Harinder Pal Singh Grewal vs State Of Punjab

Sandeep Moudgil, J

The jurisdiction of this Court has been invoked under Article 226 of the Constitution of India, seeking a direction to the respondents to release the petitioner’s withheld retiral benefits, including gratuity, leave encashment and regular pension, along with interest of 18% p.a. on the delayed payment thereof.

The petitioner was appointed in the Department of Food, Civil Supplies and Consumer Affairs, Punjab, on 19.05.1989 and was governed by the Punjab Food and Supplies Class-II Service Rules, 1998 and the Punjab Civil Services Rules. Though he attained the age of superannuation on 31.12.2018, his service was extended twice under the amended Rule 3.26 of the Punjab Civil Services Rules, ultimately up to 31.12.2020. However, pursuant to withdrawal of the extension by the State Government, he was retired and relieved from service on 31.03.2020.

At the time of retirement, a show cause notice dated 21.02.2018 concerning Mahavir Rice Mill, SBS Nagar, was pending against him. The said proceedings were subsequently dropped by order dated 02.02.2021, and a fresh No Due Certificate was issued on 08.02.2021.

Meanwhile, the respondents withheld the petitioner's retiral benefits, including pension, gratuity and leave encashment, stating that an inquiry concerning the paddy crop years 1999-2000 to 2002-2003 in respect of rice mills at Muktsar and Moga was pending against him. The petitioner disputed the existence of any duly instituted departmental proceedings and relied upon the departmental information received under the RTI Act in this regard.

Aggrieved by the continued withholding of his retiral benefits, the petitioner has approached this Court seeking their release along with interest on the delayed payment.

Learned counsel for the petitioner submitted that the petitioner retired on 31.03.2020 after rendering more than 30 years of service, but his retiral benefits, including pension, gratuity and leave encashment, have not been released. Despite repeated representations, the respondents failed to release the dues.

It was contended that the respondents sought to justify the withholding of the benefits on the ground of a departmental inquiry relating to rice mills at Muktsar and Moga. However, there was no order of the competent authority instituting any such proceedings against the petitioner, which fact was also supported by the information obtained under the RTI Act.

Learned counsel further submitted that the show cause notice dated 21.02.2018 concerning Mahavir Rice Mill, SBS Nagar, was ultimately dropped vide order dated 02.02.2021, followed by issuance of a fresh No Due Certificate on 08.02.2021. Thus, the said proceedings could not constitute a justification for continued withholding of the petitioner's retiral dues.

It was lastly argued that the alleged inquiry related to an old matter and, in the absence of duly instituted proceedings, the respondents could not withhold the retiral benefits indefinitely. Relying upon Rule 2.2(b) of the Punjab Civil Services Rules, learned counsel submitted that the petitioner was entitled to release of his retiral benefits along with interest for the period of delay.

Learned counsel for the respondents submitted that the retiral benefits of the petitioner were not withheld arbitrarily, but in accordance with the Finance Department instructions dated 23.07.2015, as a departmental inquiry was pending against him at the time of his retirement. It was stated that the inquiry related to recoveries from rice millers of Muktsar and Moga for the years 1999-2000 to 2002-2003, wherein the role of the petitioner, who was posted in the Rice Branch during the relevant period, was also under examination.

It was further contended that the matter involved substantial financial implications for the State and huge amounts were allegedly recoverable from various rice mills. The petitioner had been in-charge of the concerned Rice Branch and, according to the respondents, the non-recovery of the amounts was attributable to his negligence and inaction. Therefore, his role could not have been ignored without a proper examination of the matter.

Learned counsel submitted that under the applicable rules and the Finance Department instructions, gratuity and leave encashment could be withheld where departmental proceedings were pending at the time of retirement. It was pointed out that although the show cause notice was subsequently dropped on 02.02.2021, the respondents immediately thereafter initiated steps for release of the benefits; leave encashment was sanctioned and the case for regular pension and gratuity was forwarded to the Accountant General.

Lastly, it was contended that there was no deliberate delay on the part of the respondents and, therefore, the petitioner was not entitled to interest. The respondents submitted that any delay was occasioned by the pendency of the show cause notice/inquiry and that the petitioner's pension case was ultimately finalized by the Accountant General, whereafter directions were issued for release of his regular pension and gratuity.

Heard.

