Case Note & Summary
The dispute in this appeal concerned the liability of the Union of India to pay interest on delayed death-cum-retirement gratuity to a retired employee. The Central Administrative Tribunal had directed payment of interest at the rate of seven per cent per annum for the first twelve months and ten per cent per annum thereafter, by an order dated 22 November 1990 in Original Application No. 1383 of 1990. The Union of India challenged that order before the Supreme Court after obtaining leave, as the notice sent to the respondent on 8 May 1992 had been deemed served because neither the acknowledgment card nor the unserved notice was returned. The admitted facts showed that the respondent had been in unauthorised occupation of the quarter allotted to him and had remained in such occupation for more than two years. Owing to that unauthorised occupation, the death-cum-retirement gratuity had not been released to him, as the administration had issued a circular directing that such gratuity should not be paid until the retired employee surrendered possession of the quarter. The only question argued before the Supreme Court was whether the respondent was entitled to interest on account of the failure to release the death-cum-retirement gratuity under the applicable Rules. The appellant Union of India contended that the delay in payment was not due to any administrative lapse but was the result of the circular issued by the Board, which required withholding of the gratuity until possession of the quarter was surrendered. The respondent had obtained a favourable order from the Tribunal granting interest, but the Supreme Court examined the principle of law governing such circumstances. The Court referred to its earlier decision in Raj Pal Wahi and Others v. Union of India and Others, Special Leave Petition (Civil) Nos. 7688-91 of 1988, decided on 27 November 1989, where this Court had refused to hold that the petitioners were entitled to interest for delayed payment of death-cum-retirement gratuity because the delay occurred due to the order passed on the basis of a circular of the Railway Board, and not on account of any administrative lapse. Applying that principle to the present case, the Supreme Court observed that in view of the circular issued by the administration directing not to make payment of death-cum-retirement gratuity till the retired employee surrenders possession, the delay in payment was not due to any administrative lapse but on account of the circular issued by the Board. Under these circumstances, the Court held that the respondent was not entitled to the interest as directed by the Tribunal. Accordingly, the appeal was allowed and the order of the Tribunal directing payment of interest was set aside. No costs were awarded. The decision reiterates that when retirement dues are withheld on account of an employee's unauthorised occupation and pursuant to a departmental circular, the employee cannot claim interest for the period of withholding, as the delay is attributable to the employee's own failure to surrender possession and to the operation of the circular rather than to any administrative fault.
Headnote
A) Service Law - Retirement Benefits - Interest on Delayed Death-cum-Retirement Gratuity - Not mentioned - The respondent, a retired employee, was denied interest on delayed gratuity because he had unauthorisedly occupied his allotted quarter for over two years and payment was withheld pursuant to an administrative circular requiring surrender of possession before payment - The Supreme Court held that the delay was not due to administrative lapse but due to the circular, relying on Raj Pal Wahi, and set aside the Tribunal's award of interest - Held that no interest is payable under such circumstances (Paras 1-1).
Issue of Consideration
Whether respondent is entitled to payment of interest for failure to release death-cum-retirement gratuity under the Rules, where delay resulted from circular requiring surrender of quarter and unauthorized occupation?
Final Decision
Appeal allowed; order of Central Administrative Tribunal directing interest set aside; respondent held not entitled to interest; no costs.
Law Points
- Delay in payment of death-cum-retirement gratuity due to administrative circular requiring surrender of quarter and employee's unauthorized occupation is not administrative lapse
- employee not entitled to interest for delayed payment
- following Raj Pal Wahi precedent
