With respect the Provident Fund reliance is placed on the
judgement of the Supreme Court in Gorakhpur University & Ors. vs. Dr. Shitla Prasad Nagendra & Ors., (2006) 6 SCC 591, wherein the Court held that terminal benefits including Provident Fund cannot be withheld and the same are immune from attachment, deduction or adjustment even against any of the dues from the employee. To the same effect is the
decision of the Division Bench of the Bombay High Court in Ramdas Govind Bakhle vs. Maharashtra State Financial Corporation (2000)SCC OnLine Bom 9, wherein the Court relying on Bhagirathijena vs. Board of Directors, Orissa State Financial Corporation & Ors., (1993) 3 SCC 666, held that no amount from the Provident Fund of an employee can be deducted in the absence of service Regulations providing so and
the Court directed the Respondent therein to release the Provident Fund of the Petitioner.{Para 7}
13. A perusal of the provisions of Rule 7.7 makes it evident that before the Competent Authority can withhold the Leave Encashment of an employee, wholly or partly, a conscious decision must be taken to withhold the Leave Encashment due to the employee on account of there being a possibility of some money becoming recoverable from him, once the Disciplinary Proceedings conclude.
14. While interpreting the said Rule, the Division Bench held as
follows:-
“10. The aforesaid Rule would show that the competent
authority may wholly or partly, withhold leave encashment in
respect of a Government servant who retires on attaining the
age of superannuation, while under suspension or while
undergoing disciplinary or criminal proceedings, provided the
competent authority is of the view that there is a possibility of
some money becoming recoverable from him on the conclusion
of proceedings against him. In the present case, the respondents
have not produced any order to show that a conscious decision
has been taken by the Government to withhold the leave
encashment due to the petitioner upon his retirement, on
account of there being a possibility of some money becoming
recoverable from him on the conclusion of proceedings against
him. The nature of the charge levied against the petitioner also
does not support the withholding of the leave encashment. We
cannot agree with the submissions of learned counsel for the
respondents that if the charge against the petitioner is proved,
it could also have the effect of nullifying the examination
process in which the petitioner is alleged to have manipulated
the marks of some of the candidates. Pertinently, the said
examination took place in the year 2010. It is not the
respondent’s case that any of the successful candidates have
been put to notice in this regard. It is not claimed that the said
examination process has been assailed by any unsuccessful
candidate on account of the alleged misconduct of the
petitioner, or that the same has been set aside, or the challenge
is still pending. We are, therefore, of the view that withholding
of leave encashment of the petitioner is not justified.
IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 3114/2020 & CM 10817/2020
SH. S.B. SINGH Vs NATIONAL TEXTILE CORPORATION
CORAM: HON'BLE MS. JUSTICE JYOTI SINGH
Pronounced on: 17.11.2020
1. By way of the present petition, the Petitioner seeks a direction to
the Respondent to release his retiral benefits amounting to approximately
Rs. 98.98 Lakhs. Broadly classified the retiral benefits sought are under
the following heads:-
a) Gratuity
b) Leave Encashment
c) Provident Fund
2. The facts of the case relevant to the adjudication of the writ
petition are in a narrow compass. Petitioner was an employee of the
Respondent and retired as Chief General Manager (Finance/MIS) on
31.01.2020, after 35 years of service, which according to the Petitioner
was unblemished. On 01.02.2020, a day after his retirement, Petitioner
was served with a scanned copy of a letter dated 31.01.2020 containing
allegations amounting to misconduct regarding a Mega International
event ‘Textile India-2017’, organized by Ministry of Textiles, wherein
Respondent/NTC had participated. A detailed narrative of the file notings
which preceded the issuance of Charge Memo has been given by the
Petitioner but is unnecessary for the adjudication of the issues under
consideration by this Court. Suffice would it be to note that the Charge
Memo was issued under Rule 25 of the National Textile Corporation
Limited Conduct, Discipline and Appeal Rules, 2009 (hereinafter referred
to as ‘Rules, 2009’). In a nutshell, the charges are with respect to the
designing, construction and maintenance of NTC stalls at the Textile
India in 2017 and the allegations against the Petitioner are that
subsequent to the direction of the Director (Finance), Petitioner
recommended to concur with the proposal for construction and
maintenance of the stall, which led to higher cost of the tender and
shortlisting of the party in a haphazard manner. The process which was based on a report of the Tender Evaluation Committee was, as per the allegations, not transparent.
