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Pension and Gratuity with holding pending inquiry = whether, in the absence of any provision in the Pension Rules, the State Government can withhold a part of pension and/or gratuity during the pendency of departmental/ criminal proceedings? = Fact remains that there is an imprimatur to the legal principle that the right to receive pension is recognized as a right in “property”. 14. Article 300 A of the Constitution of India reads as under: “300A Persons not to be deprived of property save by authority of law. – No person shall be deprived of his property save by authority of law.” Once we proceed on that premise, the answer to the question posed by us in the beginning of this judgment becomes too obvious. A person cannot be deprived of this pension without the authority of law, which is the Constitutional mandate enshrined in Article 300 A of the Constitution. It follows that attempt of the appellant to take away a part of pension or gratuity or even leave encashment without any statutory provision and under the umbrage of administrative instruction cannot be countenanced. 15. It hardly needs to be emphasized that the executive instructions are not having statutory character and, therefore, cannot be termed as “law” within the meaning of aforesaid Article 300A. On the basis of such a circular, which is not having force of law, the appellant cannot withhold – even a part of pension or gratuity. As we noticed above, so far as statutory rules are concerned, there is no provision for withholding pension or gratuity in the given situation. Had there been any such provision in these rules, the position would have been different. 16. We, accordingly, find that there is no merit in the instant appeals as the impugned order of the High Court is without blemish. Accordingly, these appeals are dismissed with costs quantified at Rs. 10,000/- each.

published in    http://judis.nic.in/supremecourt/filename=40650   

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6770 OF 2013
(Arising out of Special Leave Petition (Civil) No. 1427 of 2009)

 
State of Jharkhand & Ors. ….. Appellant(s)
Vs.
Jitendra Kumar Srivastava & Anr.
…..Respondent(s)

 
WITH
C.A. No. 6771/2013
(arising out of SLP(C) No. 1428 of 2009)
J U D G M E N T

A.K. Sikri, J

1. Leave granted.

2. Crisp and short question which arises for consideration in
these cases is as to whether, in the absence of any provision in the
Pension Rules, the State Government can withhold a part of pension
and/or gratuity during the pendency of departmental/ criminal
proceedings? The High Court has –

answered this question, vide the impugned judgment, in the negative
and hence directed the appellant to release the withheld dues to the
respondent. Not happy with this outcome, the State of Jharkhand has
preferred this appeal.

3. For the sake of convenience we will gather the facts from
Civil Appeal arising out of SLP(Civil) No. 1427 of 2009. Only facts
which need to be noted, giving rise to the aforesaid questions of
law, are the following:

The respondent was working in the Department of Animal
Husbandry and Fisheries. He joined the said Department in the
Government of Bihar on 2.11.1966. On 16.4.1996, two cases were
registered against him under various Sections of the Indian Penal
Code as well as Prevention of Corruption Act, alleging serious
financial irregularities during the years 1990-1991, 1991-1992 when
he was posted as Artificial Insemination Officer, Ranchi. On
promulgation of the Bihar Reorganisation Act, 2000, State of
Jharkhand (Appellant herein) came into existence and the Respondent
became the employee of the appellant State. Prosecution, in respect
of the aforesaid two criminal cases against the respondent is
pending. On 30th January, 2002, the appellant also ordered
initiation of disciplinary action against him. While these
proceedings were still pending, on attaining –

the age of superannuation, the respondent retired from the post of
Artificial Insemination Officer, Ranchi on 31.08.2002. The appellant
sanctioned the release and payment of General Provident Fund on
25.5.2003. Thereafter, on 18.3.2004, the Appellant sanctioned 90
percent provisional pension to the respondent. Remaining 10 percent
pension and salary of his suspension period (30.1.2002 to 30.8.2002)
was withheld pending outcome of the criminal cases/ departmental
inquiry against him. He was also not paid leave encashment and
gratuity.

