Voluntary retirement does not deprive employees of the right to gratuity and interest on delayed retiral dues.

The petitioner was a teacher in a State-aided educational institution who opted for the Voluntary Retirement Scheme (VRS) and retired on August 31, 2019, at the age of 55

While her pension was sanctioned and paid, the respondents withheld her retirement gratuity

Additionally, while her General Provident Fund (GPF) was released in January 2020, the respondents failed to pay interest on the GPF amount for the period between her retirement and the actual realization

The petitioner sought a Mandamus for the release of gratuity with 18% interest and unpaid GPF interest

1. Whether a government servant who takes voluntary retirement before the age of superannuation (60 years) is entitled to the payment of gratuity under the prevailing rules

2. Whether the petitioner is entitled to interest on the delayed payment of gratuity and GPF dues in the absence of specific statutory provisions for the same

Fundamental Rule 56(e) of the Financial Handbook, which mandates that a government servant allowed to retire voluntarily is entitled to pension and gratuity

Government Order dated 31.07.2001, clarifying that voluntary retirees are entitled to all retiral dues

The Constitutional principle that pension and gratuity are not "bounties" but "property" protected under Article 300-A, as established in Deoki Nandan Prasad v. State of Bihar and State of Kerala v. M. Padmanabhan Nair

S.K. Dua v. State of Haryana, which held that interest for delayed retiral dues is a fundamental right under Articles 14, 19, and 21 of the Constitution even in the absence of statutory rules

The court reasoned that since the facts of the petitioner’s service and retirement were undisputed, she fell squarely within the ambit of Fundamental Rule 56(e), which guarantees retiral benefits to those opting for voluntary retirement

The court rejected the notion that the respondents could withhold gratuity based on the lack of a specific "option" to retire at 60, noting that once retirement is permitted, the right to gratuity vests automatically

Applying the doctrine of restitution, the court held that any "culpable delay" in disbursing these "valuable rights" must be compensated with interest to make the employee whole for the loss of use of their money

The court determined that the retention of the petitioner's GPF and gratuity without justification necessitated interest at market rates (8% for gratuity and 7.9% for GPF) to prevent the state from benefiting from its own wrong

The court directed the respondents to: (i) calculate and pay the principal gratuity amount (approx. ₹14,34,362/-) within two months; (ii) pay 8% interest on the gratuity from the date of retirement (31.08.2019) until payment, escalating to 12% if not paid within two months; and (iii) pay interest of 7.9% per annum on the GPF amount for the delayed period (₹73,121/-)

The court further ordered the State to recover the interest component from the salaries of the specific officers responsible for the illegal withholding of dues