Ajay Rastogi JUDGMENT
M.R. Shah, J.
1. The short but interesting questions of law which fell for consideration of this Court are, (i) as to whether is it permissible in law for the Appellant (employer) to withhold the payment of gratuity of the Respondent (employee), even after his superannuation from service, because of the pendency of the disciplinary proceedings against him?, and (ii) where the departmental enquiry had been instituted against an employee while he was in service and continued after he attained the age of superannuation, whether the punishment of dismissal can be imposed on being found guilty of misconduct in view of the provisions made in Rule 34.2 of the CDA Rules of 1978?
2. While considering the issues involved, the facts in nutshell are required to be considered, which are as under:
The Respondent herein (hereinafter referred to as the "employee") was posted as Chief General Manager (Production) at Rajmahal area under Mahanadi Coalfields Limited, the Appellant herein (hereinafter referred to as the "employer"). That the employer Mahanadi Coalfield Limited has made the Conduct, Discipline & Appeal Rules, 1978 (hereinafter referred to as the "CDA Rules"). That these Rules are applicable to all the employees of the Appellant company. Rule 27 of the CDA Rules mentions the authorities who are empowered to impose various punishments which are specified in column 3 of the Schedule attached to the CDA Rules. Rule 29 of the CDA Rules enlists the procedure for imposing major penalties for misconduct and misbehaviour. Rule 30 of the CDA Rules provides for action on the Inquiry Report. Rule 34 of the CDA Rules, which is relevant for our purpose, provides for special procedure in certain cases and which permits continuance of disciplinary proceedings even after the final retirement of an employee, provided the disciplinary proceedings are instituted while the employee was in service whether before his retirement or during his re-employment. It further provides that such disciplinary proceedings 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. Rule 34.3 provides for withholding the payment of gratuity during the pendency of the disciplinary proceedings and it further permits for ordering the recovery 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 Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service. The relevant Rules of the CDA Rules shall be discussed in detail hereinbelow.
2.1. While the Respondent-employee was in service and posted as Chief General Manager, he was served with the chargesheet dated 1.10.2007. There was very serious allegation of misconduct alleging dishonestly causing coal stock shortages amounting to Rs. 31.65 crores and thereby causing substantial loss to the employer. The employee was thereafter suspended from service on 09.02.2008 Under Rule 24.1 of the CDA Rules, pending departmental enquiry against him. This suspension however was revoked from 27.02.2009 without prejudice to the departmental enquiry. On completion of 60 years of age, the Respondent-employee was superannuated with effect from 31.07.2010. However, at the time of superannuation, the departmental enquiry which was initiated against the employee remained pending. Therefore, the Appellant - employer withheld the gratuity due and payable to the Respondent-employee. The Respondent herein submitted an application dated 21.09.2010 to the Director (Personnel) for payment of gratuity. On the same date, he also submitted an application before the Controlling Authority under the Payment of Gratuity Act for payment of gratuity. Notice was issued to the Appellant to appear. The Appellant appeared and stated that the payment of gratuity was withheld due to the reason that the disciplinary proceedings are pending against him. The Controlling Authority held that in that view of the matter, the claim of the Respondent was pre-mature.
The Respondent-employee challenged the order by filing the writ petition. The learned Single Judge dismissed the writ petition holding that in view of the existence of an appellate forum against the order passed by the Controlling Authority, the Respondent may file an appeal before the Appellate Authority. However, instead of filing an appeal before the Appellate Authority, the Respondent-employee then filed Intra Court Writ Appeal before the Division Bench of the High Court. The Division Bench of the High Court has held that the writ petition was maintainable. On merits and relying upon the decision of this Court in the case of Jaswant Singh Gill v. Bharat Coking Coal Ltd., reported in MANU/SC/8647/2006 : (2007) 1 SCC 663, the High Court ruled that the disciplinary proceedings against the Respondent were initiated prior to the age of superannuation. However, the Respondent retired from service on superannuation and hence the question of imposing a major penalty of removal from service would not arise. The Division Bench of the High Court has further held that the power to withhold payment of gratuity as contained in Rule 34(3) of the CDA Rules shall be subject to the provisions of the Payment of Gratuity Act, 1972. The Division Bench of the High Court has further held that the statutory right accrued to the Respondent to get gratuity cannot be impaired by reason of the Rules framed by the Coal India Limited which do not have the force of a statute. Consequently, direction is given to the Appellant-employer to release the amount of gratuity payable to the Respondent-employee. Hence, the present appeal.
3. Shri Mahabir Singh, learned Senior Advocate appearing on behalf of the Appellant-employer has vehemently submitted that in the facts and circumstances of the case and in view of the specific provisions under the CDA Rules, namely, Rules 34.2 and 34.3 of the CDA Rules, the decision of this Court in the case of Jaswant Singh Gill (supra) shall not be applicable.
3.1. It is further submitted by Shri Mahabir Singh, learned Senior Advocate appearing on behalf of the employer that Rule 34.2 of the CDA Rules authorises and/or permits the authority to continue the disciplinary proceedings, if instituted while the employee was in service, even after the final retirement of the employee and 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. It is submitted that therefore even a major penalty of dismissal can be imposed on conclusion of departmental proceedings even after the final retirement of the employee, if the departmental proceedings are instituted while the employee was in service. It is submitted that the afore-stated Rule 34.2 of the CDA Rules has not been properly appreciated and/or considered by this Court in the case of Jaswant Singh Gill (supra). It is submitted that in the said decision, this Court has proceeded on the footing that after the final retirement of the employee, a penalty of removal or dismissal is not permissible. It is submitted that the aforesaid is just contrary to Rule 34.2 of the CDA Rules.
