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Sunday, May 31, 2020

Fixation of maximum length of service as an alternative criterion for retirement from public service, by no stretch of imagination, can be held to be violative of any recognised norms of employment planning. There may be a large number of compelling reasons that may necessitate the Government (or for that matter the legislature) to prescribe the rule of retirement from the government service on completion of specified years. If the reasons are germane to the object sought to be achieved, such provision can hardly be faulted.” 20. In the instant case, apart from the scheme of rules of which a reference has been made, the appellant could not enter into service below the age of attaining majority, if there is no express provision of minimum age at the entry level under the Bihar Service Code as prayed, in isolation is accepted and the age at the entry level is left open ended, it will take us to a stage where a toddler or a minor of any given age can claim his eligibility to enter into public employment which is manifestly illogical and impermissible in law. 21. Thus, under the existing scheme of Rules, the qualifying service which one could render in any manner would not exceed 42 years and this what has been clarified by the Government by its circular dated 15th January, 1998 and that was taken note of 16 by the Board in its meeting held on 15th January, 2004 which was not the subject matter of challenge and the appellant was communicated of retirement on attaining full employment of 42 years rendered on 31st May, 2012, which, in my opinion, could not be said to be in contravention to the scheme of rules.

1
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8225 OF 2012
Gopal Prasad … Appellant
versus
Bihar School Examination
Board & Others … Respondent
J U D G M E N T
Indira Banerjee, J.
I have gone through the draft judgment prepared by my
esteemed brother, but have unfortunately not been able to
agree that the appeal should be dismissed.
2. The appeal is against an order dated 3.8.2012, passed by a
Division Bench of the High Court of Judicature at Patna,
dismissing Letters Patent Appeal No.1090 of 2012 and affirming
2
the order of the Single Bench dated 24.4.2017 dismissing the
Writ Petition CWJC No. 7718 of 2012, filed by the Appellant.
3. The Appellant was appointed as Calligraphist-cum-Assistant
of the Bihar School Examination Board on 20th May 1970, at
about 15½ years of age . It is not in dispute, that on the date of
appointment of the Appellant, that is, 20th May 1970 there was
no minimum age prescribed for appointment to the post of
Calligraphist-cum-Assistant. However, the minimum age of entry
into pensionable service was 16 years. This meant that the
period of service of an employee before attaining the age of 16
years, would not count towards pension.
4. By a Government circular dated 15th January 1998 issued
by the Personnel and Administrative Reforms Department of the
State of Bihar, the minimum age for appointment to an inferior
service under the Government of Bihar was fixed at 18 years.
The said circular, fixing the minimum age for appointment at 18
years, which was issued almost 18 years after the appointment
of the petitioner, was prospective and applied only to
3
appointments made after issuance of the said circular.
5. The terms and conditions of service of employees of the
Bihar School Examination Board are governed by the Bihar
Service Code. Rule 73 of the Bihar Service Code inter alia
provides that “The date of compulsory retirement of a
Government Servant is the date on which he attains the age of
58 years. He may be retained in service after the date of
compulsory retirement with the sanction of State Government
on public grounds, which must be recorded in writing.”
6. On 15th January 2004, the Bihar School Examination Board
resolved to treat the age of entry into service, of those
incumbents who were below 18 years at the time of joining
service, as 18 years at the time of their appointment.
7. The relevant extract of the resolution, as translated in
English, is extracted hereinbelow for convenience:-
“Today dated 15
th
 January, 2004 meeting of Board of
Bihar Schools Examination Committee held in the
Room of the Chairman. In which Dr. Jitender Singh,
Chancellor, Patna University, Patna and Shri Subhash
Chander Chaudhary, Assistant Teacher, C.M. High
4
School, Siwan participated as Members in addition to
the Chairman.
Proceedings
Agenda No. 1 : …………
Agenda No.2 :
Regarding employees
having age less than 18
years appointed in the
Committee
After analysis of the legal advice received
in the light of the judgment taken in the
meeting of the Committee held on
18.11.2003 about the employees having
age less than 18 years appointed in the
Committee, Hon’ble Member Dr. Jitender
Singh, chancellor Patna University, Patna
informed that proceedings should be
initiated in Committee also under the letter
No.1961 dated 12.11.1995 from the
Secretary, Higher Education Department,
Bihar Patna. According to the provision of
the said letter, decision was taken
unanimously that employees who have
been appointed in the Bihar Schools
Examination Committee at the age below
18 years, taking their age at 18 years as on
the date of their appointment, they be
superannuated on completion of age of 60
years in the case of Category-4 and on
completion of age of 58 years in case of
Category-3.
8. On a bare reading of the said resolution, it is patently clear
that employees who had been appointed before attaining the
age of 18 years, were to be deemed to have attained the age of
18 years on the date of their appointment and that they would
superannuate on completion of 60 years of age if they were
Category-4 employees and on completion of 58 years of age in
case they were Category-3 employees. The age of 58 years for
5
category-3 employees was, later, during the tenure of service of
the Appellant, increased to 60 years.
9. The resolution may not have perfectly been worded. In my
view, the resolution was a beneficial one in the interest of those
employees who would otherwise have been deprived of
pensionary benefits for the period of service rendered by them
before attaining the age of 18 years. Such employees were to
be deemed to be 18 years on the date of their appointment, so
that they were not deprived of pensionary benefits for part of
their service period, but were to retire on attaining the age of
retirement as prescribed in Rule 73 of the Bihar Service Code.
The resolution might also have been necessitated by reason of
irregular appointments after the Circular dated 15th January
1998 of persons who had not attained 18 years of age, to put all
disputes with regard to the legality of their appointment to rest.
It does not appear that the resolution was intended to retire
employees who had joined service before attaining the age of
18 years, before completion of their actual age of retirement,
6
as per the Rules.
10. If it were the intent of the resolution, that employees
appointed before attaining the age of 18 years, would retire
before attaining the actual age of retirement, as per Rule 73 of
the Bihar Service Code, the language and/or wording of the
resolution would have been different. The resolution would then
have expressly stated that, the date of birth of employees,
appointed before attaining the age of 18 years, would, for the
purpose of retirement, be deemed to be the date on which the
concerned employee would have been born, if he/she were to
complete 18 years of age on the date of appointment. The
Resolution would clearly have stated that such employees
would retire on attaining the age of retirement prescribed in the
Bihar Service Code on the basis of their deemed date of birth,
notwithstanding the fact that they may not have attained the
age of retirement as per the Bihar Service Code as per their
date of birth as recorded by the Bihar School Examination
Board.
7
11. As observed above the date of retirement of the employees
of the Bihar School Examination Board is governed by Rule 73 of
the Bihar Service Code. No decision to decrease the age of
retirement of employees who had joined service before
attaining the age of 18 years, could in my view, have been
taken without amending Rule 73 of the Bihar Service Code in
accordance with law. There could be no question of amendment
of any provision of the Bihar Service code merely by a resolution
of the Bihar School Examination Board.
12. On 14th February 2004 an Office Order was issued to the
Appellant, the contents of which, as translated, are extracted
hereinbelow:-
“Shri Gopal Prasad, Assistant got appointment in
Bihar School Examination Committee in the age
less than 18 years, The minimum age for
appointment in service in any of the Government
(Semi-Government) Autonomous Institutions has
been prescribed at 18 years. Decision has been
taken in the meeting of the Bihar Schools
Examination Committee held on 15.01.2004 that
taking their age at 18 years as on the date of their
appointment, they be superannuated on
completion of age of 60 years in the case of
Category-4 and on completion of age of 58 years in
8
case of Category-3.
Therefore, treating the age of Shri Gopal Prasad,
Assistant at 18 years as on the date of his
appointment i.e. 27.05.1970, as per the directions,
orders are issued to record his date of retirement in
Service books as 31.05.2010.”
13. The order dated 14th February 2004 in so far as the same
purports to record the date of retirement of the Appellant as 31st
May 2010 in his Service Book, is contrary to Rule 73 of the Bihar
Service Code and also beyond the scope and ambit of the
resolution taken on 15th January 2004. Any prescription of
minimum age for appointment, subsequent to the appointment
of the Appellant, could not retrospectively be applied to the
Appellant.
14. From the pleadings filed in connection with this appeal, it is
not clear whether the Appellant objected to the said Office Order
dated 14th February 2004. In any case, an office order which is
patently illegal and entails adverse civil consequence is not
precluded from challenge on the ground that the aggrieved
employee may not have objected to the office order, and more
so, when the legality of similar orders was awaiting adjudication
in Courts of law. There were various writ petitions pending in the
9
High Court, on the question of whether persons who had joined
service before attaining the age of 18 years could unilaterally be
retired before they actually attained the age of retirement
stipulated in Rule 73 of the Bihar Service Rules, because they
were to be deemed to have completed 18 years of age on the
date of their appointment. It is also a matter of record that many
of these writ petitions were decided in favour of the employees,
instances of which have been given later in this judgment.
15. It is not in dispute that the Appellant’s date of birth is 19th
November 1954 as per the records of the Bihar School
Examination Board. It is nobody’s case that the date of birth of
the Appellant as recorded, that is 19th November 1954, is not his
correct date of birth.
16. The Appellant’s date of birth being 19th November 1954 he
was to complete 58 years of age on 19th November 2012. The
age of retirement was, however increased to 60 from 58 years,
before 18th November 2012. The Appellant’s date of birth being
19th November 1954, he was to complete sixty years of age on
18th November 2014.
10
 17. As observed above, long before the Appellant was
appointed in service of the Bihar School Examination Board,
Rule 5 in Appendix-5 of the Bihar Pension Rules was amended.
The qualifying age of government servants for consideration of
pensionary benefits was raised from 16 to 18 years.
Governmental authorities, however, continued to appoint
employees who had not attained eighteen years of age.
18. On or about 16th February 2012, the Appellant’s son filed
an application under the Right to Information Act, enquiring
about the date of superannuation fixed by the Board for his
father’s retirement.
19. By a letter dated 26th March 2012 the Board informed the
Appellant’s son that in view of the decision dated 14th February
2004, the Appellant’s age as on 27th May, 1970 was to be
considered 18 years and therefore his retirement was to be on
31st May 2010, on completion of 58 years, which age had later
been increased to completion of 60 years. The date of
retirement would therefore be 31st May 2012.
20. Thereafter, the Appellant filed the writ petition CWJC
11
No.7718 of 2012 in the High Court of Patna challenging the
communication dated 20th March 2012 under the Right to
Information Act and also the order dated 14th February 2004.
21. By an order dated 24th April 2012, the Single Bench
dismissed the writ petition, relying upon the Full Bench judgment
of the Patna High Court In Ragjawa Narayan Mishra and
Another vs. Chief Executive Officer, Bihar Rajya Khadi
Gramoudyog Board and Ors.
1
. The Full Bench of Patna High
Court had held:-
 “16. Be that as it may, one thing is certain that admittedly
both the petitioners when they entered into the contract with
the respondent Board they had not attained the age of
majority. Apart from its legal impact and effect, the
ramifications and end result on the status of a contract, in
terms of the service relationship, a person could be said to
have entered into a valid service, only, when he has attained
the age of majority. So the minimum age prescribed at the
entry point in the Government service has been 18 years. The
maximum age prescribed for the exit point is 58 years. In
other words, the total length of period of Government service
in any case for pensionary benefits would not exceed 40
years. It is In this context, the Government Circular
mentioned herein above needs to be considered. When there
is a clear Rule provision anything contrary to or inconsistent
with or incompatible to it, any circular or resolution or order,
will not have any legal and valid effect to abridge the right
enshrined in the Rule Provision. Even if the said circular of
1998 as relied upon by the petitioners is considered to be
beneficial to them then, also, it cannot be read at this
1 . 2006 (1) PLJR 410
12
juncture with the existing statutory provision incorporated in
the Bihar Pension Rules, as well as, the Bihar Service Code.
Therefore, from that point of view also the petitioners cannot
be allowed to contend that they have right to continue even
beyond the age of 58 years though provided in Rule 73 of the
Bihar Service Code which prescribes the superannuation age
of 58 years.
17. Thirdly, it is settled and established proposition of law and
principles of jurisprudence that a person who takes undue
advantage by one or other reasons at the entry point in the
service cannot be allowed to urge that he be given higher
benefit and if it Is urged then clearly, it goes to show that
something wrong or irregular has been done, at the entry
point, in service. So the settled principle, also, creates a very
strong impediment in getting the relief from this Court which
is exercising extraordinary, prerogative, equitable and
discretionary writ jurisdiction by invocation of the provision of
Article 226 of the Constitution of India.
18. In our opinion, therefore, the impugned orders questioned
in both the writ petitions, obviously, cannot be interfered with
from any point of view as discussed hereinabove. The
proposition of law, therefore, is made evidence and
unambiguous that the superannuation age prescribed in Rule
73 of the Bihar Service Code will apply for retirement purpose
and a person cannot be continued beyond the age of
completion of 40 years in service. It is, therefore, evidently,
clear that a Government servant who has completed 40 years
of service or has attained the age of 58 years has to be
superannuated in terms of the existing Rule provision. Our
answer, therefore, is very clear and we answer this reference
accordingly. The contradictory view in the aforesaid decisions
referred to hereinbefore, shall not be a good law.”
22. The mere fact that an employee may have been a
minor at the time of his initial appointment is inconsequential
in the absence of any law at the material time of his
appointment, prohibiting appointment of 15/16 year old
13
minors. The Appellant who was 15½ years old may have
been a minor, but certainly not a toddler. It is absurd that any
rational employer, far less a statutory body, would appoint a
toddler. The hypothesis of appointment of a toddler is far
fetched and unrealistic. The apprehension of claims in future
to appointment from persons less than 18 years of age is also
baseless in view of the circular dated 15th January 1998 which
fixes 18 years as the minimum age of retirement. The
circular would govern subsequent appointments.
23. It may be true that a minor is incompetent to enter
into a contract, as observed by my esteemed brother. A
contract may not be enforceable against a minor. A contract
executed by a minor may be voidable at the option of the
minor. The minor may, on attaining majority, repudiate or
ratify and accept the contract.
24. It is nobody’s case that any of the concerned
employees repudiated their contract of appointment on
attaining majority. An employer who knowingly appoints
minors with impunity, with its eyes open, cannot evade its
obligations under the contract of employment, and that too
after the employee has rendered service for almost two
decades after attaining majority. The contracts can be said
to have been ratified by the employees concerned, on
attaining majority. It cannot, also be said, that an employee
appointed when he was 15½ years old, attained any undue
14
advantage, when there was no minimum age for appointment
at the material time.
25. The learned Single Judge dismissed the writ petition
relying on the decision of the Full Bench in Ragjawa Narayan
Mishra (supra), and the Division Bench dismissed the appeal
from the decision of the learned Single Judge. The learned
Single Bench, as well as the learned Division Bench, had no
option but to follow Ragjawa Narayan Mishra (supra), since
judicial discipline required the Benches of lesser strength to
follow the decision of the Full Bench.
26. In my view, the interpretation of the Full Bench of
Rule 73 of the Bihar Service Code in Ragjawa Narayan
Mishra (supra) is misconceived and erroneous. Counsel
appearing on behalf of the Appellant has rightly argued that
there is no rule which prescribes the length of service as a
criteria for superannuation. Neither Rule 73 of the Bihar
School Code, nor Rule 57 of the Bihar Pension Rules, 1950
prescribed any limit to the length of service.
27. The Full Bench fell in error in proceeding on the basis
of the length of service, when Rule 73 of the Bihar Service
15
Code prescribes a specific age of superannuation. As argued
on behalf of the Appellant, Rule 73 of the Bihar Service Code
prescribes an age of retirement. The said Rule does not make
length of service a criteria for retirement.
 28. The raising of the minimum qualifying age of the
government servant for pensionable service, from 16 to 18
years, meant that if an employee entered service before
attaining the age of 18 years, the period of service from the
actual date of appointment till attainment of the qualifying
age for pensionable service, would not count for the purpose
of computation of pension/pensionary benefits.
29. In Ragjawa Narayan Mishra (supra), the Full
Bench failed to appreciate that the circular of 1998 could have
no manner of application to appointments that had already
been made before the said circular was issued, and certainly
not to appointments made almost two decades before
issuance of the aforesaid circular, at a time when admittedly
there was no minimum age for appointment to government
service. Even assuming that the total length of Government
16
service for pensionary benefits cannot exceed the length of
time between the date of attaining of 18 years and the
attainment of age of 58/60 years as per Rule 73, that would
mean that pensionary benefits would have to be computed on
the basis of the length of service after completion of 18 years
of age. In no case can an employee be retired before
attaining 58 and/or 60 years of age, as prescribed in Rule 73
of the Bihar Service Code.
30. The finding of the Full Bench in Ragjawa Narayan Mishra
(surpa), that the superannuation age prescribed in Rule 73 of
the Bihar Service Code would apply for retirement purpose and
a person could not be continued after completion of the
retirement age is unexceptionable. In no circumstances could
a government servant claim any right to continue in service
after competion of the age of retirement prescribed in Rule 73
of the Bihar Service Code. However, since length of service is
not a criteria for retirement under the applicable rule, that is
Rule 73 of the Bihar Service Code, a government servant who
had not completed the age of retirement as per his/her actual
17
date of birth recorded in the service records, cannot be made
to retire on the ground of completion of 40 years of service or
service in excess of 40 years. At best, the length of service
would be deemed to be forty years for computation of
pensionary benefits.
31. With the greatest of respect to the Full Bench, I am
unable to agree that Rule 5 in Appendix-5 of the Bihar Pension
Rules prescribing the qualifying age of the government servant
for consideration of pensionary benefits and/or raising of such
age from 16 years to 18 years makes any difference to the age
of retirement prescribed under the Rule 73 of the Bihar Service
Code.
32. The age of retirement and qualifying service for the
purpose of retirement benefits are not one and the same.
Qualifying service for retirement means that the length of
service for the purpose of computation of retiral benefits would
commence from attainment of the age of qualifying service of
pension.
33. Thus, if the age of qualifying service for pension is 18
18
years, the length of service for computation of pensionary
benefits would have to be computed from the date of
attainment of 18 years of age. However, if the prescribed
age of retirement is completion of 60 years, an employee
cannot be forced to retire before attaining that age except on
grounds provided in Service Rules. For example, an employee
may prematurely be retired by way of disciplinary action, if
the rules so provide.
34. When the age of retirement is governed by express
rules, which do not prescribe length of service as a criteria of
retirement, but provide for retirement upon attainment of age,
an employee cannot be made to retire before attaining that
age of retirement, only because he/she has served for a
certain length of time, by a convoluted process of logical
reasoning. My judicial conscience, also does not permit me to
uphold the judgment under appeal, only because the High
Court has, for a while, followed the Full Bench decision of that
Court which has held the field for a while. The Full Bench
decision was, in my opinion, erroneous. This Court has time
19
and again reversed its own decisions including those of
Constitutional Benches, which have held the field for decades.
