Holding

The Court held that the department's delay was inexcusable and ordered the payment of penal interest of Rs. 1 lakh to the petitioner.

Summary

Dr. Uma Agrawal, a medical officer of the Uttar Pradesh Government, retired on 30 April 1993 but did not receive her gratuity, provident fund, pension and other retirement benefits until 18 November 1995. She filed a writ petition under Article 32 seeking payment of the delayed benefits and penal interest. The Court observed that the Uttar Pradesh Service Rules require the pension process to be initiated at least two years before retirement, which the department failed to do, starting the process only after the interim order in 1996. The delay, especially given the petitioner’s serious illness, was deemed inexcusable, and the Court directed the payment of interest quantified at Rs. 1 lakh. The petition was disposed of with an order for interest payment within two months.

Issues considered

Whether the delay in disbursement of retirement benefits violates the Uttar Pradesh Service Rules and entitles the petitioner to penal interest.
Whether the government department is obligated to initiate the pension process two years prior to retirement as per the Rules.
Whether interest can be awarded for delayed payment of retirement benefits and at what quantum.

Subjects

retirement benefitspensiongratuitydelaypenal interestservice rulesgovernment servantwrit petitionUttar Pradesh

Judgment

A DR. UMA AGRA WAL
v.
STATE OF U.P. AND ANR

MARCH 22, 1999

B [DR. A.S. ANAND, C.J., M. JAGANNADHA RAO AND N.
SANTOSH HEGDE, JJ.]

ServiCe Law : Uttar Pradesh Fundamental Rules-Rules 58, 59, 60, 61,
63, 64, 65 and 68-Retiral Benefits-Delay in disbursement of-Government
C Department should initiate process for payment at least 2 years in advance-
Department taking steps nearly 3 years after retirement pursuant to interim
orders of Court and payments made 2 years thereafter-Government servant,
a cancer patient put to great hardship-Held, delay in disbursement
inexcusable and interest payable quantified at Rs. 1 lakh.
,D The pettioner retired from U.P. Government services on 30.04.1993,
was not paid her retiral benefits, namely, gratuity, provident fund, pension
etc. till 18.11.1995. She approached this Court in Writ Petition seeking
relief for disbursement of pensionery benefits becausee of inordinate delay
in payment of these benefits and also penal' interest on these retirement
E benefits. Thereafter pursuant to interim order of this Court, respondent took
active steps for finalisation of petitioner's retirment benefits but made
payments to the petitioner 2 years thereafter. Despite this inordinate delay
in disbursement of paynientsiife respondent declined to grant penal interest
on these retirement benefits.

F Allowing the petition, this Court

HELD : 1. The Rules and Departmental instructions prescribing the
time schedule in regard to the payment of pension and other retiral benefits,
are to be followed strictly. Then much of the litigation can be avoided and
G retired government servants will not feel harassed because after all, grant
of pension is not a bounty but a r.ight of the government servant Government
is obliged to follow the Rules mentioned in letter and in spirit. Delay in
settlement of retiral benefits is frustrating and must be avoided at all costs.
Such delays are occurring even in regard to family pensions for which too
there is a prescribed procedure. This is indeed unfortunate. In cases where
H a retired government servant claims interest for delayed payment, Court can
42
DR. UMA AGRAWAL v.STATE [M. JAGANNADHA RAO, J.] 43
certainly keep in mind the time-schedule prescribed in the rules/instructions A
apart from other relevant factors applicable to each case. (47-B-D]

State of Mysore v. C.R. Sheshadri & Others, (1974) 4 SCC 308 and
' State of Kera/a&: Ors v. M Padmanabhan Nair, [1985) 1 SCC 429, relied
on.
B
2. In the instant case, the government department should have initiated
the process for payment at least two years in advance of the date of petitioner's
retirement but the department actually took steps for collecting requisite
papers/information from various office where petitioner had worked for
finalisation of her retirement benefits nearly three years after retirement. C
Moreover this was pursuant to the interim orders of the court The petitioner
was a cancer patient and was indeed put to great hardship. Hence, delay in
disbursement of retiral benefits cannot be excused inasmuch as the rules
and instructions require these actions to be taken long before retirement.
Therefore, this is a fit case for awarding interest to the petitioner and for
the purpose of the computation of interest the matter should not go back. · D
Instead, on the facts of the case, the interest payable is quantified at Rs. 1
lakh and it is directed that the same shall be paid to the petitioner within .
two months. [47-E:-Hl

CIVIL ORIGINAL JURISDiCTION : Writ Pe.ition (C) No. 771 of
1995. E
Under Article 32 of the constitution of India.

