Supreme Court: CCS Pension Rules | Gratuity Can Be Withheld During Pendency Of Criminal Or Disciplinary Proceedings Against Employee

The Appellant contends that the expression "departmental or judicial proceedings" in Rule 69(1)(c) must be construed to mean that gratuity becomes payable upon the conclusion of either set of proceedings.

12. Such a submission totally misapprehends the nature of the Rule. As the learned Single Judge had rightly noted at the first instance, Rule 69(1)(c) operates as an 'embargo' or a statutory bar, not as an enabling provision. The use of the ordinary disjunctive "or" expands the scope of this bar, indicating that gratuity shall not be paid so long as either departmental or judicial proceedings are pending. 

13. Rule 69(1)(c) of the 1972 Rules has a wide import and operates in respect of any proceeding that may be pending against an employee at the time of retirement; indeed, the breadth of the provision reflects its protective character. If the Appellant's interpretation were accepted, an employee could contend that once any one set of proceedings against him/her stands concluded, the embargo stands lifted and gratuity must be released. This would altogether defeat the purpose of the provision, which is to safeguard the financial interests of the State.

14. Even in the instant case, where both the proceedings stem from identical allegations, their nature, scope, and standard of proof remain fundamentally different. By way of illustration, let us consider if the converse were true i.e., the criminal case against the Appellant had concluded in an acquittal due to failure to establish guilt beyond reasonable doubt. It would nevertheless be possible that the Appellant was eventually found liable in the pending departmental proceedings on a preponderance of probabilities. An acquittal in that case could not be determinative. If such an approach is impermissible in one direction, it cannot be countenanced in the other either. Moreover, this distinction assumes increased significance in the instant case, as the Inquiry Officer had expressly noted that the matter was sub judice and any definitive conclusion would rest on the outcome of the criminal trial.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 14669 of 2025

Decided On: 07.04.2026

Bikram Chand Rana Vs. Himachal Pradesh Road Transport Corporation

Hon'ble Judges/Coram:

Prashant Kumar Mishra and V.M. Pancholi, JJ.

Author: Prashant Kumar Mishra, J.

Citation: 2026 INSC 326,MANU/SC/0322/2026

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Supreme Court : Motor accident claim tribunal can not allow deductions from the amount of compensation on account of insurance, pensionary benefits, gratuity or grant of employment to a kin of the deceased

 The law is well settled that deductions cannot be allowed from the amount of compensation either on account of insurance, or on account of pensionary benefits or gratuity or grant of employment to a kin of the deceased. The main reason is that all these amounts are earned by the deceased on account of contractual relations entered into by him with others. It cannot be said that these amounts accrued to the dependents or the legal heirs of the deceased on account of his death in a motor vehicle accident. The claimants/dependents are entitled to 'just compensation' under the Motor Vehicles Act as a result of the death of the deceased in a motor vehicle accident. Therefore, the natural corollary is that the advantage which accrues to the estate of the deceased or to his dependents as a result of some contract or act which the deceased performed in his life time cannot be said to be the outcome or result of the death of the deceased even though these amounts may go into the hands of the dependents only after his death. {Para 12}

13. As far as any amount paid under any insurance policy is concerned whatever is added to the estate of the deceased or his dependents is not because of the death of the deceased but because of the contract entered into between the deceased and the insurance company from where he took out the policy. The deceased paid premium on such life insurance and this amount would have accrued to the estate of the deceased either on maturity of the policy or on his death, whatever be the manner of his death. These amounts are paid because the deceased has wisely invested his savings. Similar would be the position in case of other investments like bank deposits, share, debentures etc.. The tort-feasor cannot take advantage of the foresight and wise financial investments made by the deceased.

14. As far as the amounts of pension and gratuity are concerned, these are paid on account of the service rendered by the deceased to his employer. It is now an established principle of service jurisprudence that pension and gratuity are the property of the deceased. They are more in the nature of deferred wages. The deceased employee works throughout his life expecting that on his retirement he will get substantial amount as pension and gratuity. These amounts are also payable on death, whatever be the cause of death. Therefore, applying the same principles, the said amount cannot be deducted.

