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Delay in payment of gratuity and commuted value of pension--- payment of interest - delay in payment of commuted value of pension stands on similar basis as that of gratuity - The Payment of Gratuity Act, 1972

The petitioner joined the South Central Railway as casual labour on 15.11.1961 and was absorbed in the service on 17.12.1976. He retired as Bridge Inspector on 30.6.1995. Prior to his retirement, he was issued a charge sheet on 24.5.1995 and departmental enquiry was initiated against him. During pendency of enquiry, he was paid encashment of leaves. 'The petitioner has pleaded that the enquiry was completed on 17.6.1997 but it took more than two years for the respondent nO.2 to pass the order on departmental enquiry. Petitioner was exonerated of the charges leveled against him. The gratuity and pension of the petitioner was withheld due to pendency of enquiry, The petitioner was paid gratuity and commuted value of pension on 8.2.2001. Petitioner filed OA before Central Administrative Tribunal claiming interest on the delayed payment. Petitioner also disputed action of the respondent in reducing the qualifying service from 33 years to 251/2 years. CAT awarded interest of 12% p.a. from the date of retirement till payment. Aggrieved by the order of CAT, present petition has been filed.

The Court examined the issue whether the employee is entitled to payment of interest for the delayed payment of pension and gratuity.

It was observed by the Court that report of enquiry officer was submitted on 24.3.1998 but final order of punishment was not passed till 19.10.2000 and no explanation has been offered by the present respondent for this inordinate delay. Rule 87 of the Railway Servants (Pension) Rules 1993, casts a right in the retired employee to claim interest on delayed payment provided the delay in payment was attributable to administrative lapse. While there may be justification for the respondent in not releasing the gratuity till the Enquiry Officer submitted his report, such a justification did not exist after receipt of the report. Gratuity being the retrial benefit for the services rendered by the employee, unreasonable delay cannot be caused in payment of this benefit. The delay in payment of commuted value of pension stands on similar footing as that of gratuity. Though there is no specific provision but rule 87 envisage payment of interest on delayed payment of commuted value of pension, even in the absence of such rule, where there is no justification for causing delay, in equity, the retired employee is entitled to payment of interest. Therefore the present petitioner is entitled to a reasonable interest on gratuity and commuted value of pension at least from 1.4.1998. The Tribunal has committed error in denying interest to the petitioner. Respondents directed to pay interest at 12% p.a. from 1.4.1998. Writ Petition allowed.

-H.C. Hyd. FLR (157) 2018 P.67, S.K. Khader Saheb (Dead) by LRs. v. Union of India & Others

THE PAYMENT OF GRATUITY ACT, 1972

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