3. As per the Petitioner he was provided 10 days to file a written
Statement of Defence and the relevant file was provided to him on
07.02.2020. Petitioner filed a response to the Charge Memo denying the
charges and on the same date i.e. 14.02.2020 he also moved an
application before the Director (HR)/CNB, NTC Limited, seeking release of his retiral benefits. On 19.02.2020 imputation of charges and the
Annexures-II, III and IV were provided to the Petitioner and the
Petitioner thereafter filed an additional reply on 28.02.2020, wherein he
also requested for a copy of the complaint and the Report of the Chief
Vigilance Officer, which according to the Petitioner is still awaited.
4. Vide e-mail dated 28.04.2020, Petitioner again requested the
Respondent to release his retiral/terminal benefits, but to no avail.
Aggrieved by the non-release of his dues, Petitioner approached this
Court by filing the present petition.
5. Before proceeding further, it is necessary to note two developments
which have taken place during the pendency of the present writ petition.
Firstly, Respondent has released the Employee’s share of the Employees
Provident Fund to the Petitioner amounting to Rs. 42.89 Lakhs. Secondly,
learned counsel for the Petitioner, on instructions, gave a statement that
the Petitioner would not press the relief for release of Gratuity, at this
stage, pending the Disciplinary proceedings, reserving, however, his right
to claim Gratuity at the appropriate stage, in accordance with law. In view
of this, the disputes between the parties have narrowed down only to
release of the Leave Encashment and the Employer’s share of Provident
Fund to the Petitioner and on both these counts the Respondent has
contested the petition.
6. Learned counsel for the Petitioner contends that the Petitioner has
served the Respondent dedicatedly for a period of 35 years, without any
blemish in his entire tenure and his Appraisal Record has been
outstanding. The charges leveled against the Petitioner are false and
baseless and the Disciplinary Proceedings deserve to be dropped. Without prejudice, however, to the said contention, learned counsel argues that
even if the Disciplinary Proceedings are pending, Respondent is not
legally entitled to withhold Leave Encashment and the Employer’s share
of the Provident Fund. It is argued that the Supreme Court in State of
Jharkhand v. Jitendra Kumar Srivastava (2013) 12 SCC 210, has held
that terminal benefits are not bounties of the State and an employee is entitled to the benefits on account of rendering service with the employer and have been held to the property of an employee under Article 300(A) of the Constitution of India, which cannot be taken away without
following the due process of law. Unless there exists a Statutory Rule
which enables the employer to withhold the terminal benefits of an
employee, the same cannot be withheld.
7. With respect the Provident Fund reliance is placed on the
judgement of the Supreme Court in Gorakhpur University & Ors. vs. Dr.
Shitla Prasad Nagendra & Ors., (2006) 6 SCC 591, wherein the Court
held that terminal benefits including Provident Fund cannot be withheld
and the same are immune from attachment, deduction or adjustment even
against any of the dues from the employee. To the same effect is the
decision of the Division Bench of the Bombay High Court in Ramdas
Govind Bakhle vs. Maharashtra State Financial Corporation (2000)
SCC OnLine Bom 9, wherein the Court relying on Bhagirathijena vs.
Board of Directors, Orissa State Financial Corporation & Ors., (1993)
3 SCC 666, held that no amount from the Provident Fund of an employee
can be deducted in the absence of service Regulations providing so and
the Court directed the Respondent therein to release the Provident Fund of the Petitioner.
