Gratuity cannot be withheld indefinitely for unrelated pending criminal proceedings; release with interest is mandatory.

The applicant, Jagdish Prasad, retired as Fitter Electronics (MCM) from the respondent department upon attaining superannuation on 31 July 2015.

His pension and other terminal benefits, except gratuity, were released. The gratuity was withheld by the respondents through an order dated 18 August 2015 because criminal proceedings were pending against him.

The criminal case arose from a dispute concerning ownership of a house and was not connected with the applicant’s official duties.

Although the applicant was named in an FIR and a charge-sheet was filed, proceedings before the criminal court were stayed by the Allahabad High Court under Section 482 CrPC on 29 May 2020.

Whether gratuity could be withheld merely because criminal proceedings were pending against the retired employee, when the alleged offences were unrelated to his official duties.

Whether withholding gratuity for an indefinite period, without any demonstrated delay attributable to the applicant, was legally sustainable.

Whether the applicant was entitled to interest if the gratuity was not released within the period directed by the Tribunal.

The Tribunal applied the provisions of the CCS (Pension) Rules relied upon by the respondents, under which gratuity may be withheld during the pendency of judicial proceedings, including criminal proceedings.

However, it held that this power cannot justify withholding gratuity for an indefinite or unreasonable period, particularly where the proceedings are not connected with the employee’s official duties and the delay is not attributable to him.

It relied upon Udai Narain Ojha v. State of U.P., Writ Petition No. 27391 of 2012, which held that gratuity cannot be withheld indefinitely and directed release with interest where the delay was unexplained or attributable to the State.

The Tribunal also followed its earlier decision in Bhagwan Das v. Union of India & Ors., O.A. No. 78 of 2018, decided on 15 April 2023, while noting that Municipal Corporation of Delhi v. Dharam Prakash Sharma, LAWS (SC)-1998-7-26, concerned different facts and was not directly applicable.

The Tribunal accepted that the pendency of a criminal proceeding may ordinarily empower the authorities to withhold gratuity under the applicable pension rules.

Nevertheless, it found that such power was being exercised disproportionately in the present case.

The criminal proceedings arose out of a personal civil dispute relating to ownership of a house and had no nexus with the applicant’s official functions.

Since the applicant had retired in 2015, the proceedings had remained pending for an extended and undefined period, with no finding that the delay was caused by him.

Applying the principle that gratuity cannot be withheld indefinitely merely because judicial proceedings are pending, the Tribunal concluded that continued withholding of the entire gratuity was unjustified and arbitrary.

The respondents were directed to release the applicant’s gratuity within one month from receipt of a certified copy of the order.

If payment was not made within that period, the respondents were directed to pay simple interest at 6% per annum on the gratuity amount payable to the applicant.

The associated miscellaneous applications were disposed of, with no order as to costs.