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Wednesday, October 30, 2013

Rule 34 of CDA and Payment of Gratuity Act - Departmental enquiry - holding of Gratuity of a retired person - Since there is a conflict in opinion of three Bench judgment of this Court which is later in point of time. State Bank of India vs. Ram lal Bhaskar and Anr. 2011(10)SCC249. and the judgement of Jaswant Singh Gill vs. Bharat Coking Coal Ltd. & Ors. (2007) 1 SCC 663. matter referred to larger bench - Referred to larger Bench = = Ch. cum Man. Director Mahanadi Coalfield Ltd. ...........Appellant Versus Rabindranath Choubey ........Respondent = http://judis.nic.in/supremecourt/filename=40916

Rule 34 of CDA  and Payment of Gratuity Act - Departmental enquiry - holding of Gratuity of a retired person - Since there is a conflict in opinion of three Bench judgment of this  Court  which  is  later  in point of time.  State Bank of India  vs.  Ram  lal Bhaskar and Anr. 2011(10)SCC249.  and the judgement of Jaswant  Singh  Gill  vs.  Bharat Coking Coal Ltd. & Ors. (2007) 1 SCC 663. matter referred to larger bench  - Referred to larger Bench =
whether it is  permissible  in  law  for  the appellant to withhold the payment of  gratuity  to  the  respondent, even after his superannuation from service, because of the  pendency  of disciplinary proceedings against him.-
whether gratuity can be withheld in the wake of Rule 34  of  CDA  Rules when examined in juxtaposition with the provisions of the Gratuity Act.

The  Division
       Bench  of  the  High  Court  has  held  that   writ   petition   was
       maintainable. 
On merits, it ruled that the disciplinary  proceedings
       against the respondent were initiated prior to attaining the age  of
       superannuation.   
The   respondent   retired   from    service    on
       superannuation and hence the question of imposing a major penalty of
       removal or dismissal  from  service  would  not  arise  as  per  the
       decision of the Supreme Court  in  Jaswant  Singh  Gill  vs.  Bharat
       Coking Coal Ltd. & Ors. (2007) 1 SCC 663. 
The High Court has further
       held that the power to withhold payment of gratuity as contained  in
       Rule 34(3) of the Rules, 1978 shall be subject to the provisions  of
       the Payment of Gratuity Act, 1972. 
Therefore,  the  statutory  right
       accrued to the Respondent to get  gratuity  cannot  be  impaired  by
       reason of the Rules framed by the Coal India Ltd. which do not  have
       the force of a statute. 
On that basis, direction  is  given  to  the
       appellant  to  release  the  amount  of  gratuity  payable  to   the
       respondent. =

    To put it otherwise, whether in the scheme of  Gratuity  Act,  gratuity
    has to be  necessarily  released  to  the  concerned  employee  on  his
    retirement even if departmental proceedings are  pending  against  him.
    We find that Jaswant Singh Gill's case directly answers this  question,
    that too in the context of these very CDA Rules. However, it is because
    of the reason that the said judgment proceeds on the basis  that  after
    the retirement of an employee, penalty of dismissal cannot  be  imposed
    upon the retired  employee.  If  this  view  is  not  correct  and  the
    imposition of penalty of dismissal is still permissible, employer  will
    get the right to forfeit the  gratuity  of  such  an  employee  in  the
    eventualities provided under Sections 4(1)  & 4 (6) of the  Payment  of
    Gratuity Act which reads as under:-


            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 hi m 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.


           xxxxxxxxxxxxxxxxxxxxxxxxxxxxx


        (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 hi m in  the  course  of
        his employment.






    24.    Thus for invoking Clause (a) or (b) of sub-section 6 of  Section
    4 necessary pre-condition is the termination of service on the basis of
    departmental enquiry or conviction in a criminal case.  This  provision
    would not get  triggered  if  there  is  no  termination  of  services.