To cite an example, the Constitution Bench Judgment of this
Court in Atiabari Tea Co. Ltd. v. State of Assam2 which
held the field for almost half century was overruled by a
judgment of nine-Judge Bench judgment n Jindal Stainless
Ltd v. State of Haryana
3
. I see no reason why the judgment
and order impugned should not be set aside.
35. The issues of whether a government servant could be
superannuated from service on completion of 40 years of
service even in the absence of any such rule, taking aid of
Rule 73 of the Bihar Service Code, which only prescribed the
age of superannuation and whether after completion of 40
years of service, a person could be retired from service,
treating his age as 18 years at the time of entry in service,
were considered by a Division Bench of the High Court of
Jharkhand presided over by S.J. Mukhopadhaya, J. in Ganesh
Ram vs. State of Jharkhand and Ors. numbered W.P.(S)
2 AIR 1961 SC 232
3 2016 SCC Online 1260 decided on 11.11.2016
20
No.1210 of 2003, reported in 2006(2) FLR 156 in the context
of Rule 73 of the Bihar Service Code. The Bihar Service Code
is applicable in the State of Jharkhand created pursuant to the
Bihar Reorganization Act, 2000, and comprising areas that
were earlier in the State of Bihar. The issues were answered
in the negative in favour of the employees and against the
State of Jharkhand and others. A copy of the judgment in
Ganesh Ram (supra) is also annexed to the Paper Book as
Annexure P-5.
36. In Ganesh Ram (supra) the Court found, and rightly,
that there was no common minimum age of 18 years
prescribed by the State of Bihar for appointment to service of
the State, or in the State of Jharkhand. The minimum
eligibility age varied from job to job. The Court observed
and held:-
“7…..The definition of 'employee', as laid down
under Section 2(i) of the Act, means any person,
who is employed for hire or reward or to do any
work, skilled or unskilled, etc. and also includes an
employee, employed by the appropriate
Government i.e. State Government or Central
Government. Clause (a) to Section 2 defines
21
"adolescent" means a person, who has completed
his fourteenth year of age but has been completed
his eighteenth year. "Adult" has been defined under
Clause (aa) of Section 2, which means a person,
who has completed his eighteenth year of age and
"child", as defined under Clause (bb) of Section 2,
means a person, who has not completed his
fourteenth year of age. Section 3 of Minimum Wages
Act, 1948 while prescribes the manner in which the
appropriate Government will fix the minimum rates
of wages, under Sub-section (3) appropriate
Government is empowered to fix different minimum
rates of wages for "adults", "adolescent", "children"
and "apprentices". This simply shows that even in
the Government employment, an "adolescent",
though minor, can be appointed for whom different
wages may be fixed.”
The High Court further noted:-
“8. The State of Bihar has issued Police Order No.
209-82, circulated vide Memo No. 6568/P2/43-271-
88, dated 11th August, 1988. This Police Order is
also applicable in the State of Jharkhand, in view of
Section 84 of the Bihar Reorganization Act, 2000. As
per this Order, in every distinct, out of the
sanctioned strength of police force, two posts can
be reserved in which dependent children of police
force, below 18 years of age, can be appointed on
compassionate ground, if the police personnel dies
while on duty. Those children, so appointed, are
commonly known "as Bal-Arakshi" and are paid
minimum of the scale of pay of the post, without
annual increment, till they attain majority. It is only
on attaining majority, if the "Bal-Arakshi" so wishes
and is qualified, they are appointed as Constable
against such posts. The children, on appointment,
are provided with two half-pants, two shirts two-sets
of socks, one pair of shoes etc. This simply goes to
show that there is no bar on appointment of a minor
in the services of the State.”
37. Of Course, as noted in the judgment in Ganesh Ram
22
(supra) after the enactment and enforcement of the Child Labour
(Prohibition and Regulation) Act, 1986 employment of a child
which means a person who has not completed 14 years of age is
prohibited for certain types of work. However, the said Child
Labour (Prohibition and Regulation) Act, 1986 is of no application
in this case, because the petitioner was appointed long before
the enactment and enforcement of the said Act and in any case
he was above 14 years of age at the time of appointment.
38. The issue of whether an employee could be made to retire
before completion of actual age of retirement as prescribed in
Rule 73 of the Bihar Service Code on the basis of a deemed age
was answered in the negative, against an employer and in
favour of the employee in the following cases referred to in
Ganesh Ram (supra):-
1. Mokhtar Ahmad v. B.S.R.T.C. and Ors. (1995(1) PLJR 183(DB)
2. Mantu v. C.C.L. (2001 (1) JCR 181)
3. Kalanand Jha v. State of Jharkhand and Ors. (2001 (3) JCR 228)
4. Balkeshwar v. Central Coalfields Ltd. (2002 (1) JCR 175
5. Pranadhar Prasad v. State of Jharkhand and Ors.
(MANU/JH/1137/2002.
39. I am of the view that the law has correctly been interpreted
by the Division Bench of the High Court of Jharkhand in Ganesh
Ram (supra). A person can only be retired on attainment of the
prescribed age of retirement unless the rules expressly make
length of service a criteria of retirement, as in the case of
employees of the Bihar State Electricity Board, governed by
23
Notification dated 9th September 1997, issued under Section 79
(c) of the Electricity Supply Act, 1948, under which the date of
superannuation prescribed was completion of 60 years of age or
completion of 42 years of service, whichever is earlier.
40. The judgment in Nagaland Senior Government
Employees Welfare Association and others (supra) referred
to by my esteemed brother is in my view clearly distinguishable.
39. In the aforesaid case the applicable Rules expressly made
completion of the length of service prescribed, a criteria for
retirement.
41. This Court upheld the validity of Section 3 of the Nagaland
Retirement from Public Employment Act, 1991 which provided:-
"S.-3. Retirement from public employment: (1) Notwithstanding
anything contained in any rule or orders for the time being in force,
a person in public employment shall hold office for a term of thirtythree years from the date of his joining public employment or until
he attains the age of fifty-seven years whichever is earlier :
Provided that in special circumstances, a person under public
employment may be granted extension by the State Government
upto a maximum of one year;
Provided further that the Government may have the cases of all
persons under public employment screened from time to time to
determine their suitability for continuation in public employment
after the attainment of the age of fifty years.
(2) All persons under public employment shall retire on the
afternoon of the last day of the month in which he attains the age
of fifty-seven years or on completion of thirty-three years of public
employment whichever is earlier.”
24
42. By the Nagaland Retirement from Public Employment
(Amendment) Act, 2007 (the First Amendment Act, 2007) the
age of retirement was enhanced to 60 years from 57 years. By
the Nagaland Retirement from Public Employment (Second
Amendment) Act, 2009 (the Second Amendment Act, 2009) the
length of service of the State Government employees was
increased to 35 years instead of 33 years. This Court held :-
“a provision such as that at issue which prescribes
retiring the persons from public employment in the
State of Nagaland on completion of 35 years’ service
from the date of joining or until attaining the age of 60
years, whichever is earlier, does not suffer from the
vice of arbitrariness or irrationality and is not violative
of Articles 14 and 16 of the Constitution. The appeal
has no merit and is dismissed with no order as to
costs.”
43. As observed above, in this case Rule 73 of the Bihar
Service Code does not prescribe any length of service as criteria
for retirement. The prescribed age of retirement for employees
of the category to which the Appellant belonged was 58 years,
later increased to 60 years. The decision of the respondents to
retire the Appellant before he attained the age of 60 years as
per his actual date of birth, as recorded in the service records
cannot be sustained.
44. I am of the view that the appeal should be allowed and
the judgment and order of the Division Bench and the Single
25
Bench be set aside. The Appellant is entitled to a declaration
that the Appellant was entitled to continue in service till 18th
November 2014, being the date on which he completed 60
years of age, as per his service records, and shall be entitled to
all consequential benefits including arrears of pay, if any,
pensionary benefits etc.
45. Since we have not agreed, let the matter be placed before
Hon’ble the Chief Justice of India for assignment to a larger
Bench.
.................................J
 (INDIRA BANERJEE)
MAY 28, 2020
 NEW DELHI
     REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
       CIVIL APPEAL NO(S). 8225 OF 2012
GOPAL PRASAD ….APPELLANT(S)
VERSUS
BIHAR SCHOOL EXAMINATION BOARD
AND OTHERS      ….RESPONDENT(S)
J U D G M E N T
Rastogi, J.
1. The present appeal is directed against the judgment dated
3
rd August, 2012 passed by the Division Bench of the High Court
of Judicature at Patna in Letters Patent Appeal No. 1090 of 2012
confirming the judgment of the Single Bench of the High Court
dated 24th  April, 2012 upholding that the appellant has rightly
been retired from service on attaining the age of superannuation.
1
2. The   brief   facts   relevant   for   the   present   purpose   which
manifest from the record are that the appellant was an employee
of Bihar School Examination Board(hereinafter being referred to
as “Board”) and was initially appointed as a Calligraphist cum
Assistant vide order dated 20th May, 1970 pursuant to which he
joined service on 27th May, 1970.  Although the date of birth of
the appellant as per school records was 19th November, 1954 and
at the time of entering into service on 27th May, 1970, he was 15
years 6 months and 8 days old.   At the time of his entry into
service, the retirement age of the employees of the Board was 58
years but at a later stage, the age of retirement was extended by
the   Government   of   Bihar   from   58   years   to   60   years,   in
consequence the Board also in its meeting held on 30th  March,
2005 decided to extend the age of retirement of its employees
from 58 years to 60 years and pursuant thereto, the date of
compulsory retirement of the Board employee became the date on
which one attained the age of 60 years.
3. Before the matter is examined on merits, it will be apposite
to take note of the material projection of the rules relevant for the
purpose.   The services of the State Government employees are
2
governed   by   Bihar   Service   Code,   1952,   Bihar   Pension   Rules,
1950.   The age of superannuation has been prescribed under
Rule 73 of the Bihar Service Code, 1952.  At the same time, Rule
57 of the Bihar Pension Rules, 1950 effective from 20th January,
1950 prescribes the qualifying service, and further amended by
Rule   5   of   Section   IV(Qualifying   service)   of   the   Pension   Rules
amended with effect from 23rd August, 1950.  The rules relevant
for the purpose are extracted hereunder.
Rule 73 of the Bihar Service Code, 1952
“The date of compulsory retirement of a Government
servant is the date on which he attains the age of 58
years.  He may be retained in service after the date of
compulsory retirement with the sanction of the State
Government   on   public   grounds,   which   must   be
recorded in writing.”
    Rule 57 of the Bihar Pension Rules, 1950 effective from 20th
 
January, 1950
“For   a   Government   servant   in   inferior   service,
qualifying   service,   shall   not   begin   until   the
Government servant concerned attained the age of 16
years.”
Rule 5 of Section IV(Qualifying Service) of the Pension Rules
    effective from 23rd
   August, 1950
“The minimum age after which service for pension is
raised from 16 to 18 years in the case of Government
servant belonging to an inferior service (1) who enters
service of the Government of Bihar, after the date on
which this order came into force or (2) who, having
entered such service on or before that date did not
hold  a  lien  or   suspended  lien   on   a  permanent
pensionable post under the Government of Bihar on
that date.”
3
4. The reliance has also been placed by a Government Circular
dated 15th January, 1998 issued by Personnel and Administrative
reforms Department of the State of Bihar.
5. On a careful scanning of the aforesaid provisions, it clearly
manifest that the pension rules were introduced in 1950 and
after amendment was made under Rule 5 of the Pension Rules,
1950 effective from 23rd August, 1950, the minimum age of the
qualifying service for pension became 18 years. It is not disputed
that minimum age for entering into service under Bihar Service
Code, 1952 has not been prescribed but still there cannot be any
entry into service before one has attained the age of majority, i.e.
18 years as prescribed under the Rules, 1950 unless there is a
specific   rule   to   the   contrary.     Keeping   in   view   the   age   of
retirement, as in the instant case is of 60 years, the maximum
qualifying service which one could render would be of 42 years.
6. The Board in its meeting held on 15th January, 2004 took a
decision   that   those   who   have   entered   into   service   prior   to
attaining the age of 18 years, taking their age as 18 years as on
the date of their appointment, they will be superannuated on
competition   of   60   years   in   the   case   of   category­4   and   on
4
competition of age of 58 years in the case of category­3.   The
extract   of   the   Resolution   of   the   Board   meeting   held   on   15th
January,   2004   placed   at   Annexure   P­2   of   the   paper   book,
relevant for the purpose is extracted hereunder:­
“….
Agenda no. 2
Regarding   employees   having   age
less than 18 years appointed in the
Committee.
After   analysis   of   the   legal   advice
received in the light of the judgment
taken   in   the   meeting   of   the
Committee held on 18.11.03 about
the employees having age less than
18   year   appointed   in   the
Committee,   Hon’ble   Member   Dr.
Jitender   Singh,   Chancellor   Patna
University,   Patna   informed   that
proceedings   should   be   initiated   in
Committee also under the letter No.
1961   dated   12.11.1995   from   the
Secretary,   High   Education
Department,   Patna.     According   to
the   provision   of   the   said   letter,
decision   was   taken   unanimously
that   employees   who   have   been
appointed   in   the   Bihar   Schools
Examination Committee at the age
below 18 years, taking their age at
18   years   as   on   the   date   of   their
appointment,   they   be
superannuated   on   competition   of
age   of   60   years   in   the   case   of
Category­4 and on completion of age
of 58 years in case of Category­3.
7. Taking note of its resolution dated 15th January, 2004, the
appellant was informed vide communication dated 26th  March,
2012 that he has completed 42 years of qualifying service which
5
an employee could render and accordingly he stood retired from
service on 31st May, 2012 after completing 42 years of qualifying
service.
8. The claim of the appellant was that he should be retired
from service on completing 60 years on the basis of his age
recorded in the Board as well as in his service book, i.e., 19th
November, 1954.  It appears from the record that the controversy
and conflict of opinion of the Division Bench of the High Court of
Bihar was resolved by the Full Bench vide Judgment dated 5th
January,   2005   by   the   High   Court   of   Patna   in   the   case   of
Ragjawa   Narayan   Mishra   and   Ors.   Vs.   Chief   Executive
Officer,   Bihar   Rajya   Khadi   Gramoudyog   Board   and   Ors.1
which was noticed by the Single Bench of the High Court and
confirmed by the Division Bench in its impugned judgment while
repudiating the claim of the appellant for continuation in service
until he completes the age of 60 years on the basis of his age
recorded in the Board, i.e. 19th November, 1954.
9. Learned counsel for the appellant submits that a person
cannot be superannuated prior to his attaining the age of 60
1 2006(1) PLJR 410
6
years merely because he completes 42 years of qualifying service,
in the absence of any such rule to the contrary.  The aforesaid
decision was in teeth of Rule 73 of the Bihar Service Code, 1952
which   merely   prescribes   the   age   as   the   criteria   for
superannuation.  There is no rule prescribing length of service as
a criteria for superannuation and this has not been considered
by the Full Bench which has been relied upon by the High Court
in   the  impugned   judgment   in   repelling  the   contention   of   the
appellant.
10. Learned counsel for the respondents, on the other hand,
while supporting the findings recorded by the Division Bench of
the High Court in the impugned judgment submits that there
was difference of opinion between the two Division Benches of the
High Court and that has been resolved by the Full Bench in
Ragjawa Narayan Mishra and Ors. case(supra) and this has
been followed consistently by the High Court and further submits
that the entry into public employment could not be offered before
one attains the age of majority i.e. 18 years as per Section 3 of
The Majority Act, 1875, the age of superannuation would be 58
years/60   years,   as   the   case   may   be,   the   total   service   which
7
logically one could render may not exceed in any case beyond
40/42 years of service and this what has been resolved by the
Board in its meeting held on 15th  January, 2004 and this was
never the subject matter of challenge even by the appellant when
he was communicated by letter dated 26th March, 2012 that he
would be attaining the age of superannuation on 31st May, 2012
on completing 42 years of service.
11. Learned counsel further submits that Rule 73 of the Bihar
Service Code, 1952 read with Rule 57 of the Bihar Pension Rules,
1950 and Rule 5 of Section IV of the Pension Rules makes it clear
that there could not be any entry in the Government service
before the person attains the age of 18 years even in the year
1970 when the appellant was appointed and if the age at the
entry level and the exit level has been prescribed by the rule
making authority, by no stretch, one could go ahead more than
40/42 years of service.   In the given circumstances, when the
appellant indisputedly had completed 42 years of service in May
2012,   the   decision   of   the   respondent   to   retire   him   on
superannuation cannot be said to be faulted with and it may not
be revisited at this stage more so when it has been consistently
8
followed by the High Court for almost more than one and half
decade and needs no interference. 
12. The provisions of the aforesaid statutory rules which has
been referred to supra envisage that the Government, by virtue of
an amendment inserted rule 5 to the Bihar Pension Rules which
came   into   effect   w.e.f.   23rd  August,   1950,   much   before   the
appellant entered into service of the Board, the qualifying age of a
Government   servant   for   consideration   of   pensionary   benefits
came to be 18 years in the Government service which came to be
clarified by the Government by its order dated 15th January, 1998
making its intention clear to all its subordinates that 18 years
shall be the age of Government servant entering into service.
13. There   is   no   dispute   that   the   service   conditions   of   the
employees are ordinarily governed by the statutory rules or in its
absence, under regulations or administrative decisions having a
binding force but the person who attains the age of majority
alone be competent enough to enter into valid contract of service.
Section 11 of the Indian Contract Act, 1872 defines as to who is
competent to contract.
“Who  are  competent  to  contract  – Every person is
competent to contract who is of the age of majority
9
according to the law to which he is subject, and who is
of sound mind and is not disqualified from contracting
by any law to which he is subject.”
14. The provision clearly manifests that for entering into valid
contract of service, one has to attain the age of majority in terms
of The Majority Act, 1875 and what could be the age of majority
has been defined under Section  3 of  The Majority Act, 1875
which is as under:­
“3. Age of Majority of persons domiciled in India­(1)
Every person domiciled in India shall attain the age of
majority on his completing the age of eighteen years
and not before.
(2) In computing the age of any person, the date on
which he was born is to be included as a whole day
and he shall be deemed to have attained majority at
the beginning of the eighteenth anniversary of that
day.”
15. Indisputedly, the appellant, in the instant case, was minor
on the date of entry into service in May 1970 and unless there is
a specific rule to the contrary, minor is not eligible/qualified to
seek public employment.  It is true that the minimum age at the
entry   level   shall   always   be   prescribed   by   the   rule   making
authority.   In the instant case, the State authority under its
Pension   Rules,   1950   prescribes   the   qualifying   service   of
Government   servant   which   was   raised   to   18   years   by   an
10
amendment   made   effective   from   23rd  August,   1950.     If   the
minimum age at the relevant time was not prescribed under the
Bihar Service Code, 1952, at least the Government is justified in
taking assistance of the Pension Rules, 1950 to hold that the
minimum age at the entry point shall be 18 years for all practical
purposes.   That apart, if the age at the entry level is left open
ended, the minor of whatever age, can seek his eligibility for
public employment leaving no lifetime of service one could render
which is manifestly illogical and can never be the intention of the
rule making authority.