3.2. It is further submitted by Shri Mahabir Singh, learned Senior Advocate appearing on behalf of the employer that even otherwise Rule 34.3 authorises and/or permits the disciplinary authority to withhold the payment of gratuity, or order the recovery from gratuity of the whole or part of any pecuniary loss caused to the company if such an employee has been guilty of offences/misconduct as mentioned in Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service. It is submitted that Rule 34.3 of the CDA Rules is in conformity and/or in consonance with Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 and there is no conflict between the two.
3.3. Learned Senior Advocate appearing on behalf of the Appellant has heavily relied upon the decision of this Court in the case of State Bank of India v. Ram Lal Bhaskar, reported in MANU/SC/1237/2011 : (2011) 10 SCC 249. It is submitted that while considering the pari materia provisions under the State Bank of India Officers' Service Rules, 1992, namely, Rule 19(3), this Court has confirmed the order of dismissal of an employee which was passed after his retirement. It is submitted that in the said decision, this Court distinguished another judgment of this Court in the case of UCO Bank v. Rajinder Lal Capoor, reported in MANU/SC/7810/2007 : (2007) 6 SCC 694 on the ground that in the said case the delinquent officer had already been superannuated and the chargesheet was served upon him after his retirement. It is submitted that thereafter this Court has further held that if the chargesheet is served before the retirement, enquiry can continue even after the retirement as per Rule 19(3) of the State Bank of India Officers' Rules, 1992. It is submitted that therefore this Court in the case of Ram Lal Bhaskar (supra) specifically held that if the Rules permit, enquiry can continue even after the retirement of the employee. It is submitted that in the present case Rule 34.3 of the CDA Rules permits the enquiry to continue even after the retirement of the employee. It is submitted that the said decision is by a three Judge Bench, however, decision in the case of Jaswant Singh Gill (supra) is by a two Judge Bench.
3.4. It is further submitted by Shri Mahabir Singh, learned Senior Advocate appearing on behalf of the employer that therefore when Rule 34 of the CDA Rules permits continuation of the departmental enquiry even after the retirement of an employee and such a retired employee is deemed to be in service and on conclusion of the departmental enquiry initiated while the employee was in service, penalty of dismissal is permissible, the employer will get the right to forfeit the payment of gratuity of such an employee as provided Under Section 4(1) and 4(6) of the Payment of Gratuity Act, 1972 and even Under Rule 34.3 of the CDA Rules.
3.5. Making the above submissions and relying upon the decision of this Court in the case of Ram Lal Bhaskar (supra) and relying upon Rule 34.2 and 34.3 of the CDA Rules, it is prayed to allow the present appeal and quash and set aside the impugned judgment and order passed by the Division Bench of the High Court.
4. The present appeal is vehemently opposed by Shri Anukul Chandra Pradhan, learned Senior Advocate appearing on behalf of the Respondent-employee. It is submitted by the learned Senior Advocate that two issues are referred to be considered by a larger Bench, namely, (1) Whether the Authority/Employer has power to dismiss/terminate an employee (Respondent herein) even after retirement from service, if departmental disciplinary proceedings are initiated during his employment/service; and (2) Whether the employer is empowered with authority to withhold the payment of gratuity during pendency of disciplinary proceedings.
4.1. It is vehemently submitted by the learned Senior Advocate appearing on behalf of the employee that so far as issue No. 1 is concerned, Rule 27 provides the nature of penalties. Rule 27.1(i) prescribes minor penalties, such as, withholding increment and promotion including recovery of any pecuniary loss caused to the company for misconduct, whereas the major penalties are prescribed Under Rule 27.1(iii), such as, reduction to a lower grade, compulsory retirement, removal and dismissal from service. It is submitted that on simple reading of Rule 27.1(iii), it can be said un-mistakenly that the four major penalties can be imposed so long as an employee remains in employment. It is submitted that there was no order issued to the Respondent with regard to extension of his employment/service or re-employment for certain period. It is submitted that Rule 34.2 provides only the disciplinary proceedings will be deemed to be continued and concluded as if he was in service. It is submitted that hence the termination/dismissal cannot be passed after the retirement of an employee. It is submitted that while there is no service/re-employment, there arises no question of removal or dismissal from service.
4.2. Now so far as issue No. 2, namely, whether the employer is empowered with authority to withhold the payment of gratuity during pendency of disciplinary proceedings is concerned, it is vehemently submitted by the learned Senior Advocate appearing on behalf of the Respondent that as per mandate of Section 4(1) of the Payment of Gratuity Act, 1972, gratuity becomes payable as soon as the employee retires subject to the condition that the employee shall have five years continuous service.
4.3. It is further submitted by the learned Senior Advocate appearing on behalf of the employee that in terms of Clauses (a) or (b) of Sub-section 6 of Section 4 of the Payment of Gratuity Act, 1972, the exercise of power to forfeit the gratuity amount of an employee is available when the authority satisfies the precondition that the service of the employee has already been terminated for any act, omission or negligence causing any damage or loss or destruction of property belong to an employer. It is submitted that therefore "termination from service" is sine qua non and basic requirement for invoking power Under Sections 4(6)(a) or 4(6)(b) of the Payment of Gratuity Act.
4.4. It is further submitted by the learned Senior Advocate appearing on behalf of the employee that as per Section 4(1) of the Payment of Gratuity Act, gratuity shall be payable to the employee on the termination of his employment if he has rendered continuous service for not less than five years. It is submitted that termination of employment may take place on (i) on his superannuation; or (ii) on his retirement or resignation; or (iii) on his death or disability due to accident or disease. It is submitted that in the present case the Respondent was terminated by superannuation and therefore the Respondent shall be entitled to the amount of gratuity Under Section 4(1) of the Payment of Gratuity Act, 1972.
