Entitlement to Interest on Gratuity and Retiral Dues Postponed by Departmental Proceedings Upon Clearance of All Charges.

The applicant, a retired IAS officer (Punjab cadre), superannuated on August 31, 2006.

At the time of retirement, two departmental charge sheets (dated April 22, 2005, and August 28, 2006) were pending against him.

Consequently, the respondents withheld his Gratuity and Leave Encashment, though 100% provisional pension was granted.

Parallelly, a vigilance FIR No. 47/2004 was registered, in which the applicant was acquitted by the Special Judge, Roopnagar on October 31, 2018.

Despite the criminal acquittal and inquiry reports being submitted years prior, the departmental proceedings remained pending until they were finally dropped on January 17, 2023, and July 26, 2023.

Following this, a "No Dues Certificate" (NDC) was issued on August 7, 2023.

Leave encashment was paid on December 21, 2023, and Gratuity was sanctioned in February 2024.

The applicant sought interest @ 18% p.a. on the delayed payments from September 1, 2006.

1. Whether the withholding of retiral benefits (Gratuity and Leave Encashment) was legally justified during the pendency of departmental and criminal proceedings.

2. Whether the applicant is entitled to interest on the delayed payment of retiral benefits following the conclusion of proceedings in his favor.

Rule 6(2) of the All India Service (Death-cum-Retirement Benefits) Rules, 1958, which mandates that while provisional pension is payable during pending proceedings, no gratuity shall be paid until the final orders are passed.

Principle from R. Veerabhadram v. Government of Andhra Pradesh (2000), which establishes that withholding gratuity during a pending criminal case is not illegal and does not automatically trigger a right to interest.

The Tribunal observed that the respondents were within their rights under Rule 6(2) to withhold the applicant's gratuity and leave encashment because active disciplinary and judicial proceedings were pending at the time of his retirement in 2006.

The respondents established that once all proceedings were formally dropped in 2023, they acted promptly by issuing an NDC within a month.

The Tribunal noted that Leave Encashment was paid on December 21, 2023—within approximately four months of the NDC—which it deemed a "reasonable time" under the circumstances.

It reasoned that since the delay was caused by the pendency of cases rather than administrative negligence, and payments were processed swiftly post-clearance, interest for the entire 17-year period was not warranted.

The Tribunal directed that if the payment was made more than six months after the issuance of the NDC on August 7, 2023, the respondents must pay interest at the rate of 6% per annum for the period of such delay.

The O.A. was allowed to this limited extent.