16. Admittedly, in the instant case, when the appellant entered
into service, he was 15 years and 6 months old and had not
attained the age of majority and the minimum age at the entry
point   in   terms   of   the   Pension   Rules,   1950   is   18   years   and
maximum age prescribed for exit point is 60 years as a logical
consequence, the total length of service which one could render
in the Government service may not exceed 42 years and when
there   is   an   unambiguous   self­explicit   provision,   anything
contrary to or inconsistent with or incompatible to it, any circular
or resolution or order, will not have any legal and valid effect to
11
abridge the right enshrined in the scheme of Rules and this what
has been considered by the Full Bench of the Patna High Court
which was relied upon by the single Judge of the High Court
while repudiating claim of the appellant in  Ragjawa  Narayan
Mishra  and Ors.(supra) as follows:­
“16.   Be   that   as   it   may,   one   thing   is   certain   that
admittedly both the petitioners when they entered into
the contract with the respondent Board they had not
attained   the   age   of   majority.   Apart   from   its   legal
impact and effect, the ramifications and end result on
the   status   of   a   contract,   in   terms   of   the   service
relationship, a person could be said to have entered
into a valid service, only, when he has attained the age
of majority. So the minimum age prescribed at the
entry point in the Government service has been 18
years. The maximum age prescribed for the exit point
is 58 years. In other words, the total length of period of
Government   service   in   any   case   for   pensionary
benefits   would   not   exceed   40   years.   It   is   in   this
context,   the   Government   Circular   mentioned   herein
above needs to be considered. When there is a clear
Rule   provision   anything   contrary   to   or   inconsistent
with or incompatible to it, any circular or resolution or
order,   will   not   have   any   legal   and   valid   effect   to
abridge the right enshrined in the Rule Provision. Even
if   the   said   circular   of   1998   as   relied   upon   by   the
petitioners is considered to be beneficial to them then,
also,   it   cannot   be   read   at   this   juncture   with   the
existing statutory provision incorporated in the Bihar
Pension   Rules,   as  well  as,   the   Bihar   Service   Code.
Therefore, from that point of view also the petitioners
cannot be allowed to contend that they have right to
continue   even   beyond   the   age   of   58   years   though
provided in Rule 73 of the Bihar Service Code which
prescribes the superannuation age of 58 years.
17. Thirdly, it is settled and established proposition of
law and principles of jurisprudence that a person who
takes undue advantage by one or other reasons at the
12
entry point in the service cannot be allowed to urge
that he be given higher benefit and if it Is urged then
clearly,   it   goes   to   show   that   something   wrong   or
irregular has been done, at the entry point, in service.
So the settled principle, also, creates a very strong
impediment in getting the relief from this Court which
is exercising extraordinary, prerogative, equitable and
discretionary   writ   jurisdiction   by   invocation   of   the
provision of Article 226 of the Constitution of India.
18.   In  our   opinion,   therefore,   the   impugned   orders
questioned   in   both   the   writ   petitions,   obviously,
cannot be interfered with from any point of view as
discussed   hereinabove.   The   proposition   of   law,
therefore, is made evidence and unambiguous that the
superannuation age prescribed in Rule 73 of the Bihar
Service Code will apply for retirement purpose and a
person   cannot   be   continued   beyond   the   age   of
completion   of   40   years   in   service.   It   is,   therefore,
evidently, clear that a Government servant who has
completed 40 years of service or has attained the age
of 58 years has to be superannuated in terms of the
existing Rule provision. Our answer, therefore, is very
clear and we answer this reference accordingly. The
contradictory view in the aforesaid decisions referred
to hereinbefore, shall not be a good law.”
17. One view has been expressed by the full Bench of the Patna
High Court of which the reference has been made, the other view
of the prospect which has been referred to by the Jharkhand
High Court of which a reference has been made by the appellant
in   the   appeal   but   what   persuaded   me   further   is   that   the
judgment of the Full Bench of the Patna High Court dated 5th
December,   2005   at   least   in   the   State   of   Bihar   has   been
consistently followed for almost a decade and a half and learned
13
Single Judge/Division Bench has passed several orders placing
reliance on the Full Bench of the Patna High Court.   The view
which has been expressed is one of the plausible view and, in my
view, it would not be advisable to overturn only for the reason
that the view expressed by the Jharkhand High Court appears to
be more plausible in appreciating the scheme of statutory rules of
which a reference has been made.
18. Indisputedly, the appellant cannot be allowed to contend
that he has a right to continue upto the age of 60 years as per his
date of birth recorded in the Board records in view of Rule 73 of
the Bihar Service Code, 1952.  From the scheme of Rules, it is
clear that the superannuation age prescribed under Rule 73 of
the Bihar Service Code, 1952 will apply for retirement purpose
and   the   person   cannot   be   continued   beyond   the   age   of
completion of 42 years in service taking  note of the  Pension
Rules, 1950.   It clearly manifests that the Government servant
who had completed 42 years of service on attaining the age of 60
years, both implicit, has to be superannuated in terms of the
scheme of Rules and this what has been considered by the Full
14
Bench of the High Court in the judgment which has been relied
by the High Court of Patna in the impugned judgment.
19. A   two   Judge   Bench   of   this   Court   in  Nagaland   Senior
Government Employees Welfare Association and Others Vs.
State   of   Nagaland   and   Others  2010(7)   SCC   643   had   an
occasion   to   examine   the   validity   of   Section   3   of   the   Public
Employment   Act,   1991   as   amended   by   the   Public
Employment(Amendment) Act, 2007 which was substituted by
the following provision:­
“3. (1) Notwithstanding anything contained in any
rule or orders for the time being in force, a person in
public employment shall hold office for a term of 35
years from the date of joining public employment or
until he attains the age of 60 years, whichever is
earlier.
(2) A person under public employment shall retire
on the afternoon of the last day of the month in
which he attains the age of 60 years, or in which he
completes   35   years   of   public   employment,
whichever is earlier.”
This   Court   further   held   that   fixation   of   maximum   length   of
service   as   an   alternative   criterion   for   retirement   from   public
service, by no stretch of imagination, can be held to be violative
of any recognized norms of employment planning.   Para 40 is
extracted hereunder:­
15
“40. We are afraid, K. Nagaraj case [(1985) 1 SCC
523   instead   of   helping   the   appellants,   rather
supports   the   stand   of   the   State.   Fixation   of
maximum   length   of   service   as   an   alternative
criterion for retirement from public service, by no
stretch of imagination, can be held to be violative of
any   recognised   norms   of   employment   planning.
There may be a large number of compelling reasons
that may necessitate the Government (or for that
matter   the   legislature)   to   prescribe   the   rule   of
retirement   from   the   government   service   on
completion   of   specified   years.   If   the   reasons   are
germane to the object sought to be achieved, such
provision can hardly be faulted.”
20. In the instant case, apart from the scheme of rules of which
a reference has been made, the appellant could not enter into
service below the age of attaining majority, if there is no express
provision of minimum age at the entry level under the Bihar
Service Code as prayed, in isolation is accepted and the age at
the entry level is left open ended, it will take us to a stage where
a toddler or a minor of any given age can claim his eligibility to
enter into public employment which is manifestly illogical and
impermissible in law.
21. Thus, under the existing scheme of Rules, the qualifying
service which one could render in any manner would not exceed
42 years and this what has been clarified by the Government by
its circular dated 15th January, 1998 and that was taken note of
16
by the Board in its meeting held on 15th  January, 2004 which
was not the subject matter of challenge and the appellant was
communicated of retirement on attaining full employment of 42
years rendered on 31st  May, 2012, which, in my opinion, could
not be said to be in contravention to the scheme of rules.
22. The   appeal   is   without   substance   and   is   accordingly
dismissed.
23. Pending application(s), if any, stand disposed of.
       ………………………………….J.
       (AJAY RASTOGI)
NEW DELHI
MAY 28, 2020
17

There is a clear distinction between ‘retirement of a partner’ and ‘dissolution of a partnership firm’. On retirement of the partner, the reconstituted firm continues and the retiring partner is to be paid his dues in terms of Section 37 of the Partnership Act. In case of dissolution, accounts have to be settled and distributed as per the mode prescribed in Section 48 of the Partnership Act. When the partners agree to dissolve a partnership, it is a case of dissolution and not retirement [See – Pamuru Vishnu Vinodh Reddy v. Chillakuru Chandrasekhara Reddy and Others, (2003) 3 SCC 445]. In the present case, there being only two partners, the partnership firm could not have continued to carry on business as the firm. A partnership firm must have at least two partners. When there are only two partners and one has agreed to retire, then the retirement amounts to dissolution of the firm

NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 6659-6660 OF 2010
GURU NANAK INDUSTRIES,
FARIDABAD AND ANOTHER ..... APPELLANT(S)
 VERSUS
AMAR SINGH (DEAD) THROUGH LRS ..... RESPONDENT(S)
J U D G M E N T
SANJIV KHANNA, J.
Four persons, including two brothers, Swaran Singh and
Amar Singh, both of whom have since died and are represented by
their legal representatives, had constituted a partnership firm –
Guru Nanak Industries, on 2nd May 1978. On 6th May 1981, a fresh
partnership deed was executed between Swaran Singh and Amar
Singh as the other two partners had resigned. The partnership
firm was primarily in the business of manufacture and sale of print
machinery for paper, polythene etc. Initially, profits and losses
were to be divided in the ratio of 69:31 between Swaran Singh and
Amar Singh. However, with effect from 1st April 1983, profit and
Civil Appeal Nos. 6659-6660 of 2010 Page 1 of 11
loss sharing ratio was altered between Swaran Singh and Amar
Singh to 60:40 respectively.
2. On 29th March 1989, Guru Nanak Industries and Swaran Singh
filed a civil suit against Amar Singh claiming that the latter had
retired from partnership with effect from 24th August 1988 and had
voluntarily accepted payment of his share capital of
Rs.89,277.11p. In addition, he had been advanced loan from the
funds of the partnership firm on the same date. Amar Singh had
agreed that he would not be entitled to profits and liabilities of the
firm. In support, reliance was placed upon intimation dated 5th
October 1988 sent by Amar Singh to Bank of India, the bankers of
the partnership firm. It was stated that Amar Singh was paid
amounts of Rs.1,00,000/- and Rs.50,000/- by way of pay orders
and another amount of Rs.1,00,000/- in cash for which he had
executed receipt dated 17th October 1988 (Exhibit P-9). Further,
Amar Singh, after retirement, had floated a proprietorship concern,
namely, Guru Nanak Mechanical Industries with effect from 14th
September 1988 and was manufacturing and selling the same
machinery.
3. Amar Singh contested the suit and on 29th April 1989, filed a suit
for dissolution of partnership and rendition of accounts. The plea
Civil Appeal Nos. 6659-6660 of 2010 Page 2 of 11
and contention of Amar Singh was that he had never resigned.
Some disputes had arisen between him and Swaran Singh on 19th
August 1988 when he had written a letter to the bankers to stop
operation of the bank account. Subsequently, he had written
another letter dated 24th August 1988 (Exhibit P-5) as a partner,
which letter was also signed by Swaran Singh as a partner, stating
that the dispute between the partners had been settled and the
bank may allow operation of the account. Amar Singh had pleaded
that the receipt dated 17th October 1988 is forged and has been
manipulated as he had signed and given papers to Swaran Singh.
4. The trial court dismissed the suit filed by Amar Singh and partly
decreed the suit filed by Guru Nanak Industries and Swaran Singh
primarily by relying upon letter dated 24th August 1988 (Exhibit P-5)
and also the receipt dated 17th October 1988 (Exhibit P-9)
observing that there is discrepancy in the two versions given by
Amar Singh, the first version being that his signature on the letter
dated 17th October 1988 (Exhibit P-9) was forged and the second
version being that the receipt had been manipulated by adding the
last sentence.
5. Two appeals preferred by Amar Singh were accepted by the first
appellate court observing that the receipt dated 17th October 1988
Civil Appeal Nos. 6659-6660 of 2010 Page 3 of 11
(Exhibit P-9) was certainly manipulated by adding the last
sentence. Letter dated 24th August 1988 (Exhibit P-5), in fact,
supported the case of Amar Singh that he had not resigned as the
letter was signed by both Amar Singh and Swaran Singh, wherein
Amar Singh has been described as a partner. Official records in
the Sales Tax Department and Income Tax Department also
support the case of Amar Singh that the partnership firm was not
dissolved on 24th August 1988. Accordingly, Amar Singh was held
to be entitled to the prayer for partition of movable and immovable
property wherein 40% belonged to Amar Singh and 60% belonged
to Swaran Singh. The accounts would be rendered and settled as
on the date of institution of the suit for dissolution of partnership,
that is, 29th April 1989. Amar Singh would also be entitled to
interest @ 9% per annum.
6. Swaran Singh, who had died when the civil suits were pending
before the trial court and represented by his widow, filed two
appeals before the Punjab and Haryana High Court which have
been dismissed by the impugned judgment dated 18th May 2009.
7. Having heard counsel for the parties and having perused the
relevant documents and oral evidence, we are not inclined to
interfere with the findings recorded by the first appellate court,
Civil Appeal Nos. 6659-6660 of 2010 Page 4 of 11
which have been affirmed by the High Court as they are born out
from the records. Exhibit P-5, a letter dated 24th August 1988, was
individually signed by both Amar Singh and Swaran Singh clearly
stating that they were partners of Guru Nanak Industries. By this
letter, Amar Singh had requested the bank to start operation of the
account of the partnership firm stating that the disputes between
the partners had been settled. The subsequent letter dated 5th
October 1988 relied by the appellants and written by Amar Singh
states that there has been mutual understanding and agreement
between him and Swaran Singh and as a result he had left the firm
with effect from 24th August 1988 and, therefore, he would not be
responsible in the event of any loan being granted after 24th August
1988. This letter also records that Amar Singh ‘had to completely
withdraw his share and accounts’.
8. The receipt Exhibit P-9 dated 17th October 1988, which is a
disputed document, reads as under:
“Received with thanks a sum of Rs.1,00,000/- (Rupees
One Lac only) by cash from S. Swaran Singh, Mg/
Partner of M/s. Guru Nanak Industries (Regd.), Plot
No. C.P.-6&7, N.H.5, Rly. Road, Faridabad (Haryana)
on account of part payment of the settlement made
between both the partners of firm. The above amount
is being received by the undersigned with regard to
dissolution of our partnership on 24.8.1988. With the
receipt of this amount my total amounts are settled.
Nothing is due to me from S. Swaran Singh & his firm.
Civil Appeal Nos. 6659-6660 of 2010 Page 5 of 11
There is a contradiction in the earlier portion and the last
sentence of the said receipt. The first portion refers to payment of
Rs.1,00,000/- from Swaran Singh, partner of Guru Nanak
Industries, on account of part payment of settlement between the
two partners. The last sentence does not gel and, in fact,
contradicts the first portion. The manipulation is apparent from the
photocopy of the receipt that has been placed on record as
Annexure-13/A with the documents. The words ‘retiring partner’
have been typed later on. They also cannot be reconciled with the
subsequent line, that is, “For Guru Nanak Industries (Regd.)”.
9. Amar Singh accepts that he had received payment of
Rs.1,00,000/- and Rs.50,000/- by way of demand drafts. We
would accept that Amar Singh had also received payment of
Rs.1,00,000/- in cash. Amar Singh, in his written statement, had
referred to three immovable properties, viz. CP No. 6&7,
Neighbourhood No.5, Railway Road, N.I.T, Faridabad; plot situated
in Timber Market, Parvesh Marg, Railway Road, Faridabad –
121002; and Plot No.8, measuring 4098 sq.yards allotted by HUDA
situated in Industrial Area, Sector-5, Faridabad . In addition, as per
Amar Singh, the partnership firm had constructed factory sheds on
two properties. Amar Singh, in his written statement, had given
Civil Appeal Nos. 6659-6660 of 2010 Page 6 of 11
details of the machinery, finished goods and material, stock in
trade, vehicles etc. In addition, he had furnished particulars of
different FDRs having maturity value of Rs.7,71,920/-. It is claimed
that the partnership firm has goodwill of more than Rs.10,00,000/-.
10. Sukhdev Singh (PW-2), s/o. Swaran Singh (who had died before
he would enter the witness box), in his cross-examination, has
accepted that the firm was the owner of plot Nos. CP 6&7, NH-5,
Faridabad and Plot No.8, Sector-5 measuring 4098 sq.yards. He
could not recollect the machinery as on date of dissolution, that is,
24th August 1988. He could not deny the suggestion that at the
time of dissolution the value of the factory plots was Rs.25,00,000/-
each or that the goodwill of the firm was at least Rs.10,00,000/-.
He did not know whether his father had encashed FDRs of
Rs.77,000/- (sic – Rs.7,77,000/-) in the name of the partnership
firm. However, he accepted as correct that the value of the
machinery owned by the firm on the date of dissolution could be
Rs.17,00,000/-, though he was not sure. Similarly, he could not
answer whether the value of the finished goods or furniture and
fixtures, on the date of dissolution, was Rs.17,00,000/- and
Rs.17,50,000/- respectively and that stock in hand was
Rs.3,60,000/-.
Civil Appeal Nos. 6659-6660 of 2010 Page 7 of 11
11. The primary claim and submission of the appellants is that Amar
Singh had resigned as a partner and, therefore, in terms of clause
(10) of the partnership deed (Exhibit P-3) dated 6th May 1981, he
would be entitled to only the capital standing in his credit in the
books of accounts. However, the argument has to be rejected as
in the present case there were only two partners and there is
overwhelming evidence on record that Amar Singh had not
resigned as a partner. On the other hand, there was mutual
understanding and agreement that the partnership firm would be
dissolved. This is apparent from even the version put forward by
Swaran Singh and deposed to by his son, Sukhdev Singh (PW-2).
Even the letter dated 5th October 1988 refers to the fact that Amar
Singh is to completely withdraw the share and accounts which
means that the things were yet to be settled. The receipt Exhibit
P-9 dated 17th October 1988 refers to part payment of
Rs.1,00,000/- towards settlement between the two partners. It also
refers to the date of dissolution as 24th August 1988, which clearly
indicates that payments were still to be made whereupon the two
sides would have completely severed their relationship although
there was a mutual agreement that the date of dissolution was 24th
August 1988.
