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

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