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Thursday, August 15, 2013

Pension and Gratuity with holding pending inquiry = whether, in the absence of any provision in the Pension Rules, the State Government can withhold a part of pension and/or gratuity during the pendency of departmental/ criminal proceedings? = Fact remains that there is an imprimatur to the legal principle that the right to receive pension is recognized as a right in “property”. 14. Article 300 A of the Constitution of India reads as under: “300A Persons not to be deprived of property save by authority of law. - No person shall be deprived of his property save by authority of law.” Once we proceed on that premise, the answer to the question posed by us in the beginning of this judgment becomes too obvious. A person cannot be deprived of this pension without the authority of law, which is the Constitutional mandate enshrined in Article 300 A of the Constitution. It follows that attempt of the appellant to take away a part of pension or gratuity or even leave encashment without any statutory provision and under the umbrage of administrative instruction cannot be countenanced. 15. It hardly needs to be emphasized that the executive instructions are not having statutory character and, therefore, cannot be termed as “law” within the meaning of aforesaid Article 300A. On the basis of such a circular, which is not having force of law, the appellant cannot withhold - even a part of pension or gratuity. As we noticed above, so far as statutory rules are concerned, there is no provision for withholding pension or gratuity in the given situation. Had there been any such provision in these rules, the position would have been different. 16. We, accordingly, find that there is no merit in the instant appeals as the impugned order of the High Court is without blemish. Accordingly, these appeals are dismissed with costs quantified at Rs. 10,000/- each.

                               published in    http://judis.nic.in/supremecourt/filename=40650                 
              REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL NO. 6770 OF 2013
      (Arising out of Special Leave Petition (Civil) No. 1427 of 2009)




      State of Jharkhand  & Ors.                        ….. Appellant(s)


                                     Vs.


      Jitendra Kumar Srivastava & Anr.
      …..Respondent(s)




      WITH
      C.A. No. 6771/2013
      (arising out of SLP(C) No. 1428 of 2009)


                               J U D G M E N T

      A.K. Sikri, J

      1.    Leave granted.

      2.    Crisp and short question which  arises  for  consideration  in
      these cases is as to
whether, in the absence of any provision in the
      Pension Rules, the State Government can withhold a part  of  pension and/or  gratuity  during  the  pendency  of  departmental/  criminal proceedings?  
The High Court has -

      answered this question, vide the impugned judgment, in the  negative
      and hence directed the appellant to release the withheld dues to the
      respondent.
Not happy with this outcome, the State of Jharkhand has
      preferred this appeal.

      3.    For the sake of convenience we  will  gather  the  facts  from
      Civil Appeal arising out of SLP(Civil) No. 1427 of 2009.  Only facts
      which need to be noted, giving rise to the  aforesaid  questions  of
      law, are the following:

            The  respondent  was  working  in  the  Department  of  Animal
      Husbandry and Fisheries.  He  joined  the  said  Department  in  the
      Government of Bihar on  2.11.1966.  On  16.4.1996,  two  cases  were
      registered against him under various Sections of  the  Indian  Penal
      Code as well as  Prevention  of  Corruption  Act,  alleging  serious
      financial irregularities during the years 1990-1991, 1991-1992  when
      he  was  posted  as  Artificial  Insemination  Officer,  Ranchi.  On
      promulgation  of  the  Bihar  Reorganisation  Act,  2000,  State  of
      Jharkhand (Appellant herein) came into existence and the  Respondent
      became the employee of the appellant State. Prosecution, in  respect
      of the aforesaid  two  criminal  cases  against  the  respondent  is
      pending.  On  30th  January,  2002,  the  appellant   also   ordered
      initiation  of  disciplinary  action  against   him.   While   these
      proceedings were still pending, on attaining -

      the age of superannuation, the respondent retired from the  post  of
      Artificial Insemination Officer, Ranchi on 31.08.2002. The appellant
      sanctioned the release and payment  of  General  Provident  Fund  on
      25.5.2003. Thereafter, on 18.3.2004,  the  Appellant  sanctioned  90
      percent provisional pension to the respondent. Remaining 10  percent
      pension and salary of his suspension period (30.1.2002 to 30.8.2002)
      was withheld pending outcome of  the  criminal  cases/  departmental
      inquiry against him. He was  also  not  paid  leave  encashment  and
      gratuity.