R.K. Jain, f:vfanoj Goel, Ajay K. Agrawal for the Petitioner

· Pramod Swarup for.AK. Srivastava for the Respondents. F
The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. The petitioner was working as Medical
Officer in the service of the Government of Uttar Pradesh and retired on
30.4.1993 on comph;tion of 58 years. She filed this writ petition on 18.11.1995 G
complaining that .she has not been paid her retiral benefits, namely, gratuity,
provident fund, pension etc. This Court admitted the writ petition on 4.12.1995
and issued notice to the respondents. The respondents submitted to this
Court that, after her retirement, in spite of the petitioner being requested to
send three sets of pension papers, petitioner did not send them. This was, H
44 SUPREME COURT REPORTS [1999] 2 S.C.R.

A however, denied by the petitioner. This Court directed the respondents on
12.2.1996 that upon petitioner furnishing three sets of pension papers with all
relevant documents, the . same should be processed. The respondents then
sent a special messenger to various places to get details of her ·Service and
thereafter the pension papers were sent on 24.12.1996 to the Director General,
B Medical Health, U.P. It .was stated that provisional pension was paid in
December, 1996 and February, 1997. Arrears were paid on 17.3.1997. Papers
were sent on 29. l.1997 to the Pension Directorate, Lucknow. In regard to the
GIS it was pointed out that the petitioner had not paid premium of Rs.4770
and thereafter, the petitioner deposited the same on 9.12.1997. The GIS was
sent to petitioner on 17.12.1997, 90% of GPF was paid on 20.1.1998, balance
C was paid on 25.4.1_?98. The Gratuity was paid on 25.6.1997 and the encashment
of earned leave was also paid on the same date. The petitioner demanded
interest while the respondents contended that no interest was payable. Though
some other questions relating to promotion etC. were' referred to in the writ
petition, learned senior counsel for the petitioner stated that the petitioner is
D confining this writ petition only in regard to the pensionary benefits. Now the.
only question that remains to be decided is the question relating to payment
of interest. Learned counsel for the petitioner requested us that some gu~elines
may be issued regarding the steps to be taken by departments for prompt
payment of retiral benefits. ·

E Now-a-days, several writ petitions are being filed in this Court and
various High Courts seeking relief for disbursement of retiral benefits, because
of inordinate delays in payment of these benefits. As Krishna Iyer, J. stated
in State of Mysore v. C.R. Sheshadri & Others, [1974] 4 SCC 308, 'a retired
government official is sensitive to delay in drawing monetary benefits. And
to avoid posthumous satisfaction of the pecuniary expectation of the
F superannuated public servant not unusual in government', it is becoming
necessary to issue directions, in several cases, for early payment of these
dues. In yet another case in State of Kera/a&" Others, v. M Padmanabhan
Nair, [ 1985] 1 SCC 429, this Court had occasion to point out that usually 'the
delay occurs by reason of nen production of the L.P.C (last pay certificate)
G and the N.L.C. (no liability certificate) from the concerned departments' but
both the documents pertain to matters, records whereof would be with the
concerned government departments. It was observed that inasmuch as the
date of retirement of every government servant was very much known in
advance, it was difficult to appreciate why the process of collecting the
· requisite information and issuance of the abovesaid two documents should
H not be completed well before the date of r~tirement so that the payment of
DR. UMA AGRAWAL v.STATE [M. JAGANNADHA RAO, J.] 45
gratuity amount could be made on the date of retirement or on the following A
day and the pension, at the expiry of the following month. This Court stated
that the necessity for prompt payment of the retirement dues to a government
servant immediately after his retirement could not be over-emphasised and it
would not be unreasonable to direct that there would be a liability to pay
penal interest on these retirement benefits. In several cases, decided by this B
Court, interest at the rate of 12% per annum has been directed to be paid by
the State.

As these delays have increased in the last few years, it has become
necessary to refer to the Rules and Departmental instructions which do
contain adequate provisions for compilation of all the necessary data and C
preparation of the necessary documents for disbursement of retiral benefits,
well in advance. The present case arises from Uttar Pradesh and we find that
the Government of Uttar Pradesh has issued insf!"Uctions to the effect that
"the Head Office, or other authority responsible for preparing the pension
papers should initiate the pension case, two years before retirement of the
Government servant. At that stage, the essential information necessary for D
working out the qualifying service should be collected, and the entire service
book and other service records should be examined and completed with a
view to remove deficiencies and imperfections, if any, in the service book/
records. This process should be completed" atleast eight months in advance
of the date of retirement of the Government servant. The actual computation E
and preparation of the pension papers should then start and "any deficiency
or imperfection, or omission which still remains in the service records should
be ignored, and the determination of qualifying service should be proceeded
with on the basis of entries in the service records, whatever the degree of
imperfection to which it might have been possible to bring them by that time".
· "The process of determining the qualifying service and the average emoluments F
and the admissible pension and gratuity should be positively completed
within a period of 2 months and the pension papers sent to the Accountant-
General not later than 6 months before the date of retirement. The said office
is to issue the pension payment order (including the order for the payment
of the Death-cum-retirement gratuity) one month in advance of the date of G
retirement". "It should be ensured that the payment of superannuation pension
commences on the first of the month following the month in which the
government servant retires". This appears to be the clear position in Uttar
Pradesh. ·

We may in this connection also refer to F.R. 58 which relates to H
46 SUPREME COURT REPORTS [1999] 2 S.C.R.