The principal question which arises for consideration is whether the respondents were justified in withholding the retiral benefits of the petitioner on the ground that an inquiry relating to recoveries from rice mills of Sri Muktsar Sahib and Moga Districts was pending against him. The respondents have stated that the matter pertained to the period 1999-2000 to 2002-2003 and that the role of the petitioner, who was posted in the Rice Branch during the relevant period, was being examined.

The material on record fails to disclose any formal order by the competent authority instituting departmental proceedings against the petitioner, and a preliminary inquiry or examination of their role—absent formal institution under the statutory scheme—cannot legally be treated as a pending proceeding to justify withholding retiral dues.

The aforesaid issue has to be examined in the light of Rule 2.2(b) of the Punjab Civil Services Rules, Volume-II, which specifically governs departmental proceedings against a government employee after his retirement. The relevant provision reads as under:

A plain reading of the aforesaid provision makes it clear that the power to institute departmental proceedings against a retired employee is circumscribed by the conditions expressly stipulated therein. Clause (ii) creates a specific statutory bar against institution of proceedings in respect of an event which took place more than four years prior to such institution. The provision, therefore, does not leave an unrestricted discretion with the respondents to keep an old matter under examination and, on that basis, continue withholding the retiral benefits of a retired employee.

In the present case, the alleged matter concerning the rice mills is stated to relate to the year 2011-12, whereas the petitioner retired on 31.03.2020. Even as per the record relied upon by the respondents, no duly instituted departmental proceeding, charge-sheet or order of the competent authority initiating such proceeding has been placed on record. The statutory requirement cannot be satisfied merely by referring to an inquiry or examination being undertaken by the department. Consequently, the alleged inquiry could not furnish a lawful basis for withholding the petitioner's retiral benefits.

There is yet another aspect which assumes significance. The show-cause notice dated 21.02.2018, which was pending against the petitioner at the time of his retirement, related to Mahavir Rice Mill, SBS Nagar. The said show-cause notice was admittedly dropped by the respondents on 02.02.2021 and thereafter a No Due Certificate was issued in favour of the petitioner. The respondents themselves thereafter sanctioned leave encashment and forwarded the case for sanction of regular pension and gratuity to the Accountant General. Thus, the very proceeding which had initially operated as an impediment to release of the retiral benefits ceased to survive.

The submission of the respondents that the matter involved substantial financial implications for the State cannot, by itself, alter the legal position. The Court is conscious that the State is entitled to protect its legitimate financial interests and to recover Government dues in accordance with law. However, such power has to be exercised within the framework of the statutory rules. An apprehension of financial loss, however serious, cannot confer upon the respondents a power which the Rules do not permit them to exercise against a retired employee.

It is equally well settled that pension and other retiral benefits constitute valuable and vested rights earned by an employee through his service and cannot be treated as a bounty or as a matter of discretion of the employer. Such benefits can be withheld only when there exists a lawful authority permitting such withholding. In the present case, the respondents have failed to demonstrate any such statutory authority which could justify withholding the petitioner’s earned retiral benefits on the basis of the alleged inquiry.

The question of interest also requires consideration. The petitioner retired on 31.03.2020, whereas his leave encashment was sanctioned only in August, 2021 and the process for regular pension and gratuity was undertaken thereafter. The respondents contend that the delay was occasioned by the pending inquiry. Once the basis for such withholding is found unsustainable, the delay cannot be justified merely by reference to that inquiry. The Supreme Court in “State of Kerala v. M. Padmanabhan Nair”, (1985) 1 SCC 429, has held that pension and gratuity are valuable rights and that culpable delay in their payment attracts interest. The relevant extract of the same is as hereunder:

Accordingly, the petitioner cannot be denied the benefit of interest for the period during which his retiral dues remained withheld without a legally sustainable basis. The respondents are, therefore, liable to compensate the petitioner by payment of interest on the delayed retiral benefits from the date on which the respective amounts became due till the date of actual payment.

In view of the aforesaid discussion, the present writ petition is allowed. The respondents shall release the retiral dues payable to the petitioner and shall also pay interest thereon at the rate of 7% per annum from the date the respective benefits became due till the date of actual realization, after giving credit for any amount already paid. The exercise shall be completed within 8 weeks from the date of receipt of a certified copy of this order.

Pending application(s), if any shall disposed off.