Ms. Shashi Rani vs Municipal Corporation Of Delhi & Ors.

Hon'ble Dr. Sumeet Jerath, Member (A) :

The instant OA has been filed by the applicant under section 19 of the Administrative Tribunals Act, 1985 seeking the following reliefs:-

Brief facts of the case as per the counsel for the applicant are that the applicant had joined service as a Primary Teacher in the Municipal Corporation of Delhi on 06.11.1985. She subsequently retired on superannuation on 30.06.2021 from the post of Principal, Primary MCD School, West Vishwas Nagar/Shahdara, Delhi. She stated that although the pension of the applicant was fixed and she started receiving pension from the month following her retirement, her other retiral dues, particularly commutation of pension and gratuity, were not released within the prescribed period. She also stated that the commutation amount of pension, amounting to Rs.15,31,951/- was ultimately released to the applicant on 02.05.2024, i.e. after a delay of about two years and ten months from the date of her retirement. The retirement gratuity, stated to be Rs.16,45,248/-, was released in three installments. The first installment of Rs.7,51,930/- was released on 01.10.2024, whereas the second installment of Rs.7,51,930/- and the third installment of Rs.1,41,388/- were released on 02.08.2025. Thus, according to the applicant, the gratuity was also released after considerable delay. According to the counsel, the respondents have also confirmed these dates and amounts, in their short reply-cum-status report. To support her case, she relied upon the Office Memorandum dated 01.08.2017 issued by the Department of Pension and Pensioners' Welfare concerning timely handing over of the pensioner's copy of PPO along with retirement dues and the Office Memorandum dated 09.03.2021 emphasizing timely processing and payment of retirement dues. She contended that the respondents were under an obligation to release the retiral dues within the prescribed period and that the prolonged withholding of such amounts deprived her of the use of her legitimate retirement benefits. She further relied upon the judgment of the Hon'ble Supreme Court in Gagan Bihari Prusty vs. Paradip Port Trust & Ors. - SLP (C) No. 4468/2022 and has claimed interest on the delayed payment. In the OA, she has claimed an amount of Rs.11,21,764/- towards interest on the gratuity and commutation amount and has also sought damages of Rs.10,00,000/- on account of alleged mental and physical harassment and financial hardship. She asserted that there was no delay or default on her part in processing her pensionary papers. However, aggrieved by the delay on the part of the respondents the applicant approached this Tribunal to ventilate her grievance.

The counsel for the applicant took the following grounds to support her case :-

Per contra, learned counsel for the respondents, submitted that all the admissible retiral dues have already been released to the applicant. He stated that the commutation amount of Rs.15,31,951/- due on 30.06.2021 was paid on 02.05.2024 and the gratuity amount of Rs.16,45,248/- was paid in installments dated 01.10.2024 and 02.08.2025. He further submitted that the applicant's monthly pension was duly sanctioned and has been paid regularly without interruption since her retirement. He added that the delay in release of the commutation and gratuity was neither intentional nor deliberate but was occasioned by acute financial constraints faced by the Municipal Corporation of Delhi. According to him, the Corporation was facing severe financial stress on account of delayed release of grants, increased statutory liabilities and other unavoidable financial commitments. It has also been stated that MCD performs essential civic functions and owing to scarcity of funds, priority had to be given to payment of salaries of serving employees and other essential statutory obligations. Consequently, the retiral benefits of the applicant were released in a phased manner as and when funds became available. He also submitted that there was no arbitrary, mala fide or intentional withholding of the applicant's dues and that the claim for interest is misconceived. The claim for damages/compensation has also been opposed on the ground that it has no legal or factual basis. The respondents have accordingly prayed for dismissal of the OA.

We have considered the submissions of learned counsel for the parties; perused the material available on record and examined the judicial precedents cited by the applicant. The main issue requiring consideration is whether the applicant is entitled to interest on the delayed payment of her retiral dues and, if so, at what rate and in what manner.

As the respondents have themselves admitted that there is delay on their part, at this stage, it would be appropriate to follow the Full Bench judgment of this Tribunal in Rajbir Singh vs. Municipal Corporation of Delhi & Ors., - O.A. No. 2821/2023, decided on 30.10.2025. The Full Bench was constituted specifically to resolve the divergent views regarding the appropriate rate of interest payable on delayed retiral benefits of employees of MCD. The Full Bench considered the applicability of the CCS (Pension) Rules to MCD employees and examined, inter alia, Rule 65 of the CCS (Pension) Rules, 2021 and Rule 68 of the CCS (Pension) Rules, 1972. The Full Bench noted that Rule 65 provides for payment of interest on delayed pension, family pension and gratuity at the rate and in the manner applicable to GPF, where the delay is attributable to administrative reasons or lapses and is not attributable to the Government servant. It further noticed the corresponding provision contained in Rule 68 of the CCS (Pension) Rules, 1972. The Full Bench held that where the delay in payment of pension, gratuity and other retiral benefits is not attributable to the employee, interest is payable at the applicable GPF rate for the relevant years. Importantly, the Full Bench also clarified the manner in which such interest is to be calculated. It held that the interest applicable to delayed GPF is calculated on a compound basis, with the applicable rate being taken year-wise, and that the same manner of calculation is applicable to delayed payment of pension, gratuity and other retiral dues. The Full Bench ultimately held that interest on delayed GPF as well as pension, gratuity etc. would be payable at the GPF rate for the relevant years and that such interest would be calculated on compound basis. The Full Bench also rejected the contention that Section 34 of the Code of Civil Procedure could govern interest on post-retiral dues. It observed that interest on post-retiral dues becomes payable from the date the amount becomes due and that the special statutory provisions governing retiral benefits would prevail. It further relied upon the principle laid down by the Hon'ble Supreme Court in S.K. Dua vs. State of Haryana & Anr. that retiral benefits are not a bounty or charity and that interest can be claimed where statutory rules, administrative instructions or guidelines provide for the same, and even otherwise the right to such benefits has constitutional protection.