Civil Appeal Nos. 6659-6660 of 2010 Page 8 of 11
12. There is a clear distinction between ‘retirement of a partner’ and
‘dissolution of a partnership firm’. On retirement of the partner, the
reconstituted firm continues and the retiring partner is to be paid
his dues in terms of Section 37 of the Partnership Act. In case of
dissolution, accounts have to be settled and distributed as per the
mode prescribed in Section 48 of the Partnership Act. When the
partners agree to dissolve a partnership, it is a case of dissolution
and not retirement [See – Pamuru Vishnu Vinodh Reddy v.
Chillakuru Chandrasekhara Reddy and Others, (2003) 3 SCC
445]. In the present case, there being only two partners, the
partnership firm could not have continued to carry on business as
the firm. A partnership firm must have at least two partners. When
there are only two partners and one has agreed to retire, then the
retirement amounts to dissolution of the firm [See – Erach F.D.
Mehta v. Minoo F.D. Mehta, (1970) 2 SCC 724].
13. Therefore, in view of the aforesaid discussion, we dismiss the
appeals and uphold the judgment and decree dated 24th
September 2004 passed by the Additional District Judge,
Faridabad and sustained by the High Court, except that the date of
dissolution of the firm would be taken as 24th August 1988 and not
31st of March 1989.
Civil Appeal Nos. 6659-6660 of 2010 Page 9 of 11
14. Counsel for the appellants, at the time of arguments, had
expressed desire of the appellants to settle the matter with the
respondents – legal heirs of the Amar Singh. He had prayed for
four weeks’ time. It appears that settlement has not been possible.
The case is rather old and Swaran Singh and Amar Singh have
expired. Primarily it is a money matter where the accounts have to
be settled and payment etc. has to be made by the legal
representatives of Swaran Singh. The case record also reveals
that Amar Singh had set up his own business in SeptemberOctober 1988 in the name of Guru Nanak Mechanical Industries,
similar to the name of the partnership firm. Swaran Singh had not
objected. We would, therefore, give one more opportunity to the
parties to appear before the Supreme Court Mediation and
Conciliation Centre to explore possibility of a settlement. However,
in case of no settlement within a period of three months, the matter
would proceed before the trial court for passing of the final decree,
in accordance with law.
......................................J.
(N.V. RAMANA)
......................................J.
Civil Appeal Nos. 6659-6660 of 2010 Page 10 of 11
(SANJIV KHANNA)
......................................J.
(KRISHNA MURARI)
NEW DELHI;
MAY 26, 2020.
Civil Appeal Nos. 6659-6660 of 2010 Page 11 of 11

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 1 imposed on being found guilty of misconduct in view of the provisions made in Rule 34.2 of the CDA Rules of 1978?

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9693 OF 2013
Chairman­cum­Managing Director,
Mahanadi Coalfields Limited …Appellant
                Versus
Sri Rabindranath Choubey …Respondent
J U D G M E N T
M.R. SHAH, J.
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
1
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
2
disciplinary proceedings are instituted while the employee was in
service   whether   before   his   retirement   or   during   his   reemployment.     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 sub­section (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 respondent­employee 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
3
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
respondent­employee   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 respondent­employee.  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 pre­mature.
The respondent­employee 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
4
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 respondent­employee 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 (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
5
appellant­employer to release the amount of gratuity payable to
the respondent­employee.  Hence, the present appeal.
3. Shri Mahabir Singh, learned Senior Advocate appearing on
behalf of the appellant­employer 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
6
the   afore­stated   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 sub­section (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 sub­section (6) of Section
4 of the Payment of Gratuity Act, 1972 and there is no conflict
between the two.
7
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 (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 (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
8
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.
9
4. The present appeal is vehemently opposed by Shri Anukul
Chandra Pradhan, learned Senior Advocate appearing on behalf
of the respondent­employee. 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 un­mistakenly that the four major penalties can be
imposed so long as an employee remains in employment.   It is
10
submitted that there was no order issued to the respondent with
regard to extension of his employment/service or re­employment
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/reemployment, 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 sub­section 6 of Section 4 of the Payment of Gratuity Act,
1972, the exercise of power to forfeit the gratuity amount of an
11
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
12
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
13
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
14
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 socio­economic 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.
15
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 appellantemployer to withhold the payment of amount of gratuity payable
to the respondent­employee, 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 respondent­employee much before he attained the age
of   superannuation,   i.e.,   on   1.10.2007.     That   while   the
disciplinary proceedings were pending, the respondent­employee
attained the age of superannuation on 31.07.2010.  In view of the
pendency of the disciplinary proceedings, the appellant­employer
withheld the payment of gratuity.  It is the case on behalf of the
16
respondent­employee   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   respondent­employee   shall   be   entitled   to   the   amount   of
gratuity.  It is also the case on behalf of the respondent­employee
that even considering clause (b) of sub­section 6 of Section 4 of
the   Payment   of   Gratuity   Act,   the   gratuity   payable   to   the
respondent­employee 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 respondent­employee 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
17
once the order of dismissal is not permissible, Section 4 of the
Payment  of Gratuity Act  shall  be  attracted and  therefore  the
respondent­employee shall be entitled to the amount of gratuity.
On the other hand, as observed hereinabove, it is the case on
behalf   of   the   appellant­employer   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
18
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 Sub­section (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 re­employment 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 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
19
(6) Notwithstanding anything contained in sub­section (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 respondent­employee 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,
20
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,
21
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
22
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
23
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, sub­section 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
24
the whole or part of any pecuniary loss caused to the company if
have been guilty of offences/misconduct as mentioned in subsection 6 of Section 4 of the Payment of Gratuity Act, 1972 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 sub­section 6 of Section 4 of the Payment of
Gratuity Act and there is no inconsistency between sub­section
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 respondentemployee   for   very   serious   allegations   of   misconduct   alleging
dishonestly causing coal stock shortages amounting to Rs.31.65
crores and thereby causing substantial loss to the employer.
Therefore,   if   such   a   charge   is   proved   and   punishment   of
25
dismissal is given thereon, the provisions of sub­section 6 of
Section 4 of the Payment of Gratuity Act would be attracted and
it would be within the discretion of the appellant­employer to
forfeit the gratuity payable to the respondent.   Therefore, the
appellant­employer   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 re­employment, 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.
26
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,
(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
27
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   re­employment,   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.”
(emphasis supplied)
10.4 In State Bank of Patiala & Anr. v. Ram Niwas Bansal (Dead)
Thr. Lrs.  (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
28
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, 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 22­11­2001 with effect from 23­
1Ecil v. B. Karunakar, (1993) 4 SCC 727.
2Ram Niwas Bansal v. State Bank of Patiala, (2002) 2 SLR 375 (P&H).
29
4­1985. 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 nonfurnishing 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   23­4­1985   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 non­furnishing 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
fifty­eight 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 fifty­eight 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 19­7­1969 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
3Ram Niwas Bansal v. State Bank of Patiala, (1998) 4 SLR 711.
30
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 23­4­1985. 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 22­11­2001. We have already held that the said
order would not have been made retrospectively operative, but
31
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 order5 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.5
 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
4R. Jeevaratnam v. State of Madras, AIR 1966 SC 951.
51989 Supp (2) SCC 437.
32
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 case30 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 25­2­
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.”
(emphasis supplied)
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 & Anr.
(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,
33
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,
34
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 Sharma6
 wherein
this Court while interpreting Regulation 470 of the Civil Services
Regulations in State of U.P. v. Harihar Bhole Nath7
 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.”
6(1987) 2 SCC 179
7(2006) 13 SCC 460
35
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
    Council8
  as under: (All ER p. 599 B­D)
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.
81952 AC 109 : (1951) 2 All ER 587 (HL)
36
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:
37
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 one­third 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.” 
(emphasis supplied)                       
10.7 An inquiry has to be taken to a logical end. In Union of India
v.   Ajoy   Kumar   Patnaik  (1995)   6   SCC   442,   the   question   of
continuance of departmental inquiry after retirement from service
38
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.”
(emphasis supplied)
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
39
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 show­cause notice. It is initiated
only when a charge­sheet is issued….”
(emphasis supplied)
A review was filed; the same was dismissed in UCO Bank v.
Rajinder Lal Capoor, (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 &
Ors. (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
40
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 subrule (1), if instituted while the government servant was in
service whether before his retirement or during his reemployment,   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 Bholenath9
 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
9(2006) 13 SCC 460
41
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 1992­1993, 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
India10
.
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  (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
10(2006) 5 SCC 88
42
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 Mysore11 and State
of Uttar Pradesh v. Brahm Datt Sharma12 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.
11AIR 1960 SC 247
12(1987) 2 SCC 179
43
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
Gujarat13 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.”
(emphasis supplied)
10.11 In State of West Bengal & Ors. v. Pronab Chakraborty
(2015) 2 SCC 496, right of the Governor to withhold the pension
in   certain   circumstances   under   rule   10   of   the   West   Bengal
Services (Death­cum­Retirement Benefit) Rules, 1971 came up
for   consideration.     Rule   10(1)   provides   for   two   kinds   of
punishments. Firstly, the right of withholding or withdrawal of
pension.     Secondly,  the   right   to   order   the   recovery   from   the
pension of the whole or part of any pecuniary loss caused to the
Government.  It was held that the employee could be proceeded
against   after   the   date   of   his   retirement   on   account   of   grave
misconduct or negligence.  Even in the absence of any pecuniary
loss caused to the Government, it is open to the employer to
13(1978) 2 SCC 202
44
continue the departmental proceedings after the employee has
retired from service.  It was observed:
4. The State of West Bengal has assailed the order passed by the
High Court on 22­12­201014  by asserting that Rule 10 of the
1971 Rules had been incorrectly interpreted by the High Court.
Therefore, the solitary issue that arises for our consideration in
the present appeal is the interpretation of Rule 10 of the 1971
Rules. Rule 10(1) aforementioned is extracted hereunder:
“10. Right of the Governor to withhold pension in certain
cases.—(1)   The   Governor   reserves   to   himself   the   right   of
withholding or withdrawing a pension or any part of it whether
permanently or for a 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   a
departmental or judicial proceeding to have been guilty of grave
misconduct   or   negligence,   during   the   period   of   his   service,
including service rendered on re­employment after retirement:
Provided that—
(a) such departmental proceeding if instituted while the
officer was in service, whether before his retirement or
during his re­employment, shall after the final retirement
of the office, be deemed to be a proceeding under this
article   and   shall   be   continued   and   concluded   by   the
authority   by   which   it   was   commenced   in   the   same
manner as if the officer had continued in service;
(b) such departmental proceedings, if not instituted while
the office was in service, whether before his retirement or
during his re­employment—
(i) shall not be instituted save with the sanction of the
Governor;
(ii) shall not be in respect of any event which took place
more than four years before such institution; and
(iii) shall be conducted by such authority and in such
place as the Governor may direct and in accordance with
the procedure applicable to departmental proceedings in
which an order of dismissal from service could be made
in relation to the officer during his service;
(c) no such judicial proceeding, if not instituted while the
officer was in service, whether before his retirement or
during his re­employment shall be instituted in respect
14Pranob Chakraborty v. State of W.B., W.P. ST No. 497 of 2010, order dated 22.12.2010 (Cal.)
45
of a cause of action which arose or an event which took
place more than four years before such institution; …”
A perusal of Rule 10(1) extracted hereinabove reveals, that two
different   kinds   of   punishments   are   contemplated   thereunder.
Firstly, “… the right of withholding or withdrawing a pension …”
which the delinquent employee is entitled to, permanently or for
a specified period. And secondly, “… the right of ordering the
recovery from a pension of the whole or part of any pecuniary
loss caused to the Government …”. The above two punishments
can be inflicted on a delinquent, even after he retires on attaining
the age of superannuation, provided he is found guilty of “…
grave   misconduct   or   negligence   …”   during   the   period   of   his
service.
5. It is therefore apparent, that it is not only for pecuniary loss
caused to the Government that proceedings can continue after
the   date   of   superannuation.  An   employee   can   be   proceeded
against, after the date of his retirement, on account of “… grave
misconduct or negligence …”. Therefore/, even in the absence of
any pecuniary loss caused to the Government, it is open to the
employer   to   continue   the   departmental   proceedings   after   the
employee   has   retired   from   service.  Obviously,   if   such   grave
misconduct   or   negligence   entails   pecuniary   loss   to   the
Government, the loss can also be ordered to be recovered from
the employee concerned. It was therefore not right for the High
Court,   while   interpreting   Rule   10(1)   of   the   1971   Rules   to
conclude that proceedings after the date of superannuation could
continue only when the charges entailed pecuniary loss to the
Government.”
(emphasis supplied)
10.12 In  State Bank of India v. A.N. Gupta & Ors.  (1997) 8
SCC 60, it was observed that unless the service rules provide for
continuance   of   disciplinary   proceedings   after   the   date   of
superannuation,   the   pension   cannot   be   withheld   when   no
decision was taken for eight years the proceedings were quashed.
The relevant portion is quoted hereunder:
46
16. Right to receive pension is a right to property under Rule 7 of
the Pension Rules when it says that no employee shall have any
right of property in the pension fund beyond the amount of his
contribution   to  the  pension  section  of   the   fund  with  interest
accrued thereon. That being so Rule 11 cannot be interpreted to
mean that claim to pension of an employee on superannuation
can be defeated by the Bank by merely withholding sanction of
retirement.   For   about   8   years   when   these   two   matters   were
pending in the  Delhi High  Court  the  Bank  did not take  any
decision   in   terms   of   Rule   11   to   sanction   retirement   of   the
respondents. The Bank never communicated to the respondents
that   it   had   withheld   sanction   to   their   retirement   or   did   not
approve their service. It is only during the course of proceedings
in the High Court that the Bank came up with the plea that it
wanted to have the allegations against the respondents enquired
into. To us the language of Rule 11 appears quite explicit. No
sanction   is   required   from   the   Bank   to   leave   the   service   on
reaching the age of superannuation as provided in Rule 26 of the
Service Rules applicable to Assistants. Rule 26 of the Service
Rules clearly mandates the retirement of an employee on his
attaining the age of superannuation and there cannot be two
opinions   on   that.   We,   therefore,   hold   that   Rule   11   has   no
application   in   the   case   of   the   respondents   who   retired   on
attaining the age of superannuation. We cannot agree with the
plea   of   the   Bank   that   sanctioning   of   retirement   must   be
understood as sanctioning of service which in terms must be
understood   as   approval   of   service.   Proceeding   in   the   garb   of
disciplinary proceedings cannot be permitted after an employee
has ceased to be in the service of the Bank as Service Rules do
not provide for continuation of disciplinary proceedings after the
date of superannuation. Sanction of the Bank is required only if
the retirement of an employee is by any other method except
superannuation. We do not think that the decision of the Andhra
Pradesh High Court in T. Narasiah v. State Bank of India15 and
that of the Bombay High Court in J.K. Kulkarni v. State Bank of
India16 have laid down good law.
(emphasis supplied)
10.13 In Takhatray Shivadattray Mankad v. State of Gujarat
(1989) Supp. 2 SCC 110, the question of departmental inquiry
instituted before retirement and its continuation after the age of
superannuation was considered.   It was held that proceedings
could be continued under the relevant rules, and as provided, the
15(1978) 2 LLJ 173
16MP No. 964 of 1977 decided on 29-11-1977
47
order   could   have   been   passed   with   respect   to   pension   and
gratuity.     The  proceedings did  not   become  infructuous.    The
order   passed   by   the   Government   to   withhold   pension   and
gratuity was upheld.  What is of significance is that proceedings
do not lapse, and punishment, as may be considered appropriate,
can be imposed in terms of the rules.   The relevant portion is
extracted hereunder:
“25.  An examination of Rule 188 shows that the Government
may reduce the amount of pension of a government servant as it
may think fit if the service of the government servant has not
been thoroughly satisfactory. As per Rule 189 the government
may withhold or withdraw a pension or part of it if the petitioner
is convicted of serious crime or found to have been guilty of
misconduct during or after the completion of service provided
that   before   any   order   to   this   effect   is   issued,   the   procedure
referred to the Bombay Civil Services (Conduct, Discipline and
Appeal) Rules  are followed.  These rules, thus, have expressly
preserved the State Government’s power to reduce or withhold
pension by taking proceedings against a government servant even
after his retirement. The validity of these rules has not been
challenged. These two rules came for interpretation before this
Court in State of Maharashtra v. M.H. Mazumdar17 and this Court
expressed its view with reference to these rules as follows: (SCC
pp. 55­56, para 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
17(1988) 2 SCC 52
48
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.  Narasimhacharv.  State  of  Mysore18  and  State  of
Uttar   Pradesh  v.  Brahm   Datt   Sharma19  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.”
In compliance with the principle of natural justice requiring an
opportunity of hearing to be afforded to a government servant
before an order affecting his right is passed and in accordance
with the procedure specified in Note I to Rule 33 of the Bombay
Civil Services (Conduct, Discipline and Appeal) Rules a showcause   notice   as   pointed   out   earlier   had   been   issued   to   the
appellant on 17­7­1971 calling upon him to show­cause within
30 days from the date of the receipt of the notice as to why the
proposed   reduction   should   not   be   made   in   the   pension   and
death­cum­retirement gratuity. But the appellant failed to avail
that   opportunity   to   disprove   the   allegations   and   satisfy   his
appointing   authority   that   he   rendered   satisfactory   service
throughout.   It   was   in   those   circumstances   the   appointing
authority   taking   into   consideration   the   serious   allegations
levelled against him in the disciplinary proceedings had thought
it   fit   to   impose   reduction   in   the   pension   and   gratuity   in
accordance with Rules 188 and 189 of the Bombay Rules on the
ground that the appellant had not rendered satisfactory service.
The appellant is not entitled to take advantage of clause (b)(ii) of
the   proviso   to   Section  189­A  of   the   Bombay  Rules  since   the
proceedings   had   been   instituted   long   before   his   retirement.
18(1960) 1 SCR 981
19(1987) 2 SCC 179
49
Further as per clause (a) of the said proviso, the proceedings
already instituted while the government servant was in service
could   be   continued   and   concluded   even   after   his   retirement.
Hence for the reasons stated above the impugned order dated 15­
11­1977 reducing the pension and gratuity cannot be said to
contravene the Bombay Rules.
26.  At   the   risk   of   repetition,   we   may   point   out   that   three
departmental   proceedings   containing   serious   allegations   of
misconduct were instituted against the appellant of which one
was instituted even before he was compulsorily retired on 12­1­
1961 and other two proceedings were instituted in the year 1963
that   is   much   earlier   to   the   appellant   attaining   the   age   of
superannuation on 14­1­1964. These departmental proceedings
are   stated   to   have   become   infructuous   consequent   upon   the
retirement   of   the   appellant   on   attaining   the   age   of
superannuation.   To   the   show­cause   notice   dated   17­7­1971
proposing   to   inflict   reduction   in   pension   and   gratuity   the
appellant, instead of giving a proper reply, disproving the charges
and   satisfying   the   appointing   authority   that   he   rendered
satisfactory service throughout had delayed the matter for over a
period of six years. It was in that situation that the impugned
order dated 15­11­1977 happened to be passed.