8. In so far as the relief of Leave Encashment is concerned, learned
counsel submits that in Satya Prakash vs. Chairman Cum Managing
Director, Bharat Sanchar Nigam Ltd. & Ors., (2019) SCC OnLine Del
8039 this Court has granted Leave Encashment to the Petitioner, along
with interest, holding that there has to be a conscious decision to withhold
the Leave Encashment of an employee, upon his retirement, on account
of there being a possibility of some money becoming recoverable from
him, on conclusion of the Disciplinary Proceedings. Reliance is also
placed on a judgement of another Division Bench of this Court in Govt.
of NCT of Delhi Through Chief Secretary and Anr. vs. Prem Nath
Manchanda (2018) SCC OnLine Del 13066 and in Ashok Kumar
Ahluwalia vs. The Chairman & Managing Director National Fertilizers
Limited (2014) SCC OnLine Del 2712, where the observations of the
Court are to the same effect. Learned counsel also places reliance on a
judgement of the Three Judge Bench of the Punjab and Haryana High
Court in Punjab State Civil Supplies Corpn. Ltd. & Ors. vs. Pyare Lal,
(2014) SCC OnLine P&H 15012, where, according to the counsel, Court
has clearly held that withholding of retiral benefits can only be under the
applicable Rules and in the absence of any such enabling Rule, the
benefits including Leave Encashment cannot be withheld. The said
judgement was followed in another case by the Punjab and Haryana High
Court in Pawan Kumar vs. The Registrar, Punjab State Co-Operative
Societies & Ors. (2018) SCC OnLine P&H 1677.
9. Per contra learned counsel for the Respondent contends that the
Petitioner is neither entitled to release of Leave Encashment nor the
Employer’s share of the Provident Fund. It is argued that the Petitioner’s employment is governed by Rules, 2009 and Rule 25.13 of the National Textile Corporation Ltd. Conduct, Discipline and Appeal Rules, 2009
(herein after referred to as ‘CDA Rules’) specifically provides that an
employee, against whom Disciplinary Proceedings are pending, shall not
be entitled to payment of retiral benefits till the Proceedings are complete.
While Rule 25.13.1 permits continuation of Disciplinary Proceedings if
instituted when the employee is in service, Rule 25.13.3 enables the
Respondent to initiate Disciplinary Proceedings against an employee even
after his retirement, in respect of prima facie established
lapses/misconduct while he was in service for a grave misconduct in
respect of any event which took place not more than four years earlier. It
is contended that in view of the provisions of the said Rules, Respondent
thus has the right and power to withhold terminal benefits during the
pendency of Disciplinary Proceedings.
10. With regard to Leave Encashment, it is argued that Rule 7.7 of the
NTC Leave Rules, 2015 entitles the Authority competent to grant leave,
to withhold whole or part of the cash equivalent to Earned leave, in case
of an employee, who retires from service on superannuation, if
Disciplinary Proceedings are pending against him, in view of the
possibility of some money becoming recoverable from him. Reliance is
placed on the judgement of this Court in J.P. Mahajan vs. Governing
Body Kirori Mal College Delhi and Ors. 2019 VII AD (Delhi) 611,
wherein all the three claims of the Petitioner therein i.e. Gratuity,
Employer’s Contribution to PF and Leave Encashment were rejected in
view of the applicable service Rules. It is thus contended that since the Disciplinary Proceedings are pending the Petitioner is only entitled to release of the Employee’s share of the PF, which stands disbursed to the Petitioner and the Employer’s share being a retiral benefits falling under Rule 25.13.2 of the CDA Rules cannot be released till the Disciplinary Proceedings culminate into exoneration of the Petitioner.
11. I have heard the learned counsels for the parties and examined their
rival contentions.