      4.    Feeling aggrieved with this action of the withholding  of  his
      10 percent of the pension and non-release  of  the  other  aforesaid
      dues, the respondent preferred the Writ  Petition  before  the  High
      Court of Jharkhand.  This Writ Petition was disposed of by the  High
      Court by remitting the case back to the  Department  to  decide  the
      claim of the petitioner for payment of provisional pension, gratuity
      etc.  in  terms  of  Resolution  No.  3014  dated  31.7.1980.    The
      appellant,  thereafter,  considered  the   representation   of   the
      respondent but rejected the same vide orders  dated  16.3.2006.  The
      respondent challenged the rejection by filing another Writ  Petition
      before the High Court.  The  said  petition  was  dismissed  by  the
      learned Single Judge. The respondent filed Intra Court Appeal  which
      has been allowed by the Division Bench vide the -

      impugned orders dated 31.10.2007. The Division Bench has  held  that
      the question is squarely covered by the full Bench decision of  that
      Court in the case of Dr. Dudh Nath Pandey vs. State of Jharkhand and
      Ors. 2007  (4)  JCR  1.  In  the  said  full  Bench  Judgment  dated
      28.8.2007,  after detailed discussions  on the  various  nuances  of
      the subject matter, the High Court has held:

           “ To sum up the answer for the two questions are as follows:

           (i)   Under Rule 43(a) and 43(b) of Bihar Pension  Rules,  there
                 is no power for the Government  to  withhold  Gratuity  and
                 Pension during the pendency of the departmental  proceeding
                 or criminal proceeding. It  does  not  give  any  power  to
                 withhold Leave Encashment at any stage either prior to  the
                 proceeding or after conclusion of the Proceeding.

           (ii)  The circular, issued by the Finance Department,  referring
                 to the withholding of the leave encashment would not  apply
                 to the present facts of the case as it has no  sanctity  of
                 law”.

      5.    Mr. Amarendra Sharan, the learned Senior Counsel appearing for
      the petitioner accepted the fact that in so far as the Pension Rules
      are concerned, there is no  provision  for  withholding  a  part  of
      pension  or  gratuity.  He,  however,  submitted  that   there   are
      administrative instructions which permit withholding of  a  part  of
      pension and gratuity. His submission was that  when  the  rules  are
      silent on a particular aspect, gap can be filled by the -

      administrative instructions which was well settled  legal  position,
      laid down way back in  the  year  1968  by  the  Constitution  Bench
      Judgment of this Court in Sant Ram Sharma vs. Union  of  India  1968
      (1) SCR 111. He,  thus, argued that the High Court has committed  an
      error in holding that there was no  power  with  the  Government  to
      withhold   the   part    of    pension    or    gratuity,    pending
      disciplinary/criminal proceedings.

      6.    The aforesaid arguments of the learned Senior Counsel based on
      the judgment in Sant Ram Sharma would not cut any ice in so  far  as
      present case is concerned, because of the reason this  case  has  no
      applicability in the given case.   Sant  Ram  judgment  governs  the
      field of administrative law wherein the Constitution Bench laid down
      the principle that the rules framed by the authority in exercise  of
      powers contained in an enactment, would also have  statutory  force.
      Though the administration can issue administrative instructions  for
      the smooth administrative function, such administrative instructions
      cannot   supplant   the   rules.   However,   these   administrative
      instructions can supplement the statutory rules by  taking  care  of
      those situations where the statutory rules are silent.   This  ratio
      of that judgment is narrated in the following  manner:

           “It is true that there is no specific  provision  in  the  Rules
           laying down the principle of promotion of junior or senior grade
           -

           officers to selection grade posts.  But that does not mean  that
           till statutory rules are framed in this  behalf  the  Government
           cannot issue administrative instructions regarding the principle
           to be followed  in  promotions  of  the  officers  concerned  to
           selection grade posts.  It is true that Government cannot  amend
           or supersede statutory rules by administrative instructions, but
           if the rules are silent on any particular point  Government  can
           fill up the gaps and supplement the rules and issue instructions
           and inconsistent with the rules already framed”.