    25.    It is the case of the appellant that in the charge sheet  served
    upon the respondent herein,  there  are  very  serious  allegations  of
    misconduct alleging dishonestly causing coal stock  shortage  amounting
    to Rs. 31.65 crores,  and  thereby  causing  substantial  loss  to  the
    employer.
 If such a charge is proved and  punishment  of  dismissal  is
    given thereupon, the provisions of  Section  4(6)  of  the  Payment  of
    Gratuity would naturally get attracted  and  it  would  be  within  the
    discretion of the appellant to forfeit  the  gratuity  payable  to  the
    respondent. 
As a corollary one can safely say  that  the  employer  has
    right to withhold the gratuity pending departmental  inquiry.  
However,
    as explained  above,  this  course  of  action  is  available  only  if
    disciplinary authority has necessary powers to impose  the  penalty  of
    dismissal upon the respondent even after his retirement. 
Having  regard
    to our discussion above of Jaswant  Singh  Gill  (supra)  and  Ram  Lal
    Bhaskar (supra), this issue needs to be considered authoritatively by a
    larger Bench. 
We, therefore, are of the opinion that present appeal  be
    decided by a Bench of three Judges.


    26.    We accordingly direct the Registry to place  the  matter  before
    Hon'ble the Chief Justice for constituting a larger Bench to hear  this
    appeal.

                                                           [REPORTABLE]


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                         CIVIL APPEAL NO.  9693/2013
              [SPECIAL LEAVE PETITION (CIVIL)NO. 31583 OF 2013]




    Ch. cum Man. Director Mahanadi Coalfield Ltd.
    ...........Appellant


    Versus


    Rabindranath Choubey
    ........Respondent




                               J U D G M E N T




    A.K. SIKRI, J.




