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REPORTABLE  

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL No.1681 OF 2019  

(Arising out of SLP(C) No.31739/2016)   

CHIEF GENERAL MANAGER GUJARAT   

TELECOM CIRCLE,BHARAT SANCHAR   

NIGAM LTD. & ORS.       APPELLANT(S)  

VERSUS  

MANILAL AMBALAL PATEL & ANR.          RESPONDENT(s)  

    J U D G M E N T  

K.M. JOSEPH, J.  

 1. This appeal by special leave is directed against  

the judgment of the High Court in Special Civil  

Application filed under Articles 226 and 227 of the  

Constitution of India by the appellants wherein  

appellants challenged the order dated 29.10.2013  

passed by the Central Administrative Tribunal  

(hereinafter referred to as the "Tribunal"). The  

Tribunal by the impugned order quashed order dated  

12.03.2013 and directed the appellants to pay interest  

at the rate applicable to the Provident Fund deposits

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for the delay occurred in payment of DCRG and Commuted  

Value of Pension (hereinafter referred to as the  

"CVP") from 01.08.2008 till the date of payment.  

2. The first respondent (hereinafter referred to as  

the "applicant"), who filed the application before the  

Tribunal was granted provisional pension by proceeding  

dated 04.08.2008. It reads as follows:-  

“Sub: Retirement on superannuation of 31.7.2008 A/N- Cases of officers of STS of Executive Grade (Ad-hoc)  Regarding.    In accordance with BSNL New Delhi order No. 35/1/2007  

Pers-1 date 3.7.2008 and on approval of the competent  

authority, the following officers of STS of Executive  

Grade) adhoc permanently abscribed in BSNL are permitted  

to retire from BSNL services on attaining the age of  

superannuation w.e.f. 31.7.2007 (A/N).  

Sl.  

No.  

Name of Officer Staff No./ERP  

No.  

Present  

working  

unit  

1. Sh. J.R. Sathwara, DE 10913/7005735 PGMTD  

Ahmedabad  

2. Sh. B.P. Mishra, DE 12277/7021009 PGMTD  

Vadodara  

3. Sh. P.P. Panchal, DE 11560/7016759 PGMTD  

Vadodara  

4. Sh.N.N. Chaniyara, DE 13808/7025957 GMTD –  

Rajkot  

5. Sh. M.A. Patel, DE 11719/7021051 PGMTD  

Surat  

2. The BSNL C.O. ND has intimated that the vigilance  

clearance in respect of Shri M.A. Paatel, (SL. No. 5)  

DE, O/o PGMTD Surat has not received from Vigilance  

Cell of BSNL and therefore the officer shall be given  

only provisional pension and the DCRG and CVP shall  

be withheld till the conclusion of the vigilance/  

disciplinary case as per CCS (Pension) rules 1972.

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3. It may please be ensured that there is no Vig/  

Disc case pending or contemplated against any of the  

above officer mentioned above as on the date of  

retirement. If any such case comes to notice, only  

provisional pension shall be granted to the officer  

(s) and his DCRG and CVP shall be withheld till the  

Vigilance clearance is accorded.  

4. Copy of the charge relinquishing report may be  

sent to this office in respect of all concerned.”  

Though, the Anti-Corruption Bureau (hereinafter  

referred to as the "ACB") had registered a case  

against the applicant, the investigating officer,  

however, had found no evidence against him.  

Investigating officer had submitted A-summary before  

the Principal District Sessions, Judge, Banaskantha,  

Palanpur, who refused to accept the summary. The State  

of Gujarat thereupon challenged the order. On  

30.03.2012 the criminal revision application, filed  

by the State, was allowed according sanction to the  

investigating officer to file A-summary report before  

the trial Court. The applicant applied for interest  

on pensionary benefits i.e. DCRG and CVP, which, was  

rejected, on the basis that the criminal revision  

petition, filed by the State, against the order of the  

trial Court refusing to accept the A-summary was  

disposed of and that after the order of the High Court

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and Vigilance clearance the amounts were paid. He  

approached the Tribunal and the Tribunal directed  

payment of interest. The High Court in the writ  

petition, filed by the appellants, has reasoned that  

on 01.08.2008 (the applicant was to retire on  

superannuation on 31.07.2008), there were no criminal  

proceedings against him. The High Court, inter alia,  

held as follows:  

“We are unable to accept the said submission as  

narrated hereinabove. There were no criminal  

proceedings on 01.08.2008. All that the High Court in  

its order has done directing the authority below,  

which is produced at page no.219 at Para 14, which  

read as under;  

14. The report made to the Court below by the  

investigating officer was, therefore, made under  

Section 173 of the Code and the Court was  

required to pass an order under Section 173(4)  

of the Code, which the Special Court has failed  

to do. The order passed by the learned Principal  

District and Sessions Judge, Banaskantha at  

Palanpur, dated 03.05.2006 is, therefore, set  

aside. The prayer sought by the investigating  

officer for Summary “A” is allowed. Accordingly,  

present revision application is allowed. Rule is  

made absolute to the aforesaid extent. Muddamal  

currency note be confiscated to the State.  

 It will relate back to the date of filing of     

A-Summary, which is prior to the date when the

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respondent retired. More particularly, in the year  

2007, when the Criminal Revision Application was filed  

before this High Court.”  

3. It was found that it related back to the A-

summary, which is prior to the date, when the  

applicant retired, more particularly, in the year  

2007, when the revision was filed in the High Court.   

