Gratuity payment may be withheld until conclusion of departmental proceedings for employees governed by CCS (Pension) Rules.

The applicant was initially engaged as a Casual Labour in 1983 and eventually promoted to Sorting Assistant

He retired on superannuation on March 31, 2022

On March 3, 2022, immediately prior to his retirement, the respondents issued a charge sheet under Rule 14 of the CCS (CCA) Rules, 1965, alleging that the applicant had misrepresented his date of birth as March 15, 1962, whereas his actual date of birth was August 9, 1957

The respondents claimed this resulted in an irregular service extension of over four years and a pecuniary loss of ₹34,52,160 to the department

While provisional pension was sanctioned, the respondents withheld the applicant’s Death-cum-Retirement Gratuity (DCRG) pending the conclusion of the departmental proceedings via an order dated July 1, 2022

The applicant challenged this withholding, seeking the release of DCRG under the Payment of Gratuity Act, 1972

1. Whether the respondents are legally permitted to withhold DCRG during the pendency of departmental proceedings for a major penalty

2. Whether the Payment of Gratuity Act, 1972, has an overriding effect over the CCS (Pension) Rules for Central Government employees

Rule 69(1)(c) of the CCS (Pension) Rules, 1972 (now Rule 8(4)(c) of the 2021 Rules), which stipulates that no gratuity shall be paid to a government servant until the conclusion of departmental or judicial proceedings and the issuance of final orders

Supreme Court precedent in N. Manoharan v. The Administrative Officer (2026), which clarified that Central Government employees governed by the CCS (Pension) Rules are excluded from the definition of "employee" under Section 2(e) of the Payment of Gratuity Act, 1972

The "overriding effect" of Section 14 of the Payment of Gratuity Act does not apply to those who do not fall within the Act's threshold definition of an employee

The Tribunal reasoned that since the applicant was a Central Government servant holding a civil post, his terminal benefits are strictly governed by the CCS (Pension) Rules rather than the Payment of Gratuity Act

Under Rule 69(1)(c) / Rule 8(4)(c), the respondents possess the explicit statutory authority to withhold gratuity when a disciplinary proceeding for a major penalty (Rule 14) is pending

The Tribunal rejected the applicant's contention regarding the overriding nature of the 1972 Act, noting that Section 2(e) of said Act contains an exclusionary clause for persons holding posts under the Central Government and governed by other gratuity rules

Because the applicant met these exclusionary criteria, the general overriding clause in Section 14 remained inapplicable

The Tribunal found the withholding justified given the serious allegations of fraud regarding the applicant's date of birth and the resulting financial loss to the state

The Tribunal answered the issues by affirming that the Payment of Gratuity Act does not apply to the applicant and that the statutory rules permit withholding gratuity during active litigation or inquiry

The Original Application was dismissed, and no order as to costs was made