-. A ''preparation of pension papers". It states that "every Hea~ of Office shall
undertake the work of preparation of pension papers in Form 7 two years
before the date. on which the Government servant is due to retire on
superannuation or on the dat~ on which he proceeds on leave pr~paratory
to retirement whichever is earlier". F.R.59 deals with the 'stages for the
B completion ofpension papers•: Sub-clause (l)(a) bears the heading, thefirst
stage, and refers to the verification of service details. There are five parts in
this sub-clause. Sub-clause (l)(b) refers to the secondstage, namely, making
-
good the omissions in the service book. Sub-clause 1(b )(ii) is important and
it states very clearly as follows :

c "Every ·effort shall be made to complete the verification of service, as
in clause (a) and to make good omissions, imperfections or deficiencies
· referred to sub-clause (i) of this. clause. Any omission, imperfections
or deficiencies including the portion of service shown as unverified
in the service book which it. has not been possible to verify in
D accordance with the procedure laid down in clause (a) shall be ignored
and service qualifying for pension shall be determined on the basis
of the entries in the book."

This directive. in the rules is obviously intended to see that once the
period is quite close to 10 months before the retirement of an employee,
E further time is not to be wasted in verifying data which it has not been
possible to verify by following the procedure in sub-clause (l)(a) ofF.R.59.
Sub-clause (l)(c) refers to the third stage and it says that atleast 10 months
before the date of retirement, the Head office shall take various steps by
issuing a Certificate to the government servant and the officer can offer his
F remarks and thereafter, he shall be furnished Form 4 and Form 5 which he
has to fill-up and send to the Head Office atleast 8 months before the date
ofretirement. F.R.60 refers to 'completion ofpension papers' in Part-I of Form
7 atleast 6 months before the date of retirement of the government servant.
F.R.61 deals with the 'Forwarding of Pension Papers to Accounts Officer',
in Form 5 and Form 7 with a covering letter in Form 8 along with service book
G duly completed, upto date, and other documents. This has to be done atleast
6 months before the date of retirement. Rule 63 refers to recovery of amounts
due by the government servant and the particulars in this behalf are to be
sent atleast 2 monihs before the date of retirement, so that the same could
be recovered from the gratuity. F.R.64 deals with provisional pension. F.R.65
H requires the Accounts Officer to assess the amount of pension and gratuity
DR. UMA AGRAWAL v.STATE [M. JAGANNADHA RAO, J.] 47
atleast one month before the date of retirement. F.R.68 requires interest to be A
( paid on delayed payment of gratility. As already stated, in cases of delayed
payment of pension, this Court has levied interest at 12% per annum in
several cases.

We have referred in sufficient detail to the Rules and instructions which B
prescribe the time-schedule for the various steps to be taken in regard to the
payment of pension and other retiral benefits. This we have done to remind
the various governmental departments of their duties in initiating various
steps atleast two years in advance of the date of retirement. If the rules/
instructions are follow~d strictly much of the litigation can be avoided and
retired government servants wiJl Iiot feel harassed because after all, grant of C
pension is not a bounty but a right of the government servant. Government
is obliged to follow the Rules mentioned in the earlier part of this order in
letter and in spirit. Delay in settlement of retiral benefits is frustrating and
must be avoided at all costs. Such delays are occurring even in regard to
family pensions for which too there is a prescribed procedure. This is indeed D
unfortunate. In cases where a retired government servant claims interest for
deliyed payment, the Court can certainly keep in mind the time-scn~dule
- prescribed in the rules/instructions apart from other relevant factors applicable
to each case.

The case before us is a clear example of department delay which is not E
excusable. The petitioner retired on 30.4.1993 and it was only after 12.2.1996
when an interim order was passed in this writ petition that the respondents
woke up and started work by sending a special messenger to various places
where the petitioner had worked. Such an exercise should have started atleast
in 1991, tw~ years before retirement. The amounts due to the petitioner F
were computed and the payments were made only during 1997-98. The
petitioner was a cancer patient and was indeed put to great hardship. Even
assuming that some letters were sent to ·the petitioner after her retirement
on 30.3.1993 seeking information from her, an allegation which is denied by
the petitioner, that cannot be an excuse for the lethargy of the department G
inasmuch as the rules and instructions require these actions to be taken long
before retirement. The exercise which was to be completed long before retirement
was in fact started long after the petitioner's retirement.

Therefore, this is a fit case for awarding interest to the petitioner. We
do not think that for the purpose of the computation of interest, the matter H
48 SUPREME COURT REPORTS [1999] 2 S.C.R.

A should go back. Instead, on the facts of this case, we quantify the interest
payable at Rs.1 lakh and direct that the same shall be paid to the petitioner
within two months from today.

The writ petition is disposed of accordingly. There will be no order as
to costs.
B
N.J. Petition disposed of.