Supreme Court

Chairman Cum Managing Director vs Sri Rabindranath Choubey

MANU/SC/0457/2020

27.05.2020

Service

Employer has a right to withhold the gratuity during the pendency of the disciplinary proceedings

In the facts of present case, Respondent ¬employee was in service and posted as Chief General Manager. He was served with the charge-sheet. There was very serious allegation of misconduct. The employee was thereafter suspended from service under the Conduct, Discipline & Appeal Rules, 1978 (“CDA Rules”), pending departmental enquiry against him. This suspension however was revoked without prejudice to the departmental enquiry. On completion of 60 years of age, the respondent¬-employee was superannuated. 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 to the Director (Personnel) for payment of gratuity. 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 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. Consequently, direction is given to the Appellant¬-employer to release the amount of gratuity payable to the Respondent-¬employee. Hence, the present appeal.

The short question of law which fell for consideration of present Court is 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. Another question raised is whether it is permissible for the disciplinary authority to impose penalty of dismissal after the employee stood retired from service.

Several service benefits would depend upon the outcome of the inquiry, such as concerning the period during which inquiry remained pending. It would be against the public policy to permit an employee to go scot¬-free after collecting various service benefits to which he would not be entitled, and the event of superannuation cannot come to his rescue and would amount to condonation of guilt. Because of the legal fiction provided under the rules, it can be completed in the same manner as if the employee had remained in service after superannuation, and appropriate punishment can be imposed.

Various provisions of the Payment of Gratuity Act, 1972 do not come in the way of departmental inquiry and as provided in Section 4(6) of Act, 1972 and Rule 34.3 in case of dismissal gratuity can be forfeited wholly or partially, and the loss can also be recovered. An inquiry can be continued as provided under the relevant service rules as it is not provided in the Act, 1972 that inquiry shall come to an end as soon as the employee attains the age of superannuation. The Act does not deal with the matter of disciplinary inquiry, it contemplates recovery from or forfeiture of gratuity wholly or partially as per misconduct committed and does not deal with punishments to be imposed and does not supersede the Rules 34.2 and 34.3 of the CDA Rules.

The mandate of Section 4(6) of recovery of loss provided under Section 4(6)(a) and forfeiture of gratuity wholly or partially under Section 4(6)(b) is furthered by the Rules 34.2 and 34.3. If there cannot be any dismissal after superannuation, intendment of the provisions of Section 4(6) would be defeated. In view of provisions of Rules 34.2 and 34.3 of the CDA Rules, the inquiry can be continued given the deeming fiction in the same manner as if the employee had continued in service and appropriate punishment, including that of dismissal can be imposed apart from the forfeiture of the gratuity wholly or partially including the recovery of the pecuniary loss as the case may be.

The Appellant – employer has a right to withhold the gratuity during the pendency of the disciplinary proceedings, and the disciplinary authority has powers to impose the penalty of dismissal/major penalty upon the Respondent even after his attaining the age of superannuation, as the disciplinary proceedings were initiated while the employee was in service.

Under the circumstances, the impugned judgment and order passed by the High Court cannot be sustained and the same is quashed and set aside and the order passed by the Controlling Authority is hereby restored. However, the appellant¬-employer is hereby directed to conclude the disciplinary proceedings at the earliest. The present appeal is accordingly allowed.

Tags : Gratuity Pendency Disciplinary proceedings

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