No interest accrues on delayed retiral benefits where payment delay stems from employee misconduct.

The applicant, an IPS officer of the 1993 Bihar Cadre, was apprehended while travelling with his wife on a complementary railway pass issued in another person’s name. He was penalised by the Railway authorities and prosecuted under Section 419 IPC and Section 137 of the Railways Act; the criminal case was subsequently closed after acceptance of the final report.

A departmental proceeding was initiated against him, and an inquiry report allegedly found the charge proved. He was served with a second show-cause notice on 30.01.2009, but no final disciplinary order was passed before or after his retirement on 31.12.2013.

The applicant earlier challenged the prolonged disciplinary proceeding in OA No. 128/2014. The Tribunal quashed it on 20.11.2015 on the ground of inordinate and unjustifiable delay, without examining the merits or legality of the charge.

Meanwhile, the State had withheld 20% of his pension and gratuity under Rule 6 of the All India Services (Death-cum-Retirement Benefits) Rules, 1958. Following the Tribunal’s order, the State sanctioned full provisional pension and gratuity in September 2018, and payment authority was issued on 28.09.2018; the gratuity was paid on 16.11.2018.

The applicant consequently sought interest on the delayed gratuity under Rule 19-A(1) of the AIS (DCRB) Rules, 1958, and interest on the withheld 20% pension for the period from 31.12.2013 until its release.

Whether the applicant was entitled to interest on the gratuity paid after his retirement, on the ground that its delayed payment constituted an administrative lapse under Rule 19-A(1) of the AIS (DCRB) Rules, 1958.

Whether the applicant was entitled to interest on the 20% portion of pension withheld during the pendency of the disciplinary proceedings and released subsequently.

Whether the prior quashing of the disciplinary proceeding for inordinate delay entitled the applicant to treat the withholding of pension and gratuity as illegal from the date of retirement.

The Tribunal applied Rule 6(i) of the All India Services (Death-cum-Retirement Benefits) Rules, 1958, under which pension or gratuity may be withheld, wholly or partly, in cases of grave misconduct.

It also applied Rule 19-A(1), which provides that interest at 5% per annum on delayed gratuity is payable where gratuity is authorised more than three months after it becomes due and the delay is clearly attributable to an administrative lapse; its proviso excludes interest where the delay is attributable to the member of the Service.

The Tribunal further held that the earlier order quashing the disciplinary proceeding on the ground of delay did not adjudicate the merits, legality, or procedural validity of the proceeding and did not itself direct immediate payment of retiral benefits.

The Tribunal held that the withholding of pension and gratuity arose from a pending disciplinary proceeding concerning alleged grave misconduct, rather than from an admitted administrative failure to process retiral benefits.

Although the disciplinary proceeding was later quashed, it was quashed only because of inordinate delay and not because the charge or the withholding action was found legally untenable.

The State’s subsequent decision to restore full pension and gratuity was treated as compliance with the Tribunal’s order, particularly since the State had first pursued a writ petition and thereafter issued approval for payment on 05.09.2018, followed by the Accountant General’s authority on 28.09.2018.

In the Tribunal’s view, the applicant failed to establish that the delay was attributable to administrative lapse within the meaning of Rule 19-A(1); consequently, the statutory condition for interest was not satisfied.

The Original Application was dismissed, with no order as to costs, and the connected Miscellaneous Application was disposed of.