Unjustifiably withheld gratuity attracts interest as a delayed retiral benefit.

The Indian Agricultural Research Institute (IARI) challenged a common order dated 30 January 2026 of the Central Administrative Tribunal in O.A. Nos. 1502/2023 and 1508/2023, insofar as it directed payment of interest on the respondents’ withheld gratuity

IARI stated that gratuity had been withheld under Rule 8(4)(c) of the Central Civil Services (Pension) Rules, 1972, on account of disciplinary proceedings

The respondents had superannuated in 2016, but no disciplinary proceedings had been instituted against them even ten years later

1. Whether the Tribunal was correct in directing IARI to pay interest on the respondents’ withheld gratuity

2. Whether withholding the respondents’ gratuity under Rule 8(4)(c) was justified where no disciplinary proceedings had been instituted

In S.K. Dua v. State of Haryana, (2008) 3 SCC 44, the Supreme Court held that an employee may claim interest on delayed retiral benefits under applicable statutory rules or administrative instructions, and, even in their absence, under Part III of the Constitution, relying on Articles 14, 19 and 21; retiral benefits are not a bounty

Rule 8(4)(c) of the Central Civil Services (Pension) Rules, 1972, as described by the Court, permits withholding retiral gratuity on the ground that disciplinary proceedings have been initiated against the employee

Applying S.K. Dua, the Court held that delayed payment of retiral benefits may attract interest

It then examined IARI’s stated basis for withholding gratuity and found that, although IARI relied on Rule 8(4)(c), the respondents had retired in 2016 and no disciplinary proceedings had been instituted against them even ten years later

The Court therefore agreed with the Tribunal that the ground for withholding gratuity was unjustified and that IARI could not avoid liability for interest

It directed IARI to comply with the Tribunal’s order within six weeks