4.5. It is further submitted by the learned Senior Advocate appearing on behalf of the employee that when there arises no question for dismissal or removal from service after the employee has retired on attaining the age of superannuation, the Appellant cannot withheld the amount of gratuity in exercise of powers Under Rule 34 of the CDA Rules being inconsistent with the Payment of Gratuity Act.
4.6. Learned Senior Advocate appearing on behalf of the employee has heavily relied upon the decision of this Court in the case of Jaswant Singh Gill (Supra). It is vehemently submitted that in the case of Jaswant Singh Gill (supra), this Court has considered the very provisions of the CDA Rules and has categorically observed and held that if an employee is permitted to retire, thereafter a penalty of dismissal/removal from service cannot be imposed, may be the departmental proceedings were initiated prior to his retirement. It is submitted that therefore the decision of this Court in the case of Jaswant Singh Gill (supra) shall be applicable to the facts of the case on hand with full force.
4.7. Now so far as the reliance placed upon the decision of this Court in the case of Ram Lal Bhaskar (supra), relied upon by the learned Senior Advocate appearing on behalf of the Appellant is concerned, it is vehemently submitted by the learned Senior Advocate appearing on behalf of the employee that the said decision shall not be applicable to the facts of the case on hand as in the said decision, this Court neither discussed nor expressed as to whether the authority is empowered to dismiss or remove the employee from service after retirement. It is submitted that in the said decision, this Court has only stated that the employee shall be deemed to be in service only for the purpose of continuation and conclusion of the disciplinary proceedings if the memo of charges has been served before retirement as provided Under Rule 19(3) of the State Bank of India Officers' Service Rules, 1992. It is submitted that therefore the said decision shall not be applicable to the facts of the case on hand. It is however submitted that in the case of Jaswant Singh Gill (supra), this Court has specifically held with reasons that the major penalties like dismissal or removal from service must be imposed so long as the employee remains in service, even if the disciplinary proceedings were initiated prior to attaining the age of superannuation.
4.8. It is further submitted by the learned Senior Advocate appearing on behalf of the employee that even otherwise in view of Section 14 of the Payment of Gratuity Act, 1972, the provisions of Gratuity Act shall override other enactments and therefore Rule 34.2 and Rule 34.3 of the CDA Rules shall be unenforceable and ineffective in the eyes of law as the same shall be inconsistent with the provisions of Payment of Gratuity Act, more particularly Sections 4, 7, 13 and 14 of the Payment of Gratuity Act.
4.9. It is further submitted by the learned Senior Advocate appearing on behalf of the employee that the preamble of the Payment of Gratuity Act clearly indicates the legislative intention that the payment of gratuity is to provide socio-economic justice and secure economic protection in the retired life when mental and physical fitness is deteriorated due to ageing process. It is submitted that Section 13 of the Payment of Gratuity Act gives total immunity to gratuity from attachment which is payable at the time of retirement. It is submitted therefore that the right to gratuity is a statutory right which cannot be withheld under any circumstances, other than those guidelines enumerated Under Section 4(6) of the Payment of Gratuity Act, 1972.
4.10. Making the above submissions and heavily relied upon the decision of this Court in the case of Jaswant Singh Gill (supra), it is prayed to dismiss the present appeal and answer the reference in favour of the Respondent.
5. We have heard the learned Counsel appearing for the respective parties at length.
5.1. The first question which is posed for the consideration of this Court is, whether is it permissible in law for the Appellant-employer to withhold the payment of amount of gratuity payable to the Respondent-employee, even after his superannuation from service, because of the pendency of the disciplinary proceedings against him? The second question which is posed for the consideration of this Court is, where departmental enquiry had been instituted against an employee while he was in service and continued after he attained the age of superannuation, whether the punishment of dismissal can be imposed on being found guilty of misconduct in view of the provisions made in Rule 34.2 of the CDA Rules?
5.2. It is not in dispute that a chargesheet came to be served upon the Respondent-employee much before he attained the age of superannuation, i.e., on 1.10.2007. That while the disciplinary proceedings were pending, the Respondent-employee attained the age of superannuation on 31.07.2010. In view of the pendency of the disciplinary proceedings, the Appellant-employer withheld the payment of gratuity. It is the case on behalf of the Respondent-employee that as the Respondent employee was permitted to retire and at the time when he attained the age of superannuation, there was no order of termination on the basis of the departmental enquiry or conviction in a criminal case and therefore considering Section 4 of the Payment of Gratuity Act, the Respondent-employee shall be entitled to the amount of gratuity. It is also the case on behalf of the Respondent-employee that even considering Clause (b) of Sub-section 6 of Section 4 of the Payment of Gratuity Act, the gratuity payable to the Respondent-employee may be wholly or partially forfeited if the services of such employee have been terminated for his riotous or disorderly conduct or his services have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him during the course of his employment. Relying upon the decision of this Court in the case of Jaswant Singh Gill (supra), it is the case on behalf of the Respondent-employee that as held by this Court in the said decision that once an employee is permitted to retire on attaining the age of superannuation, no order of dismissal subsequently can be passed though the disciplinary proceedings are permitted to be continued under the CDA Rules and therefore once the order of dismissal is not permissible, Section 4 of the Payment of Gratuity Act shall be attracted and therefore the Respondent-employee shall be entitled to the amount of gratuity. On the other hand, as observed hereinabove, it is the case on behalf of the Appellant-employer that Rule 34 permits the management to withhold the gratuity during the pendency of the disciplinary proceedings. It is submitted that Rule 34.2 of the CDA Rules permits the disciplinary proceedings, if instituted while the employee was in service, after the final retirement of the employee and such disciplinary proceedings shall be deemed to be 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. It is submitted therefore that for the purpose of continuing and concluding the disciplinary proceedings, such an employee shall be deemed to be in service and therefore even after the employee had attained the age of superannuation, such an employee can be dismissed from service, provided the disciplinary proceedings are instituted while the employee was in service.