15. As held by the House of Lords in Perry v. Cleaver MANU/UKHL/0008/1969 : 1969 ACJ 363 the insurance amount is the fruit of premium paid in the past, pension is the fruit of services already rendered and the wrong doer should not be given benefit of the same by deducting it from the damages assessed.

 IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 10588-89 of 2018.

Decided On: 12.10.2018

Sebastiani Lakra and Ors. Vs. National Insurance Company Ltd. and Ors.

Hon'ble Judges/Coram:

Madan B. Lokur, S. Abdul Nazeer and Deepak Gupta, JJ.

Author: Deepak Gupta, J.

Citation:  MANU/SC/1162/2018,(2019) 17 SCC 465.

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Whether government is liable to pay interest if there is delay in payment of gratuity?

 The respondents are directed to pay to the petitioner

the amount of gratuity of Rs.10 lakhs within a period of

10 weeks from the date of receipt of copy of this order.

Since the petitioner superannuated on 14.06.2013 and

the amount of gratuity has been wrongfully withheld by

the respondents, the petitioner shall be entitled to

interest at the rate of 9% from the date of his

superannuation till the date of actual payment. {Para 10}

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 4452 of 2019

ASHVINKUMAR RAMNIKLAL JANI Vs STATE OF GUJARAT

CORAM: MR. JUSTICE BIREN VAISHNAV

Date : 19/04/2022

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Bombay HC: The Claim tribunal should not deduct from deceased's salary towards insurance, pensionary benefits, gratuity while awarding compensation for a motor accident

 In my view, the assessment of compensation made by

the Tribunal is against the settled position in law. It is well settled

position in law that except the statutory deduction to be made

towards income tax, professional tax, no other deduction is

permissible under law. The deduction from salary of the deceased towards insurance, pensionary benefts, gratuity or grant of employment to kin of deceased is not permissible. In this context, the learned counsel for the appellant has placed reliance upon the decision in the case of Sebastiani Lakra & others v. National Insurance Company Ltd. & another reported at 2018 ALL SCR 2175 wherein the Apex Court has observed in paragraph nos.12 to16 as under:-

“12. The law is well settled that deductions cannot be

allowed from the amount of compensation either on

account of insurance, or on account of pensionary

benefts or gratuity or grant of employment to akin of the

deceased. The main reason is that all these amounts are

earned by the deceased on account of contractual

relations entered into by him with others. It cannot be

said that these amounts accrued to the dependents or

the legal heirs of the deceased on account of his death in

a motor vehicle accident. The claimants/dependents are

entitled to ‘just compensation’ under the Motor Vehicles

Act as a result of the death of the deceased in a motor

vehicle accident. Therefore, the natural corollary is that

the advantage which accrues to the estate of the

deceased or to his dependents as a result of some

contract or act which the deceased performed in his life

time cannot be said to be the outcome or result of the

death of the deceased even though these amounts may

go into the hands of the dependents only after his death. {Para 13}

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

BENCH AT AURANGABAD

FIRST APPEAL NO.754 OF 2012

Anita  Arun Memane, Vs  The Maharashtra State Road Transport Corporation,

CORAM: V.L. ACHLIYA, J.

Dated : 24.07.2020

Citation: 2021(2) MHLJ 396

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Whether the employer can refuse to pay the amount of provident fund and leave encashment to the employee if he had issued the charge sheet of departmental enquiry to him after retirement?

  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

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Whether government is liable to pay interest to government servant on gratuity if there is delay in payment of gratuity?