4. Feeling aggrieved with this action of the withholding of his
10 percent of the pension and non-release of the other aforesaid
dues, the respondent preferred the Writ Petition before the High
Court of Jharkhand. This Writ Petition was disposed of by the High
Court by remitting the case back to the Department to decide the
claim of the petitioner for payment of provisional pension, gratuity
etc. in terms of Resolution No. 3014 dated 31.7.1980. The
appellant, thereafter, considered the representation of the
respondent but rejected the same vide orders dated 16.3.2006. The
respondent challenged the rejection by filing another Writ Petition
before the High Court. The said petition was dismissed by the
learned Single Judge. The respondent filed Intra Court Appeal which
has been allowed by the Division Bench vide the –

impugned orders dated 31.10.2007. The Division Bench has held that
the question is squarely covered by the full Bench decision of that
Court in the case of Dr. Dudh Nath Pandey vs. State of Jharkhand and
Ors. 2007 (4) JCR 1. In the said full Bench Judgment dated
28.8.2007, after detailed discussions on the various nuances of
the subject matter, the High Court has held:

“ To sum up the answer for the two questions are as follows:

(i) Under Rule 43(a) and 43(b) of Bihar Pension Rules, there
is no power for the Government to withhold Gratuity and
Pension during the pendency of the departmental proceeding
or criminal proceeding. It does not give any power to
withhold Leave Encashment at any stage either prior to the
proceeding or after conclusion of the Proceeding.

(ii) The circular, issued by the Finance Department, referring
to the withholding of the leave encashment would not apply
to the present facts of the case as it has no sanctity of
law”.

5. Mr. Amarendra Sharan, the learned Senior Counsel appearing for
the petitioner accepted the fact that in so far as the Pension Rules
are concerned, there is no provision for withholding a part of
pension or gratuity. He, however, submitted that there are
administrative instructions which permit withholding of a part of
pension and gratuity. His submission was that when the rules are
silent on a particular aspect, gap can be filled by the –

administrative instructions which was well settled legal position,
laid down way back in the year 1968 by the Constitution Bench
Judgment of this Court in Sant Ram Sharma vs. Union of India 1968
(1) SCR 111. He, thus, argued that the High Court has committed an
error in holding that there was no power with the Government to
withhold the part of pension or gratuity, pending
disciplinary/criminal proceedings.

6. The aforesaid arguments of the learned Senior Counsel based on
the judgment in Sant Ram Sharma would not cut any ice in so far as
present case is concerned, because of the reason this case has no
applicability in the given case. Sant Ram judgment governs the
field of administrative law wherein the Constitution Bench laid down
the principle that the rules framed by the authority in exercise of
powers contained in an enactment, would also have statutory force.
Though the administration can issue administrative instructions for
the smooth administrative function, such administrative instructions
cannot supplant the rules. However, these administrative
instructions can supplement the statutory rules by taking care of
those situations where the statutory rules are silent. This ratio
of that judgment is narrated in the following manner:

“It is true that there is no specific provision in the Rules
laying down the principle of promotion of junior or senior grade

officers to selection grade posts. But that does not mean that
till statutory rules are framed in this behalf the Government
cannot issue administrative instructions regarding the principle
to be followed in promotions of the officers concerned to
selection grade posts. It is true that Government cannot amend
or supersede statutory rules by administrative instructions, but
if the rules are silent on any particular point Government can
fill up the gaps and supplement the rules and issue instructions
and inconsistent with the rules already framed”.

 
There cannot be any quarrel on this exposition of law
which is well grounded in a series of judgments pronounced post Sant
Ram Sharma case as well. However, the question which is posed in
the present case is altogether different.

7. It is an accepted position that gratuity and pension are not
the bounties. An employee earns these benefits by dint of his long,
continuous, faithful and un-blemished service. Conceptually it is
so lucidly described in D.S. Nakara and Ors. Vs. Union of India;
(1983) 1 SCC 305 by Justice D.A. Desai, who spoke for the Bench, in
his inimitable style, in the following words:

“The approach of the respondents raises a vital and none too
easy of answer, question as to why pension is paid. And why was
it required to be liberalised? Is the employer, which
expression will include even the State, bound to pay pension?
Is there any obligation on the employer to provide for the
erstwhile employee even after the contract of employment has
come to an end and the employee has ceased to render service?