4. This we understand to mean that the High Court  

takes the view that the investigating officer  

submitted A-summary report, which is initially not  

accepted by the District Court which on revision by  

the State was directed to be accepted by the High  

Court. The report submitted by the agency, finding no  

material against the applicant, would date back to the  

date on which the report was submitted which would  

further mean that as on the date when the applicant  

retired, there was no criminal proceeding against the  

applicant. Thereafter, the High Court reasoned that  

there is a delay of huge period and the applicant was  

given clearance by the Vigilance that there was no  

case pending as the State has already filed A-summary

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in the ACB trap case. There was no disciplinary action  

taken by the State. It was against Article 14 of the  

Constitution of India and the interest also was found  

not unreasonable. The High Court, in the petition  

filed under Article 227, found no infirmity in the  

order of the Tribunal and dismissed the same.  

5. We heard the learned counsel for the appellants  

as well as the learned Additional Solicitor General.  

Though service is complete on the applicant, none  

appears on his behalf.   

6. Learned counsel for the appellants drew our  

attention to the Central Civil Services (Commutation  

of Pension) Rules, 1981 (hereinafter referred to as  

the "Commutation Rules"). Therein he relied upon Rule  

4 of the Commutation Rules.  

7. It is his contention that in so far as judicial  

proceeding was pending against the applicant and the  

same came to be disposed of only in the year 2012,  

applicant cannot claim interest as the applicant is  

not even entitled to commutation of pension as is

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clear from Rule 4 of the Commutation Rules. He further  

submits that the District and Sessions Judge did not  

accept the A-summary report which led to the revision  

before the High Court in the year 2007 and the revision  

petition was pending as on 01.08.2008 when the  

applicant superannuated. Therefore, there was a  

judicial proceeding and this disentitled the applicant  

to CVP within the meaning of Rule 4. It is the further  

case that due to the pendency of the vigilance  

clearance, DCRG and CVP was withheld and only  

provisional pension was granted vide order dated  

04.08.2008 and later sanction was accorded for  

provisional pension vide order dated 02.09.2008. When  

the criminal revision was allowed by the High Court  

and the request for summary-A was allowed by judgment  

dated 30.03.2012, the respondent No.1 was accorded  

vigilance clearance and vide order dated 25.10.2012,  

approval was granted to regularize his pension and to  

release other retirement benefits. Thereafter, it is  

the case of the appellants that, as seen from the  

written submissions, by order dated 17.10.2012 the  

applicant was permitted to retire on attaining the age

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of superannuation w.e.f his date of retirement i.e.  

31.07.2008. The said order was also produced before  

us. It is the further case that the applicant  

thereupon made an application dated 01.11.2012 under  

the Commutation Rules seeking commutation. The said  

application was also produced along with the written  

submissions. It is submitted that, accordingly, the  

applicant was paid the CVP and retirement gratuity  

vide revised pension calculation sheet dated  

31.12.2012. It is the case of the appellants that the  

application made for commutation by the applicant was  

within the period of one year, as contemplated in Rule  

13(1) proviso (a). CVP is only an advance payment of  

pension and does not accrue as of right and is governed  

by the relevant Rules. Applicant was paid provisional  

pension which is the maximum admissible pension since  

his retirement and there was no monetary loss.        

8. The learned Additional Solicitor General made two  

further submissions apart from apparently adopting the  

arguments advanced by the learned counsel for the  

appellants. It is submitted that Court may notice that

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the applicant has been given provisional pension and  

provisional pension has been enjoyed by the applicant  

right from the beginning. Therefore, necessary  

adjustment would have to be made even if the arguments  

based on Rule 4 is not found acceptable. In other  

words, commutation of pension involves the payment of  

a lump sum in lieu of monthly payments in the future  

by way of pensionary benefits. When the applicant was  

in receipt of provisional pension, necessarily  

adjustments would have to be made by reckoning the  

amount and then calculating the CVP. Therefore, when  

the applicant was in receipt of the provisional  

pension, in the same breath ordering the appellants  

to pay interest would amount to conferment of double  

benefit on the applicant. In other words, applicant  

cannot on the one hand enjoy the provisional pension  

and also cannot be given interest on CVP. The second  

argument, which is pressed before us, was that there  

were departmental proceedings against the applicant.  

This is on the basis of the concept of departmental  

proceedings to be found in Rule 9 of the CCS (Pension)  

Rules, 1972 (hereinafter referred to as the "Pension

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Rules"). Rule 9(6)(a) of the Pension Rules reads as  

follows:  

"9(6)(a) departmental proceedings shall be deemed to  

be instituted on the date on which the statement of  

charges is issued to the Government servant or  

pensioner, or if the Government servant has been  

placed under suspension from an earlier date, on such  

date; and   

9. Learned ASG would point that the applicant has  

been placed under suspension and therefore that would  

suffice to deny the benefit of commutation of pension  

in which case interest could not be ordered to be  

paid.  

10. There is no dispute that CVP has been paid to the  

applicant after the conclusion of the vigilance  

proceedings, clearing the applicant, but the question  

to be considered by us as to whether the applicant was  

entitled to be paid interest for the period  

immediately after retirement till the date on which  

the CVP was actually paid to him. The scheme of the  

Pension Rules, inter alia, indicate that under Rule  

59, the authorities are duty bound to set in motion,  

the proceedings for calculating and paying the pension  

by the due date. Rule 59 would indicate that the said

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procedure is divided into three stages; first stage -  

verification of service; second stage – making good  

omission in the service book; third stage - as soon  

as the second stage is completed, but not later than  

eight months prior to the date of retirement of the  

Government servant various steps are to be undertaken.  

Rule 61 contemplates that after complying with the  

requirement of Rules 59 and 60, pension papers are to  

be forwarded to the accounts officer. Rule 64  

contemplates provisional pension being paid for  

reasons other than departmental or judicial  

proceedings.  

