Delayed Gratuity Interest Governed by GPF Rates, Not Payment of Gratuity Act, 1972.

The applicant, Pradeep Kumar, superannuated from service on July 31, 2022.

His gratuity payment was delayed and subsequently paid on December 19, 2022.

The respondents filed a short counter-affidavit on October 18, 2023, stating that due to departmental procedure, gratuity was paid after four months, and interest at 7.1% per annum, as per Rule 65(5)(a) of CCS Pension Rules, 2021, was calculated and forwarded for approval.

A supplementary counter-affidavit filed on January 6, 2025, confirmed that interest at 7.1% on the delayed gratuity was paid to the applicant on December 10, 2024.

The applicant, however, claimed interest at 18% per annum under the Gratuity Act, 1972.

1. Whether the applicant is entitled to interest at 18% per annum on the delayed payment of gratuity, despite having received interest at 7.1% per annum.

2. Whether the Central Administrative Tribunal's Full Bench decision on the applicable rate of interest on delayed retiral dues is binding.

The court primarily relied on Rule 65 of the Notification dated December 20, 2021 (akin to Rule 68 of the CCS Pension Rules, 1972).

This rule mandates that interest on delayed payment ofENSION, Family Pension, or Gratuity shall be paid in the manner applicable to the GPF amount in accordance with instructions issued from time to time.

The court also applied the authoritative pronouncement of the Full Bench of the Central Administrative Tribunal in O.A. No. 2821/2023 (Rajbir Singh v. Municipal Corporation of Delhi & Anr.) dated October 30, 2025, which held that interest on delayed retiral dues (GPF, Pension, Gratuity) is payable at the GPF rate for the relevant years, calculated on a compound interest basis.

The Payment of Gratuity Act, 1972, was noted but deemed not applicable in light of the specific rules and the Full Bench decision.

The court noted that the applicant had undeniably received interest at 7.1% per annum, equivalent to the GPF rate, on the delayed gratuity payment on December 10, 2024.

The core of the analysis revolved around the binding precedent set by the Full Bench of the Central Administrative Tribunal in Rajbir Singh.

This Full Bench explicitly held that for delayed payments of retiral dues, including gratuity, the applicable interest rate is the GPF rate for the relevant period, calculated in the same manner as GPF interest.

Since the Municipal Corporation of Delhi (which the Rajbir Singh case pertained to) was exempted from the Payment of Gratuity Act, 1972, and CCS Pension Rules applied, the Full Bench's reasoning was directly relevant and binding.

Consequently, the applicant's claim for a higher interest rate of 18% per annum under the Payment of Gratuity Act, 1972, was explicitly rejected as unsustainable in light of this authoritative and binding precedent.

It held that the applicant was not entitled to interest at 18% per annum on the delayed gratuity payment.

The payment of interest at 7.1% per annum, equivalent to the GPF rate, already made to the applicant on December 10, 2024, was deemed a full compensation for the delayed payment in accordance with statutory provisions and the binding decision of the Full Bench of the Central Administrative Tribunal.

No orders as to cost were issued.