Administrative delay beyond three months attracts GPF-rate interest on gratuity and leave salary.

The applicant, Ashok Kumar, a retired Railway employee, superannuated on 31 December 2023 after more than 36 years of service, while holding the post of Chief O.S. under the Construction Organisation. His lien was with the Electrical Branch, which was responsible for processing his post-retiral settlement dues.

He alleged that his pension, PPO and settlement dues were not released within time despite representations dated 9 February, 1 April and 18 April 2024.

During the pendency of the Original Application, the respondents issued PPO No. 20237030600529 on 24 July 2024 and paid the settlement dues on or about 29 July 2024, including GIS, leave salary, commutation, gratuity and PF settlement totalling approximately Rs.52,45,640/-.

The applicant thereafter confined his claim principally to interest on the delayed gratuity and leave salary.

Whether the applicant was entitled to interest on the delayed payment of his post-retiral settlement dues, particularly gratuity and leave salary, after his retirement on 31 December 2023.

Whether interest was payable on the commutation amount in the absence of a specific statutory provision.

Whether the delay in payment was attributable to an administrative lapse so as to attract Rule 87 of the Railway Servants (Pension) Rules, 1993.

The Tribunal applied Rule 87 of the Railway Servants (Pension) Rules, 1993, under which, where gratuity is paid after three months from the date it becomes due and the delay is attributable to an administrative lapse, interest at the rate specified by the Central Government is payable for the delayed period, unless the delay is attributable to the employee.

The Tribunal also applied the principle that interest on commutation cannot be granted without statutory authority.

It further relied upon the Railway Board’s letter dated 8 June 2022, directing lien units to arrange settlement dues of employees retiring from Construction Organisations without delay.

The Tribunal found that the applicant retired on 31 December 2023, whereas payment of the relevant gratuity and leave salary was made only on 29 July 2024, resulting in a delay of approximately seven months.

Applying Rule 87, the Tribunal excluded the initial three-month period permitted for payment and held that the remaining delay of approximately four months was attributable to administrative lapse.

Accordingly, interest was payable on the delayed gratuity and leave salary. However, the claim for interest on commutation was rejected because the applicant identified no statutory provision authorising such interest.

The respondents were directed to pay interest at the General Provident Fund rate on the delayed gratuity and leave salary for the period commencing after three months from the date of retirement until the dates of actual payment.

The exercise was to be completed within three months from receipt of a certified copy of the order.

No interest was awarded on the commutation amount, and there was no order as to costs. All connected miscellaneous applications were disposed of.