Misconceived disciplinary proceedings cannot deny retiral-benefit interest from the date of superannuation.

The petitioner, Dr Veer Singh, challenged the order dated 14 May 2024 passed by the Central Administrative Tribunal in OA No. 3789/2022, which awarded him interest at 7.5% on delayed retiral benefits only from the date of his first representation, i.e., 21 May 2019.

The petitioner had superannuated on 30 June 2012, but a charge-sheet had been issued against him on 28 June 2012, two days before retirement, resulting in withholding of his retiral dues.

The Tribunal subsequently quashed the charge-sheet on 3 January 2019 in OA No. 339/2015, holding that the petitioner was entitled to the same treatment as Dr Sandeep Miglani, against whom identical charges had been closed by the Lieutenant Governor on 28 February 2013.

The disciplinary proceedings were formally closed by the respondents on 19 December 2019, and the Tribunal’s order quashing the charge-sheet was not challenged.

Whether the petitioner was entitled to interest on his delayed retiral benefits from the date of superannuation, rather than only from the date of his first representation

Whether the pendency of disciplinary proceedings justified withholding interest on the petitioner’s retiral benefits until the date of his representation

Interest on delayed payment of retiral benefits may be restitutive rather than punitive; its purpose is to restore the claimant to the financial position in which he would have been had the amount been paid when due.

The absence of mala fides in withholding the amount does not defeat the entitlement to restitutive interest where the claimant was deprived of money legally payable to him.

The Court relied on Alok Shanker Pandey v. Union of India, (2007) 3 SCC 545, which held that interest is the normal accretion to capital and that equity requires payment of interest where one party has retained money that ought to have been paid to another.

Further, disciplinary proceedings that were misconceived ab initio could not constitute a legitimate basis for denying interest on retiral benefits from the date of retirement.

The Court held that the disciplinary proceedings could not justify postponing the accrual of interest because the charge-sheet had ultimately been quashed on the ground that the petitioner deserved the same treatment as another officer against whom identical charges had been closed.

Although the respondents may have withheld the retiral benefits bona fide while the proceedings were pending, the proceedings were found to have been misconceived from the outset.

Had the proceedings not been initiated, the petitioner would have received his retiral dues upon superannuation; therefore, the fact of their pendency could not be used to deny interest from 30 June 2012.

Applying the restitutive principle of interest, the Court concluded that the petitioner had been deprived of the use of his money, while the respondents retained the financial benefit of the delayed payment.

The Tribunal’s order was quashed and set aside to that extent.

The respondents were directed to pay the balance amount, if any, within eight weeks from the date of judgment.