Leave encashment cannot be withheld absent pending proceedings or statutory authority.

The petitioner, an MES employee serving as Elect. (HS-II) under the Garrison Engineer, Danapur Cantt., superannuated on 28 February 2025 after approximately 42 years of service.

He approached the High Court seeking payment of pension, gratuity, commutation of pension, final settlement of GPF, leave encashment and other retiral dues, alleging that no amount had been paid after his retirement.

The respondents stated that the petitioner had remained absent from duty for a period and that a meeting concerning the absence was held on 12 February 2026.

A proposal for provisional pension was initiated on 23 February 2026, and the petitioner’s final pension, commutation and gratuity were sanctioned on 13 August 2026.

The respondents further stated that no disciplinary action had been taken against the petitioner and that a committee had been constituted to consider regularisation of the period of absence.

Whether the respondents could continue to withhold the petitioner’s admissible pensionary benefits after sanctioning his full pension, commutation of pension and gratuity, particularly when no disciplinary or criminal proceeding was pending against him?

Whether the petitioner’s leave encashment could be withheld in the absence of suspension or pending disciplinary/criminal proceedings contemplated under Rule 39(3) of the CCS (Leave) Rules?

Whether the respondents were required to decide the regularisation of the petitioner’s period of absence and thereafter release all admissible retiral dues?

The Court applied Rule 39(3) of the CCS (Leave) Rules, which permits withholding of the whole or part of leave encashment only where an employee retires while under suspension or while disciplinary or criminal proceedings are pending, and where recovery of government dues may result from those proceedings.

The Court held that this power is statutory and limited by the conditions prescribed in the Rule.

Relying on State of Jharkhand v. Jitendra Kumar Srivastava, AIR 2013 SC 3383, along with D.S. Nakara v. Union of India, (1983) 1 SCC 305 and Deoki Nandan Prasad v. State of Bihar, (1971) 2 SCC 330, the Court reiterated that pensionary benefits, including gratuity and leave encashment, constitute property protected under Article 300A of the Constitution and cannot be withheld without authority of law.

The Court noted that although the petitioner had remained absent from duty, the respondents had sanctioned his full pension, commutation of pension and gratuity and had confirmed that no disciplinary action had been initiated against him.

Consequently, there was no legal basis for delaying payment of the benefits already sanctioned.

With respect to leave encashment, the Court found that neither of the statutory preconditions under Rule 39(3)—suspension or pending disciplinary/criminal proceedings—existed at the time of retirement.

The withholding of leave encashment was therefore unsupported by the Rule and amounted to deprivation of a property right without statutory authority, contrary to Article 300A and the principle laid down in Jitendra Kumar Srivastava.

The question of regularising the absence was left to the competent authority, but it could not justify indefinite withholding of the petitioner’s otherwise admissible retiral benefits.

Thereafter, the respondents were directed to release and pay all retiral dues admissible to the petitioner—including pension, gratuity, commutation of pension, leave encashment, final GPF settlement and other consequential pensionary benefits—within three weeks from receipt or communication of the order.

The writ petition was accordingly disposed of.