payable from the date when claim for the principal sum is
made, namely, the date of institution of the proceedings till the
recovery of the amount, the other view is that such interest is payable
only when a determination is made and order is passed for recovery
of the dues. However, the more consistent view has been the former
and in rare cases interest has been awarded for periods even prior to
the institution of the proceedings for recovery of the dues, where the
same is provided for by the terms of the agreement entered into
between the parties or where the same is permissible by statute”

18.1 It is true that the aforesaid decision rendered in Tahazhathe Purayi
Sarabi’s case (supra) pertains to the grant of interest on a money decree.
Nevertheless, an analogy may appropriately be drawn to the present case, as
the underlying principle is one of general application. Whether the amount
represents a decretal sum or retiral benefits, the person entitled thereto suffers
the same deprivation when he is denied the use of money lawfully due to him.
Retiral benefits accrue on retirement and are intended to provide immediate
financial security to a retired employee. Consequently, where their release is
delayed, the retiree remains deprived of the use and enjoyment of such money
throughout the period of delay. Interest, in such circumstances, is not imposed
by way of penalty but is awarded as compensation for the loss occasioned by
the deprivation of the use of money which had become payable. Therefore,
once the employee was ultimately entitled to the retiral benefits, the
compensatory principle governing the award of interest must operate from the
date such benefits became due on retirement. The principle that interest
ordinarily follows delayed payment of money due is, therefore, equally
attracted to delayed disbursement of retiral benefits.
19. In view of the foregoing factual and legal discussion, the present
appeal stands disposed of with a modification that the respondent-plaintiff shall
be entitled to interest on the delayed payment of gratuity in accordance with
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Rule 9.13, at the rate of 8.7% per annum, from the expiry of three months from
the date of his retirement till the date of actual payment. On the remaining
retiral benefits, namely pension, GPF, GIS and leave encashment, he shall be
entitled to interest at the rate of 9% per annum from the expiry of two months
from the date of his retirement till the date of actual payment, in accordance
with the principles laid down in A.S. Randhawa (supra).
20. Pending miscellaneous application(s) if any shall stand disposed of.
21. Decree sheet be prepared accordingly.

26.08.2026 HARKESH MANUJA
Tejwinder
(JUDGE)

Whether speaking/reasoned Yes/No
Whether reportable Yes/No

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