What is a pension? What are the goals of pension? What public
interest or purpose, if any, it seeks to serve? If it does seek
to serve some public purpose, is it thwarted by such artificial
division of retirement pre and post a certain date? We need
seek answer to these and incidental questions so as to render
just justice between parties to this petition.

The antiquated notion of pension being a bounty a gratituous payment
depending upon the sweet will or grace of the employer not
claimable as a right and, therefore, no right to pension can be
enforced through Court has been swept under the carpet by the
decision of the Constitution Bench in Deoki Nandan Prasad v.
State of Bihar and Ors.[1971] Su. S.C.R. 634 wherein this Court
authoritatively ruled that pension is a right and the payment of
it does not depend upon the discretion of the Government but is
governed by the rules and a Government servant coming within
those rules is entitled to claim pension. It was further held
that the grant of pension does not depend upon any one’s
discretion. It is only for the purpose of quantifying the
amount having regard to service and other allied maters that it
may be necessary for the authority to pass an order to that
effect but the right to receive pension flows to the officer not
because of any such order but by virtue of the rules. This
view was reaffirmed in State of Punjab and Anr. V. Iqbal Singh
(1976) IILLJ 377SC”.

 
8. It is thus hard earned benefit which accrues to an employee
and is in the nature of “property”. This right to property cannot
be taken away without the due process of law as per the provisions
of Article 300 A of the Constitution of India.

9. Having explained the legal position, let us first discuss the
rules relating to release of Pension. The present case is
admittedly governed by –

Bihar Pension Rules, as applicable to the State of Jharkhand. Rule
43(b) of the said Pension Rules confers power on the State
Government to withhold or withdraw a pension or part thereof under
certain circumstances. This Rule 43(b) reads as under:

“43(b) The State Government further reserve to themselves the
right of withholding or withdrawing a pension or any part of it,
whether permanently or for 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 proceeding to have been guilty to grave
misconduct, or to have caused pecuniary loss to Government
misconduct, or to have caused pecuniary loss to Government by
misconduct or negligence, during his service including service
rendered on re-employment after retirement”.

 
From the reading of the aforesaid Rule 43(b), following
position emerges:-

(i) The State Government has the power to withhold or withdraw
pension or any part of it when the pensioner is found to be
guilty of grave misconduct either in a departmental
proceeding or judicial proceeding.
(ii) This provision does not empower the State to invoke the
said power while the department proceeding or judicial
proceeding are pending.
(iii) The power of withholding leave encashment is not provided
under this rule to the State irrespective of the result of
the above proceedings.
(iv) This power can be invoked only when the proceedings are
concluded finding guilty and not before.

 

10. There is also a Proviso to Rule 43(b), which provides that:-

“A. Such departmental proceedings, if not instituted
while the Government Servant was on duty either before
retirement or during re-employment.
i. Shall not be instituted save with the sanction
of the State Government.
ii Shall be in respect of an event which took
place not more than four years before the
institution of such proceedings.
iii Shall be conducted by such authority and at
such place or places as the State Government
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
Government Servant was on duty either before retirement or
during re-employment shall have been instated in accordance
with sub clause (ii) of clause (a) and
C. The Bihar Public Service Commission, shall be
consulted before final orders are passed.

 

It is apparent that the proviso speaks about the institution of
proceedings. For initiating proceedings, Rule 43(b) puts some
conditions, i.e, Department proceeding as indicated in Rule 43(b),
if not instituted while the Government Servant was on duty, then it
shall not be instituted except:-

(a) With the sanction of the Government,

(b) It shall be in respect of an event which took place
not more than four years before the institution of
the proceedings.

(c) Such proceedings shall be conducted by the enquiry
officer in accordance with the proceedings by which
dismissal of the services can be made.

 

Thus, in so far as the proviso is concerned that deals with
condition for initiation of proceedings and the period of limitation
within which such proceedings can be initiated.

11. Reading of Rule 43(b) makes it abundantly clear that even
after the conclusion of the departmental inquiry, it is permissible
for the Government to withhold pension etc. ONLY when a finding is
recorded either in departmental inquiry or judicial proceedings that
the employee had committed grave misconduct in the discharge of his
duty while in his office. There is no provision in the rules for
withholding of the pension/ gratuity when such departmental
proceedings or judicial proceedings are still pending.