11. In the backdrop of these provisions, let us  

examine the scheme of the Commutation Rules. Rule 12  

of the Commutation Rules declares who are the eligible  

persons to apply for commutation of a percentage of  

the pension without medical examination. In fact, Rule  

11 provides that the Chapter applies to those who are  

eligible to commute their pension without medical  

examination. The person may be a person who is  

authorized to receive a superannuation pension under

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Rule 35 of the Pension Rules. Likewise, superannuation  

pension is defined in the Pension Rules and Rule 35  

of the Pension Rules declares that superannuation  

pension shall be granted to a Government servant who  

is retired on attaining the age of compulsory  

retirement. Rule 12 of the Commutation Rules further  

renders eligible a person who has been given a  

retiring pension under Rule 36 of the Pension Rules.  

A retiring pension under Rule 36 of the Pension Rules  

is granted, inter alia, to a Government servant who  

retires or is retired in advance of the age of  

compulsory retirement. The next person who is declared  

eligible is a person to whom pension is authorized on  

his absorption in or under a corporation or company  

or body in terms of Rule 37 of the Pension Rules and  

who elects to receive monthly pension and retirement  

gratuity. The next category of persons rendered  

eligible to commute is a person authorized to receive  

compensation pension on abolition of a permanent post  

under Rule 39 of the Pension Rules. Finally, under  

Rule 12 of the Commutation Rules, a person authorized  

to receive pension in whole or in part on the

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finalization of departmental or judicial proceedings  

referred to in Rule 9 of the Pension Rules and issue  

of final orders is entitled to commute the pension.   

12. Rule 13 provides for the application to be made  

for commutation of pension. We will advert to the Rule  

when it is found necessary at a later stage. Under  

Rule 14 of the Commutation Rules on receipt of  

application under Rule 13, the Head of Office has to  

take action as provided therein. Rule 15 provides for  

authorization of commuted value by the Accounts  

Officer. He is to verify whether the information  

furnished by the Head of Office is correct and  

applicant is eligible to commute a percentage of his  

pension without medical examination. Sub-rule (2) of  

Rule 15 provides that the Accounts Officer shall after  

necessary verification issue authority for payment of  

CVP to the Disbursing Authority, inter alia.  

13. Rule 18 of the Commutation Rules deals with  

another category of officers who are declared entitled  

to apply for commutation of their pension. The

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difference between Rule 12 which we have referred to  

and the persons mentioned in Rule 18 is that in the  

case of persons rendered eligible under Rule 18, they  

must undergo a medical examination whereas persons  

mentioned in Rule 12, as aforesaid, do not have to  

undergo any medical examination. Under Rule 18 of the  

Commutation Rules, the following categories of pension  

qualify:  

(1) Invalid pension under Rule 38 of the Pension  

Rules.  

(2) Pension granted under Rule 40 of the Pension  

Rules to a person who is compulsorily retired from  

service as penalty.  

(3) Compassionate allowance given under Rule 41  

of the Pension Rules.  

14. Be it noted that compassionate allowance under  

Rule 41 of the Pension Rules is contemplated in  

respect of a Government servant who is dismissed or  

removed from service. Rule 41 of the Pension Rules  

gives power to the authority competent to dismiss or  

remove a Government servant from service to sanction

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a compassionate allowance, if the case is deserving  

of special consideration and the sum is not exceeding  

two-thirds of the pension or gratuity or both which  

would have been admissible to him if he had retired  

on compensation pension. Compensation pension is dealt  

with in Rule 39 of the Pension Rules. It, inter alia,  

provides that if a Government servant is selected for  

discharge owing to the abolition of his permanent post  

then unless he is appointed to another post  which is  

deemed equal to that of his own, the Government  

servant will have the option to take compensation  

pension for the service he had rendered. The last  

category of persons under Rule 18 of the Commutation  

Rules, who is declared eligible to commute after  

undergoing medical examination, is a Government  

servant who has retired from service on one of the  

pensions which are mentioned in Rule 12 but his  

application for commutation has not been received by  

the Head of Office within one year of his retirement.  

There are other provisions which deal with the action  

to be taken which include provision for medical  

examination of the applicant falling under Rule 18,

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appeal against the finding of medical authority,  

withdrawal of his application etc.  

15. The above discussion relate to the persons who  

are eligible to commute and the pension which qualify.  

As we have noted ordinarily by the time the person is  

to retire, papers are to be got ready so that he  

becomes entitled to the CVP. Thus, if application is  

made and if all goes well, a person eligible, on his  

applying, as provided in the Rules, would become  

entitled to the pension without delay after the  

retirement.  

16. There are two situations which may result in a  

Government servant not being sanctioned the final  

pension upon his retirement. Rule 3(l) of the  

Commutation Rules defines provisional pension to be  

the pension referred to in Rule 64 or 69 of the Pension  

Rules, as the case may be. Rule 64 of the Pension  

Rules provides for sanctioning provisional pension in  

a case where there is no departmental or judicial  

proceeding. In other words, Rule 64 of the Pension

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Rules contemplates a situation where the pension is  

not finalized for reasons other than departmental or  

judicial proceeding. When a person is so granted  

provisional pension under Rule 64 of the Pension Rules  

then Rule 9 of the Commutation Rules provides for  

commutation of a fraction of the provisional pension  

which is to be subject to the limit specified in Rule  

5. It may be noticed that Rule 5 of the Commutation  

Rules, inter alia, provides that a Government servant  

shall be entitled to commute for a lump sum payment  

of an amount not exceeding forty percent of his  

pension. Therefore, this limit is applicable in  

respect of full pension and also cases of provisional  

pension. Even if a person is in receipt of only  

provisional pension but which is granted under Rule  

64, which as explained earlier, deals with a case  

which is not covered by a departmental or judicial  

proceeding, the Government servant is entitled to  

commute fraction of the provisional pension subject  

to the limit, as provided under Rule 5 of the  

Commutation Rules. Rule 31 of the Commutation Rules  

provides that when final assessment of the pension is

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done in regard to an employee to whom commuted value  

of the percentage of the provisional pension has been  

given under Rule 9, then he will be paid the difference  

of the amount between commuted value determined on  

final assessment of the pension and the commuted value  

already paid.  

