Management Cannot Deny Interest On Delayed Payment Of Ex-gratia Amount For Mistake Committed By Its Official: Central Administrative Tribunal, Allahabad

Brief Facts:

The matter pertained to the death of the husband of the first applicant, who was a serving SDE (MS) at the office of TDM, Jaunpur. He died in a serious accident while traveling to the office in a departmental vehicle. The family pension case was settled in 2011, and subsequent to her husband's death, the first applicant moved an application in 2016 for ex-gratia payment. Despite a delay of over nine years, the payment order was made in 2018 and released in 2020. The applicants approached the Central Administrative Tribunal, Allahabad (“Tribunal”).

The applicants contended that they are entitled to interest on the delayed payment of both ex-gratia and family pension. They argued that the delay in payment of ex-gratia and family pension warranted the payment of interest from the due date until the actual disbursement. They contended that the husband's death in service necessitated financial support for the family, and the delayed payments have caused undue hardship.

On the other hand, the Management vehemently opposed the claim for interest, stating that there is no provision for such payments on ex-gratia amounts. It argued that upon receiving the application, it promptly scrutinized the matter and made the payment without any undue delay. It argued that since the application for ex-gratia payment was made in 2016, there was no delay attributable to it, and therefore, it cannot be held responsible for paying interest on the ex-gratia amount.

Observations by the Tribunal:

The Tribunal noted that the ex-gratia amount was credited to the applicant's bank account on 24th November 2020. It observed that dependents of deceased employees are entitled to interest on delayed payments of ex-gratia pension and pension/family pension. Furthermore, it held that applicants cannot deny interest on delayed payments of ex-gratia amounts due to mistakes or delays on Management part. It held that if the delay in payments is not caused by the applicant but is attributable to the Management, it's only fair that the applicant is not disadvantaged financially. It emphasized that the Management is obligated to provide interest on ex-gratia compensation in line with their own policies, and the family of the deceased employee need not produce additional evidence or assert a separate claim.

Addressing the Management's argument regarding the absence of a specific rule governing the payment of interest on ex gratia compensation, the Tribunal highlighted that interest must be paid when the Management fail to fulfill their obligations as per their own rules.

Therefore, the Tribunal directed the Management to pay simple interest at a rate of 6% per annum on the ex-gratia compensation and the difference of provisional family pension from 4th June 2011 till the date of actual disbursement, i.e., 24th November 2020.

Case Title: Shakuntala Devi and Anr vs Union of India and Others.

Case Number: Original Application No. 330/00766/2021

Advocate for the Applicants: Shri Deepak Maurya/Shri Udai Chandani

Advocate for the Respondent: Shri D.S. Shukla

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