                 There cannot be any quarrel on  this  exposition  of  law
      which is well grounded in a series of judgments pronounced post Sant
      Ram Sharma case as well.  However, the question which  is  posed  in
      the present case is altogether different.

      7.    It is an accepted position that gratuity and pension  are  not
      the bounties.  An employee earns these benefits by dint of his long,
      continuous, faithful and un-blemished service.  Conceptually  it  is
      so lucidly described in D.S. Nakara and Ors.  Vs.  Union  of  India;
      (1983) 1 SCC 305 by Justice D.A. Desai, who spoke for the Bench,  in
      his inimitable style, in the following words:

           “The approach of the respondents raises a  vital  and  none  too
           easy of answer, question as to why pension is paid.  And why was
           it  required  to  be  liberalised?   Is  the   employer,   which
           expression will include even the State, bound  to  pay  pension?
           Is there any obligation on  the  employer  to  provide  for  the
           erstwhile employee even after the  contract  of  employment  has
           come to an end and the employee has ceased to render service?

           -

           What is a pension?  What are the goals of pension?  What  public
           interest or purpose, if any, it seeks to serve?  If it does seek
           to serve some public purpose, is it thwarted by such  artificial
           division of retirement pre and post a  certain  date?   We  need
           seek answer to these and incidental questions so  as  to  render
           just justice between parties to this petition.

      The antiquated notion of pension being a bounty a gratituous  payment
           depending upon the sweet will  or  grace  of  the  employer  not
           claimable as a right and, therefore, no right to pension can  be
           enforced through Court has been swept under the  carpet  by  the
           decision of the Constitution Bench in  Deoki  Nandan  Prasad  v.
           State of Bihar and Ors.[1971] Su. S.C.R. 634 wherein this  Court
           authoritatively ruled that pension is a right and the payment of
           it does not depend upon the discretion of the Government but  is
           governed by the rules and a  Government  servant  coming  within
           those rules is entitled to claim pension.  It was  further  held
           that the grant  of  pension  does  not  depend  upon  any  one’s
           discretion.  It is only  for  the  purpose  of  quantifying  the
           amount having regard to service and other allied maters that  it
           may be necessary for the authority to  pass  an  order  to  that
           effect but the right to receive pension flows to the officer not
           because of any  such order but by virtue  of  the  rules.   This
           view was reaffirmed in State of Punjab and Anr. V.  Iqbal  Singh
           (1976)  IILLJ 377SC”.




      8.    It is thus hard earned benefit which accrues  to  an  employee
      and is in the nature of “property”.  This right to  property  cannot
      be taken away without the due process of law as per  the  provisions
      of Article 300 A of the Constitution of India.

      9.    Having explained the legal position, let us first discuss  the
      rules  relating  to  release  of  Pension.   The  present  case   is
      admittedly governed by -

      Bihar Pension Rules, as applicable to the State of  Jharkhand.  Rule
      43(b)  of  the  said  Pension  Rules  confers  power  on  the  State
      Government to withhold or withdraw a pension or part  thereof  under
      certain circumstances.  This Rule 43(b) reads as under:

           “43(b) The State Government further reserve  to  themselves  the
           right of withholding or withdrawing a pension or any part of it,
           whether permanently or for specified period, and  the  right  of
           ordering the recovery from a pension of the whole or part of any
           pecuniary loss caused to Government if the pensioner is found in
           departmental or judicial proceeding to have been guilty to grave
           misconduct, or to  have  caused  pecuniary  loss  to  Government
           misconduct, or to have caused pecuniary loss  to  Government  by
           misconduct or negligence, during his service  including  service
           rendered on re-employment after retirement”.




            From the  reading  of  the  aforesaid  Rule  43(b),  following
      position emerges:-

           (i)   The State Government has the power to withhold or withdraw
                 pension or any part of it when the pensioner is found to be
                 guilty  of  grave  misconduct  either  in  a   departmental
                 proceeding or judicial proceeding.