12. The first issue that arises before the Court is with regard to the
entitlement of the Petitioner to Leave Encashment. For considering the said issue it is important to examine the applicable service Rule. Rule 7.7 of the NTC Leave Rules, 2015 deals with the power of the Competent Authority to withhold whole or part of cash equivalent to Earned leave, in the circumstances mentioned in the Rule. Rule 7.7 is as follows:-
“The authority competent to grant encashment of leave may
withhold whole or part of cash equivalent of earned leave in
case of any employee who retires from service on attaining the
age of superannuation while under suspension or while
disciplinary or criminal proceedings are pending against him if
in the view of such authority there is possibility of some money
becoming recoverable from him on conclusion of the
proceedings against him. On conclusion of the proceedings he
will become eligible to the amount withheld after adjustment of
the Company’s dues if any.”
13. A perusal of the provisions of Rule 7.7 makes it evident that before
the Competent Authority can withhold the Leave Encashment of an
employee, wholly or partly, a conscious decision must be taken to
withhold the Leave Encashment due to the employee on account of there
being a possibility of some money becoming recoverable from him, once the Disciplinary Proceedings conclude. A Division Bench of this Court in Satya Prakash (supra) had the occasion to interpret Rule 39 (3) of the CCS (Leave) Rules, 1972 which is pari materia to Rule 7.7, governing the parties in the present case. For a ready reference Rule 39 (3) of the
CCS (Leave) Rules, 1972 is extracted hereunder:-
"Rule 39: Leave/Cash payment in lieu of leave beyond the date
of retirement, compulsory retirement or quitting of service.
(3) The authority competent to grant leave may withhold whole
or part of cash equivalent of earned leave in the case of a
Government servant who retires from service on attaining the
age of retirement while under suspension or while disciplinary
or criminal proceedings are pending against him, if in the view
of such authority there is a possibility of some money becoming
recoverable from him on conclusion of the proceedings against
him. On conclusion of the proceedings, he will become eligible
to the amount so withheld after adjustment of Government dues,
if any."
14. While interpreting the said Rule, the Division Bench held as
follows:-
“10. The aforesaid Rule would show that the competent
authority may wholly or partly, withhold leave encashment in
respect of a Government servant who retires on attaining the
age of superannuation, while under suspension or while
undergoing disciplinary or criminal proceedings, provided the
competent authority is of the view that there is a possibility of
some money becoming recoverable from him on the conclusion
of proceedings against him. In the present case, the respondents
have not produced any order to show that a conscious decision
has been taken by the Government to withhold the leave
encashment due to the petitioner upon his retirement, on
account of there being a possibility of some money becoming
recoverable from him on the conclusion of proceedings against
him. The nature of the charge levied against the petitioner also
does not support the withholding of the leave encashment. We
cannot agree with the submissions of learned counsel for the
respondents that if the charge against the petitioner is proved,
it could also have the effect of nullifying the examination
process in which the petitioner is alleged to have manipulated
the marks of some of the candidates. Pertinently, the said
examination took place in the year 2010. It is not the
respondent’s case that any of the successful candidates have
been put to notice in this regard. It is not claimed that the said
examination process has been assailed by any unsuccessful
candidate on account of the alleged misconduct of the
petitioner, or that the same has been set aside, or the challenge
is still pending. We are, therefore, of the view that withholding
of leave encashment of the petitioner is not justified.
11. We, accordingly, allow the petition partially by directing
the respondent to pay the petitioner his leave encashment dues
along with interest at the rate of 8% per annum from the date
the same became due, till payment.”
15. Another Division Bench of this Court in Prem Nath (supra)
dealing with a similar issue in the context of Rule 39 (3) of the CCS
(Leave) Rules, 1972 held as under:-
“7. It is undisputed that the respondent retired from service on
31.08.2010 on attaining the age of superannuation and that at
the time of his retirement, or immediately thereafter, leave
encashment was not released to him. There is also no dispute
on the proposition that leave encashment can be withheld under
Rule 39 (3) of CCS (Leave) Rules, 1972, if at the time of
retirement, an employee is under suspension or disciplinary or
criminal proceedings are pending against him. However, a
reading of the said provision clearly shows that in order to
withhold the leave encashment in whole or in part, the authority
competent to grant leave has to pass an order specifically
withholding the encashment, if in its view there is a possibility
of some money becoming recoverable from the employee on
conclusion of the proceedings against him. The extract of Rule
39 (3) is reproduced here-in-under for ready reference:
"Rule 39: Leave/Cash payment in lieu of leave beyond
the date of retirement, compulsory retirement or
quitting of service,
(3) The authority competent to grant leave may
withhold whole or part of cash equivalent of earned
leave in the case of a Government servant who retires
from service on attaining the age of retirement while
under suspension or while disciplinary or criminal
proceedings are pending against him, if in the view of
such authority there is a possibility of some money
becoming recoverable from him on conclusion of the
proceedings against him. On conclusion of the
proceedings, he will become eligible to the amount so
withheld after adjustment of Government dues, if
any."