12. Right to receive pension was recognized as right to property
by the Constitution Bench Judgment of this Court in Deokinandan
Prasad vs. State of Bihar; (1971) 2 SCC 330, as is apparent from the
following discussion:

“29. The last question to be considered, is, whether the right to
receive pension by a Government servant is property, so as to attract
Articles 19(1)(f) and 31(1) of the Constitution. This question falls
to be decided in order to consider whether the writ petition is
maintainable under Article 32. To this aspect, we have already
adverted to earlier and we now proceed to consider the same.

30. According to the petitioner the right to receive pension is
property and the respondents by an executive order dated June 12, 1968
have wrongfully withheld his pension. That order affects his
fundamental rights under Articles 19(1)(f) and 31(1) of the
Constitution. The respondents, as we have already indicated, do not
dispute the right of the petitioner to get pension, but for the order
passed on August 5, 1966. There is only a bald averment in the counter-
affidavit that no question of any fundamental right arises for
consideration. Mr. Jha, learned counsel for the respondents, was not
prepared to take up the position that the right to receive pension
cannot be considered to be property under any circumstances. According
to him, in this case, no order has been passed by the State granting
pension. We understood the learned counsel to urge that if the State
had passed an order granting pension and later on resiles from that
order, the latter order may be considered to affect the petitioner’s
right regarding property so as to attract
Articles 19(1)(f) and 31(1) of the Constitution.

31. We are not inclined to accept the contention of the learned
counsel for the respondents. By a reference to the material provisions
in the Pension Rules, we have already indicated that the grant of
pension does not depend upon an order being passed by the authorities
to that effect. It may be that for the purposes of quantifying the
amount having regard to the period of service and other allied
matters, it may be necessary for the authorities to pass an order to
that effect, but the right to receive pension flows to an officer not
because of the said order but by virtue of the Rules. The Rules, we
have already pointed out, clearly recognise the right of persons like
the petitioner to receive pension under the circumstances mentioned
therein.

32. The question whether the pension granted to a public servant is
property attracting Article 31(1) came up for consideration before the
Punjab High Court in Bhagwant Singh v. Union of India A.I.R. 1962 Pun
503. It was held that such a right constitutes “property” and any
interference will be a breach of Article 31(1) of the Constitution. It
was further held that the State cannot by an executive order curtail
or abolish altogether the right of the public servant to receive
pension. This decision was given by a learned Single Judge. This
decision was taken up in Letters Patent Appeal by the Union of India.
The Letters Patent Bench in its decision in Union of India v. Bhagwant
Singh I.L.R. 1965 Pun 1 approved the decision of the learned Single
Judge. The Letters Patent Bench held that the pension granted to a
public servant on his retirement is “property” within the meaning of
Article 31(1) of the Constitution and he could be deprived of the same
only by an authority of law and that pension does not cease to be
property on the mere denial or cancellation of it. It was further held
that the character of pension as “property” cannot possibly undergo
such mutation at the whim of a particular person or authority.

 
33. The matter again came up before a Full Bench of the Punjab and
Haryana High Court in K.R. Erry v. The State of Punjab I.L.R. 1967 P &
H 278. The High Court had to consider the nature of the right of an
officer to get pension. The majority quoted with approval the
principles laid down in the two earlier decisions of the same High
Court, referred to above, and held that the pension is not to be
treated as a bounty payable on the sweet will and pleasure of the
Government and that the right to superannuation pension including its
amount is a valuable right vesting in a Government servant It was
further held by the majority that even though an opportunity had
already been afforded to the officer on an earlier occasion for
showing cause against the imposition of penalty for lapse or
misconduct on his part and he has been found guilty, nevertheless,
when a cut is sought to be imposed in the quantum of pension payable
to an officer on the basis of misconduct already proved against him, a
further opportunity to show cause in that regard must be given to the
officer. This view regarding the giving of further opportunity was
expressed by the learned Judges on the basis of the relevant Punjab
Civil Service Rules. But the learned Chief Justice in his dissenting
judgment was not prepared to agree with the majority that under such
circumstances a further opportunity should be given to an officer when
a reduction in the amount of pension payable is made by the State. It
is not necessary for us in the case on hand, to consider the question
whether before taking action by way of reducing or denying the pension
on the basis of disciplinary action already taken, a further notice to
show cause should be given to an officer. That question does not arise
for consideration before us. Nor are we concerned with the further
question regarding the procedure, if any, to be adopted by the
authorities before reducing or withholding the pension for the first
time after the retirement of an officer. Hence we express no opinion
regarding the views expressed by the majority and the minority Judges
in the above Punjab High Court decision, on this aspect. But we agree
with the view of the majority when it has approved its earlier
decision that pension is not a bounty payable on the sweet will and
pleasure of the Government and that, on the other hand, the right to
pension is a valuable right vesting in a government servant.