           (ii)  This provision does not empower the State  to  invoke  the
                 said power while  the  department  proceeding  or  judicial
                 proceeding are pending.


           (iii) The power of withholding leave encashment is not  provided
                 under this rule to the State irrespective of the result  of
                 the above proceedings.


           (iv)  This power can be invoked only when  the  proceedings  are
                 concluded finding guilty and not before.



      10.   There is also a Proviso  to Rule 43(b), which provides that:-

                 “A.   Such  departmental  proceedings,  if  not  instituted
                 while the Government Servant  was  on  duty  either  before
                 retirement or during re-employment.


                       i.    Shall not be instituted save with the  sanction
                            of the State Government.


                       ii    Shall be in respect  of  an  event  which  took
                            place not  more  than  four  years  before  the
                            institution of such proceedings.


                       iii   Shall be conducted by  such  authority  and  at
                            such place or places as  the  State  Government
                            may direct and in accordance with the procedure
                            applicable to proceedings on which an order  of
                            dismissal from service may be made:-


                 B.    Judicial proceedings, if  not  instituted  while  the
                 Government Servant was on duty either before retirement  or
                 during re-employment shall have been instated in accordance
                 with sub clause (ii) of clause (a) and


                 C.     The  Bihar  Public  Service  Commission,  shall   be
                 consulted before final orders are passed.



           It is apparent that the proviso speaks about the institution of
      proceedings.  For  initiating  proceedings,  Rule  43(b)  puts  some
      conditions, i.e, Department proceeding as indicated in  Rule  43(b),
      if not instituted while the Government Servant was on duty,  then it
      shall not be instituted except:-

                 (a)   With the sanction of the Government,

                 -

                 (b)   It shall be in respect of an event which  took  place
                       not more than four years before  the  institution  of
                       the proceedings.

                 (c)   Such proceedings shall be conducted  by  the  enquiry
                       officer in accordance with the proceedings  by  which
                       dismissal of the services can be made.



            Thus, in so far as the proviso is concerned  that  deals  with
      condition for initiation of proceedings and the period of limitation
      within which such proceedings can be initiated.

      11.   Reading of Rule 43(b) makes  it  abundantly  clear  that  even
      after the conclusion of the departmental inquiry, it is  permissible
      for the Government to withhold pension etc. ONLY when a  finding  is
      recorded either in departmental inquiry or judicial proceedings that
      the employee had committed grave misconduct in the discharge of  his
      duty while in his office. There is no provision  in  the  rules  for
      withholding  of  the  pension/  gratuity  when   such   departmental
      proceedings or judicial proceedings are still pending.

      12.   Right to receive pension was recognized as right  to  property
      by the Constitution Bench Judgment  of  this  Court  in  Deokinandan
      Prasad vs. State of Bihar; (1971) 2 SCC 330, as is apparent from the
      following discussion:

      “29.  The last question to be considered, is,  whether  the  right  to
      receive pension by a Government servant is property, so as to  attract
      Articles 19(1)(f) and 31(1) of the Constitution. This  question  falls
      to be decided in order  to  consider  whether  the  writ  petition  is
      maintainable  under  Article 32.  To  this  aspect,  we  have  already
      adverted to earlier and we now proceed to consider the same.

      30.   According to the petitioner the  right  to  receive  pension  is
      property and the respondents by an executive order dated June 12, 1968
      have  wrongfully  withheld  his  pension.  That  order   affects   his
      fundamental   rights    under    Articles 19(1)(f) and 31(1) of    the
      Constitution. The respondents, as we have already  indicated,  do  not
      dispute the right of the petitioner to get pension, but for the  order
      passed on August 5, 1966. There is only a bald averment in the counter-
      affidavit that  no  question  of  any  fundamental  right  arises  for
      consideration. Mr. Jha, learned counsel for the respondents,  was  not
      prepared to take up the position that the  right  to  receive  pension
      cannot be considered to be property under any circumstances. According
      to him, in this case, no order has been passed by the  State  granting
      pension. We understood the learned counsel to urge that if  the  State
      had passed an order granting pension and later on  resiles  from  that
      order, the latter order may be considered to affect  the  petitioner's
      right     regarding      property      so      as      to      attract
      Articles 19(1)(f) and 31(1) of the Constitution.

