Background Facts

The employee (respondent) retired from government service on 30.04.2011 upon attaining the age of superannuation. At the time of his retirement, an amount of Rs.24,08,922/- was lying deposited in his GPF account. On 07.03.2014, the employee withdrew Rs.15,00,000/- from his GPF account. The balance amount of Rs.10,48,705/- was subsequently released by the office of the Accountant General in 2018.

The employee filed O.A. No.649 of 2019 before the H.P. State Administrative Tribunal. It was transferred to the High Court. The employee sought interest on the GPF amount that remained with the State from 01.05.2011 to 31.10.2018. The Single Judge allowed the petition and directed the State to pay interest as per the prescribed Rules.

Aggrieved by the judgment of the Single Judge, the State filed the Letters Patent Appeal before the High Court of Himachal Pradesh.

It was argued by the State that no interest was payable to the employee as he had not applied for retention of GPF amount beyond the prescribed period of six months in accordance with Rule 11 of the General Provident Fund (Central Services) Rules, 1960. It was further contended that a specific application had to be made by the employee for retention beyond the period of six months. When the State Government allows, the retention could be permitted.

The State further submitted that the recommendation made on 31.10.2017 was beyond the power of the said official. It was further argued by the State that the employee had withdrawn Rs.15,00,000/- on 07.03.2014, and the balance amount was released in 2018, therefore, no interest was payable. Lastly, the State denied the fact that the employee had applied for retention.

On the other hand, it was argued by the employee that the State had itself initiated the process for retention of GPF amount. The employee relied upon the communication dated 18.09.2017, whereby the Executive Engineer had requested the employee to supply the requisite information directly to the office of the Accountant General (A&E) regarding retention of GPF.

Further, the employee also referred to the communication dated 08.09.2017 from the Accountant General asking for details of incumbents whose GPF accounts had been retained. It was submitted that the employee forwarded the requisite information to the Executive Engineer in response to the earlier letter. Therefore, a formal office order was passed on 31.10.2017 by the Executive Engineer permitting retention of the GPF amount beyond the period of six months for an unlimited period. It was further contended that the State had granted validation order and never withdrew it.

Findings and Observations of the Court

It was observed by the Division Bench that the State had admitted that at the time of retirement of the employee, an amount of Rs.24,08,922/- was lying deposited in his account. It was further observed that the case was being processed on account of communication received from the Accountant General's office dated 08.09.2017. Then the communication dated 18.09.2017 was addressed to the employee by the State, and the employee had subsequently replied to the same.

It was further noted by the Bench that the office order dated 31.10.2017 passed by the Executive Engineer, exercising powers under the Central Civil Services (Pension) Rules, 1960, granted permission to retain the GPF accumulation beyond the date of retirement for an unlimited period. It was observed that such order had never been withdrawn at any stage.

It was held by the Division Bench that the State cannot now turn around and say that the order was passed without jurisdiction. It was also noticed that when the employee withdrew Rs.15,00,000/- in 2014, the State had never put the employee to notice that the amount was being retained without formal permission. Therefore, it was concluded by the Court that the State had passed a validation order on 30.10.2017 and had never withdrawn the same.

With the aforesaid observations, the decision of the Single Judge was upheld by the Division Bench. Consequently, the Appeal filed by the State was dismissed by the Division Bench.

Case Name : State of H.P and others vs. Ramesh Chand and another

Case No. : LPA No.438 of 2026

Counsel for the Appellants : Varun Chandel, Additional Advocate General

Counsel for the Respondents : N/A