Delayed Payment of Retiral Benefits Attracts Compound Interest at Prevailing GPF Rates

The applicant retired on superannuation from the post of Lady Health Visitor (LHV) in the West Zone of the Municipal Corporation of Delhi (MCD) on 30.09.2022

Although a Pension Payment Order (PPO) was issued, her retirement benefits were not fully disbursed at the time of her retirement

Despite multiple representations, the respondents failed to release the dues, prompting the applicant to approach the Tribunal seeking the release of retirement benefits and interest at 18% per annum on the delayed payments

The respondents, in their short affidavit, admitted that while GPF, GIS, and Leave Encashment were paid, payments for Gratuity (Rs. 15,47,700), Commutation of Pension (Rs. 13,76,592), and Pay Difference Arrears (Rs. 33,600) remained outstanding despite bills being passed in 2019 and 2022

1. Whether the respondents are legally obligated to release the remaining retiral benefits of the applicant in a time-bound manner?

2. Whether the applicant is entitled to interest on the delayed payment of retiral benefits, and if so, at what rate?

The Tribunal primarily relied on the legal principles established by the Full Bench of the Central Administrative Tribunal in Rajbir Singh v. MCD & Another (O.A. No. 2821/2023), decided on 30.10.2025

The rule dictates that for delayed payments of GPF, Pension, and Gratuity, interest is payable at the prevailing GPF rate for the relevant years

Furthermore, the rule specifies that interest on delayed GPF is to be calculated as compound interest, which also applies to delayed payments of Pension and Gratuity

The Tribunal noted the respondents' admission that significant portions of the applicant's retiral benefits—specifically Gratuity and Commutation of Pension—remained unpaid despite the bills having been processed years prior

The applicant’s counsel argued for parity with the decision in Rajbir Singh

The respondents conceded that the interest could be granted, provided it remained subject to the outcome of W.P. No. 19558/2025 pending before the Hon'ble High Court of Delhi, which challenges the Rajbir Singh precedent

By applying the Full Bench's ruling to the admitted delay in this case, the Tribunal determined that the applicant has a legitimate claim to both the principal amounts and the interest, as the delay in disbursement was not attributable to the applicant

Regarding the claim for interest, the Tribunal directed the respondents to pay interest on both paid and unpaid retiral benefits in accordance with the Rajbir Singh decision (at the compounded GPF rate), subject to the final outcome of the pending Writ Petition in the Delhi High Court

The respondents were ordered to complete the entire payment exercise within eight weeks of receiving a certified copy of the order

No order was made as to costs