      31.   We are not inclined to accept  the  contention  of  the  learned
      counsel for the respondents. By a reference to the material provisions
      in the Pension Rules, we have already  indicated  that  the  grant  of
      pension does not depend upon an order being passed by the  authorities
      to that effect. It may be that for the  purposes  of  quantifying  the
      amount having regard  to  the  period  of  service  and  other  allied
      matters, it may be necessary for the authorities to pass an  order  to
      that effect, but the right to receive pension flows to an officer  not
      because of the said order but by virtue of the Rules.  The  Rules,  we
      have already pointed out, clearly recognise the right of persons  like
      the petitioner to receive pension under  the  circumstances  mentioned
      therein.

      32.   The question whether the pension granted to a public servant  is
      property attracting Article 31(1) came up for consideration before the
      Punjab High Court in Bhagwant Singh v. Union of India A.I.R. 1962  Pun
      503. It was held that such a  right  constitutes  "property"  and  any
      interference will be a breach of Article 31(1) of the Constitution. It
      was further held that the State cannot by an executive  order  curtail
      or abolish altogether the right  of  the  public  servant  to  receive
      pension. This decision was given  by  a  learned  Single  Judge.  This
      decision was taken up in Letters Patent Appeal by the Union of  India.
      The Letters Patent Bench in its decision in Union of India v. Bhagwant
      Singh I.L.R. 1965 Pun 1 approved the decision of  the  learned  Single
      Judge. The Letters Patent Bench held that the  pension  granted  to  a
      public servant on his retirement is "property" within the  meaning  of
      Article 31(1) of the Constitution and he could be deprived of the same
      only by an authority of law and that pension  does  not  cease  to  be
      property on the mere denial or cancellation of it. It was further held
      that the character of pension as "property"  cannot  possibly  undergo
      such mutation at the whim of a particular person or authority.




      33.   The matter again came up before a Full Bench of the  Punjab  and
      Haryana High Court in K.R. Erry v. The State of Punjab I.L.R. 1967 P &
      H 278. The High Court had to consider the nature of the  right  of  an
      officer  to  get  pension.  The  majority  quoted  with  approval  the
      principles laid down in the two earlier decisions  of  the  same  High
      Court, referred to above, and held that  the  pension  is  not  to  be
      treated as a bounty payable on the sweet  will  and  pleasure  of  the
      Government and that the right to superannuation pension including  its
      amount is a valuable right vesting in  a  Government  servant  It  was
      further held by the majority  that  even  though  an  opportunity  had
      already been afforded to  the  officer  on  an  earlier  occasion  for
      showing  cause  against  the  imposition  of  penalty  for  lapse   or
      misconduct on his part and he has  been  found  guilty,  nevertheless,
      when a cut is sought to be imposed in the quantum of  pension  payable
      to an officer on the basis of misconduct already proved against him, a
      further opportunity to show cause in that regard must be given to  the
      officer. This view regarding the giving  of  further  opportunity  was
      expressed by the learned Judges on the basis of  the  relevant  Punjab
      Civil Service Rules. But the learned Chief Justice in  his  dissenting
      judgment was not prepared to agree with the majority that  under  such
      circumstances a further opportunity should be given to an officer when
      a reduction in the amount of pension payable is made by the State.  It
      is not necessary for us in the case on hand, to consider the  question
      whether before taking action by way of reducing or denying the pension
      on the basis of disciplinary action already taken, a further notice to
      show cause should be given to an officer. That question does not arise
      for consideration before us. Nor are we  concerned  with  the  further
      question regarding the  procedure,  if  any,  to  be  adopted  by  the
      authorities before reducing or withholding the pension for  the  first
      time after the retirement of an officer. Hence we express  no  opinion
      regarding the views expressed by the majority and the minority  Judges
      in the above Punjab High Court decision, on this aspect. But we  agree
      with the view of  the  majority  when  it  has  approved  its  earlier
      decision that pension is not a bounty payable on the  sweet  will  and
      pleasure of the Government and that, on the other hand, the  right  to
      pension is a valuable right vesting in a government servant.

