Delayed retiral benefits attract compound interest at GPF rates regardless of the employer's financial constraints.

The applicant, a Primary Teacher who joined the respondent department on 09.01.1997, retired from service on 31.12.2021.

Although a Pension Payment Order (PPO) was issued on 01.01.2022, the respondents failed to release gratuity (₹9,94,500), commuted pension (₹13,37,261), and arrears related to the 7th CPC and 2nd MACP.

The respondents admitted that while some dues (GPF, GIS, and leave encashment) were paid, the remaining amounts were withheld solely due to "financial constraints" faced by the Municipal Corporation of Delhi (MCD).

The applicant approached the Tribunal seeking immediate release of all withheld dues with interest ranging from 12% to 18% p.a.

1. Whether the respondents are liable to pay interest on the delayed disbursement of gratuity, commuted pension, and other retiral benefits.

2. Whether "financial constraints" of the department serve as a legally sustainable justification for withholding the vested retiral benefits of an employee.

The Tribunal relied on the principle that retiral benefits are "vested rights" of a retired employee rather than a bounty.

The ratio decidendi of the Larger Bench of the Tribunal in Rajbir Singh v. Municipal Corporation of Delhi & Anr. (O.A. No. 2821/2023, decided on 30.10.2025), which held that interest on delayed payments of GPF, Pension, and Gratuity is mandatory and must be calculated at compoundable GPF rates for the relevant years.

The Tribunal found that the respondents did not dispute the applicant’s entitlement to the claimed amounts, as the dues had already been calculated and partially processed.

The court rejected the respondents' defense of "financial constraints," noting that such administrative difficulties cannot override the legal obligation to settle retiral dues in a timely manner.

Since the delay was admitted and unexplained by any statutory exception, the applicant was entitled to the same relief granted by the Larger Bench, specifically the application of compound interest at GPF rates to compensate for the financial prejudice caused by the delay.

It directed the respondents to release all remaining retiral dues to the applicant within eight weeks, along with interest calculated at compoundable GPF rates from the due date of payment until the actual date of release.

The relief is subject to the final outcome of Writ Petition (C) No. 19199/2025 pending before the Hon’ble High Court of Delhi, and the applicant is required to provide an undertaking to this effect.