In State of U.P. and others v. Dhirendra Pal Singh, MANU/SC/1479/2016 : 2016(4) UPLBEC 2881, the Apex Court relying upon State of Kerala and others v. M. Padmanabhan Nair, MANU/SC/0296/1984 : (1985) 1 SCC 429, held that the pension and gratuity are no longer bounty to be distributed by the Government to its employees but rather valuable rights in their hands and any culpable delay in distribution thereof must visit with penalty with interest.

19. In Y.K. Singla v. Punjab National Bank and others, MANU/SC/1109/2012 : (2013) 3 SCC 472, the Apex Court, after discussing the issue relating to interest payable on the amount of gratuity not paid within time, directed that interest at the rate of 8% per annum shall be paid on the amount of gratuity.

20. In view of the above decision, as there was no justification on the part of the respondents for withholding the payment of 90% of the enhanced gratuity admissible to the petitioner, we are of the opinion that the petitioner is entitle to be compensated for the loss by way of payment of interest. Accordingly, the communications dated 6.9.2012 and 13.12.2012 (Annexures 5 and 7 to the writ petition) stand quashed and the respondents are directed to pay 90% of the enhanced gratuity to the petitioner with interest at the rate of 8% per annum from the date the enhanced gratuity became due and payable i.e. 4th November, 2010 till the date of its payment.

IN THE HIGH COURT OF ALLAHABAD

Civil Misc. Writ Petition No. 937 of 2013

Decided On: 23.10.2017

 Radhey Shyam Chaubey  Vs.  High Court of Judicature and Ors.

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Whether government servant or judicial officer can be denied pension if judicial proceeding is pending against him?

The petitioner retired on 31.12.2007 as District Judge. At the time of retirement no disciplinary action was pending against him On 5.2.2008, subsequent to his retirement a First Information Report was lodged at Police Station Kavi Nagar, Ghaziabad under Sections 409, 420, 467, 468, 471, 477-A, 120-B IPC and Section 13(1) and 13(2) of the Prevention of Corruption Act which was registered at Case Crime No. 152 of 2008. In view of the aforesaid criminal case only 90% of his gratuity amounting to Rs. 3.15 lacs out of total Rs. 3.5 lacs was released in his favour on 6.1.2012 on completion of necessary formalities.

2. The Government Order dated 4th November, 2010, issued on the basis of the Justice E. Padmanabhan Committee report dated 17.7.2009 which was accepted by the Supreme Court vide its orders dated 19.7.2010, 29.7.2010 and 2.8.2010 the State Government provided that all judicial officers retiring on 1.1.2006 or thereafter would be entitle to gratuity/death cum retirement gratuity of Rs. 10 lacs.

3. The petitioner had retired on 31.12.2007 and, as such, became entitled to gratuity of Rs. 10 lacs as per the aforesaid Government Order in place of Rs. 3.50 lacs.

8. It is settled in law that payment of post retirement dues including gratuity are not bounty and that they cannot be withheld unless the rules provide for it. In other words, in the absence of any rules permitting withholding of post retiral dues including gratuity, the Government cannot withhold the same.

9. Learned counsel for the respondent Nos. 1 and 2 is unable to place before us any rule or statutory provision permitting withholding of post retiral dues due to pendency of a criminal case.

10. Civil Services Regulations vide Regulation 919-A(3) provides that no death-cum-retirement gratuity shall be paid to the Government servant until the conclusion of the departmental proceedings or the enquiry by the Administrative Tribunal and issue of final orders thereon.

12. A simple reading of the aforesaid provision reveals that the bar on payment of death-cum-retirement gratuity is until the conclusion of the departmental proceedings or the enquiry by the Administrative Tribunal. This bar is not applicable where a criminal case is pending as it is not a departmental proceeding or an enquiry by the Administrative Tribunal.

13. In the case at hand, there is no departmental proceedings or any enquiry by the Administrative Tribunal pending against the petitioner. The petitioner is only facing criminal proceedings and there is certainly no provision which puts a rider on the payment of death-cum-gratuity to a Government servant or a judicial officer merely for the reason that criminal proceedings are pending against him.

