Gratuity cannot be withheld solely for criminal proceedings unrelated to official duties or government loss.

The petitioner, a retired Panchayat employee, faced criminal proceedings arising from alleged financial irregularities in an employees’ cooperative society.

No departmental inquiry concerning those allegations had been initiated against him by the time he retired on 31 May 2025.

On 9 June 2025, the authorities sanctioned provisional pension and withheld his gratuity because the criminal proceedings remained pending.

Although the petition originally sought several forms of relief, the petitioner limited his challenge to the withholding of gratuity.

Whether the mere pendency of criminal proceedings, without a demonstrated nexus to the employee’s official duties, justified withholding his gratuity under Rule 145 of the Gujarat Civil Services (Pension) Rules, 2002?

Whether the authorities could withhold gratuity where no departmental inquiry had been initiated in relation to the allegations and no loss to the Government or public exchequer was demonstrated?

Rules 142 and 145 of the Gujarat Civil Services (Pension) Rules, 2002 governed provisional pension and gratuity.

Rule 145(1) provides for provisional pension, but not provisional gratuity, where a departmental inquiry or prosecution initiated before retirement remains pending.

Under Rule 145(2), if the proceedings remain unconcluded for two years after retirement, the authority is to sanction pension and gratuity, with the prescribed withholding of 10% of gratuity or ₹15,000, whichever is less.

The Court held that gratuity, as a statutory retiral benefit, may not be withheld without authority of law and that the pendency of criminal proceedings, by itself, is not an unrestricted ground for withholding it, irrespective of the allegations’ nature or their connection to official duties.

The criminal case concerned the affairs of an independent cooperative society, not the petitioner’s discharge of official functions.

The Court found no demonstrated connection between the allegations and his government employment, no departmental inquiry relating to those allegations, and no identified loss to the Government or public exchequer.

In those circumstances, withholding gratuity solely because the criminal proceedings were pending was unjustified.

The Court also observed that even if the proceedings were connected to government loss or employment, Rule 145(2) contemplated consideration of gratuity after two years, subject to the rule’s limited withholding.

It quashed the order dated 9 June 2025 insofar as it withheld gratuity and directed payment of the amount payable within eight weeks of receipt of the judgment.

If payment was not made within that period, interest at 7% per annum would apply, subject to applicable law.

The petition was allowed to that extent and the Rule made absolute accordingly.