17. Time is now ripe to notice Rule 4 of the  

Commutation Rules, which is relied upon by the  

appellant and the Government of India. The same reads  

as follows:  

"4. Restriction on commutation of pension –  

No Government servant against whom departmental or  

judicial proceedings, as referred to in Rule 9 of  

the Pension Rules, have been instituted before the  

date of his retirement, or the pensioner against  

whom such proceedings are instituted after the date  

of his retirement, shall be eligible to commute a  

percentage of his provisional pension authorised  

under Rule 69 of the Pension Rules or the pension,  

as the case may be, during the pendency of such  

proceedings."  

18. Rule 4 deals with a case where provisional pension  

has been granted under Rule 69 of the Pension Rules.  

Rule 69 of the Pension Rules contemplates sanctioning  

provisional pension when there is a departmental or  

judicial proceeding against the Government servant.

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It is when provisional pension is granted under the  

said Rule on account of the fact that there is a  

departmental or judicial proceeding pending that Rule  

4 declares that the Government servant will not be  

entitled to commute the provisional pension so granted  

under Rule 69 during the pendency of the proceeding.  

19. In this case, admittedly the applicant was  

sanctioned a provisional pension under Rule 69 on the  

basis that there was a judicial proceeding pending.  

We have set out the broad scheme of the Commutation  

Rules. First we should ascertain what is the nature  

of CVP. Is there legal right to receive CVP?  Can  

there be cases where for delayed payment of CVP,  

interest can be ordered? Is there any provision which  

provides for interest?  

20. A scanning of the Commutation Rules reveals that  

there is no provision which contemplates payment of  

interest. In fact, the appellants have produced Office  

Memorandum dated 05.10.1999 and the contention appears  

to be raised that it does not contemplate the grant

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of interest. We have gone through the said Office  

Memorandum. On the one hand the Office Memorandum does  

not contemplate grant of interest when CVP is paid  

belatedly. But on the other hand, we notice that the  

order does not declare that no interest shall be  

payable when CVP is paid belatedly.  

21. The next exercise is to ascertain the true nature  

of CVP. As we have noticed from the Commutation Rules  

that CVP is inter-linked with pension. Pension is not  

a bounty. It is a legal as well as a fundamental right  

of a Government servant to receive his pension. It is  

not an act of grace by the employer but it is the  

right of the Government servant who has put in the  

required number of years of service. This is subject  

no doubt to Rule 9 of the Pension rules under which  

there is power to withhold and recover part or whole  

of the pension. In regard to pension, it is beyond  

dispute that for belated payment of pension, interest  

can be ordered to be paid. What is the position as far  

as CVP is concerned?  

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22. Commutation of pension is nothing but payment of  

a portion of the pension calculated on a formula  

provided in the Rules, the result of which is that the  

employer will be absolved from payment of the pension  

to the extent it is commuted and the employee will  

receive the value of commuted pension in a lump sum  

at one go. No doubt after a certain number of years  

(15 years) the full pension gets restored. Therefore,  

CVP flows out of his right to receive pension. In  

fact, it is a part of his pension which is paid in  

lump sum to the employee. Having culled out the  

essential nature of CVP, we must consider whether  

there is a legal right to receive the CVP or is it  

discretionary and it may be withheld.  

23. It is undoubtedly true that it is entirely  

optional for the officer to commute a part of his  

pension. In that sense it can be said that without an  

application, he has no right to get commuted value.  

But that does it mean, when an application is made,  

as contemplated in the rules, no right is enshrined  

in the rules to get the committed value?

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24. It is important to advert to Rule 13 in its  

entirety. Rule 13 provides for the application to be  

made by the eligible persons falling under Rule 12,  

whereas Rule 19 deals with the application, to be made  

by persons, who are eligible under Rule 18. It will  

be remembered that Rule 12 deals with persons who are  

eligible for commutation of their pension without  

medical examination, whereas Rule 18 deals with  

persons who are in receipt of pension or other amounts  

and who become eligible only on undergoing medical  

examination.  

25. Coming to Rule 13 it reads as follows:  

“13. Application for commutation of pension -   

(1) An applicant, who is in receipt of any pension  

referred to in Rule 12 and desires to commute a  

percentage of that pension any time after the date  

following the date of his retirement from service  

but before the expiry of one year from the date of  

retirement, shall-  

(a) apply to the Head of Office in Form 1 after the  

date of his retirement;  

(b) ensure that the application in Form 1, duly  

completed , is delivered to the Head of Office as  

early as possible but not later one year of the  

date of his retirement :  

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(d) the Government shall have no liability for the  

payment of the commuted value of pension if the  

Government servant dies before the date of  

superannuation or forfeits claim to pension before  

such retirement.    

