Recovery of loss from retirement benefits not proper without departmental inquiry

Recovery of loss from retirement benefits not proper without departmental inquiry

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The Supreme Court has held today (15 November 2016) that withholding of a part of the retirement benefits such as gratuity and pension and, recovery of alleged loss caused to the Government from the retirement dues payable to the pensioner, are not proper where neither any departmental inquiry was conducted against him nor recourse to the relevant service rules was resorted to. This order was passed by a two-judge bench of the Supreme Court comprising Justice J. Chelameswar and Justice Prafulla C. Pant in the case of State of Uttar Pradesh and others Versus Dhirendra Pal Singh [CIVIL APPEAL NO. 10866 OF 2016 (Arising out of S.L.P. (C) No. 33582 of 2016 (CC 18447/2016)].

In this case, the pensioner / respondent Dhirendra Pal Singh was working as Assistant Store Superintendent with the Irrigation Department of the State of Uttar Pradesh. He retired on 30.06.2009 on attaining the age of superannuation. At the time of his retirement GPF, leave encashment and 70% of gratuity and pension were cleared. However, the remaining 30% of gratuity and computation of pension were held up. The Government stated that there were some discrepancies in the stock in the store of the department and some enquiries were going on as to loss caused to the public exchequer. The Government, vide its order dated 23.07.2015, on the basis of alleged discrepancies withheld the remaining 30% of gratuity and pension of the pensioner and, vide order dated 06.08.2015, the Government directed recovery of Rs.7,26,589/- from the retirement dues payable to the pensioner.

The pensioner challenged these orders before the high court.

There was no departmental enquiry initiated against the pensioner and after about more than six years order as to finally withholding of remaining pension on the ground of alleged misconduct and the recovery was directed to be made from him after serving a notice on him. A single Judge bench of the Allahabad High Court held that the orders challenged in the writ petition cannot be sustained in law as neither recourse of Article 351-A of UP Civil Service Regulations was resorted to, nor any departmental enquiry was held. The high court further directed that the remaining amount of gratuity and pension of the pensioner shall be released with interest at the rate of 10% p.a. on the sum withheld by the State authorities.

The Division Bench of the high court rejected the appeal filed by the State Government against the above order of the single Judge bench.

On appeal by the State Government, the Supreme Court took note of the fact that Article 351-A of UP Civil Service Regulations lays down as under:

“351-A. 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 departmental or judicial proceedings to have been guilty of grave misconduct, or to have caused pecuniary loss to Government by misconduct or negligence, during his service, including service rendered on re-employment after retirement.

Provided that:

(a) such departmental proceedings, if not instituted while the officer was on duty either before retirement or during re-employment –

(i) Shall not be instituted with the sanction of the Governor,

(ii) shall be in respect of event which took place not more than four years before the institution of such proceedings, and

(iii) shall be conducted by such authority and in such place or places as the Governor may direct and in accordance with the procedure applicable to proceedings on which an order of dismissal from service may be made.

(b) Judicial proceedings, if not instituted while the officer was on duty either before retirement or during re-employment, shall have been instituted in accordance with sub-clause (ii) of clause (a), and

(c) the Public Service Commission, U.P., shall be consulted before final orders are passed.

Explanation – For the purposes of this article –

(a) departmental proceedings shall be deemed to have been instituted when the charges framed against the pensioner are issued to him, or, if the officer has been placed under suspension from an earlier date, on such date; and

(b) judicial proceedings shall be deemed to have been instituted:

(i) in the case of criminal proceedings, on the date on which complaint is made, or a charge-sheet is submitted, to a criminal court; and

(ii) in the case of civil proceedings, on the date on which the plaint is presented or, as the case may be, an application is made to a civil court.”

The Supreme Court noted that admittedly, no departmental enquiry was initiated in the present case against the respondent for the misconduct, if any, nor any proceedings drawn as provided in Article 351-A of UP Civil Service Regulations. Moreover, the document which was the basis of enquiry and relied upon by the State authorities reflected that the document showing discrepancy in the stock was dated 26.12.2009, i.e., after about more than five months of retirement of the respondent. In these circumstances, keeping in view Article 351-A of UP Civil Service Regulations, the Supreme Court upheld the order of the High Court quashing the orders dated 23.07.2015 and 06.08.2015 of the state authorities. However, the Supreme Court directed to reduce the interest payable by the State Government as follows: “pay interest at the rate of 6% per annum on the unpaid amount of pension from the date it had fallen due and interest at the rate of 8% per annum on the unpaid amount of gratuity from the date of retirement of the employee”.

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