8. Learned counsel for the respondent vehemently submitted
that no such order was passed by the competent authority and
the learned counsel for the petitioners was not able to rebut the
said fact. Consequently, the petitioners herein could not have
withheld the leave encashment and the money ought to have
been released to the respondent soon after his retirement. We
also do not agree with the submissions of the learned counsel
for the petitioners that only because there is no Rule for grant
of interest of leave encashment, the respondent would not be
entitled to the same. Learned counsel has not been able to point
out any rule to the contrary, which creates a bar for grant of
interest in case due amount is released after a considerable
delay. It has been clearly held by the Apex Court in several
judgments including S.K.Dua vs. State of Haryana & Anr.,
(2008) 3 SCC 44 that if there are Statutory Rules or
Administrative Instructions occupying the field, an employee
could claim payment of interest relying on such rule, but even
in the absence of any Statutory Rules or Administrative
Instructions or Guidelines, an employee can claim interest
under Part-III of the Constitution relying on Articles 14, 19 and
21 of the Constitution of India. In this regard, we also rely on a
decision passed by the Division Bench of this Court in Writ
Petition (C) No.1186/2012, titled as ‘Government of NCT of
Delhi vs. S.K.Srivastava’. This judgment also supports our view
that if no order is passed under Rule 39(3) of Leave Rules, the
leave encashment cannot be withheld. The fact of the matter is
that the petitioners are retaining the money of the respondent
from the year 2010 to 2015 and the respondent is, thus, clearly
entitled to interest on the delayed payment. Interest is awarded
to compensate the recipient for the falling value of money due
to inflation. In so far as, the plea of the petitioners that serious
cases were pending against the respondent and, therefore, the
leave encashment was not released is concerned, the same has
no merit either. Although neither the petitioners nor the
respondent have been able to throw any light on the status of
the criminal and disciplinary proceedings as of today, however,
if this was the reason for withholding the leave encashment
then the same status continues perhaps even today. The reason
given for releasing the leave encashment in 2015 is an order
passed by the Public Grievances Commission. We fail to
understand that if the petitioners were withholding the leave
encashment due to pending proceedings then they had the
remedy of not implementing the order of the Public Grievances
Commission. However, having complied with that order and
released the leave encashment, the petitioners cannot be heard
to say that the leave encashment was withheld due to pending
proceedings. Learned tribunal has, thus, rightly come to
conclusion that the respondent deserves interest at the GPF
rate for the delayed payment of leave encashment.”
16. It is thus clear that if no order is passed by the Competent
Authority as envisaged in Rule 7.7 to consciously withhold the whole or part of cash equivalent to the Earned leave on there being a possibility of some recovery from the employee, Leave Encashment cannot be withheld. In the present case during the course of arguments on a pointed query by the Court, learned counsel for the Respondent could not bring to the notice of the Court any such conscious decision by the Respondent to withhold the benefits and, thus, in my view, merely relying on the power available to the Competent Authority under Rule 7.7 cannot inure to the
advantage of the Respondent. The Petitioner in my view is thus entitled to release of Leave Encashment benefits.