26. Rule 13(1) contemplates that the applicant for  

commutation may be a person who is in receipt of  

pension under Rule 12 and he is desirous of commuting  

a percentage of pension mentioned in Rule 12. The Rule  

further provides that in such a contingency he may at  

any time after the date following the date of his  

retirement from service but before the expiry of one  

year from retirement apply in Form 1 to the Head of  

Office. He must ensure that the application duly  

completed is delivered to the Head of Office at the  

earliest but not later than one year of date of  

retirement. Sub-rule (3) of Rule 13 on the other hand  

picks out one out of the several categories falling  

in Rule 12, namely, a person who retires on  

superannuation pension for a special treatment. Sub-

rule (3) of Rule 13 contemplates that the Government  

servant who is due to retire on superannuation and  

desirous that the payment of the CVP be sanctioned or  

authorized at the time of the pension payment order

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shall apply for commutation along with pension papers.  

He must apply prior to the date of retirement. The  

application is to be submitted in Form 1A. It is to  

reach the Head of Office not later than three months  

before the date of superannuation. Secondly, he must  

actually retire on superannuation pension only.   

27. At this juncture, it is necessary to notice Rule  

6. Rule 6 provides for the time when the commutation  

of pension is to become absolute. It reads as follows:  

“6. Commutation of pension to become absolute-    

(1) The commutation of pension shall become  

absolute in the case of an applicant referred to-   

(i) in sub-rule (1) of Rule 13, on the date on  

which the application in Form 1 is received by the  

Head of Office ;   

(i-a) in sub-rule (3) of Rule 13, on the date  

following the date of his retirement;   

(ii) in Chapter IV, on the date on which the medical  

authority signs the medical report in Part III of  

Form 4;   

Provided that -   

(a) in the case of an applicant who is drawing his  

pension from a treasury or Accounts Officer, the  

reduction in the amount of pension on account of  

commutation shall be operative from the date of  

receipt of the commuted value of pension or at the  

end of three months after issue of authority by the  

Accounts Officer for the payment of commuted value  

of pension, whichever is earlier, and   

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(b) in the case of an applicant who is drawing  

pension from a branch of a nationalized bank, the  

reduction in the amount of pension on account of  

commutation shall be operative from the date on  

which the commuted value of pension is credited by  

the bank to the applicant's account to which  

pension is being credited.   

(c) in the case of an applicant governed by sub-

rule (3) of Rule 13 in whose case the commuted  

value of pension becomes payable on the day  

following the date of his retirement, the reduction  

in the amount of pension on account of commutation  

shall be operative from its inception. Where,  

however, payment of commuted value of pension could  

not be made within the first month after the date  

of retirement, the difference of monthly pension  

for the period between the day following the date  

of retirement and the date preceding the date on  

which the commuted value of pension is deemed to  

have been paid in terms of Rule 49 of the Central  

Government Accounts (Receipts and Payments) Rules,  

1983, shall be authroized by the Accounts Officer]  

(2) In the case of an applicant referred to in Rule  

9 or Rule 10, the commuted value is paid in two or  

more stages, the reduction in the amount of pension  

shall be made from the respective dates of the  

payments as laid down in Clause (a) or Clause (b)  

of the proviso to sub-rule (1).   

(3) The date on which the payment of the commuted  

value of pension was made to the applicant or the  

commuted value was credited to the applicant's  

account shall be entered in both halves of the  

Pension Payment Order by the disbursing authority  

under intimation to the Accounts Officer who  

authorized the payment of commuted value of  

pension.”  

      (Emphasis Supplied)  

28. Rule 6 declares that the commutation in regard to  

a person covered by Rule 13(1) is to become absolute  

when Form 1 is received by the Head of Office. In the  

case of application under sub-rule (3) of Rule (13),

27  

it becomes absolute on the date following the date of  

his retirement. We are not to be detained by Chapter  

4 which deals with cases where medical examination is  

necessary. It is important to notice Clause (c) to the  

proviso to Rule 6. It clearly contemplates that in the  

case of person who applied under Rule 13(3), the CVP  

becomes payable on the date following the date of his  

retirement. This interpretation is inevitable having  

regard to the express language of the said Rule. In  

fact, it contemplates that the reduction in the amount  

of pension on account of commutation shall be  

operative from its inception. This means that  

consequent upon commutation, the full pension which  

he would otherwise receive would suffer a diminution  

and it is to take effect from the very first day  

following his retirement. In fact, Clause (c) proviso  

to Rule 6 does contemplate a situation where the CVP  

is not made within the first month from the date of  

retirement as it provides that the difference of  

monthly pension for the period between the day  

following the date of retirement and the date  

preceding the date on which the CVP is deemed to have

28  

been paid in terms of the Central Government Account  

(Receipts and Payments) Rules, 1983.   

29. We have noticed the Rules. We have found out that  

the Rules declare the categories of pension which  

would qualify for commutation. In other words, those  

persons who fall in Rule 12 of the Commutation Rules,  

without undergoing any medical examination can apply  

for commutation, as provided in Rule 13, which  

includes a person who receives superannuation pension.  

If such a person applies under Rule 13, well within  

the time, he is indeed conferred a legal right under  

the Statutory Rules to receive commutated pension. It  

does not lie in the mouth of Government which is  

excepted to act as a model employer to sit over the  

papers and delay the sanctioning or the payment of the  

CVP.   

30.  Therefore in a case where Rule 13(3) applies  

and the Government servant who is due to retire on  

superannuation applies for getting CVP along with  

pension papers, prior to the date of his retirement  

as provided and he actually retires on superannuation

29  

and his application is within time, the CVP must be  

paid immediately after the retirement. It may be true  

that in the case of a person covered by Rule 18 which  

deals with the cases, which we have mentioned, like  

invalid pension, pension under Rule 40 of the Pension  

Rules on being compulsorily retired by way of penalty  

or compassionate allowance on being dismissed or  

removed he must undergo a medical examination.  