6. While considering the issues involved in the present appeal, the relevant provisions of the CDA Rules and Section 4 of the Payment of Gratuity Act are required to be referred to and considered, which are as under:
34.2 Disciplinary proceeding, 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 proceeding 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.
34.3 During the pendency of the disciplinary proceedings, the Disciplinary Authority may withhold payment of gratuity, for ordering the 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 Sub-section (6) of Section 4 of the payment of gratuity act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service including service rendered on deputation or on re-employment after retirement. However, the provisions of Section 7(3) and 7(3A) of the Payment of Gratuity Act 1972 should be kept in view in the event of delayed payment in the case the employee is fully exonerated.
Section 4 - Payment of gratuity
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,--
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.
Explanation.--For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.
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(6) Notwithstanding anything contained in Sub-section (1),--
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer' shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited]--
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
7. 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.
8. 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 materia 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.
9. 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.
9.1. 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 Sub-section 6 of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service. It further makes clear that Rule 34.3 for withholding of such a gratuity would be subject to the provisions of Section 7(3) and 7(3A) 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 Sub-section 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.
9.2. It is required to be noted that in the present case the disciplinary proceedings were initiated against the Respondent-employee 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.
10. The second question for consideration is where departmental inquiry had been instituted against an employee while he was in service and continued after he attained the age of superannuation, whether the punishment of dismissal can be imposed on being found guilty of misconduct in view of the provisions made in Rule 34.2 of the CDA Rules.
10.1. Rule 34 (2) of the CDA Rules provides in case disciplinary proceeding, if instituted while the employee was in service whether before his retirement or during his re-employment, such proceedings shall be continued and concluded by the authority by which it was commenced in the same manner as if an employee had continued in service. There is a deemed fiction created by the Rule concerning the continuance of employee in service during the departmental proceeding. The legal fiction is required to be given a logical effect.
10.2. Rule 34.3 of the CDA Rules provides for withholding the payment of gratuity during the pendency of the disciplinary proceedings and provides for recovery from gratuity of the whole or part of any pecuniary loss caused to the employer in case of misconduct as provided in Section 4(6)(a) of the Payment of Gratuity Act, 1972. The gratuity can be wholly or partially forfeited as provided in Section 4(6)(b) in case he is found guilty, and services are terminated for disorderly misconduct or act of violence or offence involving moral turpitude committed during the course of employment.
10.3. The question of the effect of deemed fiction of continuance of employee in service after the employee had attained the age of superannuation was considered in D.V. Kapoor v. Union of India, MANU/SC/0335/1990 : (1990) 4 SCC 314. Rule 9(2) of the Civil Services Pension Rules, 1972, came up for consideration. The Rule provided that the departmental proceedings instituted while the employee was in service shall be deemed to be continued in service, the said Rule was similar to Rule 34(2) of the CDA Rules. It was held that the departmental inquiry should be continued and concluded by the authority in the same manner as if the government employee had remained in service. The only condition provided in the proviso to the Rule was that a report to be submitted to the President. It was held:
2. The contention of Mr. Kapoor, learned Counsel for the Appellant is that the Appellant having been allowed to retire voluntarily the authorities are devoid of jurisdiction to impose the penalty of withholding gratuity and pension as a measure of punishment and the proceedings stand abated. We find no substance in the contention. Rule 9(2) of the Rules provided that the departmental proceedings if instituted while the government servant was in service whether before his retirement or during his re-employment, shall, after the final retirement of the government servant, be deemed to be proceedings under this Rule and shall be continued and concluded by the authority by which they were commenced in the same manner as if the government servant had continued in service. Therefore, merely because the Appellant was allowed to retire, the government is not lacking jurisdiction or power to continue the proceedings already initiated to the logical conclusion thereto. The disciplinary proceedings initiated under the Conduct Rules must be deemed to be proceedings under the Rules and shall be continued and concluded by the authorities by which the proceedings have been commenced in the same manner as if the government servant had continued in service. The only inhibition thereafter is as provided in the proviso namely "provided that where the departmental proceedings are instituted by an authority subordinate to the President, that authority shall submit a report recording its findings to the President". That has been done in this case and the President passed the impugned order. Accordingly, we hold that the proceedings are valid in law and they are not abated consequent to voluntary retirement of the Appellant and the order was passed by the competent authority, i.e. the President of India.