27. The learned counsel for the appellant strenuously contended
that after the disciplinary inquiries had been dropped on the
ground that they had become infructuous, the Government was
not right and justified in reducing the pension and gratuity on
the same charges which were the subject­matter of the enquiries.
This argument of the learned counsel, in our opinion, does not
merit consideration because the charges against the appellant
were not made use of for awarding any punishment after his
retirement from service but only for determining the quantum of
the appellant’s pension in accordance with the rules relating to
the payment of pension and gratuity. In this connection it would
be apposite to refer the observation of the Supreme Court in
State of Uttar Pradesh  v.  Brahm Datt Sharma  which we quote
below: (SCC p. 184, para 5)
“If disciplinary proceedings against an employee of
the government are initiated in respect of misconduct
committed   by   him   and   if   he   retires   from   service   on
attaining   the   age   of   superannuation,   before   the
completion of the  proceedings  it is open to the State
Government to direct deduction in his pension on the
proof of the allegations made against him. If the charges
are not established during the disciplinary proceedings
or if the disciplinary proceedings are quashed it is not
permissible to the State Government to direct reduction
50
in   the   pension   on   the   same   allegations,   but   if   the
disciplinary proceedings could not be completed and if
the charges of serious allegations are established, which
may have bearing on the question of rendering efficient
and   satisfactory   service,   it   would   be   open   to   the
Government to take proceedings against the government
servant in accordance with rules for the deduction of
pension and gratuity.”
10.14 In  The  Secretary, Forest Department & Ors. v. Abdur
Rasul   Chowdhury  (2009)   7   SCC   305,   it   was   held   that   the
employer could proceed with the departmental inquiry though
the Government servant has retired from service for imposing
‘punishment’ contemplated under the rules. It was held:
“13. Rule 10 of the Rules speaks of the right of the Governor to
withhold   pension   in   certain   cases.   Rule   10(1)   says   that   the
Governor   reserves   to   himself   the   right   of   withholding   or
withdrawing pension or any part of it whether permanently or for
a specified period and the right of ordering the recovery from
pension of the whole or the part of any pecuniary loss caused to
the Government, if the pensioner is found in a departmental or
judicial proceedings to have been guilty of grave misconduct or
negligence   during   the   period   of   service,   including   service
rendered on re­employment after retirement. Proviso appended to
the Rules specifically provides that the resort to sub­rule (1) to
Rule   10   can   be   made   only   apart   from   others,   that   the
departmental proceedings had been instituted while the officer
was in service.
15.  In the present case, while the delinquent employee was in
service,   the   departmental   enquiry   proceedings   had   been
instituted by the employer by issuing the charge memo and the
proceedings   could   not   be   completed   before   the   government
servant   retired   from   service   on   attaining   the   age   of
superannuation and in view of Rule 10(1) of the 1971 Rules, the
employer can proceed with the departmental enquiry proceedings
though   the   government   servant   has   retired   from   service   for
imposing only punishment contemplated under the Rules.”
51
10.15 In  Ram   Lal   Bhaskar   (supra),   the   employee   was   in
service when the inquiry was initiated.  He was dismissed from
service after attaining the age of superannuation.   This court
considered the argument that the order of the appellate authority
was   illegal   and   without   jurisdiction.   The   Rules   provided   that
disciplinary proceedings could be continued in the same manner
as if the officer continued to be in service.  Thus, it was held that
the employee was deemed to be in service for the continuance of
proceedings.  No merit was found in the submission that inquiry
and order of dismissal passed after superannuation was illegal
and without jurisdiction.   The relevant discussion is extracted
hereunder:
“8.  The learned counsel for Respondent 1, on the other hand,
supported the impugned order of the High Court and submitted
that there is no infirmity in the impugned order of the High
Court. He further submitted that in any case Respondent 1 had
retired from service on 31­1­2000, and though the charge­sheet
was served on him on 22­12­1999 when he was still in service,
the enquiry report was served on him by letter dated 28­9­2000
and he was dismissed from service on 15­5­2001 after he had
retired from service. He submitted that after the retirement of
Respondent 1, the appellant had no jurisdiction to continue with
the enquiry against Respondent 1. In support of this contention,
he cited the decision of this Court in UCO Bank v. Rajinder Lal
Capoor20
.
9.  We have perused the decision of this Court in  UCO Bank  v.
Rajinder Lal Capoor and we find that in the facts of that case the
delinquent officer had already superannuated on 1­11­1996 and
the charge­sheet was issued after his superannuation on 13­11­
20(2007) 6 SCC 694
52
1998 and this Court held that the delinquent officer having been
allowed to superannuate, the charge­sheet, the enquiry report
and the orders of the disciplinary authority and the appellate
authority must be held to be illegal and without jurisdiction. In
the facts of the present case, on the other hand, we find that the
charge­sheet was issued on 22­12­1999 when Respondent was in
service and there were clear provisions in Rule 19(3) of the State
Bank   of   India   Officers   Service   Rules,   1992,   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.
10. We may mention here that a similar provision was also relied
on behalf of UCO Bank in  UCO Bank  v.  Rajinder  Lal Capoor
(supra)   in   Regulation   20(3)(iii)   of   the   UCO   Bank   Officer
Employees’ Service Regulations, 1979, but this Court held that
the   aforesaid   regulation   could   be   invoked   only   when   the
disciplinary   proceedings   had   been   initiated   prior   to   the
delinquent officer ceased to be in service. Thus, the aforesaid
    decision of this Court in     UCO Bank   v.    Rajinder Lal Capoor (supra)
does not support Respondent 1 and there is no merit in the
contention of the counsel for Respondent 1 that the enquiry and
the order of dismissal were illegal and without jurisdiction.”
(emphasis supplied)
In the instant case, Rule 34.2 of the CDA Rules holds the
field and is binding, in the absence of any statutory interdiction
made by any other provision regarding continuance of the inquiry
and   for   taking   it   to   a   logical   end   in   terms   of   the   deemed
continuation of the employee in service. Decision of this Court in
the case of Ram Lal Bhaskar (supra) is by a three Judge Bench,
which is binding.
53
10.16 The   reliance   placed   on   the   provision   contained   in
section 4(6) of the  Payment of Gratuity Act, 1972,  is devoid of
substance. The  Act  is to provide for a scheme for payment of
gratuity to the employees.  Section 2(A) of the Act specifies the
continuous service and what would amount to interruption and
exclusion therefrom.  An employee in continuous service, within
the meaning of section 2(A)(1), for one year or six months, as
provided, shall be deemed to be in continuous service.  Section 3
deals with the appointment of the Controlling Authority.  Section
4 deals with the payment of gratuity.  Section 4(1) provides that
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,   on   his   superannuation,   or   retirement   or
resignation,   or   his   death   or   disablement   due   to   accident   or
disease.  Five years of continuous service shall not be necessary
in case a person ceased to be in service due to death or disability.
Section   4(2)   provides   for   entitlement   of   gratuity   for   every
completed year of service or part thereof, in excess of six months,
the employer shall pay gratuity at the rate of fifteen days’ wages
based   on   the   rate   of   wages   last   drawn   by   the   employee
concerned.   Section 4(5) provides that nothing in this section
54
shall affect the right of an employee to receive better terms of
gratuity   under   any   award   or   agreement   or   contract   with   the
employer.   What   is   ensured   under   the   Act   is   the   minimum
amount of gratuity.
10.17 Section 4 provides for payment of gratuity. Section 4(6)
contains   a  non­obstante  clause   to   sub­section   1.     In   case   of
service of the employee have been terminated for wilful omission
or negligence causing any damage or loss to, or destruction of,
property belonging to the employer, gratuity shall be forfeited to
the extent of the damage or loss so caused as provided under
section 4(6)(a).  Even in the absence of loss or damage, gratuity
can be wholly or partially forfeited under the provisions of section
4(6)(b), in case termination of services was based upon disorderly
conduct or act of violence on his part or offence involving moral
turpitude committed during the course of employment.  Thus, it
is apparent that not only damage or loss can be recovered, but
gratuity can be wholly or partially withheld in case services are
terminated for the reasons specified in section 4(6)(b).
10.18 The  Payment   of   Gratuity   Act,   1972,  makes   no
provision   with   respect   to   departmental   inquiries.   Since   no
statutory provisions of the Payment of Gratuity Act, 1972 come in
55
the   way   of   the   CDA   Rules   to   continue   the   inquiry   after
superannuation of the employee in case it was instituted while he
was in service and his deemed continuance in service; thus, no
fetter is  caused   upon   operation   of  Rule   34.2   providing   for   a
continuation   of   the   inquiry   and   deemed   continuation   of   the
employee in service after the age of superannuation.
10.19 The provisions of Section 4(6) of the Act of 1972 prevail
over   Section   4(1)   as   provisions   of   Section   4(6)   contain  nonobstante  clause as to Section 4(1).   It would prevail over the
provisions made in Section 4(1) and gratuity would not become
payable mandatorily as provided in Section 4(1).  The provisions
of Section 4(6) provide recovery or forfeiture where services of
employee have been terminated for the reasons prescribed in
Section 4(6)(a) and 4(6)(b).  Section 4(6)(a) and (b) both provide for
recovery of loss caused or forfeiture wholly or partially in the case
of   termination   of   services.     In   case   after   superannuation   of
employee   there   cannot   be   any   dismissal   i.e.,   termination   of
services as contemplated in Section 4(6), then there can be no
recovery of pecuniary loss caused by employee or forfeiture of
gratuity wholly or partially as that can only be done in the event
of termination of services on charges found established.  Such an
56
interpretation would render continuance of inquiry otiose and
would defeat the public policy and the provisions of Act of 1972.
The recovery of loss or forfeiture is one of the punishments which
depends   on   exigency   of   termination   by   way   of   dismissal   as
mandated by Section 4(6).  To give effect to the provisions of the
Act, the punishment of dismissal can be imposed in view of Rule
34.2,   otherwise   it   would   defeat   the   intendment   of   provisions
contained in Section 4(6)(a) and 4(6)(b) of the Act of 1972.
10.20 Section   4(1)   used   the   expression   'termination   of
employment   after   five   years   by   way   of   superannuation,
retirement or resignation or on his death or disablement due to
accident or disease’ that is in a normal course. It does not deal
with a situation where departmental inquiry is instituted and
continued and completed after the age of superannuation and
termination of employment had not taken place on completion of
the age of superannuation as there is a deemed continuation of
the   employment   for   the   purpose   of   holding   an   inquiry   and
passing the appropriate punishment order after the conclusion of
the departmental inquiry on the basis of misconduct if any found
established. Provisions of section 4(1) do not impinge upon the
continuation of inquiry.  Section 4(6) prevails on it.  The Payment
57
of   Gratuity   Act,   1972,  can   govern   the   conditions   concerning
payment of gratuity. It cannot control and provide with respect to
an   employer's   right   to   hold   a   departmental   inquiry   after
retirement, and there is no provision prescribing what kind of
punishment can be imposed in the departmental inquiry if it is
continued   after   attaining   the   age   of   superannuation.     The
relevant rules would govern such matters.  In case the Payment
of Gratuity Act, 1972, is interpreted to interdict the departmental
inquiry after the age of superannuation and to deal with the
nature of punishment to be imposed, it would be taken as a case
of   over­inclusion   in   the   Act   which   deals   exclusively   with   the
payment of gratuity. 
10.21 In   view   of   the   various   decisions   of   this   Court   and
considering the provisions in rules in question, it is apparent that
the punishment which is prescribed under Rule 27 of the CDA
Rules, minor as well as major, both can be imposed. Apart from
that, recovery can also be made of the pecuniary loss caused as
provided in Rule 34.3 of the CDA Rules, which takes care of the
provision under  sub­section (6) of Section 4  of the  Payment of
Gratuity Act, 1972.  The recovery is in addition to a punishment
that can be imposed after attaining the age of superannuation.
58
The legal fiction provided in Rules 34.2 of the CDA Rules of
deemed continuation in service has to be given full effect.
10.22 The expression used in section 4(1) “termination” does
not include “dismissal." The Constitution Bench considered the
difference   between   the   termination   and   dismissal   in  M.
Ramanatha Pillai v. The State of Kerala & Ors. (1973) 2 SCC 650
wherein   the   following   observations   were   made   as   to   the
distinction   between   the   terms   dismissal   and   termination
considering the provisions of Article 311 of the Constitution.  It
was observed:
“19. When Article 311 states that no person shall be dismissed,
removed or reduced in rank until he has been given a reasonable
opportunity of showing cause against the action proposed to be
taken in regard to him it affords a protection and security of
government   service.   Article   311   applies   to   all   government
servants holding permanent, temporary or officiating post. The
protection   afforded   by   Article   311   is   however   limited   to   the
imposition of three major penalties. These are dismissal, removal
or   reduction   in   rank.   The   words   “dismissed”,   “removed”   and
“reduced   in   rank”   are   technical   words.   Both   in   the   case   of
removal or dismissal there is a stigma. It also involves loss of
benefit.   There   may   also   be   an   element   of   personal   blame
worthiness of the government servant. Reduction in rank is also
a   punishment.   The   expression   “rank”   in   Article   311(2)   has
reference to a person’s classification and not to his particular
place in the same cadre in the hierarchy of the service to which
he belongs. Merely sending back a servant to his substantive post
has been held not to be a reduction in rank as a punishment
since he had no legal right to continue in officiating post. The
striking out of a name from the panel has been held to affect
future rights of promotion and to be a reduction in rank.”
59
(a) Dismissal   by   way   of   punishment,   termination   of
employment by means of exigencies provided in section 240 of
the Government of India Act was considered in Jagdish Mitter v.
Union of India AIR 1964 SC 449.  It was held:
8.   Having   regard   to   the   legislative   history   of   the   provisions
contained in Article 311, the words “dismissed”, “removed” and
“reduced in rank” as used in Article 311(1), have attained the
significance of terms of Article. As has been observed by Das,
C.J. in Parshotam Lal Dhingra v. Union of India21, “both at the
date   of   the   commencement   of   the   1935   Act   and   of   our
Constitution  the  words  ‘dismissed’,  ‘removed’   and   ‘reduced   in
rank’   as   used   in   the   service   rules,   were   well   understood   as
signifying or denoting the three major punishments which could
be inflicted on government servants. The protection given by the
rules to the Government servants against dismissal, removal or
reduction in rank, which could not be enforced by action, was
incorporated in sub­section (1) and (2) of Section 240 to give
them a statutory protection by indicating a procedure which had
to be followed before the punishments of dismissal, removal or
reduction in rank could be imposed on them and which could be
enforced in law. These protections have now been incorporated in
Article 311 of our Constitution”. It is thus clear that every order
terminating   the   services   of   a   public   servant   who   is   either   a
temporary servant, or a probationer, will not amount to dismissal
or removal from service within the meaning of Article 311. It is
only when the termination of the public servant’s services can be
shown to have been ordered by way of punishment that it can be
characterised either as dismissal or removal from service.
(b) Similarly, in P. Balakotaiah v. Union of India, AIR 1958 SC
232 the provisions of Article 311 came up for consideration, the
distinction between the dismissal and termination was discussed
thus:
21 1958 SCR 828 at pp.856-857
60
“(18)(IIc) It is then contended that the procedure prescribed by
the Security Rules for the hearing of the charges does not satisfy
the   requirements   of   Article   311,   and   that   they   are,   in
consequence, void. But Article 311 has application only when
there is an order of dismissal or removal, and the question is
whether an order terminating the services of the employees under
Rule 3 can be said to be an order dismissing or removing them.
Now, this Court has held in a series of decisions that it is not
every termination of the services of an employee that falls within
the operation of Article 311, and that it is only when the order is
by way of punishment that it is one of dismissal or removal under
that   Article.  Vide   Satish   Chandra   Anand   v.   Union   of   India22
,
Shyam Lal v. State of Uttar Pradesh and the Union of India)23
,
State of Bombay v. Saubhagchand M. Doshi24 and Parshotam Lal
Dhingra   v.   Union   of   India25.   The   question   as   to   what   would
amount to punishment for purposes of Article 311 was also fully
considered in Parshotam Lal Dhingra case. It was therein held
that if a person had a right to continue in office either under the
service   rules   or   under   a   special   agreement,   a   premature
termination of his services would be a punishment. And, likewise,
if the order would result in loss of benefits already earned and
accrued, that would also be punishment. In the present case, the
terms of employment provide for the services being terminated on
a proper notice, and so, no question of premature termination
arises. Rule 7 of the Security Rules preserves the rights of the
employee to all the benefits of pension, gratuities and the like, to
which they would be entitled under the rules. Thus, there is no
forfeiture   of   benefits   already   acquired.   It   was   stated   for   the
appellants that a person who was discharged under the rules was
not eligible for re­employment, and that that was punishment.
But the appellants are unable to point to any rule imposing that
disability. The order terminating the services under Rule 3 of the
Security   Rules   stands   on   the   same   footing   as   an   order   of
discharge under Rule 148, and it is neither one of dismissal nor
of removal within the meaning of Article 311.”
(emphasis supplied)
(c) In Shyam Lal v. State of Uttar Pradesh & Ors., AIR 1954 SC
369,   it   was   held   that   every   termination   is   not   dismissal   or
removal. In Ravindra Kumar Misra v. UP State Handloom Corpn.
22 (1953) SCR 655
23 (1955) 1 SCR 26
24 CA No.182 of 1955
25 CA No.65 1957
61
Ltd.   &   Anr.  1987   Supp.   SCC   739,   the   distinction   between
termination simpliciter and punitive dismissal was considered,
and it was observed:
“6. As we have already observed, though the provisions of Article
311(2) of the Constitution do not apply, the Service Rules which
are almost at par make the decisions of this Court relevant in
disposing   of   the   present   appeal.   In   several   authoritative
pronouncements   of   this   Court,   the   concept   of   “motive”   and
“foundation” has been brought in for finding out the effect of the
order of termination. If the delinquency of the officer in temporary
service   is   taken   as   the   operating   motive   in   terminating   the
service, the order is not considered as punitive while if the order
of termination is founded upon it, the termination is considered
to be a punitive action. This is so on account of the fact that it is
necessary   for   every   employer   to   assess   the   service   of   the
temporary  incumbent  in order  to  find out as  for  whether  he
should be confirmed in his appointment or his services should be
terminated. It may also be necessary to find out whether the
officer should be tried for some more time on temporary basis.
Since both in regard to a temporary employee or an officiating
employee   in   a   higher   post   such   an   assessment   would   be
necessary merely because the appropriate authority proceeds to
make an assessment and leaves a record of its views the same
would   not   be   available   to   be   utilised   to   make   the   order   of
termination following such assessment punitive in character. In a
large   democracy   as   ours,   administration   is   bound   to   be
impersonal   and   in   regard   to   public   officers   whether   in
government or public corporations, assessments have got to be in
writing for purposes of record. We do not think there is any
justification in the contention of the appellant that once such an
assessment   is   recorded,   the   order   of   termination   made   soon
thereafter must take the punitive character.”