In the present case, there is no allegation that the applicant was responsible for the delay in release of her commutation or gratuity. On the contrary, the respondents themselves have stated that the delay was occasioned by financial constraints faced by MCD. Thus, the explanation furnished by the respondents itself demonstrates that the delay was not attributable to the applicant. The plea of financial constraints, however genuine it may be from the perspective of the Corporation, cannot by itself deprive a retired employee of the interest statutorily payable on delayed retiral dues. Retirement benefits are earned by an employee through years of service and are intended to provide financial security after retirement. Once the respondents accept that the amounts had become payable but could not be released for want of funds, the delay cannot be treated as attributable to the applicant. We also find that the delay in the present case is substantial. The applicant retired on 30.06.2021. Her commutation amount was released only on 02.05.2024, while the gratuity was released in installments extending up to 02.08.2025. These facts are not in dispute, having been specifically acknowledged in the respondents' status report. In these circumstances, the case of the applicant is squarely covered by the ratio laid down by the Full Bench in Rajbir Singh (supra). The Full Bench decision specifically concerns retired employees of MCD and holds that, where delay in payment of retiral dues is not attributable to the employee, interest is payable at the applicable GPF rate for the relevant years and is to be calculated on a compound basis. Learned counsel for the respondents has submitted that the Full Bench judgment in Rajbir Singh has been challenged before the Hon'ble High Court of Delhi in W.P.(C.) No. 19558/2025 - Municipal Corporation of Delhi vs. Rajbir Singh and that the matter is pending. This aspect has also been noticed in subsequent orders of this Tribunal. Nevertheless, the Full Bench decision continues to hold the field and has been consistently followed by various Benches of this Tribunal in cases involving delayed retiral benefits of MCD employees, generally making the relief subject to the outcome of the pending writ proceedings.

We are, therefore, of the considered view that the applicant is entitled to interest on the delayed payment of her admissible retiral dues, including the gratuity and commutation of pension, in accordance with the principles laid down in Rajbir Singh. The calculation shall be made at the GPF rates applicable for the relevant years and in the manner prescribed by the Full Bench, i.e. on a compound basis. The respondents shall prepare a year-wise calculation, duly taking into account the respective dates on which each component of the retiral dues became payable and the dates on which the respective amounts were actually released. As regards the claim of the applicant for a quantified amount of Rs.11,21,764/- towards interest, we are not inclined to grant the said amount as a fixed amount merely on the basis of the calculation made by the applicant. The exact amount of interest is required to be worked out by the competent authority in accordance with the applicable GPF rates for the relevant years and the methodology laid down in Rajbir Singh. The respondents shall accordingly undertake the calculation and release the amount found payable. The applicant has also sought damages of Rs.10,00,000/- on account of alleged mental and physical harassment and financial agony. Though the delay in release of retiral dues is undoubtedly unfortunate and has caused inconvenience to the applicant, we do not find sufficient material on record to award a separate amount of damages of Rs.10,00,000/-. The applicant is, however, adequately compensated for the financial deprivation caused by the delayed release of her retiral dues through payment of interest in terms of the applicable rules and the Full Bench decision. We accordingly dispose of the present OA with the following directions :-

The respondents shall calculate the interest payable to the applicant on the delayed payment of her admissible retiral dues, including gratuity and commutation of pension, in terms of the Full Bench judgment dated 30.10.2025 in Rajbir Singh vs. MCD & Ors. - O.A. No.2821/2023.

Such interest shall be calculated at the GPF rate applicable for the relevant years, with the calculation being made on a compound basis, in accordance with the methodology laid down by the Full Bench.

The calculation shall be made from the date on which the respective retiral dues became payable, subject to the applicable statutory period, and up to the actual dates of their respective payments.

The respondents shall complete the exercise and release the admissible amount of interest to the applicant within three months from the date of receipt of a certified copy of this order.

The respondents shall furnish to the applicant a copy of the calculation statement showing the year-wise rate of interest and the manner in which the interest has been calculated.

The claim for Rs.10,00,000/- towards damages/compensation is rejected.

It is clarified that the payment of interest pursuant to this order shall remain subject to the final outcome of W.P.(C.) No.19558/2025 -Municipal Corporation of Delhi vs. Rajbir Singh, pending before the Hon'ble High Court of Delhi.

Pending M.A., if any, shall stand disposed of accordingly. There shall be no order as to costs.