10.4. In State Bank of Patiala and Anr. v. Ram Niwas Bansal (Dead) Thr. L.Rs. MANU/SC/0165/2014 : (2014) 12 SCC 106, a similar question came up for consideration. A departmental inquiry was initiated while the employee was in service. The relevant service Regulation 19.2 applicable to the employee of the bank was similar to Rule 34.2 of the CDA Rules. This Court held that departmental proceedings had been initiated against an officer during the period when he was in service, the said proceedings could continue even after his retirement. It was further held that the concept of deemed continuance in service of the officer would have full play and, therefore, the order of removal could have been passed after finalization of the departmental proceeding. Still, removal order could not have been passed retrospectively. However, that would not invalidate the order of dismissal, but the order of dismissal would have prospective effect as held in R. Jeevaratnam v. the State of Madras MANU/SC/0314/1965 : AIR 1966 SC 951. The relevant portion of State Bank of Patiala (supra) is extracted hereunder:
31. In the case at hand, the said stage is over. The Full Bench on the earlier occasion had already rendered a verdict that serious prejudice had been caused and, accordingly, had directed for reinstatement. The said direction, if understood and appreciated on the principles stated in B. Karunakar1, is a direction for reinstatement for the purpose of holding a fresh enquiry from the stage of furnishing the report and no more. In the case at hand, the direction for reinstatement was stayed by this Court. The Bank proceeded to comply with the order of the High Court from the stage of reply of enquiry. The High Court by the impugned order2 had directed payment of back wages to the delinquent officer from the date of dismissal till passing of the appropriate order in the disciplinary proceeding/superannuation of the Petitioner therein whichever is earlier. The Bank has passed an order of dismissal on 22-11-2001 with effect from 23-4-1985. The said order, as we perceive, is not in accord with the principle laid down by the Constitution Bench decision in B. Karunakar, for it has been stated there that in case of non-furnishing of an enquiry report the Court can deal with it and pass an appropriate order or set aside the punishment and direct reinstatement for continuance of the departmental proceedings from that stage. In the case at hand, in the earlier round the punishment was set aside and direction for reinstatement was passed. Thus, on the face of the said order it is absolutely inexplicable and unacceptable that the Bank in 2001 can pass an order with effect from 23-4-1985 which would amount to annulment of the judgment3 of the earlier Full Bench. As has been held by the High Court in the impugned judgment that when on the date of non-furnishing of the enquiry report the delinquent officer was admittedly not under suspension, but was in service and, therefore, he would continue in service till he is dismissed from service in accordance with law or superannuated in conformity with the Regulations. How far the said direction is justified or not or how that should be construed, we shall deal with while addressing the other points but as far as the order of removal being made retrospectively operational, there can be no trace of doubt that it cannot be made retrospective.
32. Presently, we shall proceed to deal with the issue of superannuation as envisaged under the Regulations. Regulation 19(1) deals with superannuation of an employee. The relevant part of Regulation 19(1) is as follows:
19. Age of retirement.--(1) An officer shall retire from the service of the Bank on attaining the age of fifty-eight years or upon the completion of thirty years' service whichever occurs first:
Provided that the competent authority may, at its discretion, extend the period of service of an officer who has attained the age of fifty-eight years or has completed thirty years' service as the case may be, should such extension be deemed desirable in the interest of the Bank:
Provided further that an officer who had joined the service of the Bank either as an officer or otherwise on or after 19-7-1969 and attained the age of 58 years shall not be granted any further extension in service:
Provided further that an officer may, at the discretion of the Executive Committee, be retired from the Bank's service after he has attained 50 years of age or has completed 25 years' service as the case may be, by giving him three months' notice in writing or pay in lieu thereof:
35. At this juncture, it is noteworthy to refer to Regulation 19(2) of the Regulations. It reads as follows:
19. (2) In case disciplinary proceedings under the relevant Regulations of service have been initiated against an officer before he ceases to be in the Bank's service by the operation of, or by virtue of any of the said Regulations or the provisions of these Regulations the disciplinary proceedings may, at the discretion of the Managing Director, be continued and concluded by the authority by which the proceedings were initiated in the manner provided for in the said Regulations 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.
Explanation.--An officer will retire on the last day of the month in which he completes the stipulated service or age of retirement.
The aforesaid Regulation, as it seems to us, deals with a different situation altogether. It clearly lays down that if the disciplinary proceedings have been initiated against an officer during the period when he is in service, the said proceedings can continue even after his retirement at the discretion of the Managing Director and for the said limited purpose the officer shall be deemed to be in service.
41. In the case at hand, the disciplinary proceeding was initiated against the delinquent officer while he was in service. The first order of dismissal was passed on 23-4-1985. The said order of punishment was set aside by the High Court and the officer concerned was directed to be reinstated for the limited purpose i.e. supply of enquiry report and to proceed in the disciplinary proceeding from that stage. The said order was not interfered with by this Court. The Bank continued the proceeding. Needless to emphasise, the said continuance was in pursuance of the order of the Court. Under these circumstances, it has to be accepted that the concept of deemed continuance in service of the officer would have full play and, therefore, an order of removal could have been passed after finalisation of the departmental proceeding on 22-11-2001. We have already held that the said order would not have been made retrospectively operative, but that will not invalidate the order of dismissal but it would only have prospective effect as has been held in R. Jeevaratnam4.
42. Having said that, it becomes necessary to determine the date of retirement and thereafter delve into how the period from the date of first removal and date of retirement would be treated. We may hasten to add that for the purpose of deemed continuance the delinquent officer would not be entitled to get any benefit for the simple reason i.e. the continuance is only for finalisation of the disciplinary proceedings, as directed by the Full Bench of the High Court. Hence, the effect and impact of Regulation 19(1) of the Regulations comes into full play. On a seemly construction of the first proviso we are of the considered view that it requires an affirmative act by the competent authority, for it is an exercise of power of discretion and further the said discretion has to be exercised where the grant of extension is deemed desirable in the interest of the Bank. The submission of Mr. Patwalia to the effect that there should have been an intimation by the employer Bank is founded on the finding recorded by the High Court in the impugned order 5 that no order had been brought on record to show that the delinquent officer had retired. As the facts would reveal, in the year 1992 the officer concerned stood removed from service and at that juncture to expect the Bank in law to intimate him about his date of superannuation or to pass an order would be an incorrect assumption. The conclusion which appears logical and acceptable is that unless an extension is granted by a positive or an affirmative act by the competent authority, an officer of the Bank retires on attaining the age of 58 years or upon the completion of 30 years of service, whichever occurs first.