    1. Leave granted.
    2. The respondent was working as  Chief  General  Manager  (Production)
       since 17.2.2006 at Rajmahal area under Mahanadi Coalfields Ltd., the
       appellant herein. 
A memo containing articles of charge was issued to
       him on 1.10.2007 alleging that there was shortage of stock  of  coal
       in Rajmahal Group of  mines  which  was  under  his  management  and
       enquiry was proposed to be conducted under Rule 29 of  the  Conduct,
       Discipline & Appeal Rules.
    3. During the pendency of the departmental proceeding,  the  Respondent
       was  allowed  to  retire  on  31.7.2010  on  attaining  the  age  of
       superannuation.
The Respondent submitted an application on 21.9.2010
       to the Director (Personnel) for payment of  gratuity.  
On  the  same
       date, he  also  submitted  an  application  before  the  Controlling
       Authority  under  Payment  of  Gratuity  Act   cum-Regional   Labour
       Commissioner for payment of gratuity.
    4. Notice was issued to the Appellant to appear. The appellant appeared
       and stated that the payment of gratuity was withheld due  to  reason
       that disciplinary case  is  pending  against  him.  The  controlling
       authority held that the claim of the Respondent was pre-mature.
    5. The respondent challenged the order by filing the writ petition. The
       single Judge dismissed the writ petition holding that in view of the
       existence of an appellate forum against  the  order  passed  by  the
       Authority, the Respondent may file an appeal  before  the  Appellate
       Authority within 21 days from the date of passing  of  the  impugned
       order.
    6. The Respondent then filed Intra  Court  Writ  Appeal.  
The  Division
       Bench  of  the  High  Court  has  held  that   writ   petition   was
       maintainable. 
On merits, it ruled that the disciplinary  proceedings
       against the respondent were initiated prior to attaining the age  of
       superannuation.   
The   respondent   retired   from    service    on
       superannuation and hence the question of imposing a major penalty of
       removal or dismissal  from  service  would  not  arise  as  per  the
       decision of the Supreme Court  in  Jaswant  Singh  Gill  vs.  Bharat
       Coking Coal Ltd. & Ors. (2007) 1 SCC 663. 
The High Court has further
       held that the power to withhold payment of gratuity as contained  in
       Rule 34(3) of the Rules, 1978 shall be subject to the provisions  of
       the Payment of Gratuity Act, 1972. 
Therefore,  the  statutory  right
       accrued to the Respondent to get  gratuity  cannot  be  impaired  by
       reason of the Rules framed by the Coal India Ltd. which do not  have
       the force of a statute. 
On that basis, direction  is  given  to  the
       appellant  to  release  the  amount  of  gratuity  payable  to   the
       respondent.
    7. In  the  aforesaid  circumstances,  the  question  which  falls  for
       consideration is as to
whether it is  permissible  in  law  for  the appellant to withhold the payment of  gratuity  to  the  respondent, even after his superannuation from service, because of the  pendency  of disciplinary proceedings against him.
    8. Before we proceed to answer this question in the light of  arguments
       advanced by Counsel on either side, we would like to point out  that
       the question of maintainability of the  writ  petition  against  the
       order of the Controlling Authority under the  Payment  Gratuity  Act
       was not raised before us by the learned Counsel for  the  appellant.
       Thus, the learned Counsel did not challenge the approach of the writ
       appeal Court in entertaining the writ appeal on merits by giving the
       reason that it was so doing to avoid confusion and  ambiguity,  more
       so when there were no disputed facts involved and the issue involved
       was pure question of law. We are,  therefore,  not  called  upon  to
       decide  as  to  whether  the  approach  of  the  Division  Bench  in
       entertaining the writ appeal on merits was erroneous or not.
    9. Reverting to the issue framed above, before we examine the same,  we
       would also like to narrate some more facts for  clear  understanding
       of the issue involved. The appellant- Ch.-cum-Man. Director Mahanadi
       Coalfield Limited (CIL) has framed the Conduct Discipline and Appeal
       Rules, 1978 (hereinafter to be referred as 'CDA Rules').  These  are
       applicable to the employees of the appellant company as well.
   10. Rule 27  of  these  CDA  Rules  mentions  the  authorities  who  are
       empowered to impose  various  punishments  which  are  specified  in
       column III of the Schedule attached to these Rules. Rule 29  enlists
       the procedure  for  imposing  major  penalties  for  misconduct  and
       misbehaviour. The CDA Rules are not statutory  in  nature.  However,
       they govern the employees of the appellant.
   11. When the respondent was served with charge sheet dated 1.10.2007, he
       was posted as Chief General Manager, Rajmahal, Group of Mines,  ECL.
       Shortly, after the service of charge sheet, respondent was  made  to
       join as Chief General Manager, Mining in M-3 Grade on  transfer  and
       was posted as Chief General Manager, Production, MCL.  On  9.2.2008,
       he was suspended from service under Rule 24.1.  of  the  CDA  Rules,
       pending departmental inquiry against him. This suspension,  however,
       was revoked from 27.2.2009 without  prejudice  to  the  departmental
       inquiry. On completion of  60  years  of  age,  the  respondent  was
       superannuated with  effect  from  31.7.2010  for  which  notice  for
       retirement on superannuation was  given  by  the  appellant  to  the
       respondent vide letter dated 8.2.2010.
   12. It would also be pertinent to mention that the inquiry  against  the
       respondent was concluded on 25.3.2009. However,  thereafter  nothing
       has been heard by the respondent. It is not known as to whether  the
       Inquiry Officer has submitted the report on the said inquiry and  if
       a report is submitted whether he has exonerated  the  respondent  or
       held him guilty of the charges. Be as it may even if  there  is  any
       report, no further action has been taken on the said report  by  the
       disciplinary authority till date and more than 4 ½ years have lapsed
       in the meantime.
   13. On the aforesaid facts, the case of the respondent before the courts
       below was that his statutory rights to receive  the  gratuity  could
       not be interdicted and as per the provisions of Payment of  Gratuity
       Act he  was  entitled  to  have  the  payment  of  gratuity  on  his
       superannuation.
Since, the  appellant  had  referred  to  the  Rules
       framed under which gratuity could be withheld pending inquiry,  this
       position was sought  to  be  countered  by  the  respondent  with  a
       submission that such Rules which were non-statutory in nature  could
       not thwart the right of the respondent to claim the  gratuity  which
       was statutorily recognised  in  his  favour  under  the  Payment  of
       Gratuity Act, 1972. 
As noted above, while giving brief narration  of
       facts, the High  Court  has  accepted  the  aforesaid  plea  of  the
       respondent and while doing so it has referred  to  the  judgment  of
       this Court in the case of Jaswant Singh Gill v. Bharat  Coking  Coal
       Ltd. and Ors. (supra). Some of the judgments cited by the  appellant
       before the High Court, which would be referred to at a later  stage,
       have been distinguished by the High Court holding that they are  not
       applicable.
   14. The arguments of the learned Counsel for the  respondent  were  same
       which were  addressed  before  the  High  Court.
Likewise,  learned
       Counsel for the appellant also made the very  same  submissions.  He
       argued that in view of Rule 34 of the CDA Rules, the management  had
       a right to withhold payment of gratuity. He also submitted that this
       rule was not contrary to any provisions of the Payment  of  Gratuity
       Act.
The submission in this behalf was that in Payment  of  Gratuity
       Act there is no provision that gratuity has to be released even when
       departmental proceedings  are  pending  against  an  employee.   
The
       learned Senior Counsel for the appellant placed strong  reliance  on
       the judgment of this Court in  State  Bank  of  India  vs.  Ram  Lal
       Bhaskar and Anr. ; 2011(11)SCALE 589; 2011(10)SCC249.
   15. In so far as rule position is concerned, it is  not  in  doubt  that
       Rule 34 permits the management to withhold the gratuity  during  the
       pendency of the disciplinary proceedings. Rule 34.2 and 34.3 of  the
       CDA Rules are relevant in  this  behalf  which  make  the  following
       reading:


