No.4/18/99-P&PW (D)

Government of India

Ministry of Personnel, Public Grievances & Pensions

(Department of Pension &Pensionersí Welfare)



New Delhi, dated the 14th August 2002







Subject:- Permanent transfer of Govt. servants to Govt. Companies/Corporations Ė grant of retirement benefits to permanent Govt. servants on absorption prior to 16.6.67.



Attention is drawn to the instructions contained in this Dept.ís Office Memorandum No. 4(6)/85-P&PW (D) dated the 3rd January 1995 on the subject cited above.In terms of para 4 of the said Office Memorandum, CPF benefits received in terms of Ministry of Finance O.M. dated 10.11.1960, were to be refunded by the said employee of the Govt. together with interest at the rate applicable to GPF accumulation on the date of such refund and calculated in the same manner as interest on GPF is worked out.


2.††† The above provision had been subject of litigation in various Courts.The CAT, Principal Bench, in its Judgement in one such case, directed that the last four lines of the O.M. dated 3.1.95 regarding the manner and rate of interest at which the amount is refundable is quashed and set aside.The CAT ordered further that simple interest @ 6% or rate applicable to GPF accumulation during that particular year, whichever is less for that year on the refundable amount from the date of payment under O.M. dated 10.11.60 till the date when the refund is made should be charged from the concerned employee.High Court of Delhi upheld the said judgement.In the appeal filed in the Madras High Court against a similar judgement of CAT, Madras, the High Court inter-alia observed that it is only equitable that if the Govt. is to have interest on the Provident Fund amount which the employees had received at the time they left the Govt. Service, the govt. also should pay interest on the pension which, according to itís own policy it was required to pay to those employees for the period of delay in disbursing that pension.


3.††† The modalities of implementing the above stated judgement of the High Court of Delhi were under active consideration of the Govt.In substitution of last 4 lines of this Dept.ís O.M. No. 4(6)/85-P&PW (D) dated 3.1.95, the President is now pleased to decide that CPF benefits received in terms of Ministry of Finance O.M. dated 10.11.60 will have to be refunded by the said employee of the Govt. with interest @ 6% or rate applicable for GPF accumulations during that particular year, whichever is less.Interest on arrears becoming due to an absorbee shall be payable either from 1.4.95 or 3 months from the date of submission of claim of the absorbee, whichever is later.The rate of interest would be 6% or the rate of interest applicable to GPF accumulations during the particular year, whichever is less.


4.††† The pension sanctioning authority viz. Ministry/Dept./Office where the absorbed employee was employed prior to absorption, will have to work out the interest on the CPF accumulation to be refunded by the concerned employee received by him in terms of O.M. dated 10.11.60, in accordance with the above provisions.Wherever higher rate of interest has been charged on CPF accumulation from the concerned absorbee, the excess amount charged from him shall be refunded to the concerned employee.


5.††† This issues with the concurrence of Ministry of Finance, Dept. of Expn. Vide their U.O. Note No. C-62//EV/2002dated 2.8.2002.



(Sujit Datta)

Director (PW)





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