(d) In  Registrar   General,   High   Court   of   Gujarat   &   Anr.   v.
Jayshree Chamanlal Buddhbhatti (2013) 16 SCC 59, termination
was   held   to   be   dismissal.     The   relevant   portion   is   extracted
hereunder:
62
“25.   The   respondent   relied   upon   the   law   laid   down   from
Parshotam Lal Dhingra v. Union of India onwards. In that case it
was held by the Constitution Bench that: (AIR p. 49, para 28)
“28. … if the Government has, by contract or under the
rules,   the   right   to   terminate   the   employment   without
going through the procedure prescribed for inflicting the
punishment of dismissal or removal or reduction in rank,
the Government may, nevertheless, choose to punish the
servant and if the termination of service is sought to be
founded on misconduct, negligence, inefficiency or other
disqualification,   then   it   is   a   punishment   and   the
requirements of Article 311 must be complied with.”
26. The next judgment cited is one of three Judges of this Court
in  State of Bihar v.  Shiva Bhikshuk Mishra6  wherein  it  was
observed as follows: (SCC p. 875, para 5)
“5. … So far as we are aware no such rigid principle has
ever been laid down by this Court that one has only to
look   to   the   order   and   if   it   does   not   contain   any
imputation of misconduct or words attaching a stigma to
the character or reputation of a government officer it
must be held to have been made in the ordinary course
of administrative routine and the court is debarred from
looking at all the attendant circumstances to discover
whether   the   order   had   been   made   by   way   of
punishment.”
27. These judgments have been followed by a Bench of seven
Judges in Samsher Singh v. State of Punjab, where this Court
was   concerned   with   the   termination   of   the   services   of   a
probationary judicial officer on the basis of a vigilance inquiry,
which was conducted by the State Government on the request of
the High Court. The Court held the termination to be bad, and
while doing so laid down the law in this behalf in no uncertain
terms in paras 63 to 66 (of the SCC report) which read as follows:
(SCC pp. 851­52)
“63. No abstract proposition can be laid down that where
the   services   of   a   probationer   are   terminated   without
saying anything more in the order of termination than
that the services are terminated it can never amount to a
punishment in the facts and circumstances of the case.
If   a   probationer   is   discharged   on   the   ground   of
misconduct, or inefficiency or for similar reason without
a proper enquiry and without his getting a reasonable
opportunity of showing cause against his discharge it
may in a given case  amount to removal from service
within the meaning of Article 311(2) of the Constitution.
63
64.   Before   a   probationer   is   confirmed   the   authority
concerned is under an obligation to consider whether the
work of the probationer is satisfactory or whether he is
suitable   for   the   post.   In   the   absence   of   any   rules
governing a probationer in this respect the authority may
come to the conclusion that on account of inadequacy for
the job or for any temperamental or other object not
involving moral turpitude the probationer is unsuitable
for   the   job   and   hence   must   be   discharged.   No
punishment is involved in this. The authority may in
some   cases   be   of   the   view   that   the   conduct   of   the
probationer may result in dismissal or removal on an
inquiry. But in those cases the authority may not hold
an inquiry and may simply discharge the probationer
with a view to giving him a chance to make good in other
walks of life without a stigma at the time of termination
of probation. If, on the other hand, the probationer is
faced   with   an   enquiry   on   charges   of   misconduct   or
inefficiency   or   corruption,   and   if   his   services   are
terminated   without   following   the   provisions   of   Article
311(2) he can claim protection. In State of Bihar v. Gopi
Kishore   Prasad8   it   was   said   that   if   the   Government
proceeded   against   the   probationer   in   the   direct   way
without   casting   any   aspersion   on   his   honesty   or
competence, his discharge would not have the effect of
removal by way of punishment. Instead of taking the
easy course, the Government chose the more difficult one
of starting proceedings against him and branding him as
a dishonest and incompetent officer.
65.   The   fact   of   holding   an   enquiry   is   not   always
conclusive. What is decisive is whether the order is really
by   way   of   punishment   (see   State   of   Orissa   v.   Ram
Narayan   Das9).   If   there   is   an   enquiry   the   facts   and
circumstances of the case will be looked into in order to
find   out   whether   the   order   is   one   of   dismissal   in
substance (see Madan Gopal v. State of Punjab10). In
R.C. Lacy v. State of Bihar11 it was held that an order of
reversion passed following an enquiry into the conduct of
the probationer in the circumstances of that case was in
the   nature   of   preliminary   inquiry   to   enable   the
Government to decide whether disciplinary action should
be taken. A probationer whose terms of service provided
that   it   could   be   terminated   without   any   notice   and
without any cause being assigned could not claim the
protection   of   Article   311(2)   (see   Ranendra   Chandra
Banerjee v. Union of India12). A preliminary inquiry to
satisfy   that   there   was   reason   to   dispense   with   the
services of a temporary employee has been held not to
64
attract Article 311 (see Champaklal Chimanlal Shah v.
Union of India13). On the other hand, a statement in the
order   of   termination   that   the   temporary   servant   is
undesirable   has   been   held   to   import   an   element   of
punishment (see Jagdish Mitter v. Union of India14).
66. If the facts and circumstances of the case indicate
that the substance of the order is that the termination is
by way of punishment then a probationer is entitled to
attract Article 311. The substance of the order and not
the form would be decisive (see K.H. Phadnis v. State of
Maharashtra15).”
(e) In  Dinesh  Chandra  Sangma  v. State of Assam and  Ors.,
(1977) 4 SCC 441, it was held that compulsory retirement is not
a dismissal or removal.  In Workers Employed in Hirakud Dam v.
State of Orissa & Ors. (1971) 1 SCC 583, it was held:
“15.   The   question   that   arises   for   consideration   is   about   the
connotation of the expression “dismissed” used in para 11. The
contention of Mr Ramamurthy that the expression “dismissed”
has reference only to termination of the services of an employee
as   and   by   way   of   punishment   is   largely   based   upon   the
provisions   contained   in   the   Government   of   India   Act   and   in
Article 311 of the Constitution. Based upon those provisions Mr
Ramamurthy claims that the expression “dismissal” is a technical
word used in cases in which a person’s services are terminated
by way of punishment. Quite naturally he relied upon the Service
Rules where the word “dismissal” has been used to denote a
major punishment inflicted upon an employee for misconduct. Mr
Ramamurthy, no doubt, is well­founded in his contention that
the word “dismissal” used in the Government of India Act as also
in the Constitution and the Service Rules has been interpreted to
mean termination of a person’s service by way of punishment.”
(f) In  Satish Chandra Anand v. Union of India  AIR 1953 SCC
250 it was held that termination by notice is not dismissal or
removal. It was held:
65
“8. Taking Article 14 first, it must be shown that the petitioner
has been discriminated against in the exercise or enjoyment of
some   legal   right   which   is   open   to   others   who   are   similarly
situated. The rights which he says have been infringed are those
conferred by Article 311. He says he has either been dismissed or
removed from service without the safeguards which that Article
confers. In our opinion, Article 311 has no application because
this is neither a dismissal nor a removal from service, nor is it a
reduction in rank. It is an ordinary case of a contract being
terminated by notice under one of its clauses.”
(g) Similarly, in  State Bank of India v. The Workmen of State
Bank   of   India   &   Ors.  (1991)   1   SCC   13   retrenchment   under
section 25F was held not to be dismissal.
10.23 It   is   a   settled   proposition   of   law   that   in   case   of
termination of service there is a distinction as to whether it is a
simpliciter termination or a punitive dismissal and this court can
lift the veil and find out the real nature of termination whether it
is simpliciter termination or punitive dismissal as held in  B.T.
Krishnamurthy v. Sri Basaveswara Education  Society  (2013) 4
SCC   490,  Paramjit   Singh   v.   Director   of   Schools   (Public
Instructions), (2010) 14 SCC 416, State of U.P. v. Ram Vinai Sinha,
(2010) 15 SCC 305, Jaswantsingh Pratapsingh Jadeja v. Rajkot
Municipal Corpn. (2007) 10 SCC 71, the State of Punjab v. Rajesh
Kumar (2006) 12 SCC 418, Jai Singh v. Union of India (2006) 9
SCC 717. 
66
10.24 In   the   case   of   dismissal   by   way   of   punishment,
gratuity is not payable because of special provisions made in the
Working  Journalists  Act   was  held   by  this  Court  in  P.   Rajan
Sandhi v. Union of India & Anr. (2010) 10 SCC 338.  The relevant
portion is extracted hereunder:
“11.   It   may   be   seen   that   there   is   a   difference   between   the
provisions for denial of gratuity in the Payment of Gratuity Act
and   in   the   Working   Journalists   Act.   Under   the   Working
Journalists Act gratuity can be denied if the service is terminated
as a punishment inflicted by way of disciplinary act, as has been
done in the instant case. We are of the opinion that Section 5 of
the Working Journalists Act being a special law will prevail over
Section 4(6) of the Payment of Gratuity Act which is a general
law. Section 5 of the Working Journalists Act is only for working
journalists, whereas the Payment of Gratuity Act is available to
all employees who are covered by that Act and is not limited to
working   journalists.   Hence,   the   Working   Journalists   Act   is   a
special law, whereas the Payment of Gratuity Act is a general law.
It is well settled that special law will prevail over the general law,
vide G.P. Singh’s Principles of Statutory Interpretation, 9th Edn.,
2004, pp. 133 and 134.
12.   The   special   law   i.e.   Section   5(1)(a)(i)   of   the   Working
Journalists Act, does not require any allegation or proof of any
damage or loss to, or destruction of, property, etc. as is required
under the general law i.e. the Payment of Gratuity Act. All that is
required   under   the   Working   Journalists   Act   is   that   the
termination   should   be   as   a   punishment   inflicted   by   way   of
disciplinary action, which is the position in the case at hand.
Thus, if the service of an employee has been terminated by way of
disciplinary action under the Working Journalists Act, he is not
entitled to gratuity.”
10.25 Section  4(1) deals with normal superannuation  and
does   not   cover   the   cases   where   the   departmental   inquiry   is
pending, or dismissal had been ordered. It did not interdict the
67
departmental inquiry if it was initiated while the employee was in
service and continued after superannuation as if the employee
continued in service. Section 4 of the  Payment of Gratuity Act,
1972  contains no  bar, and purposive construction has  to be
made of the provisions contained in section 4(1).   Section 4(6)
provides where particular misconduct is found established, how
gratuity to be dealt with, but provisions cause no fetter on the
power of an employer to impose a punishment of dismissal.   It
makes   no   provision   in   particular   with   respect   to   the
departmental   inquiry   but   rather   buttresses the   power   of   an
employer to forfeit gratuity wholly or partially or to recover loss
provided in Section 4(6).   Neither the provisions in section 4(1)
nor section 4(6) of the Payment of Gratuity Act create embargo on
the   departmental   inquiry   and   its   continuance   after
superannuation.  Thus, provisions of Rule 34.2 of the CDA Rules
would prevail.    Even the executive instruction can hold the field
in the   absence of statutory rules and are equally binding as laid
down in  State of Madhya Pradesh and Anr. v. Kumari Nivedita
Jain and Ors., (1981) 4 SCC 296, State of Andhra Pradesh and
Anr. v. Lavu Narendranath  and  Ors. etc.,  AIR 1971 SC 2560,
Distt. Registrar, Palghat and Ors. v. M.B. Koyakutty and Ors.,
68
(1979) 2 SCC 150, Union of India and Anr. v. Tulsiram Patel, AIR
1985   SC   1416.   This   Court   held   that   only   when   statutory
provision is otherwise, executive instructions cannot prevail.  In
our opinion, no dint is caused by the  Payment of Gratuity Act,
1972, and the efficacy of Rules is not adversely affected on the
proper interpretation of Section 4(1) and 4(6) of the Act of 1972.
10.26 In  UCO   Bank   &   Ors.   v.   Rajendra   Shankar   Shukla,
(2018) 14 SCC 92 this court did not interfere on the ground that
there was an enormous delay of about seven years in issuing a
charge sheet.  Efficiency bar was permitted to be crossed during
that   period,   and   the   employee   was   not   paid   the   subsistence
allowance or pension during the pendency of the disciplinary
inquiry.     It   was   observed   that   the   employee   was   entitled   to
subsistence allowance during the inquiry.  The decision of UCO
Bank & Ors. v. Prabhakar Sadashiv Karvade (2018) 14 SCC 98
was   referred.   An   observation   was   made   that   punishment   of
dismissal could not have been imposed after superannuation, but
the same could not be said to be the ratio of the decision. It was
mainly for the reasons mentioned by this court concerning delay,
non­payment  of  subsistence allowance and the employee was
deprived   of   meaningful   participation   under   the   departmental
69
inquiry. After giving the aforesaid findings, it was not necessary
to go into the aforesaid question.  Thus, the opinion expressed as
to the punishment of dismissal could not be said to be the ratio
of the decision.  The reliance was placed on UCO Bank & Ors. v.
Prabhakar Sadashiv Karvade  (supra).   Though the decision of
UCO Bank v. Rajinder Lal Capoor (supra) was referred to by this
court, but it did not consider the effect of deeming fiction of
continuance of inquiry and continuance of the employee in the
service as pointed out above in the various decisions and it relied
upon Regulation 48 providing for pecuniary loss caused to the
bank.  Whereas in Ramesh Chandra Sharma v. Punjab National
Bank & Anr.  (supra)  it was held to the contrary that once the
inquiry   is   initiated   under   Regulation   4   of   the   (Discipline   &
Appeal) Regulations, Regulation 48 of the Pension Regulations
had   no   application,   and   order   of   dismissal   was   upheld.   The
decision in Ramesh Chandra Sharma v. Punjab National Bank &
Anr. (supra)  and other decisions which were binding upon the
Division   Bench   were   not   considered.     In   the   absence   of
consideration of the said decision and other decisions mentioned
above   in   which   it   was   held   that   legal   fiction   of   deemed
70
continuation   has   to   be   taken   to   a   logical   conclusion
consequently, the observation made that after superannuation
punishment of dismissal cannot be imposed in UCO Bank & Ors.
v. Rajendra Shankar Shukla (supra), was not the ratio of decision,
and the opinion expressed on the strength of the said decision in
UCO Bank v. Prabhakar Sadashiv Karvade  (supra) suffers from
infirmity and cannot prevail.
10.27 In Jaswant Singh Gill v. Bharat Coking Coal Ltd. (2007)
1 SCC 663, it was held that the provisions of section 4(6) of the
Payment   of   Gratuity   Act,   1972  would   prevail   over   the   nonstatutory Bharat Coking Coal Ltd. ­ a subsidiary of Coal India
Ltd. Rules 34.2 and 34.3 and provisions of Payment of Gratuity
Act,   1972,  were   considered.     It   was   held   that   even   if   the
disciplinary   inquiry   was   initiated   before   attaining   the   age   of
superannuation,   if   the   employee   attains   the   age   of
superannuation, the question of imposing a major penalty by
removal   or   dismissal   from   service   would   not   arise.   Once   the
employee had retired and his services had not been extended for
the purpose of imposing punishment, a major penalty could not
be imposed.  It was also held that the rule framed by Coal India
Ltd. are non­statutory rules, and in view of the provisions of the
71
Payment of Gratuity Act, 1972, they cannot prevail.  In the said
case,   the   order   of   dismissal   was   passed   after   the   age   of
superannuation.  It was found that misconduct did not cover the
grounds mentioned in section 4(6)(a) for recovery of the loss, nor
it was the case of misconduct in which gratuity could have been
withheld   wholly   or   partially   in   the   exigencies   as   provided   in
section 4(6)(b).  We find it difficult to agree with the said decision
as Rules hold the field and are not repugnant to provisions of the
Payment of Gratuity Act, 1972.  This Court held that Rules could
not hold the field as they were not statutory; thus, the effect of
the rule providing of deeming legal fiction as if he had continued
in   the   service   notwithstanding   crossing   the   age   of
superannuation was not considered.  Apart from that, the validity
of Rules 34.2 or 34.3 could not have been decided as it was not
in question in the said case.  The Controlling Authority and the
Appellate Authority ordered the payment of gratuity.  The main
ground   employed   was   that   in   the   order   passed   by   the
departmental authority, the quantum of damage or loss caused
was not indicated, and it was not the case covered by Section 4(6)
(a)   and   4(6)(b).     A   writ   petition   filed   by   the   employer   was
dismissed.  However, the Intra Court Appeal was allowed, and it
72
was opined that the Controlling Authority could not have gone
into   the   validity   of   the   dismissal   order   and   forfeiture   of   the
gratuity since it was not an appellate authority of disciplinary
authority   imposing   the   punishment   of   dismissal.     Thus,   the
jurisdictional scope in the  Jaswant Singh Gill  case (supra) was
limited. We are unable to agree with the decision rendered in
Jaswant   Singh   Gill  case   (supra)  inter   alia  for   the   following
reasons:
(i) The order of termination was not questioned, nor the
authority under the Payment of Gratuity Act, 1972, had
jurisdiction to deal with it.
(ii) The validity or enforceability and vires of service Rules
34.2 and 34.3 were not questioned
(iii) The Controlling Authority under the Payment of Gratuity
Act, 1972, had no jurisdiction to go into the legality of
order of the disciplinary authority.
(iv) The scope of the case before this Court was confined to
validity   of   order   of     Controlling   Authority   and   to
questions   which   could   have   been   dealt   with   by
Controlling Authority.
73
(v) No fetter is caused on the efficacy of the Rules by Section
4(1) and 4(6) of the Payment of Gratuity Act, 1972.  The
Rules need not be statutory to have efficacy as they are
not repugnant to the Payment of Gratuity Act, 1972. This
Court did not consider the scope of provisions of the
Gratuity Act and provisions of Rule 34.2, providing legal
fiction of employee deemed to be in service even after
superannuation.
(vi) The Controlling Authority had no jurisdiction to deal with
Rules   34.2   and   34.3   or   to   pronounce   upon   validity
thereof or of dismissal.   Thus, the observations made,
traveling beyond the scope of the proceedings, cannot be
said to be binding and cannot constitute the ratio with
respect   to   continuance   of   departmental   inquiry   after
superannuation and what kind of punishment can be
imposed by an employer.   The jurisdiction of authority
was only to consider payment of gratuity under Section
4(6) of the Payment of Gratuity Act, 1972.
Thus, we overrule the decision in Jaswant Singh Gill (supra).