           “34.2 Disciplinary proceeding, if instituted while the  employee
           was in service whether before his retirement or during  his  re-
           employment 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.”






    16.    The bone of contention is as to
whether this rule is contrary to the provisions of the Payment of Gratuity Act and, therefore, this rule being non-statutory is to be ignored and the provisions of the Gratuity Act are to be preferred. In this behalf we will  have  to  examine  the
    scheme of the Gratuity Act to find
whether as  per  the  Gratuity  Act,
    such a person like the respondent, would become entitled to receive the
    gratuity under this Act.
    17.    It is because of the reason  that  a  statutory  right  accrued,
    thus, cannot be impaired by reason of a rule which does  not  have  the
    force of statute.
It will bear  repetition  to  state  that  the  Rules
    framed by Respondent No. 1 or its holding company are not statutory  in
    nature.
    18.    It would be of interest to note that the  inter  play  of  these
    very CDA Rules, 1978 of CIL and the Provisions of Gratuity Act came for
    consideration in the case of Jaswant Singh Gill (supra) and this  Court
    explained the legal position  of  CDA  Rules  vis-a-vis  Gratuity  Act/
    gratuity of an employee in the following manner:-


           “The Act was enacted with a view to provide  for  a  scheme  for
           payment of gratuity to employees engaged inter  alia  in  mines.
           Section 3 of the Act provides for appointment of an  officer  to
           be the controlling authority. Controlling  authority  is  to  be
           responsible   for   administration   of   the   act.   Different
           authorities, however, may  be  appointed  for  different  areas.
           Section 4 of the Act entitles an employee to gratuity  after  he
           has rendered continuous service for not  less  than  five  years
           inter alia on his superannuation. Sub- Section (6) of Section  4
           contains a non-obstante clause stating:

               (a)    the gratuity of an employee, whose services have been
               terminated for  any  act,  willful  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 or 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.

