In State of Kerala and others v. M. Padmanabhan Nair[1], this Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on the retirement but are valuable rights in their hands, and any culpable delay in disbursement thereof must be visited with the penalty of payment of interest. at the rate of 8 % per annum -STATE OF UTTAR PRADESH AND 2 ORS. Vs. DHIRENDRA PAL SINGH – 2016 Nov. http://judis.nic.in/supremecourt/imgst.aspx?filename=44306

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10866 OF 2016
(Arising out of S.L.P. (C) No. 33582 of 2016
(CC 18447/2016)
State of Uttar Pradesh and others … Appellants

Versus

Dhirendra Pal Singh …Respondent
O R D E R
Leave granted.

This appeal is directed against order dated 31.05.2016, passed by the High
Court of Judicature at Allahabad, in Special Appeal Defective No. 408 of
2016, whereby the intra-court appeal was dismissed affirming the order
dated 10.12.2015 passed by the learned single Judge in Writ-A No. 49921 of
2015.

Brief facts of the case are that respondent Dhirendra Pal Singh was
Assistant Store Superintendent with the Irrigation Department of the State
of Uttar Pradesh. He stood retired on 30.06.2009 on attaining the age of
superannuation. At the time of his retirement GPF, leave encashment and
70% of gratuity and pension were cleared, but rest of the 30% of gratuity
and computation of pension were held up. The stand of the appellants is
that there were some discrepancies in the stock in the store of the
department and some enquiries were going on as to loss caused to the public
exchequer. After making representations when the remaining amount of
gratuity and pension was not cleared, the respondent filed Civil Suit No.
338 of 2012. However, the same was dismissed as withdrawn as the
appellants/State authorities, vide order dated 23.07.2015 finally, on the
basis of alleged discrepancies withheld the remaining part of gratuity and
pension of the respondent and, vide order dated 06.08.2015, directed
recovery of Rs.7,26,589/-, from the retiral dues payable to the respondent,
which was challenged in the writ petition.
There was no departmental enquiry initiated against the respondent and
after about more than six years order as to finally withholding of
remaining pension on the ground of alleged misconduct and the recovery was
directed to be made from the respondent after serving a notice on him.
Learned single Judge of the High Court found that the orders challenged in
the writ petition cannot be sustained in law as neither recourse of Article
351-A of UP Civil Service Regulations was resorted to, nor any departmental
enquiry was held. Learned single Judge further directed that the remaining
amount of gratuity and pension of the respondent shall be released with
interest at the rate of 10% p.a. on the sum withheld by the State
authorities. The Division Bench, in special appeal filed by the State,
found no illegality in the order passed by the learned single Judge.
We have heard learned counsel for the appellants and the respondent.
Article 351-A of UP Civil Service Regulations reads as under: –
“351-A. 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 departmental or judicial proceedings to have been
guilty of grave misconduct, or to have caused pecuniary loss to Government
by misconduct or negligence, during his service, including service rendered
on re-employment after retirement.

Provided that:

such departmental proceedings, if not instituted while the officer was on
duty either before retirement or during re-employment –

Shall not be instituted with the sanction of the Governor,
shall be in respect of event which took place not more than four years
before the institution of such proceedings, and

shall be conducted by such authority and in such place or places as the
Governor may direct and in accordance with the procedure applicable to
proceedings on which an order of dismissal from service may be made.

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

the Public Service Commission, U.P., shall be consulted before final orders
are passed.

Explanation – For the purposes of this article –

departmental proceedings shall be deemed to have been instituted when the
charges framed against the pensioner are issued to him, or, if the officer
has been placed under suspension from an earlier date, on such date; and

judicial proceedings shall be deemed to have been instituted:

in the case of criminal proceedings, on the date on which complaint is
made, or a charge-sheet is submitted, to a criminal court; and

in the case of civil proceedings, on the date on which the plaint is
presented or, as the case may be, an application is made to a civil court.”

Admittedly, no departmental enquiry was initiated in the present case
against the respondent for the misconduct, if any, nor any proceedings
drawn as provided in Article 351-A of UP Civil Service Regulations.
Learned single Judge of the High Court has observed that the document which
is the basis of enquiry and relied upon by the State authorities, copy of
which was Annexure C.A.1 to counter affidavit filed in the writ petition,
itself reflected that the document showing discrepancy in the stock was
dated 26.12.2009, i.e. after about more than five months of retirement of
the respondent. In the circumstances, keeping in view Article 351-A of UP
Civil Service Regulations, we agree with the High Court that the orders
dated 23.07.2015 and 06.08.2015 were liable to be quashed and, to that
extent, we decline to interfere with the impugned order.
Learned counsel for the appellants argued that the High Court has erred in
awarding interest at the rate of 10% per annum on the sum due to the
respondent. In this connection, it is submitted that the suit was filed by
the respondent only in 2012 and that too was withdrawn.
We have considered the submissions of learned counsel for the appellants
and reply given by learned counsel for the respondent.
In State of Kerala and others v. M. Padmanabhan Nair[1], this Court has
held that pension and gratuity are no longer any bounty to be distributed
by the Government to its employees on the retirement but are valuable
rights in their hands, and any culpable delay in disbursement thereof must
be visited with the penalty of payment of interest. In said case the Court
approved 6% per annum interest on the amount of pension decreed by the
trial court and affirmed by the High Court. As to the rate of interest on
amount of gratuity Section 7(3-A) of Payment of Gratuity Act, 1972, it is
provided that if the amount of gratuity payable is not paid by the employer
within the period specified in sub-section (3), the employer shall pay,
from the date on which gratuity becomes payable to the date on which it is
paid, simple interest at such rate, not exceeding the rate notified by the
Central Government from time to time for repayment of long term deposits,
as that Government may by notification specify. It further provides that
no such interest shall be payable if the delay in payment is due to the
fault of the employee, and the employer has obtained permission in writing
from the controlling authority for the delayed payment on this ground. In
the present case, there is no plea before us that the appellants had sought
any permission in writing from the controlling authority. As to the delay
on the part of employee, it has come on the record that he made
representations, whereafter he filed a suit in respect of withheld amount
of gratuity and pension. In Y.K. Singla v. Punjab National Bank and
others[2], this Court, after discussing the issue relating to interest
payable on the amount of gratuity not paid within time, directed that
interest at the rate of 8% per annum shall be paid on the amount of
gratuity.

In the light of law laid down by this Court, as above, and further
considering the facts and circumstances of the case, we modify the impugned
order passed by the High Court in respect of interest directed to be paid
on the amount of withheld gratuity and pension. We direct that the
appellants shall pay interest at the rate of 6% per annum on the unpaid
amount of pension from the date it had fallen due and interest at the rate
of 8% per annum on the unpaid amount of gratuity from the date of
retirement of the employee.
With the modification, as above, in the impugned order passed by the High
Court, this appeal stands disposed of. No order as to costs.
……………………………….J.
[J. Chelameswar]

………………………..……..J.

[Prafulla C. Pant]

New Delhi;

November 15, 2016.
———————–
[1] (1985) 1 SCC 429

[2] (2013) 3 SCC 472

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