Statutory interest rates under Pension Rules prevail over discretionary higher interest for delayed gratuity payments.

The respondent, Mangai, sought the disbursement of Death-cum-Retirement Gratuity (DCRG) following the death of her husband, K. Shanmugam, a retired Forest Guard who died on 20.05.2024

Although he retired on 31.05.2017, the DCRG (Rs. 2,44,294/-) was delayed due to an administrative error where the Accountant General dispatched the authorization to the wrong division

The Writ Court, in WP.No.31218 of 2025, ordered the State to pay the DCRG with 18% interest per annum

The State appealed this order, arguing that while they admit the delay, the interest rate should be governed by statutory rules rather than judicial discretion

1. Whether the High Court, in the exercise of its discretion, can enhance the rate of interest for delayed DCRG payments to 18% when a specific statutory rule exists

2. Whether the respondent is entitled to interest at the rate prescribed under Rule 45A of the Tamil Nadu Pension Rules, 1978, or the higher rate granted by the Writ Court

Rule 45A of the Tamil Nadu Pension Rules, 1978, which stipulates that a retired employee is entitled to interest for the belated settlement of DCRG

The Court distinguished the precedent D.D. Tewari (Dead) v. Uttar Haryana Bijli Vitran Nigam Limited, (2014) 8 SCC 894, noting that while the Supreme Court granted 18% interest in that specific broader context, it does not override specific state pension rules where applicable

The Court reasoned that since Rule 45A of the Tamil Nadu Pension Rules, 1978, expressly provides for interest on delayed DCRG payments, the statutory rate must prevail

The Court observed that exercising judicial discretion to enhance interest rates to 18% would cause a loss to the State Exchequer and create an inconsistent "pandora’s box" of similar claims

The Court noted that the State had already acknowledged the administrative delay and had issued G.O.(D) No.75 dated 13.04.2026 to settle the DCRG along with interest as per the statutory mandate

The deviation from the statutory rate by the Writ Court was deemed undesirable for maintaining legal consistency

The Court held that interest for belated settlement of DCRG must be restricted to the rate admissible under Rule 45A of the Tamil Nadu Pension Rules, 1978

Since the Government had already settled the amount with the statutory interest via G.O.(D) No.75, no further relief was required