           9. The Rules framed by the Coal India Limited are not  statutory
              rules.  They  have  been  made  by  the  holding  company  of
              Respondent No. 1. The provisions of the Act, therefore,  must
              prevail over the Rules. Rule 27 of  the  Rules  provides  for
              recovery from gratuity only to the extent of loss  caused  to
              the company by negligence  or  breach  of  orders  or  trust.
              Penalties, however, must  be  imposed  so  long  an  employee
              remains in service. Even if  a  disciplinary  proceeding  was
              initiated  prior   to   the   attaining   of   the   age   of
              superannuation, in  the  event,  the  employee  retires  from
              service, the question of imposing a major penalty by  removal
              or dismissal from service would not arise. Rule 34.2 no doubt
              provides  for  continuation  of  a  disciplinary   proceeding
              despite retirement of employee  if  the  same  was  initiated
              before his retirement  but  the  same  would  not  mean  that
              although he was permitted to retire and his services had  not
              been extended for the said purpose, a major penalty in  terms
              of  Rule  27  can  be  imposed.  Power  to  withhold  penalty
              contained in Rule 34.3 of the Rules must be  subject  to  the
              provisions of the Act. Gratuity becomes payable  as  soon  as
              the  employee  retires.  The  only  condition  therefore   is
              rendition of five years continuous service. A statutory right
              accrued, thus, cannot be impaired by reason of a  rule  which
              does not have the force of a statute. It will bear repetition
              to state that the Rules framed by Respondent  No.  1  or  its
              holding company are not statutory in nature. The Rules in any
              event do not provide for withholding of retrial  benefits  or
              gratuity.




          10. The Act provides for a  closely  neat  scheme  providing  for
              payment  of  gratuity.  It  is  a  complete  code  containing
              detailed provisions covering the essential  provisions  of  a
              scheme for a gratuity. It not only creates a right to payment
              of  gratuity  but  also  lays   down   the   principles   for
              quantification thereof as also the conditions on which he may
              be denied therefrom. As noticed hereinbefore, Sub-section (6)
              of Section 4 of the Act contains a non- obstante clause  vis.
              Sub-section (1) thereof. As by reason thereof, an accrued  or
              vested right is sought to be taken away, the conditions  laid
              down thereunder must be fulfilled. The  provisions  contained
              therein must, therefore, be scrupulously observed. Clause (a)
              of Sub-section  (6)  of  Section  4  of  the  Act  speaks  of
              termination of service of an employee for  any  act,  willful
              omission or  negligence  causing  any  damage.  However,  the
              amount liable to be forfeited would be only to the extent  of
              damage or loss caused. The  disciplinary  authority  has  not
              quantified the loss or damage. It  was  not  found  that  the
              damages or loss caused to Respondent No. 1 was more than  the
              amount of gratuity payable to the appellant.  Clause  (b)  of
              Sub-section (6) of Section 4 of the  Act  also  provides  for
              forfeiture of the whole amount of gratuity  or  part  in  the
              event his services had been terminated  for  his  riotous  or
              disorderly conduct or any other act of violence on  his  part
              or if he has been convicted for an  offence  involving  moral
              turpitude.  Conditions  laid  down  therein  are   also   not
              satisfied. Termination of services  for  any  of  the  causes
              enumerated in Sub-section  (6)  of  Section  4  of  the  Act,
              therefore, is imperative.”













    19.    The principles which are laid down in the aforesaid judgment are
    recapitulated below:-
           (i)        No  doubt,  Rule  34.2  of  CDA  Rules  provides  for
                continuation of disciplinary proceedings despite  retirement
                of  an  employee  if  the  same  was  initiated  before  his
                retirement However, after his retirement, major  penalty  in
                terms of Rule 27 cannot be imposed. We may state  here  that
                rule 27 of CDA Rules provides for the  nature  of  penalties
                including 'recovery from pay or gratuity of the  whole  part
                of any back loss cause  to  the  company  by  negligence  or
                breach of orders  for  trust'.  Major  penalties  which  are
                prescribed under Rule 27 are reduction  to  a  lower  grade,
                compulsory retirement, removal from service  and  dismissal.
                The Court thus, held that these major  penalties  cannot  be
                imposed upon a retired employee.