14. A Division Bench of this Court in State of U.P. and three others v. Faini Singh (Special Appeal No. 416 of 2014 decided on 25.4.2014) while considering the provisions of Regulation 919-A(3) of Civil Services Regulations observed that the power of withholding or withdrawing pension is to be used in cases where allegations are of serious nature or grave misconduct and of causing pecuniary loss and it cannot be exercised mechanically merely on the pendency of any judicial proceedings without considering the allegations against the retired Government servant. In other words, pendency of even judicial proceedings has not been recognized as a matter of right to withhold the pension.

15. In Bangali Bahu Misra v. State of U.P., MANU/UP/1042/2002 : 2003(3) AWC 1760, a Division Bench of this Court seized of a similar controversy held that in the absence of any provision under law even if the petitioner is subjected to punishment in criminal proceedings that would not be a ground for withholding the post retiral benefits admissible to him.

IN THE HIGH COURT OF ALLAHABAD

Civil Misc. Writ Petition No. 937 of 2013

Decided On: 23.10.2017

 Radhey Shyam Chaubey  Vs.  High Court of Judicature and Ors.

Hon'ble Judges/Coram:

Pankaj Mithal and Irshad Ali, JJ.

Citation: 2018 (3) AWC 2521.

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Whether government servant is entitled to get interest if payment of gratuity is delayed beyond his retirement?

 As has been held by the Hon'ble Supreme Court in Y.K. Singla (supra), consequent upon the acquittal of an employee, it would be erroneous to conclude that the gratuity payable to such employee on attaining the age of superannuation was withheld on account of some fault of the employee himself. In the present case, it is not as if the petitioner, was ultimately convicted in criminal prosecution launched against him, in which case, the petitioner, could have been held to be at fault. Therefore, applying the principle explained by the Hon'ble Supreme Court in Y.K. Singla (supra), we hold that the delay in payment of gratuity to the petitioner beyond three months from the date of retirement was for no fault of the petitioner. In terms of Rule 129A of the MCS (Pension) Rules, 1982, read with clause 3 of the GR dated 6th May 1991 therefore, the petitioner is entitled to be paid interest for the period of delay beyond three months from the date of first retirement i.e. with effect from 1st July 1997.

35. In Prabhakar Dalal (supra), the Division Bench of this Court, in the context of Rules 129A, 130 (1)(c) of the MCS (Pension) Rules, 1982 and GR dated 23rd June 1986 has held that paragraph 3 of the GR will have to be construed to mean that on a person against whom disciplinary or judicial proceedings were pending, if he is discharged or the disciplinary authority comes to the conclusion that no punishment needs to be imposed and in case of judicial authority, such authority acquits such person, than in those cases, on the competent authority authorising the release of gratuity, it will be presumed that the gratuity is deemed to have been fallen due on the date immediately following the date of retirement for the purpose of interest. The Division Bench has commended harmonious construction of the statutory rules and the executive instructions in the GR, so that executive instructions would not fall foul of the rules.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 12966 of 2017

Decided On: 03.04.2018

 Vinodkumar Narayan Dixit Vs. The State of Maharashtra

Hon'ble Judges/Coram:

V.K. Tahilramani, Actg. C.J. and M.S. Sonak, J.

Citation: 2018(6) MHLJ 696

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Whether family pension can be bequeathed by will?

Thus, the payment of pension is strictly governed by the service
rules   and,   therefore,   it   cannot   be   an   'estate'   disposable   by   will.
Though the Government employee has right to receive the pension, itcannot be treated as a 'property'.  On this point, I rely on the case of
Jodh Singh (supra).   In the said case, the officer bequeathed his
movable and immovable property to his father during his life time
and nominated his parents for the Provident Fund, as his relation
with his wife was not cordial.   The Hon'ble Supreme Court while
dealing with the issue held that the pension is a retirement benefit
and is not payable in the life time of the employee and what is not
payable during the life time of the deceased over which he has no
power of disposition and cannot form part of his estate.   It is the
event   of   his   death   that   provides   the   eligibility   qualification   for
claiming special family pension.
24. In the case of Sundariya Bai Choudhary (supra), the Division
Bench of Madhya Pradesh High Court has taken a similar view that
the pension of deceased cannot be said to be an estate and it is not
transferable   and   cannot   be   bequeathed   by   Will.     However,   other
pensionary   benefits   like   Provident   Fund,   Gratuity   etc.   and   other