17. In so far as the claim of the Petitioner for the Employer’s share of
PF is concerned, Respondent has vehemently opposed the release of the
same by placing reliance on Rule 25.13.2 of the CDA Rules. The
argument is that the employer’s share falls in the category of retirement
benefits and therefore by virtue of the said Rule, once the employer has
the power to initiate disciplinary proceedings after retirement, the benefits
can be withheld. Reliance is also placed on the judgment of the Supreme
Court in Chairman-Cum-Managing Director, Mahanadi Coalfields
Limited vs. Rabindranath Choubey, 2020 SCC OnLine SC 470 as well
as a judgment of the Coordinate Bench in J.P. Mahajan (supra). Learned
counsel for the Petitioner on the other hand argues that the Employer’s
share of PF cannot be treated on the same pedestal as Gratuity or other
retirement benefits as there is no provision under the CDA Rules to
withhold the said benefit.
18. In my view there is no merit in this contention of the learned
counsel for the Respondent. Rules 25.13.1 to Rule 25.13.3 are as under:
“25.13 Continuation of inquiry beyond Superannuation:
25.13.1 Disciplinary proceedings, if instituted while
the employee was in service whether before
his retirement or during his reemployment
shall, after the final retirement of the
employee, be deemed to be subsisting
proceedings and shall be continued and
concluded by the authority by which it was
commenced in the same manner as if the
employee had continued in service.
25.13.2 In such cases, the employee will cease to be in
the services of the Corporation from the date
of superannuation/retirement and will not be
eligible for salary or any other benefits from
the date following the date of superannuation
/ retirement. He will also not be entitled to the
payment of retirement benefits till the
proceedings are completed and final order is
passed thereon, except his own contribution
to the Contributory Provided Fund.”
25.13.3 “Initiation of Disciplinary Proceedings after
Retirement:
Disciplinary proceedings, if not initiated by
the employee was in service shall be initiated
against an employee in respect of prima facie
established lapses/misconduct after
retirement in respect of grave misconduct in
respect of any event which took place more
than 4 years earlier.”
19. Rule 25.13.1 deals with the continuation of the disciplinary
proceedings, if instituted while the employee was in service, whether
before his retirement or during his re-employment. It prescribes that the said proceedings when instituted before the retirement shall be deemed to be subsisting and shall be continued and concluded as if the employee had continued in service. Rule 25.13.2 significantly begins with the words “in such cases” and stipulates that the employee will cease to be in service from the date of superannuation and will not be eligible for salary or any other benefits after the said date. He will also not be entitled to retiral benefits till the completion of the proceedings and passing of the final order thereon except his own contribution to the Contributory Provident Fund. It is clear that the prohibition envisaged in Rule 25.13.2 for receiving the retiral benefits including the Employer’s contribution to the PF, is clearly relatable to Rule 25.13.1. Rule 25.13.3, on the other hand deals with initiation of disciplinary proceedings after retirement of
the employee and permits the initiation with respect to a lapse or a
misconduct relating to an event which took place up to 4 years prior to
the initiation of the proceedings. There is no rider or prohibition attached
to Rule 25.13.3 unlike the one attached to Rule 25.13.1 and therefore, in
the absence of any Rule prohibiting the entitlement of an employee to the
Employer’s share of PF, if the disciplinary proceedings are initiated after
retirement, the employee cannot be deprived of the said benefit.
20. It is to be noted that this distinction is also recognized by the
Supreme Court in the case of Chairman-Cum-Managing Director,
Mahanadi Coalfields Limited (supra), relied upon heavily by the
Respondent. This is borne out from a reading of the following passages
from the said judgment:
“26. Indisputably, the respondent was governed by the CDA
Rules. Therefore, Rules 34.2 and 34.3 of the CDA Rules shall
be applicable and the respondent-employee shall be governed
by the said provisions. Rule 34 permits the management to
withhold the gratuity during the pendency of the disciplinary
proceedings. Rule 34.2 permits the disciplinary proceedings to
be continued and concluded even after the employee has
attained the age of superannuation, provided the disciplinary
proceedings are instituted while the employee was in service. It
also further provides that such disciplinary proceedings shall
be deemed to be the proceedings and shall be continued and
concluded by the authority by which it was commenced in the
same manner as if the employee had continued in service.