           (ii)  Gratuity  Act  gives  right  to  an  employee  to  receive
                gratuity  on  rendition  of  5  years  continuous   service.
                Gratuity become payable as soon  as  the  employee  retires.
                This statutory right which accrues to an employee cannot  be
                impaired by reason of a rule which does not have  the  force
                of a statute. Therefore, Rule 34.3 of the CDA  Rules,  which
                is non-statutory in nature, is contrary to the provisions of
                the Gratuity Act. As such, gratuity cannot  be  withheld  on
                the  retirement  of  an  employee   even   if   departmental
                proceedings were initiated against him before his retirement
                and are pending at the time of retirement.




    20.    Jaswant Singh Gill (supra) was a judgment delivered by two judge
    Bench. 
Mr. Mahavir Singh, learned  senior  counsel  has  placed  strong
    reliance to a three Bench judgment of this  Court  which  is  later  in
    point of time. 
This case is known as State Bank of India  vs.  Ram  lal
    Bhaskar and Anr. 2011(10)SCC249.
In that case, Rule 19(3) of the  State
    Bank of India Officers Service Rules, 1992 came up  for  interpretation
    which was para materia with rule 13.42 of  the  CDA  Rules.  
Said  rule
    19(3)  of  SBI  Officers  Service  Rules  also   permits   disciplinary
    proceedings to continue even after the retirement  of  an  employee  if
    those were instituted when the delinquent employee was in service. 
Then
    for the purpose of such proceedings the otherwise retired  employee  is
    deemed to be in service and those proceedings shall  be  continued  and
    concluded as if the employee had continued in service.  
Thus,  such  an
    employee is deemed to be in service for limited and  specified  purpose
    only viz. for  the  purposes  of  continuance  and  conclusion  of  the
    proceedings. 
In that case, charge sheet was served upon the  respondent
    before his retirement. 
The proceedings continued after  his  retirement
    and were conducted in accordance with relevant  rules  wherein  charges
    were proved. 
On that basis punishment of dismissal was  imposed. 
 After
    exhausting the departmental remedies, the  respondent  filed  the  writ
    petition in the High Court which was allowed and order of dismissal was
    quashed. 
This Court reversed the  said  decision  of  the  High  Court.
    