retiral dues or extra renumeration would be estate of the deceased
and that can be bequeathed by him.
25. In the case of Violet (supra), the Hon'ble Supreme Court had an
opportunity to deal with Railway Family Pension Rules and held that
pension cannot be bequeathed by will since it is not a part of estate of
the employee but it is for monetary benefit of wife and children.
26. After going through the facts of the cases and law laid down
therein which are referred above, it is pertinent to note that in these
cases, husbands have disposed of the property by will to other family
members by denying the claim of the wife and, therefore, the Courts
have taken a view that wife has prime claim over the pension of the
husband and that cannot be denied.  In the present case, Jaydeo has
bequeathed his pension to his first wife only.  It is a settled position of
law that pension is not a estate and so it cannot be bequeathed by
will, so to that extent, i.e., the portion of bequeath of pension in
favour of Draupada is bad in law, however, the statements made in
the   will   about   the   status   of   Draupada   and   his   final   wish   that
Draupada alone has right over his pension corroborates a fact of valid

nomination of Draupada as a first wife.
27. Thus, it is held that pension is not a estate or property and
cannot be disposed of and to that extent, the portion in the will

regarding bequeath is against the law.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO.577 OF 2015
WITH
CIVIL APPLICATION NO.1770 OF 2015
Draupada @ Draupadi Jaydeo Pawar
and Others 
vs.
Indubai d/o. Kashinath Shivram Chavan
and Another 

CORAM : MRS.MRIDULA BHATKAR, J.

 Dated  : 10th FEBRUARY, 2016
Citation: 2017(1) ALLMR197

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Supreme Court: Court can not attach pension and gratuity amount even after converted to cash

We also agree with Ms. Shobha that the High Court could not have gone behind the decree in the execution proceedings and the alteration in the manner of recovery of the decretal amount was erroneous and cannot be sustained. We also agree with Ms. Shobha that even after the retiral benefits, such as pension and gratuity, had been received by the appellant, they did not lose their character and continued to be covered by proviso (g) to Section 60(1) of the Code. Except for the decision in the Jyoti Chit Fund and Finance case (supra), where a contrary view was taken, the consistent view taken thereafter support the contention that merely because of the fact that gratuity and pensionary benefits had been received by the appellant in cash, it could no longer be identified as such retiral benefits paid to the appellant.

Supreme Court of India

Radhey Shyam Gupta vs Punjab National Bank & Anr on 4 November, 2008

Bench: Altamas Kabir, Markandey Katju

Citation:(2009)1SCC376                                                                              

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Whether Retiral benefits like gratuity and pension can be withheld by employer?

Retrials benefits like gratuity and pension cannot be withheld by the employer and if done so, interest is payable. Such payments are no longer bounty.
Pension and gratuity are no longer any bounty to be distributed by the employer/Government as already held by the Supreme Court of India in the case of State of Kerala & Ors. vs. M. Padmanabhan Nair, (1985) 1 SCC 429 that pension and gratuity have become valuable right of the employee and any culpable delay in the settlement of the pension and gratuity must be dealt with the penalty of interest at the current market rate from the due date of payment till the date of payment to the employee.

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7113

OF 2014

(Arising out of SLP (C) No. 25015 of 2011)

D.D. TEWARI(D) THR. LRS.

......APPELLANTS

VERSUS

UTTAR HARYANA BIJLI VITRAN NIGAM LTD. & ORS. 

Citation;2014 ALLSCR3023

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