Pendency of criminal appeal by employee cannot disentitle State from withholding Death-cum-Retirement Gratuity: Supreme Court

Read Judgment: The Secretary, Local Self Government Department & Ors. Etc. V. K. Chandran Etc.

Pankaj Bajpai

New Delhi, March 17, 2022: Observing that it is a very restrictive view to disburse Death-cum-Retirement Gratuity (DCRG) on account of the proceedings against a pensioner coming to an end, even where a conviction has arisen, and especially where the convicted person has availed of the remedy of appeal, the Supreme Court has said that the pendency of the appeal cannot disentitle the State from withholding the DCRG, considering that it is a hiatus period within which certain arrangements have to be made which would be dependent on the outcome of the appeal.

A Division Bench of Justice Sanjay Kishan Kaul and Justice M.M Sundresh clarified that there is no question of any other departmental proceedings arising independently against the employees as the conclusion of the criminal proceedings would entitle the State to pass appropriate orders based solely on the result of the said proceedings.

Going by the background of the case, K. Chandran (respondent) was working as Village Extension Officer. In the course of his employment the Vigilance Department registered a crime u/s 7, 13(1)(d) r/w/s 13(2) of the Prevention of Corruption Act, 1998 alleging that he had received Rs.500 as bribe from one K.K. Mohanan. Accordingly, respondent was suspended from service on October 27, 2006 and was reinstated in service on Mar 01, 2008. He retired from service on March 31, 2011 on superannuation while working as the General Extension Officer in Wayanad. Later, the Inquiry Commissioner and Special Judge, Kozhikode convicted K. Chandran and sentenced him to undergo rigorous imprisonment for 2 years and a fine of Rs.5,000. 

The respondent then approached the Kerala Administrative Tribunal (KAT), but, in vain, as it was held by KAT that judicial proceedings had been concluded and K. Chandran had been convicted. It was opined that K. Chandran being a convict and that too for receiving a bribe, could not claim entitlement to the DCRG. In the meanwhile, the Government of Kerala issued specific guidelines directing the authorities to finalize departmental action or vigilance inquiries within one year of the retirement. 

Now, the issue to be examined by the High Court was whether pending criminal appeal, and with the sentence being suspended, could the DCRG be directed to be released on the construction of the applicable rules. The respondent approached the High Court of Kerala requiring the disbursement of DCRG within a fixed time. In view of there being a divergence of opinion, the matter was referred to a larger Bench. 

The State of Kerala sought to advance a plea that normally there cannot be any proceedings continued against a Government servant after retirement as the employer-employee relationship does not subsist. The High Court opined in favour of the respondent employees. Rule 3A of the Kerala Service Rules was opined to be only tailored towards the effective implementation of Rule 3 and could not have any separate or distinct consequences. The High Court also found that liabilities could be recovered from DCRG only after giving the employee a reasonable opportunity to explain. Accordingly, it was held that the recovery under Rule 3 could only be against pension and not DCRG, and Rule 3A insofar as it permitted DCRG to be withheld was struck down. 

After considering the submissions, the Top Court noted that a mere acquittal in a criminal case would not imply that no action can be taken in departmental proceedings, however, the choice was with the State Government as to whether they would like to hold separate departmental proceedings or go by the final view of the criminal court, the latter is naturally based not on preponderance of probabilities but on proof beyond reasonable doubt. 

It is the latter course which the State has followed, and thus, an employee’s entitlement to all benefits and the right not to be now dismissed from service all inure if the criminal proceedings conclude in favour of the employee, added the Court. 

However, speaking for the Bench, Justice Kaul observed that were these proceedings to be concluded against the employee and the conviction upheld it cannot be said that the department would still be required to pay all the retirement benefits, and the department can also pass an order of dismissal based solely on the criminal conviction. 

“The KSR do provide for a provisional pension so that the economic sustenance requirements of an employee are taken care of. The provisional pension cannot be more than the actual pension. It is nobody’s case that the respondents-employees are not getting provisional pension”, added the Bench. 

Justice Kaul opined that Rule 3A cannot be read in isolation and Rule 3, Note 2, Ruling 3, and Rule 3A have to be read in conjunction as they provide for the treatment of the DCRG in case of disciplinary or judicial proceedings pending at the stage of retirement.

Even in the absence of these proceedings in certain eventualities the amounts can be recovered from the DCRG, added the Bench. 

The Apex Court therefore concluded that it cannot be said that the DCRG would have to be released to the respondents pending consideration of the criminal appeal.