However, we find that there is  no  direct  discussion,   in  the  said
    judgment, on the issue   as  to  whether  it  is  permissible  for  the
    disciplinary authority to impose the penalty of  dismissal  of  service
    after the retirement of the employee.  
In fact  the  Court  had  dealt
    with two aspects.
One question which was deliberated was as to
whether
    inquiry could continue after the  retirement  of  the  respondent  from
    service. 
This question was answered in the affirmative having regard to
    Rule 19(3) of the SBI Officers Service Rules.
The  Court  distinguished
    another  judgment  in  UCO  Bank  &  Anr.  vs.  Rajinder  Lal   Capoor;
    2007(6)SCC694 on a ground that in the said case the delinquent  officer
    had already been superannuated and the charge sheet  was  served  after
    his retirement.  
In these circumstances the court had taken the view in
    Rajinder Lal  Capoor’s  case  that  when  an  employee  is  allowed  to
    superannuate, no inquiry  can  be  initiated  against  him  thereafter.
    However, if charge sheet is served before the  retirement  enquiry  can
    continue even after the retirement as per Rule 19(3).  
This proposition
    thus stands settled viz. if  the Rules  permit,  enquiry  can  continue
    even after the retirement of the employee.
    21.    Other  aspect which was dealt with was as to  whether  the  High
    Court could interdict the findings of disciplinary authority and arrive
    at its conclusion that the findings recorded by the Inquiry Officer was
    not substantiated by any officer on record on  the  basis  of  evidence
    produced.   This  Court  held  that  so  long  the  findings   of   the
    disciplinary authority are supported by some evidence, the  High  Court
    is not empowered  to  re-appreciate  the    evidence  as  an  appellate
    authority and came to a different and independent findings on the basis
    of that evidence. This is not the issue before us in the instant case.
    22.    It is thus, clear that the question as  to  whether  penalty  of
    dismissal could be imposed after a  retirement  was  not  categorically
    raised or dealt with. No doubt, penalty of dismissal was inflicted upon
    the employee in that case.  But it was not  specifically  on  in  clear
    terms contended that such a penalty could not be imposed on an employee
    who is already permitted to retire. At the  same  time,  innuendo,  the
    judgment gives a  semblance  of  indication  that  such  a  penalty  is
    permissible because of the reason  that  as  per  the  rules,  for  the
    purposes of enquiry, the employee shall be deemed to be in service.  As
    a sequittor, one can deduce the  principle  that  when  the  Rules,  by
    creating fiction, treat the officer still in service,  albeit  for  the
    limited purpose of the continuance and conclusion of such  proceedings,
    then any of the prescribed  penalties,  including  dismissal,   can  be
    imposed.  However,  as  we  have  pointed  out  above,  the  issue   of
    permissibility of penalty of dismissal on such a retired  official  was
    neither raised nor any direct discussion followed  thereupon.   At  the
    same time, fact remains that  penalty  of  dismissal,  even  after  the
    retirement, was upheld.  This goes contrary to the dicta laid  down  in
    Jaswant Singh Gill (supra) which took the view that no major penalty is
    permissible after retirement was not even referred to.
    23.    The issue which confronts us in the  instant  appeal  is  as  to
    whether gratuity can be withheld in the wake of Rule 34  of  CDA  Rules when examined in juxtaposition with the provisions of the Gratuity Act.
    To put it otherwise, whether in the scheme of  Gratuity  Act,  gratuity
    has to be  necessarily  released  to  the  concerned  employee  on  his
    retirement even if departmental proceedings are  pending  against  him.
    We find that Jaswant Singh Gill's case directly answers this  question,
    that too in the context of these very CDA Rules. However, it is because
    of the reason that the said judgment proceeds on the basis  that  after
    the retirement of an employee, penalty of dismissal cannot  be  imposed
    upon the retired  employee.  If  this  view  is  not  correct  and  the
    imposition of penalty of dismissal is still permissible, employer  will
    get the right to forfeit the  gratuity  of  such  an  employee  in  the
    eventualities provided under Sections 4(1)  & 4 (6) of the  Payment  of
    Gratuity Act which reads as under:-


            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 hi m 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.


           xxxxxxxxxxxxxxxxxxxxxxxxxxxxx


        (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 hi m in  the  course  of
        his employment.






    24.    Thus for invoking Clause (a) or (b) of sub-section 6 of  Section
    4 necessary pre-condition is the termination of service on the basis of
    departmental enquiry or conviction in a criminal case.  This  provision
    would not get  triggered  if  there  is  no  termination  of  services.




    25.    It is the case of the appellant that in the charge sheet  served
    upon the respondent herein,  there  are  very  serious  allegations  of
    misconduct alleging dishonestly causing coal stock  shortage  amounting
    to Rs. 31.65 crores,  and  thereby  causing  substantial  loss  to  the
    employer.
 If such a charge is proved and  punishment  of  dismissal  is
    given thereupon, the provisions of  Section  4(6)  of  the  Payment  of
    Gratuity would naturally get attracted  and  it  would  be  within  the
    discretion of the appellant to forfeit  the  gratuity  payable  to  the
    respondent. 
As a corollary one can safely say  that  the  employer  has
    right to withhold the gratuity pending departmental  inquiry.  
However,
    as explained  above,  this  course  of  action  is  available  only  if
    disciplinary authority has necessary powers to impose  the  penalty  of
    dismissal upon the respondent even after his retirement. 
Having  regard
    to our discussion above of Jaswant  Singh  Gill  (supra)  and  Ram  Lal
    Bhaskar (supra), this issue needs to be considered authoritatively by a
    larger Bench. 
We, therefore, are of the opinion that present appeal  be
    decided by a Bench of three Judges.


    26.    We accordingly direct the Registry to place  the  matter  before
    Hon'ble the Chief Justice for constituting a larger Bench to hear  this
    appeal.





                                  ….......................................J.
                                                        [K.S. RADHAKRISHNAN]






                                 …........................................J.
                                                                [A.K. SIKRI]




    New Delhi
    October  29 , 2013




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