CHAIRMAN CUM MANAGING DIRECTOR MAHANADI COALFIELDS LIMITED vs. SRI RABINDRANATH CHOUBEY

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 Signature Not Verified while he was in service and continued after he attained the age of Digitally signed by JAYANT KUMAR ARORA Date: 2020.05.27 18:14:40 IST Reason: 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   re­ employment.     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  provisions under the State Bank of India Officers’ Service materia 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/re­ employment, 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   pre­ condition   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 J aswant 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   un­ enforceable 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 appellant­ employer 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   .   As observed Jaswant Singh Gill (supra) 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  , Rule 19(3) of the State Bank of India Ram Lal Bhaskar (supra) 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  and it is observed even in the said decision that the UCO (supra) 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 sub­ section 6 of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the company by misconduct or negligence, during his service.  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 respondent­ employee   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 1 appreciated   on   the   principles   stated   in   B.   Karunakar ,   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 2 the impugned order  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  non­ furnishing 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 3 annulment of the judgment   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:”  At this juncture, it is noteworthy to refer to Regulation 19(2) 35. 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 4   have prospective effect as has been held in R. Jeevaratnam   . 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 5 M.P.  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 6 before this Court in  State of U.P.  v.  Brahm Datt Sharma  wherein this Court while interpreting Regulation 470 of the Civil Services 7 Regulations in  State of U.P.  v.  Harihar Bhole Nath  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.   We   have   noticed   hereinbefore   that   the   Bank   has   made 17. Regulations which are statutory in nature. Regulation 20(3)( iii ) of the said Regulations reads thus: “20.   (3)( )   The   officer   against   whom   disciplinary iii 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 8   Council      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.   It is true that the disciplinary authority in its order while 23. 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)( )   of   the   (Discipline   and   Appeal) iii 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: “ . The aforementioned Regulation, however, could be 21 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)( ) The departmental proceedings referred to in sub­ a rule (1), if instituted while the government servant was in service whether before his retirement or during his re­ employment,   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. 9 11.  In  State of U.P.  v.  Harihar Bholenath  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 10 India . 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 11 respondent. In  M. Narasimhachar  v.  State of Mysore  and  State 12 of Uttar Pradesh  v.  Brahm Datt Sharma  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 13 Gujarat  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 14 High Court on 22­12­2010   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; ( ) such departmental proceedings, if not instituted while b 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 15 Pradesh High Court in  T. Narasiah  v.  State Bank of India  and that of the Bombay High Court in  J.K. Kulkarni  v.  State Bank of 16 India  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 17 Court in  State of Maharashtra  v.  M.H. Mazumdar  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. 18 In   M.  Narasimhachar v.   State of Mysore   and   State of 19 Uttar   Pradesh   v.   Brahm   Datt   Sharma   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 show­ cause   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     Secretary The , 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:   The learned counsel for Respondent 1, on the other hand, “8. 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   v.  UCO Bank Rajinder Lal 20 Capoor .   We have perused the decision of this Court in   UCO Bank   v. 9. 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

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).

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

continuation   of   the   inquiry   and   deemed   continuation   of   the employee in service after the age of superannuation.

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.

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

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.

not include “dismissal." The Constitution Bench considered the

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

employment by means of exigencies provided in section 240 of

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, 21 C.J. in Parshotam Lal Dhingra v. Union of India , “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.

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 22 that   Article.  Vide   Satish   Chandra   Anand   v.   Union   of   India , 23 Shyam Lal v. State of Uttar Pradesh and the Union of India) , 24 State of Bombay v. Saubhagchand M. Doshi  and Parshotam Lal 25 Dhingra   v.   Union   of   India .   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)

369,   it   was   held   that   every   termination   is   not   dismissal   or

22 (1953) SCR 655 23 (1955) 1 SCR 26 24 CA No.182 of 1955 25 CA No.65 1957 61

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.”

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).”

(1977) 4 SCC 441, it was held that compulsory retirement is not

“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.”

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.”

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

66

gratuity is not payable because of special provisions made in the

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.”

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

power of an employer to impose a punishment of dismissal.   It makes   no   provision   in   particular   with   respect   to   the

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

Distt. Registrar, Palghat and Ors. v. M.B. Koyakutty and Ors., 68

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. 

(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

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

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 (supra)  it was held to the contrary that once the Bank & Anr.   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

infirmity and cannot prevail.

1 SCC 663, it was held that the provisions of section 4(6) of the Payment   of   Gratuity   Act,   1972  would   prevail   over   the   non­ statutory 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

limited. We are unable to agree with the decision rendered in

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.

74

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.”

was opined that it was not possible to continue with the inquiry unless the service was continued by issuing a notification before

“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 Sub­ Inspector 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.” 

which provides for legal fiction with respect to continuance in service, and it has to be given full effect to the ratio of decision

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

“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.”

(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

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)

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

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.

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.

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   post­ retirement   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

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.

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.

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.

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 1   Coal Ltd. & Ors.   .  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 2 State Bank of India Vs. Ram Lal Bhaskar and Another       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 th by   a   larger   Bench   of   this   Court   by   its   judgment   dated   29 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) th since 17   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 st on 1   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 st age of superannuation, he stood retired from service on 31  July, 2010.     It   revealed   from   the   record   that   inquiry   officer   had th submitted a report of inquiry to the disciplinary authority on 25 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 th on  24   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   re­ employment   shall,   after   the   final retirement of the employee, be deemed to be proceeding and shall be continued and concluded   by   the   authority   by   which   it was commenced in the same manner as if the employee had continued in service.  34.3 During   the   pendency   of   the   disciplinary proceedings,   the   Disciplinary   Authority may   withhold   payment   of   gratuity,   for ordering the 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 Sub­ Section (6) of Section 4 of the Payment of Gratuity   Act,   1972  or   to   have   caused pecuniary   loss   to   the   company   by misconduct   or   negligence,   during   his service   including   service   rendered   on deputation   or   on   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 sub­ section (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 3 Maharashtra  Vs.  M.H.   Mazumdar       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 4 judgment in  UCO Bank & Ors. Vs. Rajendra Shankar Shukla     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 5 and Ors. Vs. Prabhakar Sadashiv Karvade        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. 6 Vs.  Rajinder   Lal   Capoor         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   (supra) on Ram Lal Bhaskar and Anr. 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 sub­ section   (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 th dated 17  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