74
10.28 This   court   in  Anant   R.   Kulkarni   v.   Y.P.   Education
Society & Ors.  (2013) 6 SCC 515 considering the decision in
Noida Entrepreneurs Association v. Noida & Ors.  (2011) 6 SCC
508   held   that   inquiry   against   an   employee   who   had   retired
depends upon the nature of the statutory rule, which governs the
terms and conditions of his service.  A general observation was
made   that   services   cannot   be   terminated   after   the   age   of
superannuation.  The relevant portion is extracted hereunder:
“24. Thus, it is evident from the above, that the relevant rules
governing   the   service   conditions   of   an   employee   are   the
determining   factors   as   to   whether   and   in   what   manner   the
domestic enquiry can be held against an employee who stood
retired after reaching the age of superannuation. Generally, if the
enquiry has been initiated while the delinquent employee was in
service, it would continue even after his retirement, but nature of
punishment   would   change.   The   punishment   of
dismissal/removal from service would not be imposed.”
(a) In the aforesaid decision, reference was made to  State of
Assam & Ors. v. Padma Ram Borah AIR 1965 SC 473, in which it
was opined that it was not possible to continue with the inquiry
unless the service was continued by issuing a notification before
31st March 1961.  Following observations were made in State of
Assam v. Padma Ram Borah (supra):
“11. Let us proceed on the footing, as urged by learned counsel
for the appellant, that the order dated December 22, 1960 itself
amounts   to   an   order   retaining   the   respondent   in   service   till
75
departmental   proceedings   to   be   drawn   up   against   him   are
finalised.   We   shall   also   assume   that   the   finalisation   of   the
departmental   proceedings   mentioned   in   the   order  is  a   public
ground on which the respondent could be retained in service. As
the order was passed by the State Government itself, no question
of taking its sanction arises and we think that the High Court
was wrong in holding that the absence of sanction from the State
Government made the order bad. Therefore, the effect of the order
dated   December   22,   1960   was   two­fold:   firstly,   it   placed   the
respondent   under   suspension   and   secondly,   it   retained   the
respondent in service till departmental proceedings against him
were finalised. We treat the order as an order under Fundamental
Rule 56 which order having been made before January 1, 1961,
the date of respondent’s retirement, cannot be bad on the ground
of retrospectivity. Then, we come to the order dated January 6,
1961.   That   order   obviously   modified   the   earlier   order   of
December 22, 1960 inasmuch as it fixed a period of three months
from January 1, 1961 or till the disposal of the departmental
proceedings, whichever is earlier, for retaining the respondent in
service. The period of three months fixed by this order expired on
March 31, 1961. Thus the effect of the order of January 6, 1961
was that the service of the respondent would come to an end on
March   31,   1961   unless   the   departmental   proceedings   were
disposed of at a date earlier than March 31, 1961. It is admitted
that  the  departmental  proceedings   were  not  concluded  before
March 31, 1961. The clear effect of the order of January 6, 1961
therefore was that the service of the respondent came to an end
on March 31, 1961. This was so not because retirement was
automatic but because the State Government had itself fixed the
date up to which the service of the respondent would be retained.
The State Government made no further order before March 31,
1961, but about a month or so after passed an order on May 9,
1961 extending the service of the respondent for a further period
of three months with effect from April 1, 1961. We do not think
that the State Government had any jurisdiction to pass such an
order on May 9, 1961. According to the earlier order of the State
Government itself, the service of the respondent had come to an
end on March 31, 1961. The State Government could not by
unilateral action create a fresh contract of service to take effect
from April 1, 1961. If the State Government wished to continue
the   service   of   the   respondent   for   a   further   period,   the   State
Government should have issued a notification before March 31,
1961.   In   Rangachari   v.   Secretary   of   State   for   India2   Their
Lordships of the Privy Council were dealing with a case in which
a Sub­Inspector of police was charged with certain irregular and
improper conduct in the execution of his duties. After the SubInspector had retired on invalid pension and his pension had
been paid for three months, the matter was re­opened and an
76
order was made removing the Sub­Inspector from service as from
the date on which he was invalided. Lord Roche speaking for the
Board said:
“It seems to require no demonstration that an order
purporting to remove the appellant from the service
at a time when, as Their Lordships hold, he had for
some months duly and properly ceased to be in the
service,   was   a   mere   nullity   and   cannot   be
sustained.”
The decision is of no avail, in view of the rule in question,
which provides for legal fiction with respect to continuance in
service, and it has to be given full effect to the ratio of decision
negate the submission of the employee. 
(b) The decision in State of Punjab v. Khemi Ram (1969) 3 SCC
28 was also referred to in Anant R. Kulkarni (supra) in which it
was   observed   that   though   the   disciplinary   inquiry   has   to   be
concluded before the date of retirement, once the employee is
permitted to retire. In case inquiry was to be continued, he has to
be   suspended   and   retained   in   service   till   such   inquiry   is
completed and the final order is passed.  The relevant portion of
observations made in Khemi Ram (supra) is extracted hereunder:
“12. There can be no doubt that if disciplinary action is sought to
be taken against a government servant it must be done before he
retires as provided by the said rule. If a disciplinary enquiry
cannot   be   concluded   before   the   date   of   such   retirement,   the
course open to the Government is to pass an order of suspension
and refuse to permit the concerned public servant to retire and
retain him in service till such enquiry is completed and a final
order is passed therein. That such a course was adopted by the
77
Punjab Government by passing the order of suspension on July
31, 1958 cannot be gainsaid. That fact is clearly demonstrated by
the   telegram,   Ex.   P­1,   which   was   in   fact   despatched   to   the
respondent   on   July   31,   1958   by   the   Secretary,   Cooperative
Societies to the Punjab Government, informing the respondent
that he was placed under suspension with effect from August 2,
1958. As the telegram shows, it was sent to his home address at
Village   Batahar,   Post   office   Haripur,   as   the   respondent   had
already   by   that   time   proceeded   on   leave   sanctioned   by   the
Himachal Pradesh Administration. Ex. R­1 is the memorandum,
also   dated   July   31,   1958,   by   which   the   Punjab   Government
passed the said order of suspension and further ordered not to
permit the respondent to retire on August 4, 1958. That exhibit
shows that a copy of that memorandum was forwarded to the
respondent at his said address at village Batahar, Post­Office
Haripur. Lastly, there is Annexure H to the respondent’s petition
which consists of an express telegram, dated August 2, 1958 and
a letter of the same date in confirmation thereof informing the
respondent that he was placed under suspension with effect from
that date. Both the telegram and the letter in confirmation were
despatched at the address given by the respondent i.e. at his
Village Batahar, Post Office Haripur. These documents, therefore,
clearly demonstrate that the order of suspension was passed on
July 31, 1958 i.e. before the date of his retirement and had
passed from the hands of the Punjab Government as a result of
their having been transmitted to the respondent. The position,
therefore,   was   not   as   if   the   order   passed   by   the   Punjab
Government suspending the respondent from service remained
with the Government or that it could have, therefore, changed its
mind about it or modified it. Since the respondent had been
granted leave and had in fact proceeded on such leave, this was
also not a case where, despite the order of suspension, he could
have transacted any act or passed any order in his capacity as
the Assistant Registrar.”
The aforesaid decision does not buttress the case of the
employee rather defeats.  It was held by this court in Khemi Ram
(supra) that employee has to be continued in service till such
inquiry is completed and final order is passed. That is precisely
done by the deeming fiction in the instant matter. 
78
(c) In  Anant R. Kulkarni  (supra) the decision in  Kirti Bhusan
Singh v. State of Bihar (1986) 3 SCC 675 was also considered in
which it was observed:
 “6. The expression “compulsory retirement” found in Rule 73(f) of
the   Bihar   Service   Code   refers   to   retirement   of   a   government
servant on his attaining the age of superannuation. This is not a
case in which the appellant had been permitted to retire from
service   on   the   ground   that   he   had   attained   the   age   of
superannuation. No order asking the appellant to continue in
service before he had attained the age of superannuation for the
purpose of concluding a departmental inquiry instituted against
him had also been passed by the competent authority. On the
other   hand   the   appellant   had   been   permitted   to   retire   from
service on invalid pension on medical grounds even before he had
attained   the   age   of   superannuation.   Rule   73(f)   of   the   Bihar
Service Code is clearly inapplicable to the case of the appellant.
No other provision which enabled the State Government or the
competent authority to revoke an order of retirement on invalid
pension is brought to our notice.  The order of retirement on
medical grounds having thus become effective and final it was
not   open   to   the   competent   authority   to   proceed   with   the
disciplinary proceedings and to pass an order of punishment. We
are of the view that in the absence of such a provision which
entitled the State Government to revoke an order of retirement on
medical grounds which had become effective and final, the order
dated October 5, 1963 passed by the State Government revoking
the order of retirement should be held as having been passed
without the authority of law and is liable to be set aside. It,
therefore, follows that the order of dismissal passed thereafter
was also a nullity.”
(emphasis supplied)
The question in the aforesaid case was with respect to the
revocation of the order of retirement passed on medical grounds.
That does not impinge upon Rule 34.2 due to the operation of
which superannuation would not be effective.
79
(d) The   decision   in  Bhagirathi   Jena   v.   Board   of   Directors,
O.S.F.C. & Ors. (1999) 3 SCC 666 was also referred to in which it
was held:
7. In view of the absence of such a provision in the abovesaid
regulations, it must be held that the Corporation had no legal
authority to make any reduction in the retiral benefits of the
appellant. There is also no provision for conducting a disciplinary
enquiry after retirement of the appellant and nor any provision
stating that in case misconduct is established, a deduction could
be made from retiral benefits. Once the appellant had retired
from service on 30­6­1995, there was no authority vested in the
Corporation for continuing the departmental enquiry even for the
purpose of imposing any reduction in the retiral benefits payable
to the appellant. In the absence of such an authority, it must be
held that the enquiry had lapsed and the appellant was entitled
to full retiral benefits on retirement.
As   there   was   no   provision   for   conducting   a   disciplinary
inquiry   after   retirement   and   that   in   case   misconduct   was
established, a deduction could be made from the retiral benefits.
Thus,   it   was   held   that   retiral   benefits   could   not   have   been
deducted and became payable.  The rule was different.
(e) In  Anant   R.   Kulkarni  (supra),   the   decision   in  U.P.   State
Sugar Corporation Ltd. & Ors. v. Kamal Swaroop Tandon (2008) 2
SCC   41   was   also   considered   in   which   the   proceedings   were
initiated after retirement in which it was held that in case of
retirement, master and servant relationship continue for grant of
retiral benefits.  Proceedings for recovery of financial loss from an
80
employee was permissible even after his retirement. The case
relates   to   the   departmental   inquiry   to   be   instituted   postretirement   for  the   financial  loss  caused  during  the  course  of
employment.   The question of dismissal did not arise as the
inquiry   was   instituted   after   retirement.   There   cannot   be   any
quarrel that it would depend upon the relevant rule.
10.29 On the basis of the abovementioned decisions in the
State of Assam & Ors. v. Padma Ram Borah, State of Punjab v.
Khemi Ram,  Bhagirathi Jena v. Board of Directors, O.S.F.C. &
Ors.,  Kirti   Bhusan   Singh   v.   State   of   Bihar,  U.P.   State   Sugar
Corporation Ltd. & Ors. v. Kamal Swaroop Tandon  (supra) this
court in  Anant   R. Kulkarni  (supra) opined that relevant rules
governing   the   service   conditions   of   an   employee   are   the
determining factor as to whether or not the domestic inquiry can
be held against an employee who stood retired after reaching the
age   of   superannuation.     To   this   extent,   there   is   no   problem
caused by the aforesaid decision.   However, this court made a
general observation that if the inquiry had been initiated while
the delinquent employee was in service, it would continue even
after his retirement, but the nature of punishment would change.
The punishment of dismissal, removal from service would not be
81
imposed.  The general observation made cannot come in the way
of a specific rule and decision cannot be said to be of universal
application and cannot be said to be binding in a case the rules
provide legal fiction and continuance of employee in the service
as if he had continued in service.
10.30 In view of the various decisions, it is apparent that
under Rule 34.2 of the CDA Rules inquiry can be held in the
same manner as if the employee had continued in service and the
appropriate major and minor punishment commensurate to guilt
can be imposed including dismissal as provided in Rule 27 of the
CDA Rules and apart from that in case pecuniary loss had been
caused that can be recovered. Gratuity can be forfeited wholly or
partially.
10.31 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   scot­free   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
82
manner   as   if   the   employee   had   remained   in   service   after
superannuation, and appropriate punishment can be imposed.
Various provisions of the Gratuity Act discussed above do not
come in the way of departmental inquiry and as provided in
Section 4(6) 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 Payment of Gratuity Act,
1972 that inquiry shall come to an end as soon as the employee
attains the age of superannuation.  We reiterate that 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.
The provisions of section 4(1) and 4(6) of Payment of Gratuity Act,
1972   have  to   be   given   purposive   interpretation,   and   no   way
83
interdict holding of the departmental inquiry and punishment to
be imposed is not the subject matter dealt with under the Act.
10.32 Thus considering the 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.
11. In view of the above and for the reasons stated above and
in view of the decision of three Judge Bench of this Court in
Ram Lal Bhaskar (supra)  and our conclusions as above, it is
observed and held that (1)  the appellant – employer has a right
to withhold the gratuity during the pendency of the disciplinary
proceedings, and (2) 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.
84
Under   the   circumstances,   the   impugned   judgment   and
order passed by the High Court cannot be sustained and the
same deserves to be quashed and set aside and is accordingly
hereby   quashed   and   set   aside  and   the   order   passed   by  the
Controlling   Authority   is   hereby   restored.     However,   the
appellant­employer   is   hereby   directed   to   conclude   the
disciplinary proceedings at the earliest and within a period of
four   months   from   today   and   pass   appropriate   order   in
accordance with law and on merits and thereafter necessary
consequences as per Section 4 of the Payment of Gratuity Act,
1972,   more   particularly   Sub­section   (6)   of   Section   4   of   the
Gratuity Act and Rule 34.3 of the CDA Rules shall follow. The
present appeal is accordingly allowed.  However, in the facts and
circumstances of the case, there shall be no order as to costs.
…………………………………J.
[ARUN MISHRA]
………………………………….J.
[M.R. SHAH]
NEW DELHI;
May 27, 2020.
 
85
     REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
       CIVIL APPEAL NO(S). 9693 OF 2013
CHAIRMAN­CUM­MANAGING DIRECTOR
MAHANADI COALFIELDS LIMITED ….APPELLANT(S)
VERSUS
SRI RABINDRANATH CHOUBEY      ….RESPONDENT(S)
J U D G M E N T
Rastogi, J.
1. I had the privilege of going through the elaborate judgment
proposed by my brother Shah, J.  Two legal questions have been
raised for our consideration (i) whether it is permissible in law for
the employer to withhold the payment of gratuity to the employee
after   retirement   from   service   on   account   of   pendency   of   the
disciplinary   proceedings   against   him   and   (ii)   whether   it   is
permissible for the disciplinary authority to impose penalty of
dismissal after the employee stood retired from service.
1
2. While I entirely agree with a view on question no. (i) that in
view of rule 34.3 of the Coal India Executives’ Conduct Discipline
and Appeal Rules, 1978(hereinafter being referred to as “Rules
1978”), it is permissible for the employer to withhold gratuity
even   after   retirement/superannuation  during   pendency   of   the
disciplinary proceedings.  However, unable to persuade myself on
question (ii).
3. The facts giving rise to the controversy have been set out at
great length in the judgment of my erudite brother Shah J.   I,
therefore, do not consider it necessary to recapitulate the same
once again except to the extent it may be necessary in the case of
this judgment to do so.
4. Before adverting to the factual matrix, it may be relevant to
take note of the scheme of Rules, 1978.
5. The Scheme of Rules, 1978 with which we are presently
concerned was earlier examined by a two Judge Bench of this
Court in the case of  Jaswant  Singh  Gill  Vs.  Bharat  Coking
    Coal Ltd. & Ors.1
.  The view expressed by the two Judge Bench
of this Court came up for consideration in the instant case before
another two Judge Bench of this Court and this Court was of the
1 2007(1) SCC 663
2
view   that   in  Jaswant   Singh   Gill(supra),   the   issue   of
permissibility of penalty of dismissal or removal from service on a
retired employee was neither raised nor any direct discussion has
been   followed   thereupon   and   taking   note   of   the   stated   pari
materia Rule 19(3) of the State Bank of India Officers Service
Rules, 1992 examined by the three Judge Bench of this Court in
State Bank of India Vs.     Ram Lal Bhaskar and Another2
  and
keeping in view the discussion in the case of  Jaswant  Singh
Gill(supra), the two Judge Bench of this Court was of the view
that the question as to whether the disciplinary authority has
necessary powers to impose penalty of dismissal or removal to an
employee after retirement from service requires to be examined
by   a   larger   Bench   of   this   Court   by   its   judgment   dated   29th
October, 2013 which has been placed before us for consideration.
6. The   facts   in   brief   to   be   culled   out   are   that   the   first
respondent was working as a Chief General Manager(Production)
since 17th  February, 2006 and while he was in service for the
alleged misconduct which he had committed in discharge of his
duties, he was served with a memo along with article of charges
on 1st  October, 2007.   There could not be any restraint over
2 2011(10) SCC 249
3
passing of the age factor of the delinquent and on attaining the
age of superannuation, he stood retired from service on 31st July,
2010.     It   revealed   from   the   record   that   inquiry   officer   had
submitted a report of inquiry to the disciplinary authority on 25th
March, 2009 but what further action has been taken by the
authority   thereafter   is   not   made   known   to   this   Court.     A
presumption has to be drawn that fate of disciplinary inquiry is
still pending with the competent authority for taking its decision
as   per   the   procedure   prescribed   under   the  scheme   of   Rules,
1978.
7. The appellant Mahanadi Coalfields Limited is a subsidary
company of Coal India Limited, a Government owned company
registered under the Companies Act and is a State within the
meaning of Article 12 of the Constitution and amenable to the
writ jurisdiction under Article 226 of the Constitution of India.
For maintaining discipline in service, with the approval of the
Board of Directors of Coal India Limited(CAL) in its meeting held
on 24th  February, 1978, framed these rules called Coal India
Executive Conduct, Discipline and Appeal Rules, 1978 and is
applicable to all employees holding posts in the executive cadre
scales of pay of Coal India Limited and its subsidiary companies
4
and to such other employees as may be notified from time to time
has   a   binding   force   and   is   indeed   not   in   derogation   to   the
provisions of the Payment of Gratuity Act, 1972(hereinafter being
referred to as Act, 1972”). 
8. The scheme of Rules, 1978 not only defines the duties and
obligations of the executives and employees but to the extent
illustrates any act or omission or commission which shall be
treated as misconduct under Chapter II and any misconduct, if
committed by an employee, in discharge of his official duties, the
disciplinary action could be initiated against an employee for the
stated   misconduct   while   he   is   in   service   as   provided   under
Chapter IV of the scheme of Rules, 1978.