Therefore, applications by a person covered under  

Rules 12 and 18 stand on a different footing. As far  

as application by a person governed by Rule 12,  

provided he makes an application as contemplated under  

Rule and the application gives details of the amount  

of percentage of commutation which he requires subject  

to the maximum of forty percent, he is entitled to  

demand the payment of CVP. We have already noticed  

that the Rule does not provide the payment of  

interest. The Office Memorandum dated 05.10.1999 does  

not prohibit payment of interest. The question would  

then arise on what basis the Government servant can  

seek interest.  

30  

31. In S.K. Dua Vs. State of Haryana and another,  

(2008) 3 SCC 44, this Court was dealing with a case  

where the appellant was paid provisional pension but  

other retirement benefit were not given including CVP,  

leave encashment, gratuity etc. There was a  

disciplinary proceeding and ultimately the appellant  

was found exonerated from all the charges. In the said  

circumstances, the benefits were given after four  

years. As regards the question, as to on what basis  

interest would be granted for delayed payment, we  

notice the following statement of law made by this  

Court:  

"14. In the circumstances, prima facie, we are of  

the view that the grievance voiced by the appellant  

appears to be well- founded that he would be  

entitled to interest on such benefits. If there are  

Statutory Rules occupying the field, the appellant  

could claim payment of interest relying on such  

Rules. If there are Administrative Instructions,  

Guidelines or Norms prescribed for the purpose, the  

appellant may claim benefit of interest on that  

basis. But even in absence Statutory Rules,  

Administrative Instructions or Guidelines, an  

employee can claim interest under Part III of the  

Constitution relying on Articles 14, 19 and 21 of  

the Constitution. The submission of the learned  

counsel for the appellant, that retiral benefits  

are not in the nature of bounty is, in our opinion,  

well-founded and needs no authority in support  

thereof. In that view of the matter, in our  

considered opinion, the High Court was not right  

in dismissing the petition in limine even without  

issuing notice to the respondents."  

(Emphasis Supplied)   

31  

32.  Coming to the facts of this case, we notice  

that the applicant was given provisional pension under  

Rule 69 of the Pension Rules. This immediately  

attracts Rule 4 of the Commutation Rules prohibiting  

commutation of the provisional pension. In fact, Rule  

69 of the Pension Rules contemplates sanctioning of  

provisional pension which is to be equal to the  

maximum pension which would have been admissible on  

the basis of the qualifying service upto the date of  

retirement of the Government servant or if he was  

under suspension on the date of retirement upto the  

date immediately before being placed under suspension.  

This brings us to Rule 9(4) of the Pension Rules,  

which is the basis for applying Rule 69. Rule 9(4)  

reads as follows:    

"9(4). In the case of Government servant who has  

retired on attaining the age of superannuation or  

otherwise and against whom any departmental or  

judicial proceedings are instituted or where  

departmental proceedings are continued under sub-

rule (2), a provisional pension as provided in Rule  

69 shall be sanctioned.  

33.  To fully appreciate the scheme of the Rules,  

we may also refer to Rule 9(6), which reads as follows:

32  

 "9(6) For the purpose of this rule -   

 (a) departmental proceedings shall be deemed to be  

instituted on the date on which the statement of  

charges is issued to the Government servant or  

pensioner, or if the Government servant has been  

placed under suspension from an earlier date, on  

such date; and   

 9(6)(b) judicial proceedings shall be deemed to be  

instituted-  

(i)  in the case of criminal proceedings, on the  

date on which the complaint or report of a Police  

Officer, of which the magistrate takes cognizance,  

is made, and  

(ii) in the case of civil proceedings, on the date  

the plaint is presented in the Court.”  

34.  The learned counsel for the appellants and the  

learned ASG are no doubt correct in contending that  

there is prohibition against commuting of pension but  

we must notice one aspect. What Rule 4 taboos is  

commutation of provisional pension which is granted  

under Rule 69 during the pendency of the proceedings.  

35. As we have noticed, there are three situations.  

The first category is where the pension is finalized  

immediately upon retirement and on the basis of the  

application, the commutation as permissible subject  

to the limit of forty percent, is ordered. The second  

category is where there is provisional pension granted  

under Rule 64. In such a case also commutation is

33  

permissible but of the provisional pension again  

subject to the limit under Rule 5. In the third  

category where provisional pension is sanctioned on  

account of pendency of judicial or departmental  

proceeding Rule 4 applies and it forbids the  

commutation of "the provisional pension" granted under  

Rule 69. Since, in this case the applicant was  

admittedly sanctioned provisional pension, while the  

provisional pension was in place, the applicant could  

not have sought commutation of the provisional pension  

granted under Rule 69 in view of the embargo against  

such commutation contained in Rule 4.   

36. On 17.10.2012, the following order was passed:  

"Subject: Retirement on superannuation on  

31.07.2008 (A/N) - Case of officers of STS of  

Executive Grade (Adhoc) - Regarding.  

In continuation to this office Order No.354-

1/2007-Pers-I dated 31.07.2008, the following  

officer of Adhoc STS of Executive Grade  

(Telecom/TTS/TFS) permanently absorbed in BSNL is  

permitted to retire from BSNL Services on attaining  

the age of superannuation w.e.f. the date indicated  

against his name.  

S. No. Staff No./  

HR No.  

Name/Desgn.  

of the  

officer  

Circle  DOB Date of  

Retirement  

1. 11719 Shri M.A.  

Patel, DE  

GUJ 01.08.48 31.07.2008  

(A/N)

34  

2. It has been certified that retirement order is  

being issued on the basis of Vigilance Clearance  

received from the CVO, BSNL.  