43. In this regard the pronouncement in C.L. Verma v. State of M.P. MANU/SC/0076/1990 : 1989 Supp (2) SCC 437 is apt to refer. In the said case the effect of Rule 29 of the Madhya Pradesh State Municipal Service (Executive) Rules, 1973 fell for interpretation. In the said Rule it was provided that a member of the service shall attain the age of superannuation on the date he completes his 58 years of age. The proviso to the said Rule stipulated that the State Government may allow a member of the service to continue in employment in the interest of Municipal Council or in public interest and, however, no member of service shall continue in service after he attains the age of 60 years. The Appellant therein had attained the age of 58 years two days prior to the order of dismissal. The Court opined that the tenor of the proviso clearly indicates that it is intended to cover specific cases and individual employees. Be it noted, on behalf of the Government a notification was issued by the Department concerned. The Court opined that the said circular was not issued under the proviso to Rule 29 but was administrative in character and that on the face of mandate in Rule 29 the administrative order could not operate. The Court further ruled that as the Appellant therein had attained the age of superannuation prior to the date of passing the order of dismissal, the Government had no right to deal with him in its disciplinary jurisdiction available in regard to employees.
44. We have referred to this decision in C.L. Verma case 30 to highlight that the Regulation herein also is couched in similar language and, therefore, the first proviso would have full play and it should be apposite to conclude that the delinquent officer stood superannuated on completion of 30 years of service on 25-2-1992. It is because the conditions stipulated under the first proviso to the said Regulation deal with a conditional situation to cover certain categories of cases and require an affirmative act and in the absence of that it is difficult to hold that the delinquent officer did not retire on completion of thirty years of service.
10.5. It depends upon the Rules in a case where a departmental inquiry was instituted while the employee was in service, proceedings had been continued, under the Rule what kind of punishment can be imposed after the employee had attained the age of superannuation.
10.6. In Ramesh Chandra Sharma v. Punjab National Bank and Anr. MANU/SC/7735/2007 : (2007) 9 SCC 15, a similar question arose for consideration. The employee was dismissed from service after superannuation. The High Court set aside the order on the ground that after superannuation, the disciplinary inquiry could not have been continued, and punishment of dismissal could not have been imposed. This Court set aside the order of the High Court, allowed the appeal filed by the bank and dismissed the appeal filed by the employee, and held that order of dismissal could be passed in view of the Rule in question. It was held that it depends upon the terms and conditions of the service of the employee by which he was governed. It was also observed that after attaining the age of superannuation, the question of imposition of dismissal of the employee from service would not ordinarily arise. At the same time, it was held that the imposition of such a punishment would not be impermissible in law. The legal fiction created by the Rule concerning the continuance of employee on a deemed basis in service has to be given full effect. In case the order of dismissal from service was passed, the employee would not be entitled to the pensionary benefit. It was also held that if the employee is removed or dismissed from service Under Regulation 4 of the (Discipline and Appeal) Regulations, the Bank need not take recourse to Regulation 48 of the Pension Regulations as Regulation 22 thereof would be attracted. Rule 43 of the Pension Regulation provided for withholding or withdrawal of the pension. Regulation 48 provided for recovery of pecuniary loss caused to the bank. In the case of deemed continuation, Regulation 48 was held to be inapplicable. The relevant portion is extracted hereunder:
13. The question as to whether a departmental proceeding can continue despite the delinquent officer's reaching the age of superannuation would depend upon the applicability of the extant rules. It may be true that the question of imposition of dismissal of the delinquent officer from service when he has already reached the age of superannuation would not ordinarily arise. However, as the consequences of such an order are provided for in the service rules, in our opinion, it would not be correct to contend that imposition of such a punishment would be wholly impermissible in law.
15. The question, we may notice, came up for consideration before this Court in State of U.P. v. Brahm Datt Sharma MANU/SC/0711/1987 : (1987) 2 SCC 179 wherein this Court while interpreting Regulation 470 of the Civil Services Regulations in State of U.P. v. Harihar Bhole Nath MANU/SC/8621/2006 : (2006) 13 SCC 460 held as under: (Brahm Datt Sharma case (supra), SCC p. 186, para 8)
8. A plain reading of the Regulation indicates that full pension is not awarded as a matter of course to a government servant on his retirement instead; it is awarded to him if his satisfactory service is approved. If the service of a government servant has not been thoroughly satisfactory the authority competent to sanction the pension is empowered to make such reduction in the amount of pension as it may think proper. Proviso to the Regulation lays down that no order regarding reduction in the amount of pension shall be made without the approval of the appointing authority. Though the Regulations do not expressly provide for affording opportunity to the government servant before order for the reduction in the pension is issued, but the principles of natural justice ordain that opportunity of hearing must be afforded to the government servant before any order is passed. Article 311(2) is not attracted, nonetheless the government servant is entitled to opportunity of hearing as the order of reduction in pension affects his right to receive full pension. It is no more in dispute that pension is not bounty; instead it is a right to property earned by the government servant on his rendering satisfactory service to the State.
16. The question, thus, as to whether continuation of a disciplinary proceeding would be permissible or the employer will have to take recourse only to the pension rules, in our opinion, would depend upon the terms and conditions of the services of the employee and the power of the disciplinary authority conferred by reason of a statute or statutory rules.
17. We have noticed hereinbefore that the Bank has made Regulations which are statutory in nature. Regulation 20(3)(iii) of the said Regulations reads thus:
20. (3)(iii) The officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The officer concerned will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF.
The said Regulation clearly envisages continuation of a disciplinary proceeding despite the officer ceasing to be in service on the date of superannuation. For the said purpose a legal fiction has been created providing that the delinquent officer would be deemed to be in service until the proceedings are concluded and final order is passed thereon. The said Regulation being statutory in nature should be given full effect.