Therefore, as such, on a fair reading of Rule 34.2 of the CDA
Rules, an employee shall be deemed to be continued in service,
after he attains the age of superannuation/retired, for the
limited purpose of continuing and concluding the disciplinary
proceedings which were instituted while the employee was in
service. Therefore, at the conclusion of such disciplinary
proceedings any of the penalty provided under Rule 27 of the
CDA Rules can be imposed by the authority including the order
of dismissal. If the submission on behalf of the employee that
after the employee has attained the age of superannuation
and/or he has retired from service, despite Rule 34.2, no order
of penalty of dismissal can be passed is accepted, in that case,
it will be frustrating permitting the authority to continue and
conclude the disciplinary proceedings after retirement. If the
order of dismissal cannot be passed after the employee has
retired and/or has attained the age of superannuation in the
disciplinary proceedings which were instituted while the
employee was in service, in that case, there shall not be any
fruitful purpose to continue and conclude the disciplinary
proceedings in the same manner as if the employee had
continued in service.
27. It is true that while considering the very provisions of the
CDA Rules, namely, Rule 34.2 and Rule 34.3 of the CDA Rules,
this Court in the case of Jaswant Singh Gill (supra) has
observed and held that once the employee is permitted to retire
on attaining the age of superannuation, thereafter no order of
dismissal can be passed. However, for the reasons stated
hereinabove, we are not in agreement with the view taken by
this Court in the case of Jaswant Singh Gill (supra). As
observed hereinabove, if no major penalty is permissible after
retirement, even in a case where the disciplinary proceedings
were instituted while the employee was in service, in that case,
Rule 34.2 would become otiose and shall be meaningless. On
the contrary, there is a decision of three Judge Bench of this
Court in the case of Ram Lal Bhaskar (supra) taking just a
contrary view. In the case of Ram Lal Bhaskar (supra), Rule
19(3) of the State Bank of India Officers Service Rules, 1992
came up for consideration which was pari materia with Rule
34.2 of the CDA Rules. The said Rule 19(3) of the State Bank of
India Officers Service Rules, 1992 also permits the disciplinary
proceedings to continue even after the retirement of an
employee if those were instituted when the delinquent employee
was in service. In that case, chargesheet was served upon the
respondent before his retirement. The proceedings continued
after his retirement and were conducted in accordance with the
relevant rules where charges were proved. Punishment of
dismissal was imposed. The High Court allowed the petition
and quashed the order of dismissal. This Court reversed the
said decision of the High Court. In the said decision, it was
specifically observed by this Court while considering the pari
material provisions that in case disciplinary proceedings under
the relevant rules of service have been initiated against an
officer before he ceased to be in the bank's service by the
operation of, or by virtue of, any of the rules or the provisions
of the Rules, the disciplinary proceedings may, at the discretion
of the Managing Director, be continued and concluded by the
authority by whom the proceedings were initiated in the manner
provided for in the Rules as if the officer continues to be in
service, so however, that he shall be deemed to be in service
only for the purpose of the continuance and conclusion of such
proceedings. In the said decision, this Court also took note of
another decision of this Court in the case of Rajinder Lal
Capoor (supra) and it is observed even in the said decision that
the UCO Bank Officer Employees' Service Regulations, 1979
which were also pari materia to the SBI Rules as well as the
CDA Rules, could be invoked only when the disciplinary
proceedings had been initiated prior to the delinquent officer
ceased to be in service. It is to be noted that Jaswant Singh Gill
(supra) was a judgment delivered by a two Judge Bench and the
judgment in the case of Ram Lal Bhaskar (supra) is a judgment
delivered by a three Judge Bench. Under the circumstances and
even otherwise for the reasons stated above and in view of Rule
34.2 of the CDA Rules, even a retired employee who was
permitted to retire on attaining the age of superannuation can
be subjected to major penalty, provided the disciplinary
proceedings were initiated while the employee was in service.
