State of Kerala and Others vs M. Padmanabhan Nair

Pension and gratuity are no longer an bounty to be distributed by the Government to its employees on their retirement but have become, under the decisions of this Court valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with the penalty of payment of interest at the current market rate till actual payment

Usually the delay occurs by reason of non-production of the LP.C. (Last Pay Certificate) and the N.LC, (No Liability Certificate) from the concerned Departments but both these documents pertain to matters, records whereof would be with the concerned Government Departments, Since the date of retirement of every Government servant is very much known in advance we fail to appreciate why the process of collecting the requisite information and issuance of these two documents should not be completed at least a week before the date of retirement so that the payment of gratuity amount could be made to the Government servant on the date he retires or on the following day and pension at the expiry of the following month. The necessity for prompt payment of the retirement dues to a Government servant immediately after his retirement cannot be over- emphasised and it would not be unreasonable to direct that the liability to pay penal interest on these dues at the current market rate should commence at the expiry of two months from the date of retirement.

The instant case is a glaring instance of such culpable delay in the settlement of pension and gratuity claims due to the respondent who retired on 19-5-1973. His pension and gratuity were ultimately paid to him on 14-8-1975, L e., more than two years and 3 months-after his retirement and hence after serving lawyer's notice he filed a suit mainly to recover interest by way of liquidated damages for delayed payment The appellants put the blame on the respondent for delayed payment on the ground that he had not produced the requisite LP.C (Last Pay Certificate) from the Treasury Officer under Rule 185 of the Treasury Code. But on a plain reading of Rule 186, the High Court held and in our view rightly that a duty was cast on the Treasury Officer to grant to every retiring Government servant the last pay certificate which in this case had been delayed by the concerned officer for which neither any justification nor explanation had been given. The claim for interest was, therefore, rightly, decreed in respondent's favour.

Unfortunately such claim for interest that was allowed in Respondent s favour by the District Court and confirmed by the High Court was at the rate of 6 per cent per annum though interest at 12 per cent had been claimed by the respondent in his suit However, since the respondent acquiesced in his claim being decreed at 6 per cent by not preferring any cross objections in the High Court it would not be proper for us to enhance the rate to 12 per cent per annum which we were otherwise inclined to grant.

We are also of the view that the State Government is being rightly saddled with a liability for the culpable neglect in the discharge of his duty by the District Treasury Officer who delayed the issuance of the LP.C but since the concerned officer had not been impleaded as a party defendant to the suit the Court is unable to hold him liable for the decretal amount It will, however, be for the State Government .t0.consider whether the erring official should or should not be directed to compensate the Government the loss sustained by it by his culpable lapses. Such action if taken would help generate in the officials of the State Government a sense of duty towards the Government under whom they serve as also a sense of accountability to members of the public.