18. The effect of a legal fiction is well known. When a legal fiction is created under a statute, it must be given its full effect, as has been observed in East End Dwellings Co. Ltd. v. Finsbury Borough Council 1952 AC 109 : (1951) 2 All ER 587 (HL) as under: (All ER p. 599 B-D)
If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.
22. We are, therefore, of the opinion that it was permissible for the Bank to continue with the disciplinary proceedings relying on or on the basis of Regulation 20(3)(iii) of the Punjab National Bank (Officers) Service Regulations, 1979.
23. It is true that the disciplinary authority in its order while imposing punishment observed that the terminal dues of the Appellant were to be settled. It was merely an observation to take care of a contingency which might arise. No positive direction was issued in that behalf and, thus, no legal right thereby was created in favour of the Appellant to obtain the retiral benefits. What it meant thereby was that the law would take its own course.
25. Indisputably as a consequence of the order imposing the punishment of dismissal from service the Appellant would not have qualified for the pensionary benefits. Our attention, however, has been drawn by Mr. Saxena to Regulations 43 and 48 to contend that even for the purpose of withholding pension, a specific order in that behalf by a competent authority was required to be passed. The Pension Regulations are meant to be applicable where pension is required to be paid. It also provides for recovery of pecuniary loss caused to the Bank from the pensionary benefits of the employee. Regulations 43 and 48 of the Pension Regulations are as under:
43. Withholding or withdrawal of pension.--The competent authority may, by order in writing, withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, if the pensioner is convicted of a serious crime or criminal breach of trust or forgery of (sic or) acting fraudulently or is found guilty of grave misconduct.
Provided that where a part of pension is withheld or withdrawn, the amount of such pension shall not be reduced below the minimum pension per mensem payable under these Regulations.
* * *
48. Recovery of pecuniary loss caused to the Bank.--
(1) The competent authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period and order recovery from pension of the whole or part of any pecuniary loss caused to the Bank if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence or criminal breach of trust or forgery or acts done fraudulently during the period of his service:
Provided that the Board shall be consulted before any final orders are passed;
Provided further that departmental proceedings, if instituted while the employee was in service, shall, after the retirement of the employee, be deemed to be proceedings under these Regulations and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service;
(2) No departmental proceedings, if not instituted while the employee was in service, shall be instituted in respect of an event which took place more than four years before such institution:
Provided that the disciplinary proceedings so instituted shall be in accordance with the procedure applicable to disciplinary proceedings in relation to the employee during the period of his service.
(3) Where the competent authority orders recovery of pecuniary loss from the pension, the recovery shall not ordinarily be made at a rate exceeding one-third of the pension admissible on the date of retirement of the employee:
Provided that where a part of pension is withheld or withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under these Regulations.
27. Regulation 48 empowers the Bank to recover pecuniary loss caused to it from the pensionary benefits. Regulation 20(3)(iii) of the (Discipline and Appeal) Regulations must be read in conjunction with the Pension Regulations. Where the employees are pension optees, Regulation 48(1) shall apply. In any event, if an officer is removed or dismissed from service Under Regulation 4 of the (Discipline and Appeal) Regulations, the Bank need not take recourse to Regulation 48 of the Pension Regulations as Regulation 22 thereof would be attracted.
10.7. An inquiry has to be taken to a logical end. In Union of India v. Ajoy Kumar Patnaik MANU/SC/0075/1996 : (1995) 6 SCC 442, the question of continuance of departmental inquiry after retirement from service on attaining the age of superannuation came up for consideration. It was opined that it would not be a ground to close the departmental inquiry without making any finding on merits; otherwise, in all cases, it would cause grave damage to public justice, and the employee would get away with pending proceedings. An employee cannot get rid of pending departmental proceedings by efflux of time. It was held:
10. Since the competent authorities at different levels had considered the material and ultimately had decided to compulsorily retire the Respondent from service, it cannot be said that it is an arbitrary decision. It is true that pending the proceedings the Respondent has already retired from service on attaining the age of superannuation, but that would not provide a ground to dispose of this matter without giving any finding on the action taken by the competent authority. Otherwise, in all cases it would cause grave damage to public justice. The employee would get away with it due to pending proceedings. Therefore, it needs to be considered and decision rendered thereon whether the action taken by the Government or the competent authority is valid in law. In that perspective, mere retirement of the officer by efflux of time pending proceedings would not be a ground to close the matter.
10.8. In Rajinder Lal Capoor (supra), it was held that when disciplinary proceedings had been initiated before employee attained the age of superannuation, the Rule provided for deemed legal fiction of continuance of employee 'as if he was in service', till finalization of such proceedings, the employee would be deemed to be in service although he has attained the age of superannuation. It was held:
21. The aforementioned Regulation, however, could be invoked only when the disciplinary proceedings had clearly been initiated prior to the Respondent's ceasing to be in service. The terminologies used therein are of seminal importance. Only when a disciplinary proceeding has been initiated against an officer of the bank despite his attaining the age of superannuation, can the disciplinary proceeding be allowed on the basis of the legal fiction created thereunder i.e. continue 'as if he was in service'. Thus, only when a valid departmental proceeding is initiated by reason of the legal fiction raised in terms of the said provision, the delinquent officer would be deemed to be in service although he has reached his age of superannuation. The departmental proceeding, it is trite law, is not initiated merely by issuance of a show-cause notice. It is initiated only when a charge-sheet is issued....
A review was filed; the same was dismissed in UCO Bank v. Rajinder Lal Capoor, MANU/SC/7393/2008 : (2008) 5 SCC 257. It is clear that when an employee is deemed to be in service, the punishment as prescribed under the Rules can be imposed.