3. This has the approval of the Competent Authority.  

4. Copy of Charge Relinquishing report may be sent  

to this office in respect of all concerned."  

37.  On the basis of the same, apparently the applicant  

moved application on 01.11.2012 where he sought  

commutation of pension without medical examination.  

He showed his date of retirement as 31.07.2008. He  

sought the maximum admissible fraction as the proposed  

commutation. On the basis of same, the appellant was  

admittedly sanctioned CVP in December, 2012. If the  

application dated 01.11.2012 is taken as the basis of  

sanctioning of the CVP then there can be no ground at  

all to give any interest as CVP has been given within  

a reasonable time.   

38. The question, however, arises whether as has been  

found by both, the Tribunal and the High Court, this  

should be treated as a case where the applicant should  

be granted interest from the date of his retirement  

on account of the fact that on the date of his

35  

retirement there was neither the departmental  

proceeding nor a judicial proceeding.  

39. As far as the argument of the learned ASG that  

there was a departmental proceeding pending by virtue  

of the fact that an order of suspension was passed  

within the meaning of Rule 9(6), which we have already  

referred to, we are of the view that there is no merit  

in the said contention. While the applicant was placed  

under suspension, in the year 1997, it is equally  

indisputable that the said suspension was revoked in  

the year 1999 well before the date of superannuation  

of the applicant. It is not the law that to constitute  

a departmental proceeding that a Government servant  

has been placed under suspension at some point of time  

of his career. What is contemplated is that there must  

be a suspension when the applicant would have  

otherwise retired on superannuation. In this case the  

suspension stood revoked several years prior to his  

date of superannuation. Therefore, the suspension  

which was subsequently revoked cannot constitute  

suspension within the meaning of Rule 9(6)(b) of the

36  

Pension Rules and we have no hesitation in repelling  

the argument of learned ASG.   

40. A case under the Prevention of Corruption Act was  

lodged against the applicant. However, the ACB, in the  

course of investigation apparently was not able to  

muster enough material to prosecute the case. This  

resulted in the agency filing what is described as A-

summary. The A-summary came to be dealt with in the  

following manner by the Sessions Judge:  

 "Heard.  

Accused is traceable. There is no question of  

granting "A" Summary. it is nobody's case that  

accused is absconding. If at all, I.O. fact that  

evidence is not sufficient to prosecute the  

accused. He may apply under Section 169 of Cr.P.C.  

Hence rejected as it is not tenable at law."  

41.  This order was passed prior to the date of  

superannuation of the applicant. It is, therefore,  

that Criminal Revision Application No.52 of 2007 came  

to be filed before the High Court of Gujarat. By order  

dated 30.03.2012, the revision came to be allowed. It  

is noticed that the applicant opposed the revision.  

The A-summary was to be given in a case where the case  

is found to be true but the accused is absconding.

37  

Further, if the evidence against the accused is not  

sufficient to prosecute the accused, also A-summary  

could be given. The High Court took the view as  

follows:  

"The report made to the Court below by the  

investigating officer was, therefore, made under  

Section 173 of the Code and the Court was required  

to pass an order under Section 173(4) of the Code,  

which the Special Court has failed to do. The order  

passed by the learned Principal District and  

Sessions Judge, Banaskantha at Palanpur, dated  

03.05.2006 is, therefore, set aside. The prayer  

sought by the investigating officer for Summary "A"  

is allowed. Accordingly, present revision  

application is allowed. Rule is made absolute to  

the aforesaid extent. Muddamal currency note be  

confiscated to the State."   

42.  It is true that well before his retirement the  

agency which had no doubt conducted a trap against the  

applicant, had itself found that there was no material  

in view of subsequent developments. It could be said  

that this is a case where the applicant was exonerated  

by the agency well before the date of his retirement.  

No doubt this is not a case where the applicant has  

been acquitted honourably after trial. In fact, there  

was never a trial and the case was not sent up for  

trial in view of the submission of A-summary.  

38  

43. The other question also must be considered and  

that question is whether there was a judicial  

proceeding pending at the time of the retirement. A  

perusal of Rule 9 of the Pension Rules would show that  

Government had a right to withhold the pension or  

gratuity or both either in full or in part or withdraw  

a pension in full or in part either permanently or for  

the specified period. Government is also authorized  

to order recovery from pension or gratuity of the  

whole or in part of any pecuniary loss caused, if in  

any departmental or judicial proceeding, the pensioner  

is found guilty of grave misconduct or negligence  

during the period of his service which includes  

service after reemployment. Thereafter, sub-rule 9(6)  

deals with what constitutes when a departmental or a  

judicial proceeding will be deemed to commence.  

Judicial proceedings are divided into two categories.  

First category is a criminal proceeding. Second  

category is civil proceeding. As far as civil  

proceeding is concerned, it is deemed to be instituted  

when a plaint is presented. In other words, upon  

presentation of a plaint in a civil case judicial

39  

proceeding commences. In the case of a criminal  

proceeding by the deeming provision, it is deemed to  

have been instituted for the purpose of Rule 9 when  

the complaint or report of a police officer is made,  

but that is not sufficient. In a case where a complaint  

or a report of a police officer is made to a Court,  

it should culminate in cognizance being taken by the  

Magistrate, for the department to contend that the  

date of the complaint or report is to be the date of  

institution of the proceedings.   

44. From the order of the Sessions Judge which alone  

is produced, it is not clear that cognizance was  

taken. The criminal revision is a criminal proceeding.  

