Interest at GPF Rates is Payable on Delayed Disbursement of Retiral and Pensionary Benefits

The applicant, a retired employee of the Municipal Corporation of Delhi (MCD), served from July 7, 2001, to December 31, 2021.

Following his retirement, several retiral benefits were paid with significant delays: Commutation of pension was paid in two installments on October 18, 2023, and March 12, 2024; Retirement Gratuity was paid on May 3, 2024; and 7th CPC arrears were paid in August and October 2024.

The applicant approached the Tribunal seeking interest on these delayed payments, while the respondents admitted the delay but contended that the principal amounts had been settled.

1. Whether the applicant is entitled to interest on the delayed payment of retiral and pensionary benefits, including gratuity and commutation of pension.

The Tribunal applied the legal principle established by the Full Bench of the Central Administrative Tribunal in Rajbir Singh v. MCD & Ors. (O.A. No. 2821/2023), which mandates that interest is payable on the delayed release of GPF, pension, and gratuity.

The rule specifies that such interest must be calculated at the prevailing GPF rate for the relevant years and applied as compound interest.

The Tribunal noted that the respondents' own counter-reply admitted to the specific dates of payment, which confirmed a substantial delay between the applicant's retirement (December 2021) and the disbursement of dues (2023-2024).

Since the delay in releasing the principal amounts of gratuity, pension commutation, and 7th CPC arrears was undisputed, the court found the case squarely covered by the precedent in Rajbir Singh.

The court reasoned that since the respondents failed to deliver the statutory terminal benefits in a timely manner, the applicant was entitled to be compensated via interest at the GPF rate to account for the loss of use of funds.

The respondents were directed to calculate and pay interest at the applicable GPF rate for the relevant years, in line with the Rajbir Singh judgment, within six weeks from the receipt of the order.

The claim for 3rd MACP was implicitly rejected based on the service record provided by the respondents. No order was made as to costs.