Delayed payment of pension and gratuity attracts compound interest at General Provident Fund rates.

The applicant, a retired Mali (Group "C") of the Municipal Corporation of Delhi (MCD), approached the Tribunal seeking the release of all pension-cum-retirement benefits, including Gratuity, Commuted Pension, 7th CPC arrears, and MACP benefits

In their short affidavit, the respondents admitted that while Leave Encashment, GIS, and GPF had been paid, the payments for Commutation of Pension (₹7,82,691/-) and Retirement Gratuity (₹8,47,243/-) remained pending

The respondents attributed the delay to financial constraints within the organization

1. Whether the respondents are legally obligated to release the admitted pending retiral benefits notwithstanding financial constraints

2. Whether the applicant is entitled to interest on the delayed payment of gratuity and pensionary benefits

The Tribunal applied the principles established by the Full Bench in Rajbir Singh vs. MCD Ors. (O.A. No. 2821/2023), which held that interest is mandatory on delayed payments of GPF, pension, and gratuity

This precedent dictates that interest on such delayed benefits must be calculated at the prevailing GPF rate on a compound basis

Furthermore, the Tribunal referenced Rule 65 (of the relevant Pension Rules), which provides for interest on delayed payments and overrides claims of financial incapacity or contractual limitations

The Tribunal noted that the respondents did not dispute the applicant’s entitlement to the unpaid amounts of ₹7,82,691/- for Commutation of Pension and ₹8,47,243/- for Retirement Gratuity

The court found the respondents' plea of "financial constraints" insufficient to justify the withholding of statutory retiral dues

By applying the Rajbir Singh precedent, the Tribunal established that once a delay in payment is admitted, the right to receive interest at the compounded GPF rate becomes absolute

The Tribunal linked the facts of the applicant’s unpaid status directly to the mandatory interest regime defined by the Full Bench to ensure the retiree is compensated for the loss of use of funds

The respondents were further ordered to pay compound interest on these amounts at the GPF rate, in accordance with the Rajbir Singh judgment, within a period of two months from the date of receipt of the order

No order as to costs was made