Delayed retirement gratuity attracts compound interest at applicable GPF rates; financial constraints are no defence.

The applicant, a retired employee of the Municipal Corporation of Delhi (MCD), sought payment of ₹16,99,744 towards retirement gratuity, together with statutory interest for delayed payment and penal interest at 18% per annum.

During the pendency of the Original Application, the MCD paid the retirement gratuity to the applicant by order dated 9 August 2024, which payment was acknowledged by the applicant.

The surviving dispute concerned the applicant’s entitlement to interest on the delayed payment of gratuity.

The MCD opposed the claim, contending that the delay resulted from circumstances beyond its control and financial constraints.

Whether the applicant was entitled to interest on the delayed payment of retirement gratuity after the principal gratuity amount had been released.

Whether the interest payable on the delayed gratuity was required to be calculated at the applicable GPF rate on a compound-interest basis.

Whether the MCD’s plea of financial constraints could defeat the applicant’s claim for interest on delayed retiral dues.

The Tribunal applied the principle stated by the Full Bench of the Central Administrative Tribunal in Rajbir Singh v. Municipal Corporation of Delhi & Another, O.A. No. 2821/2023, decided on 30 October 2025, that interest is payable on delayed payment of GPF, pension, gratuity and other retiral dues at the applicable GPF rate for the relevant years, and that such interest is to be calculated on a compound-interest basis.

The applicant had also relied upon Rule 65 of the CCS (Pension) Rules, 2021 concerning interest on delayed payment of gratuity.

The Tribunal further held that the employer’s financial constraints, by themselves, do not disentitle a retired employee from receiving interest on delayed retiral benefits.

Once the MCD paid the principal amount of retirement gratuity, the only surviving issue was the applicant’s entitlement to interest for the period of delay.

The Tribunal treated the Full Bench decision in Rajbir Singh as directly governing the issue and found no reason to adopt a different view.

Applying that precedent, it held that the delayed gratuity was to carry interest at the applicable GPF rate, calculated on a compound basis.

The MCD’s explanation that the delay resulted from financial constraints was insufficient to extinguish the applicant’s accrued entitlement to interest.

The MCD was directed to release the requisite interest within eight weeks from the date of receipt of a copy of the order.

The Original Application was accordingly disposed of, with no order as to costs; any pending miscellaneous applications were also disposed of.