      34.   This Court in State of Madhya Pradesh  v. Ranojirao  Shinde  and
      Anr. MANU/SC/0030/1968 : [1968]3SCR489 had to  consider  the  question
      whether a "cash grant"  is  "property"  within  the  meaning  of  that
      expression in Articles 19(1)(f) and 31(1) of  the  Constitution.  This
      Court held that it was property, observing "it is obvious that a right
      to sum of money is property".

      35.   Having due regard to the above decisions, we are of the  opinion
      that the right of the petitioner to receive pension is property  under
      Article 31(1) and by a mere executive order the State had no power  to
      withhold the same. Similarly, the said claim is  also  property  under
      Article 19(1)(f) and it is not saved by Sub-article (5) of Article 19.
      Therefore, it follows that the order dated June 12, 1968  denying  the
      petitioner right to receive pension affects the fundamental  right  of
      the petitioner under Articles 19(1)(f) and 31(1)of  the  Constitution,
      and as such the writ petition under Article 32 is maintainable. It may
      be that under the Pension Act (Act 23 of 1871) there is a bar  against
      a civil court entertaining any suit relating to the matters  mentioned
      therein. That does not stand in the way of a Writ  of  Mandamus  being
      issued to the State to properly consider the claim of  the  petitioner
      for payment of pension according to law”.

      13.     In State of West Bengal Vs.  Haresh  C.  Banerjee  and  Ors.
      (2006) 7 SCC 651, this Court recognized  that even when,  after  the
      repeal of Article 19(1)(f) and Article 31 (1)  of  the  Constitution
      vide Constitution (Forty-Fourth Amendment)  Act,  1978  w.e.f.  20th
      June,  1979,  the  right  to  property  was  no  longer  remained  a
      fundamental right, it was still a Constitutional right, as  provided
      in Article 300A of the Constitution. Right to  receive  pension  was
      treated as right to property. Otherwise, challenge in that case  was
      to the vires of Rule 10(1) of the West Bengal Services (Death-cum--

      Retirement Benefit) Rules, 1971 which conferred the right  upon  the
      Governor to withhold or withdraw a pension or any part thereof under
      certain circumstances and the said challenge was  repelled  by  this
      Court.

            Fact  remains  that  there  is  an  imprimatur  to  the  legal
      principle that the right to receive pension is recognized as a right in “property”.

      14.   Article 300 A of the Constitution of India reads as under:

           “300A Persons not to be deprived of property save  by  authority  of law. -  No person shall be deprived of his property  save  by   authority of law.”




           Once we proceed on that premise, the  answer  to  the  question  posed by us in the beginning of this judgment becomes too obvious. A person cannot be deprived of this pension without the  authority  of  law, which is the Constitutional mandate enshrined in Article 300  A  of the Constitution. It follows that attempt  of  the  appellant  to  take away a part of pension or gratuity  or  even  leave  encashment  without  any  statutory  provision  and   under   the   umbrage   of  administrative instruction cannot be countenanced.

      15.    It  hardly  needs  to  be  emphasized  that   the   executive
      instructions are not  having  statutory  character  and,  therefore, cannot be termed as “law” within the meaning  of  aforesaid  Article 300A.  
On the basis of such a circular, which is not having force of  law, the appellant cannot withhold -  even a part of pension or gratuity.    
As we noticed above,  so  far
      as  statutory  rules  are  concerned,  there  is  no  provision  for
      withholding pension or gratuity in the given situation.   Had  there been any such provision in these rules, the position would have been different.

      16.    We, accordingly, find that there is no merit in  the  instant
      appeals as the impugned order of the High Court is without  blemish.
      Accordingly, these appeals are dismissed with  costs  quantified  at   Rs. 10,000/- each.




                                                                ……………………….J.

                                                        [K.S. Radhakrishnan]




                                                               ………………………….J.

                                                                [A.K. Sikri]




      New Delhi
      August 14, 2013


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