28. Once it is held that a major penalty which includes the
dismissal from service can be imposed, even after the employee
has attained the age of superannuation and/or was permitted to
retire on attaining the age of superannuation, provided the
disciplinary proceedings were initiated while the employee was
in service, sub-section 6 of Section 4 of the Payment of Gratuity
Act shall be attracted and the amount of gratuity can be
withheld till the disciplinary proceedings are concluded.
29. Even otherwise, Rule 34.3 of the CDA Rules permits
withholding of the gratuity amount during the pendency of the
disciplinary proceedings, for ordering recovering from gratuity
of the whole or part of any pecuniary loss caused to the
company if have been guilty of offences/misconduct as
mentioned in subsection 6 of Section 4 of the Payment of
Gratuity Act, 1972 in the event of delayed payment in the case
of an employee who is fully exonerated. Rule 34.3 of the CDA
Rules is in consonance with subsection 6 of Section 4 of the
Payment of Gratuity Act and there is no inconsistency between
sub-section 6 of Section 4 of the Payment of Gratuity Act and
Rule 34.3 of the CDA Rules. Therefore Section 14 of the Act
which has been relied upon shall not be applicable as there is
no inconsistency between the two provisions.
30. It is required to be noted that in the present case the
disciplinary proceedings were initiated against the respondentemployee
for very serious allegations of misconduct alleging
dishonestly causing coal stock shortages amounting to Rs.
31.65 crores and thereby causing substantial loss to the
employer. Therefore, if such a charge is proved and punishment
of dismissal is given thereon, the provisions of sub- section 6 of
Section 4 of the Payment of Gratuity Act would be attracted and
it would be within the discretion of the appellant-employer to
forfeit the gratuity payable to the respondent. Therefore, the
appellant-employer has a right to withhold the payment of
gratuity during the pendency of the disciplinary proceedings.”
21. It is also evident from reading of the judgment that the Court had
relied on specific Rule 34.3 of the CDA Rule which permitted
withholding of the gratuity amount during the pendency of the
disciplinary proceedings in view of Sub-Section (6) of Section 4 of the
Payment of Gratuity Act, 1972. It is on account of the said Rule and the
provisions of the Gratuity Act that the Court had declined to release the
gratuity to the Respondent therein.
22. In the present case it is an undisputed fact that the Petitioner retired
on superannuation on 31.01.2020 and till that time no charge sheet was
issued to him. Post his retirement the Petitioner was served with the
Memorandum of Charge on 01.02.2020. The two-fold reasons that
weighed with the Supreme Court in Chairman-Cum-Managing Director,
Mahanadi Coalfields Limited (supra) being (i) pending disciplinary
proceedings at the time of retirement, and (ii) specific provision under the
CDA Rules as well as payment of Gratuity Act, are conspicuously absent
in the present case. Respondent has not been able to point out any Rule
under the CDA Rules or any other Statutory Enactment which disentitles
the Petitioner for grant of the Employer’s share of PF. As already noted
above, reliance on Rule 25.13.2 is misconceived in the facts of the
present case. In so far as reliance by the Respondent in J.P. Mahajan
(supra) is concerned, suffice would it be to note, that the Coordinate
Bench has not specifically dealt with the issue of Employer’s Provident
Fund and therefore there is no finding or observation to support the case
of the Respondent.
23. For all the aforesaid reasons the writ petition is partly allowed.
Respondent is directed to release the amounts due to the Petitioner
towards Leave Encashment and Employer’s share of the Provident Fund
within a period of four weeks from today. In so far as the claim of the
Petitioner for Gratuity is concerned it is left open to be agitated on the
conclusion of the disciplinary proceedings and subject to its outcome.
24. CM 10817/2020, seeking release of gratuity amount of Rs.20
lakhs, is also disposed of accordingly.
JYOTI SINGH, J
NOVEMBER 17th, 2020
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