9. The Scheme of Rules, 1978 further provides a procedure
which has to be followed for imposing minor/major penalties
under Rule 29 and Rule 31 of the Rules.  That apart, a special
procedure has been provided in certain cases notwithstanding
the regular procedure contained in Rules 29, 30 or 31 of the said
rules, the authority may impose any of the penalties specified in
Rule 27 in the circumstances as referred to under clause (i) to (iii)
of Rule 34.1 of the rules.  It will be apposite to take note of the
5
term ‘employee’ and Rule 27(nature of penalties) and Rule 34.1,
34.2 and 34.3 relevant for the purpose ad infra:­
“3(f)  ‘Employee’ means an officer holding a post in
the executive cadre scales of pay or any other person
notified by the Company, if such officer or person is
employed on a whole time basis by the Company
provided   that   such   persons   on   deputation   to  the
Company  shall  continue  to  be  governed  by  these
rules or the rules applicable to them in their parent
organizations,   as   may   be   settled   at   the   time   of
finalization   of   their   terms   and   conditions   of
deputation.
27.0  NATURE OF PENALTIES
27.1 The following penalties may, for good and
sufficient reasons, be imposed on an employee
for misconduct, viz. :
(i)  Minor Penalties
(a)  Censure;
(b)  Withholding   increment,   with   or   without
cumulative effect;
(c)  Withholding promotion; and
(d)  Recovering from pay of the whole of or part
of   any   pecuniary   loss   caused   to   the
Company   by   negligence   or   breach   of
orders or trust (Rule 27.1 (i) (d) amended
vide   CIL   OM   No.   CIL/C­5A   (vi)/
50774/CDA/184 dated 23.11.05)
(ii)  Major Penalties
(a)  Reduction to a lower grade or post or stage
in a time scale;
Note :
6
The Authority ordering the reduction shall state
the period for which it is effective and whether,
on the expiry of that period, it will operate to
postpone   future   increments   or,   to   affect   the
employee's seniority and if so, to what extent.
(b) Compulsory retirement;
(c) Removal from service; and
(d) Dismissal.
Note 1
Removal   from   service   will   not   be   a
disqualification for future employment  in Coal
India   Limited   and   its   Subsidiary   Companies
while dismissal disqualifies a person for future
employment.
34.0 Special procedure in certain cases
34.1 Notwithstanding   anything   contained   in
rule 29 or 30 or 31 the Disciplinary Authority
may impose any of the penalties specified in rule
27 in any of the following circumstances :
(i) where the employee has been convicted
on a criminal charge, or on the strength of
facts or conclusions arrived at by a judicial
trial; or
(ii)   where   the   Disciplinary   Authority   is
satisfied for reasons to be recorded by it in
writing   that   it   is   not   reasonably
practicable   to   hold   an   inquiry   in   the
manner provided in these rules; or
(iii)   where   the   Disciplinary   Authority   is
satisfied that in the interest of the security
of the Company, it is not expedient to hold
any   inquiry   in   the   manner   provided   in
these rules.
Provided that the employee may be given
an opportunity of making a representation
to   the   penalty   proposed   to   be   imposed
7
before any order is made under clause (i)
above.
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 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 SubSection (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   re­employment   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.”
      (Emphasis supplied)
10. Under the scheme of Rules 1978, apart from the procedure
which has to be followed for imposing minor/major penalties
after holding a procedure prescribed under Rule 29 or 31 of the
scheme of Rules, special procedure has been provided under Rule
34 for meeting out certain exigencies.  Rule 34.1 is couched with
a non­obstante clause which could be invoked in the special
8
circumstances indicated under clauses (i) to (iii) notwithstanding
a procedure for holding a disciplinary inquiry provided under
Rule 29 or 31 of the Rules while inflicting penalties specified
under Rule 27 of the Rules.  At the same time, for the delinquent
employee   who   stood   retired   from   service   pending   disciplinary
enquiry, a special procedure has been provided under Rule 34.2
to continue and conclude  such  disciplinary  proceedings  in the
same manner as if the delinquent employee had deemed to be
continued in service for all practical purposes and with the aid of
Rule 34.3 which cannot exist without Rule 34.2, the authority
competent   may   withhold   the   payment   of   gratuity   during
pendency of the disciplinary proceedings and order for recovery
from gratuity of the whole or part of the pecuniary loss caused to
the company, if the delinquent employee is later held to be guilty
of offences/misconduct or it has caused any pecuniary loss to
the company by misconduct or negligence during discharge of
official duties as a measure of penalty mentioned under Rule
34.3 of the Rules, 1978 or under sub­section (6) of Section 4 of
the Act, 1972.  At the same time, if the delinquent employee is
exonerated in the disciplinary inquiry, he will be entitled for the
9
gratuity in the event of delayed payment in terms of Section 7(3)
and 7(3A) of Act, 1972.
11. The   Division   Bench   of   the   High   Court   in   LPA   placing
reliance   on   the   judgment   of   this   Court   in  Jaswant   Singh
Gill(supra)   directed   the   appellants   pending   disciplinary
proceedings to release the amount of gratuity payable to the
respondent under the impugned judgment.
12. It   is   well   settled   that   retiral   benefits   are   earned   by   an
employee for a long and meritorious service rendered by him/her
and it is not paid gratuitously or merely as a matter of boon, it is
paid to him/her for dedicated and devoted work.  The Act, 1972
also acknowledges under sub­section (6) of Section 4 to forfeit it
to   the   extent   pecuniary   loss   so   caused   from   the   amount   of
gratuity payable to the employee. 
13. Sub­sections   (1)   and   (6)   of   Section   4   of   the   Act,   1972
relevant for the purpose are ad infra:­
“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
10
(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:
(2)      …..
(3)      …..
(4)      …..
(5)      …..     
(6) Notwithstanding   anything   contained   in 
sub­section (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.”
11
14. The purpose of holding an inquiry against a delinquent is
not only with a view to establish the charge levelled against him
or to impose a penalty, but is also conducted with the object of
such an inquiry recording the truth of the matter, and in that
sense, the outcome of an inquiry may either not establishing or
vindicating his stand, hence result in his exoneration.  Therefore,
what is required is that there should be a fair action on the part
of the authority concerned in holding disciplinary inquiry for the
misconduct, if any, being committed by an employee in discharge
of his  duties even if  retired  from service  during pendency of
disciplinary proceedings after adopting the procedure prescribed
under the relevant disciplinary rules alike Rules, 1978 in the
instant case and indeed the scheme of Rules, 1978 with which
we are concerned is neither in derogation nor in contravention to
the scheme of the Act, 1972.
15. It is also well settled that the competence of an authority to
hold an enquiry or to continue enquiry against an employee who
has retired from service depends upon the scheme of rules and
the   terms   and   conditions   of   service   of   the   employee   are   the
determining   factors   as   to   whether   and   in   what   manner   the
12
disciplinary enquiry can be held against an employee who stood
retired or superannuated from service.
16. To   clarify   it   further   that   those   who   were   the   serving
employees,   if   held   guilty   on   conclusion   of   the   disciplinary
proceedings, minor/major penalties as referred to under Rule 27
could be inflicted by the disciplinary authority after recording
good   and   sufficient   reason   commensurate   with   the   nature   of
misconduct   and   in   the   case   of   an   employee   who   stood
retired/superannuated   from   service   pending   disciplinary
proceedings, the disciplinary authority has a right to withhold the
payment of gratuity pending disciplinary inquiry and if found
guilty in the inquiry for the offences/misconduct as indicated in
sub­section (6) of Section 4 of Act 1972, can be recovered from
his gratuity payable under Section 4 of the Act, 1972.   At the
same time, if he is exonerated by the disciplinary authority after
retirement/superannuation from service, he shall be entitled for
payment of gratuity along with interest for the delay in payment
in terms of Section 7(3) and Section 7(3A) of Act, 1972.
17. Thus, according to me, where the disciplinary proceedings
are   instituted   while   the   employee   was   in   service   but   retired
thereafter   during   its   pendency,   under   the   special   procedure
13
provided under Rule 34.2 of the Rules, 1978 the authority is
empowered to continue and conclude the disciplinary inquiry in
the same manner as if the employee had continued in service by
deeming   fiction,   however,   the   relationship   of   employer   and
employee shall not be severed until conclusion of the disciplinary
enquiry but may withhold payment of gratuity in terms of Rule
34.3 pending disciplinary inquiry and in furtherance thereof if
later held guilty, the competent authority to the extent pecuniary
loss   has   been   caused   for   the   misconduct,   negligence   in   the
discharge of duties order for recovery from gratuity either be
forfeited in the whole or in part, to the extent pecuniary loss has
been caused to the company for the offences/misconduct as a
measure of penalty in terms of Rule 34.3 of the Rules read with
sub­section (6) of Section 4 of the Act, 1972.
18. The emphasis of the learned counsel for the respondent
taking note of the view expressed by this Court in  Jaswant
Singh  Gill(supra) is that gratuity can be withheld under subsection (6) of Section 4 of the Act, 1972, if the service of an
employee is terminated for the alleged misconduct or negligence
which has been committed by him during discharge of his official
duties.  But after retirement from service since there cannot be
14
any   punishment   of   dismissal   from   service   with   retrospective
effect, the authority is not competent to withhold gratuity under
the guise of non­statutory rules, 1978.
19. In my considered view, the submission is misplaced for the
reason   that   gratuity   became   payable   to   an   employee   under
Section 4(1) of the Act, 1972 on termination of his employment
after he rendered a minimum qualifying service and termination
of his employment is either can be on his superannuation or
retirement or resignation or death or disablement due to accident
or disease or any other cause may be.   The word ‘termination’
referred   to   under   sub­section   (1)   or   under   sub­section   (6)   of
Section 4 of the Act, 1972 is in reference to the severance of
relationship of employer and employee and sub­section (6) of
Section 4 being couched with a non­obstante clause empowered
the authority in case the delinquent employee held guilty of wilful
omission or negligence causing any damage or loss or destruction
to the property of the company during the course of employment
as   a   measure   of   penalty   gratuity   may   be   forfeited   wholly   or
partially to the extent misconduct found proved.
20. The   term   ‘termination’   may   not   be   understood   with   the
penalty of dismissal or removal from service specified under Rule
15
27 of Rules, 1978.  To make it further clear, the expressions in
the schedule of substantive penalties under Rule 27 of the Rules,
1978   refers   to   various   penalties  including   reduction   in   rank,
compulsory   retirement,   dismissal,   removal,   etc.   and   could
possibly be inflicted on the serving employee and indeed cannot
be effected with retrospective effect on the delinquent employee
who stood retired from service.  The term ‘termination’ as referred
to under sub­section (6) of Section 4 of the Act is a technical
word   used   in   cases   where   the   relationship   of   employer   and
employee   is   severed   on   account   of   stated   misconduct   stands
proved although connotations are different.
21. Many a times ‘termination’ and ‘dismissal’ are held to be
synonymous   but   the   difference   between   ‘termination’   and
‘dismissal’ is that dismissal could be on account of misconduct
with   loss   of   future   employment   involving   dishonesty   or
criminality and penal in character but that is not in the case of
termination. The “termination” as per Black’s Law Dictionary is
the complete severance of relationship of employer and employee
which in the instant case could be saved during pendency of the
disciplinary proceedings in view of Rule 34.2 of the Rules, 1978
which   clearly   envisaged   that   disciplinary   proceedings,   if
16
instituted while the employee was in service, shall be deemed to
be   pending   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 and by legal fiction, the
relationship   of   employer   and   employee   shall   be   deemed   to
continue for the limited purposes of conclusion of the disciplinary
proceedings and the delinquent employee becomes qualified to
claim   gratuity   subject   to   the   outcome   of   the   disciplinary
proceedings in terms of Rule 34.3 of the Rules, 1978 read with
sub­section (6) of Section 4 of the Act, 1972. 
22. The   three   Judge   Bench   of   this   Court   in  State   of
Maharashtra  Vs.    M.H.   Mazumdar3
  taking   note   of   the   pari
materia rule 188 and 189 of the Bombay Civil Services Conduct,
Discipline and Appeal Rules and relying on earlier precedents
held in paragraph 5 as under:­
“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
3 1988(2) SCC 52
17
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 [AIR   1960   SC
247   :   (1960)   1   SCR   981]   and State   of   Uttar
Pradesh v. Brahm Datt Sharma [(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.”
23. It is supported by the judgment of this Court in the recent
judgment in UCO Bank & Ors. Vs.     Rajendra Shankar Shukla4
wherein it was held as under:­
“Under the circumstances, we have no hesitation in
dismissing the appeal filed by the Bank also on the
ground that  the punishment of dismissal could not
have   been   imposed   on   Shukla   after   his
superannuation.”
4 2018(14) SCC 92
18
 
      (Emphasis
supplied)
24. The exposition of law is further supported in  UCO  Bank
and Ors. Vs.     Prabhakar Sadashiv Karvade5
 as under:­
“The sum and substance of these Regulations is that
even though a departmental inquiry instituted against
an officer employee before his retirement can continue
even   after   his   retirement,   none   of   the   substantive
penalties specified in Regulation 4 of 1979 Regulations,
which include dismissal from service, can be imposed
on an officer employee after his retirement on attaining
the  age   of   superannuation.    Therefore,   we   have   no
hesitation to hold that order dated 12.10.2004 passed
by the disciplinary authority dismissing the respondent
from service, who had superannuated on 31.12.1993
was ex facie illegal and without jurisdiction and the
High Court did not commit any error by setting aside
the same.”
          (Emphasis
supplied)
25. The two Judge Bench of this Court in UCO Bank and Ors.
Vs.      Rajinder   Lal   Capoor6
    on   which   the   reliance   has   been
placed   by   the   respondent   employee   was   a   case   where   the
explanation   was   called   for   by   the   delinquent   employee   in
reference to the alleged misconduct which he had committed in
discharge of his official duties but charge­sheet was indubitably
issued after he stood retired from service.   The question which
arose   for   consideration   was   as   to   whether   mere   explanation
5 2018(14) SCC 98
6 2007(6) SCC 694
19
which was called for from the delinquent would be considered to
be the initiation of the disciplinary proceedings or it can be said
to be initiated only when the charge­sheet is issued in terms of
Regulation 20(3)(iii) of the UCO Bank Officer Employees Service
Regulations, 1979 and this Court after examining the scheme of
Rules, 1979 held that domestic inquiry can be said to be initiated
only when the charge­sheet is issued to the delinquent and since
the charge­sheet was issued after retirement from service this
Court held that the disciplinary proceedings initiated against the
delinquent became vitiated in law and consequently set aside the
disciplinary proceedings initiated against the retired personnel.
26. The judgment in  Ram   Lal   Bhaskar  and   Anr.(supra) on
which reliance was placed to refer the matter may not be of any
assistance in the instant facts of the case for the reason that it
was a case where a substantial question raised before this Court
for consideration was as to whether the High Court was justified
in reappreciating with the finding of the disciplinary authority
which was supported by a cogent evidence while inflicting penalty
of dismissal from service within its limited scope of judicial review
under Article 226 of the Constitution.  At this stage, a passing
reference   was   made   by   learned   counsel   for   the   delinquent
20
employee   that   as   he   stood   retired   from   service   pending
disciplinary enquiry, there could not be an order of dismissal
from service.  This Court taking note of Rule 19(3) of the State
Bank of India Officers Service Rules, 1992, in para 9 of the
judgment observed that in case the disciplinary proceedings were
initiated against an officer before he ceased to be in service, the
disciplinary   authority   vest   at   its   discretion   to   continue   and
conclude the disciplinary proceedings in the manner as if the
officer continues to be in service but what nature of substantive
penalty could be inflicted upon the retired delinquent employee
remain unanswered.   In the instant case, the specific question
has been raised for determination as to whether dismissal or any
other substantive penalties provided under Rule 27 of the scheme
of Rules, 1978 could be open to be inflicted to the delinquent
employee after he stood retired from service which was primarily
not considered by this Court in  Ram  Lal   Bhaskar  and   Anr.
referred to supra.
27. Taking note of the exposition of law which has been noticed
and   of   the   scheme   of   Rules,   1978,   which   indubitably   has   a
binding force and are not a subject matter under challenge and
are neither in derogation nor in contravention to the scheme of
21
Payment of Gratuity Act, 1972.  I have no hesitation in holding
that the substantive penalties provided under the schedule of
penalties   referred   to   under   Rule   27   could   be   inflicted   on   a
delinquent employee while he is in service but in case where the
delinquent employee stood retired or superannuated from service
pending disciplinary inquiry, at least either of the substantive
penalties   provided   under   Rule   27   are   not   available   to   the
disciplinary authority to be inflicted with retrospective effect but
at the same time punishment of forfeiture of gratuity if held guilty
for misconduct or negligence to the extent damage or pecuniary
loss has been caused to the employer can be inflicted upon the
delinquent in terms of Rule 34.3 of Rules 1978 read with subsection   (6)   of   Section   4   of   the   Act,   1972   and   in   case   the
delinquent employee stands exonerated he became entitled for
gratuity for the delay in payment in terms of Sections 7(3) and
7(3A) of Act, 1972 and as a matter of caution, it should not be
pre­supposed that where the disciplinary inquiry remain pending
and could not be concluded while the delinquent employee was in
service   in   due   course   of   time,   he   shall   be   held   guilty   and
punished under the scheme of Rules, 1978.
28. To sum up, my conclusion to the question is as under:­
22
Que.   1­Whether   it   is   permissible   in   law   for   the   employer   to
withhold the payment of gratuity even after the employee has
attained   his   superannuation   from   service   because   of   the
pendency of disciplinary proceedings against him?
Ans.   I   am   in   agreement   with   the   view   expressed   by   brother
Justice Shah that in view of Rule 34.3 of the Rules, 1978, the
employer has a right to withhold gratuity during pendency of the
disciplinary proceedings.
Que. 2­ Whether the penalty of dismissal could be imposed after
the employee stood retired from service?
Ans.   In my considered view, after conclusion of the disciplinary
inquiry, if held guilty, indeed a penalty can be inflicted upon an
employee/delinquent who stood retired from service and what
should be the nature of penalty is always depend on the relevant
scheme of Rules and on the facts and circumstances of each
case, but either of the substantive penalties specified under Rule
27 of the Rules, 1978 including dismissal from service are not
open to be inflicted on conclusion of the disciplinary proceedings
and the punishment of forfeiture of gratuity commensurate with
the nature of guilt may be inflicted upon a delinquent employee
23
provided under Rule 34.3 of Rules, 1978 read with sub­section
(6) of Section 4 of the Act, 1972.
29. To  conclude,  the   impugned  judgment   of   the  High   Court
dated 17th July, 2013 is not sustainable and deserves to be set
aside and the disciplinary authority may proceed and conclude
the pending disciplinary proceedings expeditiously and take a
final decision in accordance with the scheme of Rules, 1978 read
with sub­section (6) of Section 4 of the Payment of Gratuity Act,
1972.
30. The appeal is accordingly disposed of.
  …………………………J.
  (AJAY RASTOGI)
NEW DELHI
MAY 27, 2020
24