But the case was about the ‘A’ diary not being  

accepted. If the criminal revision was dismissed then  

the matter would have been proceeded with by the  

Sessions Judge. It is in the region of conjecture as  

to what would have followed suit. At the time of the  

retirement, the authorities could not have divined  

what would happen in the revision. No doubt, the  

purport of the revision petition was that the State

40  

wanted the ‘A’ Summary to be accepted. The acceptance  

of ‘A’ Summary which, in fact, was ordered by the High  

Court would have brought the litigation as against the  

applicant to an end. In so far as, we later propose  

to render our finding on the effect of no application  

being filed under Rule 13(3) and also keeping in mind  

that the applicant did not take steps to challenge the  

order dated 04.08.2008, we would think that much may  

not turn on our even accepting the view of the High  

Court, that there was no criminal proceeding as on the  

date of the retirement. It also must be noted that the  

present is not a case where the authorities acted  

without any material at all even.  We proceed on the  

basis that the criminal revision petition is not  

criminal proceeding under Rule (9) of the Pension  

Rules. A view was taken by the authorities regarding  

the same at the point of time which could not be said  

to have been taken without any basis at all. This, we  

say as the basis for interest on CVP can only be state  

action which is arbitrary. It is relevant to note that  

both sides proceeded on the basis that there was a  

proceeding within the meaning of Rule 9 and 69 of the

41  

Pension Rules. Further, even at the time when the  

order dated 04.08.2008 was passed it was open to the  

applicant to complain that there was no judicial  

proceeding, having regard to the nature of the  

proceeding pending in the High Court. The applicant  

instead chose not to question the sanctioning of  

provisional pension under Rule 69 and continued to  

receive the provisional pension. We will notice the  

consequences of the said order on his right to apply  

under Rule 13(1).   

45. We have noticed that a claim for interest in  

regard to CVP may lie when an application has been  

made in time under rule 13(3) and the payment is  

delayed. But in a case where application is made under  

Rule 13(1) which can be made within a period of one  

year from the date of retirement, the same would have  

to be processed and undoubtedly at the earliest it  

must be brought to its logical culmination as per the  

rules. But certainly, in a case falling under Rule  

13(1) there can be no question of paying interest from  

the date of retirement as the application itself is

42  

predicated after the date of retirement. No doubt the  

question as to payment of interest even in such cases  

would arise based on the date of application and the  

reasonableness of the time taken in processing it and  

the arbitrariness in a particular case in delaying the  

matter.  This we say for the reason that as held in  

by this Court in S.K. Dua (supra) the premise on which  

interest can be granted in the case of CVP also is the  

breach of Articles 14 and 21 and it is a matter to be  

decided on the facts of each case.  

46. It is significant to note that in this case the  

applicant has no case even that he made an application  

within the meaning of Rule 13(3) of the Commutation  

Rules as contemplated before three months of his  

retirement. Nothing stood in the way of the applicant  

applying under Rule 13(3) apparently. If on the other  

hand, there was any legal impediment which stood in  

the way, then also he cannot claim the CVP on  

retirement. Without having made such an application  

under the Commutation Rules, it is clear that there  

can be no question of even becoming entitled to

43  

commute pension w.e.f. first day following his  

retirement. The Tribunal and the High Court have  

completely overlooked the conspectus of the Rules. The  

Tribunal, in fact, has proceeded to consider the  

matter from the standpoint of interest payable on  

gratuity which also was claimed by the applicant and  

has not focused on the question relating to the point  

of time when CVP becomes payable, and that the  nature  

of CVP being one dependent entirely on an application  

from the Government servant and therefore we have no  

hesitation in coming to the conclusion that the  

direction to pay interest on the CVP, as ordered by  

the Tribunal, from the date of retirement from  

01.08.2008 is clearly erroneous. Now, as far as Rule  

13(1) is concerned, it enables a person who is in  

receipt of a pension under Rule 12, to apply after  

retirement but within one year thereof for CVP. It is  

true that the applicant was not in receipt of any  

pension under Rule 12 and therefore, he could not have  

applied under Rule 13(1). This is for the reason that  

as per order dated 04.08.2008, he was to be given  

provisional pension which as we have noted was under

44  

Rule 69 of the Pension Rules. The applicant, however,  

proceeded to accept the provisional pension. It is  

true that the effect of the order dated 04.08.2008 of  

the sanctioning of the provisional pension under Rule  

69, was that he was precluded from applying for  

commuting the provisional pension, in view of Rule 4  

and on the other hand, as he was not in receipt of  

superannuation pension, he could not have filed an  

application under Rule 13(1). Thus, a question may  

arise. Having issued order dated 04.08.2008, the  

effect of which we have clarified, should interest be  

ordered on the basis that the applicant was prevented  

from applying for CVP under Rule 13(1). We have  

already found that the applicant was not precluded  

from making any application under Rule 13(3). Had he  

done so, his claim for interest from the date of  

retirement could have been considered under Articles  

14 and 21. We also take note of the fact that the  

applicant did not challenge the order dated 04.08.2008  

and he continued to accept the provisional pension  

sanctioned thereunder. There could be no question of  

granting interest from the date of retirement in view

45  

of the absence of any application under Rule 13(3).  

We make it clear that we are not pronouncing about the  

liability to interest on DCRG amount which is not  

subject matter of controversy before us and the  

direction to pay interest on gratuity is not being  

interfered with.  

47. In the light of this, we are of the view, the  

appeal is to be allowed as above. We do so. The  

impugned order will stand set-aside and the order of  

the Tribunal directing payment of interest on CVP  

shall stand set-aside. No order as to costs.     

  ......................J.   

                           (ASHOK BHUSHAN)  

......................J.   

                               (K.M. JOSEPH)  

New Delhi,         

March 8, 2019.