Allahabad HC: Retired Employee Entitled to Interest on Delayed Pensionary Benefits; Administrative Delays Cannot Prejudice Retiree

The Allahabad High Court allowed the writ petition filed by a retired State Tax Department officer and held that a retired employee cannot be denied timely pensionary benefits due to administrative lapses, procedural delays, or inter-departmental correspondence. The Court directed the State authorities to pay interest at 8% per annum on the delayed payment of pension, gratuity, and commutation benefits for the period during which the retiral dues remained unpaid.

The petitioner retired as Administrative Officer from the State Tax Headquarters on 30 September 2019 after attaining the age of superannuation. While certain dues, such as Group Insurance, GPF, leave encashment, and salary arrears were released around the time of retirement, the major retirement benefits, including regular pension, gratuity, and commutation, were sanctioned only on 27 June 2020 and ultimately paid on 5 July 2020, resulting in a delay of more than nine months. The petitioner challenged an order rejecting his claim for interest on the delayed payment and sought compensation for the period from 1 October 2019 to 4 July 2020.

The State contended that the delay occurred because the petitioner had availed vehicle, moped, and house building advances during service and had not furnished certain repayment particulars in time. According to the department, pensionary benefits could be processed only after obtaining non-payment and no-dues certificates from the Accountant General, following verification of those details.

Relying on the Supreme Court’s decision in Dr. Uma Agrawal v. State of U.P. and the Division Bench ruling in Indrajeet Singh v. State of U.P., the Court reiterated that pension is not a bounty but a valuable right of a retired employee. It emphasised that authorities are under a statutory obligation to complete pension-related formalities well before retirement and that administrative inefficiency cannot be permitted to prejudice a retiree.

The Court also examined the statutory framework under the Uttar Pradesh Pension Cases (Submission, Disposal and Avoidance of Delay) Rules, 1995, which prescribes a detailed timeline for verification of service records, issuance of no-dues certificates, processing of pension papers, and release of pensionary benefits. It was observed that the respondents failed to demonstrate compliance with these mandatory obligations.

Holding the rejection order dated 8 July 2022 to be arbitrary and non-speaking, the Court quashed the order and directed the respondents to calculate and pay interest at 8% per annum on the delayed retirement dues, including pension, gratuity, and commutation, for the period from 1 October 2019 to 4 July 2020.

The Court further directed that the payment be made within three months, failing which the petitioner would be entitled to additional interest at 10% per annum from the date of default until actual payment.

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