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State of Uttar Pradesh and Ors. v. Dhirendra Pal Singh and Ors. - (Supreme Court) (15 Nov 2016)

Pension and gratuity are valuable rights and any culpable delay in disbursement thereof must be visited with penalty of payment of interest



Respondent was Assistant Store Superintendent with Irrigation Department of State of Uttar Pradesh. He stood retired on 30th June, 2009 on attaining age of superannuation. At time of his retirement GPF, leave encashment and 70% of gratuity and pension were cleared, but rest of 30% of gratuity and computation of pension were held up. Stand of Appellants is that there were some discrepancies in the stock in the store of Department and some enquiries were going on as to loss caused to public exchequer. After making representations, when remaining amount of gratuity and pension was not cleared, Respondent filed Civil Suit No. 338 of 2012. However, same was dismissed as withdrawn as Appellants/State authorities, vide order finally, on basis of alleged discrepancies withheld the remaining part of gratuity and pension of the Respondent and, vide order, directed recovery of Rs. 7,26,589/-, from retiral dues payable to Respondent, which was challenged in the writ petition.

Admittedly, no departmental enquiry was initiated in present case against Respondent for misconduct, if any, nor any proceedings drawn as provided in Article 351-A of UP Civil Service Regulations. Learned single Judge of the High Court has observed that the document which is the basis of enquiry and relied upon by the State authorities itself reflected that the document showing discrepancy in the stock was dated 26.12.2009, i.e. after about more than five months of retirement of the Respondent. In the circumstances, keeping in view Article 351-A of UP Civil Service Regulations, we agree with the High Court that the orders dated 23.07.2015 and 06.08.2015 were liable to be quashed and, to that extent, we decline to interfere with the impugned order.

In State of Kerala and Ors. v. M. Padmanabhan Nair , this Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest. As to rate of interest on amount of gratuity Section 7(3-A) of Payment of Gratuity Act, 1972, it is provided that if amount of gratuity payable is not paid by employer within period specified in Sub-section (3), employer shall pay, from the date on which gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits, as that Government may by notification specify. It further provides that no such interest shall be payable if delay in payment is due to the fault of the employee, and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. In present case, there is no plea that the Appellants had sought any permission in writing from controlling authority. As to the delay on the part of employee, it has come on record that he made representations, where after filed a suit in respect of withheld amount of gratuity and pension.

In Y.K. Singla v. Punjab National Bank and Ors., this Court, after discussing the issue relating to interest payable on the amount of gratuity not paid within time, directed that interest at the rate of 8% per annum shall be paid on the amount of gratuity.

In the light of law laid down by this Court, and further in facts and circumstances of case, impugned order passed by High Court modified in respect of interest directed to be paid on amount of withheld gratuity and pension. Appellants shall pay interest at the rate of 6% per annum on the unpaid amount of pension from the date it had fallen due and interest at the rate of 8% per annum on the unpaid amount of gratuity from the date of retirement of the employee.

Relevant : Section 7(3-A) of Payment of Gratuity Act, 1972, State of Kerala and Ors. v. M. Padmanabhan Nair (1985) 1 SCC 429, MANU/SC/0296/1984; Y.K. Singla v. Punjab National Bank and Ors. (2013) 3 SCC 472, MANU/SC/1109/2012


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