10.9. In V. Padmanabham v. Government of Andhra Pradesh and Ors. MANU/SC/1317/2009 : (2009) 15 SCC 537, Rule 9 of the Andhra Pradesh Pension Code provided that if the departmental inquiry is instituted when Government servant was in service, it could continue, and as a Rule provided for the continuance of such an inquiry only for recovery of the amount from the pension and gratuity. It was held that the continuation of the departmental proceedings was not illegal. The Pension Code raises a legal fiction and proceedings would be deemed to have continued. It was opined:
10. It has not been disputed before us that in terms of Rule 9(2) of the Andhra Pradesh Pension Code the disciplinary proceedings initiated against the Appellant could continue. Rule 9(2)(a) reads as under:
"9. Right of Government to withhold or withdraw pension.--(1) * * *
(2)(a) The departmental proceedings referred to in Sub-rule (1), if instituted while the government servant was in service whether before his retirement or during his re-employment, shall after the final retirement of the government servant, be deemed to be proceedings under this Rule and shall be continued and concluded by the authority by which they were commenced in the same manner as if the government servant had continued in service:
Provided that where the departmental proceedings are instituted by an authority subordinate to the State Government, that authority shall submit a report recording its findings to the State Government.
Indisputably, therefore, the departmental proceedings which have been pending against the Appellant do not suffer from any legal infirmity and in law would be deemed to have been continuing.
11. In State of U.P. v. Harihar Bholenath MANU/SC/8621/2006 : (2006) 13 SCC 460 this Court stated: (SCC p. 465, para 10)
10. A departmental proceeding can be initiated for recovery of amount suffered by the State exchequer owing to the acts of omission or commission of a delinquent employee in three different situations:
(i) when a disciplinary proceeding is initiated and concluded against a delinquent employee before he reaches his age of superannuation;
(ii) when a proceeding is initiated before the delinquent officer reached his age of superannuation but the same has not been concluded and despite the superannuation of the employee, an order of recovery of the amount from the pension and gratuity is passed; and
(iii) an enquiry is initiated after the delinquent employee reaches his age of superannuation.
13. Mr. Rama Krishna Reddy, however, would urge that having regard to the fact that the departmental proceedings were initiated in the year 1992-1993, this Court should not direct continuation of the departmental proceedings any further. Strong reliance in this behalf has been placed on M.V. Bijlani v. Union of India MANU/SC/1857/2006 : (2006) 5 SCC 88.
14. We have noticed heretobefore that continuation of the departmental proceedings is not illegal. The Pension Code raises a legal fiction in terms whereof the departmental proceedings would be deemed to have continued. The Tribunal has passed an order in favour of the Appellant on technical grounds. The High Court, therefore, in our opinion, cannot be said to have committed any illegality in passing the impugned judgment.
It is apparent that what kind of punishment can be imposed would depend upon the relevant service Rule as in the aforesaid case, the relevant service Rule 9 provided deemed continuance of the employee in service for the purpose of withholding or withdrawal of pension.
10.10. In State of Maharashtra v. M.H. Mazumdar MANU/SC/0485/1988 : (1988) 2 SCC 52, Rules 188 and 189 of Bombay Civil Services Rules came up for consideration. The Rules provided for withholding or withdrawing of a pension or any part of it. In terms of the rule, it was held that in case the pensioner was found guilty of grave misconduct while he was in service, the grant of pension and its continuation would depend upon the outcome of the inquiry. The proceeding under the relevant Rule was not for the imposition of the penalty of dismissal etc. but for the purpose of withdrawal or withholding of the pension provided under the Rules 188 and 189. This Court opined thus:
5. The aforesaid two Rules empower Government to reduce or withdraw a pension. Rule 189 contemplates withholding or withdrawing of a pension or any part of it if the pensioner is found guilty of grave misconduct while he was in service or after the completion of his service. Grant of pension and its continuance to a government servant depend upon the good conduct of the government servant. Rendering satisfactory service maintaining good conduct is a necessary condition for the grant and continuance of pension. Rule 189 expressly confers power on the Government to withhold or withdraw any part of the pension payable to a government servant for misconduct which he may have committed while in service. This Rule further provides that before any order reducing or withdrawing any part of the pension is made by the competent authority the pensioner must be given opportunity of defence in accordance with the procedure specified in Note I to Rule 33 of the Bombay Civil Services Conduct, Discipline and Appeal Rules. The State Government's power to reduce or withhold pension by taking proceedings against a government servant even after his retirement is expressly preserved by the aforesaid rules. The validity of the Rules was not challenged either before the High Court or before this Court. In this view, the Government has power to reduce the amount of pension payable to the Respondent. In M. Narasimhachar v. State of Mysore MANU/SC/0191/1959 : AIR 1960 SC 247 and State of Uttar Pradesh v. Brahm Datt Sharma MANU/SC/0711/1987 : (1987) 2 SCC 179 similar Rules authorising the Government to withhold or reduce the pension granted to the government servant were interpreted and this Court held that merely because a government servant retired from service on attaining the age of superannuation he could not escape the liability for misconduct and negligence or financial irregularities which he may have committed during the period of his service and the Government was entitled to withhold or reduce the pension granted to a government servant.
6. The High Court in our view committed serious error in holding that the State Government had no authority to initiate any proceedings against the Respondent. In B.J. Shelat v. State of Gujarat MANU/SC/0346/1978 : (1978) 2 SCC 202 disciplinary proceedings had been initiated against the government servant for purposes of awarding punishment to him after he had retired from service. The ratio of that decision is not applicable to the instant case as in the present case the purpose of the enquiry was not to inflict any punishment; instead the proceedings were initiated for determining the Respondent's pension. The proceedings were taken in accordance with Rules 188 and 189 of the Rules. It appears that the attention of the High Court was not drawn to these rules.