34. This Court in State of Madhya Pradesh v. Ranojirao Shinde and
Anr. MANU/SC/0030/1968 : [1968]3SCR489 had to consider the question
whether a “cash grant” is “property” within the meaning of that
expression in Articles 19(1)(f) and 31(1) of the Constitution. This
Court held that it was property, observing “it is obvious that a right
to sum of money is property”.

35. Having due regard to the above decisions, we are of the opinion
that the right of the petitioner to receive pension is property under
Article 31(1) and by a mere executive order the State had no power to
withhold the same. Similarly, the said claim is also property under
Article 19(1)(f) and it is not saved by Sub-article (5) of Article 19.
Therefore, it follows that the order dated June 12, 1968 denying the
petitioner right to receive pension affects the fundamental right of
the petitioner under Articles 19(1)(f) and 31(1)of the Constitution,
and as such the writ petition under Article 32 is maintainable. It may
be that under the Pension Act (Act 23 of 1871) there is a bar against
a civil court entertaining any suit relating to the matters mentioned
therein. That does not stand in the way of a Writ of Mandamus being
issued to the State to properly consider the claim of the petitioner
for payment of pension according to law”.

13. In State of West Bengal Vs. Haresh C. Banerjee and Ors.
(2006) 7 SCC 651, this Court recognized that even when, after the
repeal of Article 19(1)(f) and Article 31 (1) of the Constitution
vide Constitution (Forty-Fourth Amendment) Act, 1978 w.e.f. 20th
June, 1979, the right to property was no longer remained a
fundamental right, it was still a Constitutional right, as provided
in Article 300A of the Constitution. Right to receive pension was
treated as right to property. Otherwise, challenge in that case was
to the vires of Rule 10(1) of the West Bengal Services (Death-cum–

Retirement Benefit) Rules, 1971 which conferred the right upon the
Governor to withhold or withdraw a pension or any part thereof under
certain circumstances and the said challenge was repelled by this
Court.

Fact remains that there is an imprimatur to the legal
principle that the right to receive pension is recognized as a right
in “property”.

14. Article 300 A of the Constitution of India reads as under:

“300A Persons not to be deprived of property save by authority
of law. – No person shall be deprived of his property save by
authority of law.”

 
Once we proceed on that premise, the answer to the question
posed by us in the beginning of this judgment becomes too obvious. A
person cannot be deprived of this pension without the authority of
law, which is the Constitutional mandate enshrined in Article 300 A
of the Constitution. It follows that attempt of the appellant to
take away a part of pension or gratuity or even leave encashment
without any statutory provision and under the umbrage of
administrative instruction cannot be countenanced.

15. It hardly needs to be emphasized that the executive
instructions are not having statutory character and, therefore,
cannot be termed as “law” within the meaning of aforesaid Article
300A. On the basis of such a circular, which is not having force of
law, the appellant cannot withhold –

even a part of pension or gratuity. As we noticed above, so far
as statutory rules are concerned, there is no provision for
withholding pension or gratuity in the given situation. Had there
been any such provision in these rules, the position would have been
different.

16. We, accordingly, find that there is no merit in the instant
appeals as the impugned order of the High Court is without blemish.
Accordingly, these appeals are dismissed with costs quantified at
Rs. 10,000/- each.

 
……………………….J.

[K.S. Radhakrishnan]

 
………………………….J.

[A.K. Sikri]

 
New Delhi
August 14, 2013

 

 

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