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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10866 OF 2016 (Arising out of S.L.P. (C) No. 33582 of 2016

(CC 18447/2016)

State of Uttar Pradesh and others    … Appellants

Versus

Dhirendra Pal Singh   …Respondent

O R D E R

Leave granted.

2. This appeal is directed against order dated 31.05.2016,

passed  by  the  High  Court  of  Judicature  at  Allahabad,  in

Special  Appeal  Defective  No.  408  of  2016,  whereby  the

intra-court  appeal  was  dismissed  affirming  the  order  dated

10.12.2015 passed by the learned single Judge in Writ-A No.

49921 of 2015.

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3. Brief facts of the case are that respondent Dhirendra Pal

Singh was Assistant Store Superintendent with the Irrigation

Department of the State of Uttar Pradesh.  He stood 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,  but  rest  of  the  30% of

gratuity and computation of pension were held up.  The stand

of the appellants is 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.   After

making  representations  when  the  remaining  amount  of

gratuity  and  pension  was  not  cleared,  the  respondent  filed

Civil Suit No. 338 of 2012.  However, the same was dismissed

as withdrawn as the appellants/State authorities, vide order

dated 23.07.2015 finally, on the basis of alleged discrepancies

withheld  the  remaining  part  of  gratuity  and pension  of  the

respondent  and,  vide  order  dated  06.08.2015,  directed

recovery of Rs.7,26,589/-, from the retiral dues payable to the

respondent, which was challenged in the writ petition.

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4. There was no departmental enquiry initiated against the

respondent 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 the respondent after serving a notice on him.  Learned

single  Judge  of  the  High  Court  found  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.   Learned  single  Judge  further  directed  that  the

remaining amount of gratuity and pension of the respondent

shall be released with interest at the rate of 10% p.a. on the

sum withheld by the State authorities.  The Division Bench, in

special  appeal  filed  by  the  State,  found  no  illegality  in  the

order passed by the learned single Judge.

5. We have heard learned counsel for the appellants and the

respondent.

6. Article  351-A of  UP Civil  Service  Regulations  reads  as

under: -

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“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

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(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.”

7. 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.  Learned single Judge of the

High Court has observed that the document which is the basis

of enquiry and relied upon by the State authorities, copy of

which was Annexure C.A.1 to counter affidavit filed in the writ

petition,  itself  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 the circumstances, keeping in view Article 351-A of UP Civil

Service Regulations,  we agree with the High Court that  the

orders  dated  23.07.2015  and  06.08.2015  were  liable  to  be

quashed and, to that extent, we decline to interfere with the

impugned order.

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8. Learned counsel for the appellants argued that the High

Court has erred in awarding interest at the rate of 10% per

annum on the sum due to the respondent.  In this connection,

it is submitted that the suit was filed by the respondent only

in 2012 and that too was withdrawn.

9. We have considered the submissions of learned counsel

for the appellants and reply given by learned counsel for the

respondent.   

10. In  State of  Kerala and others  v.  M. Padmanabhan

Nair1, this Court has held that pension and gratuity are no

longer any bounty to be distributed by the Government to its

employees on the retirement but are valuable rights in their

hands, and any culpable delay in disbursement thereof must

be visited with the penalty of payment of interest.  In said case

the Court approved 6% per annum interest on the amount of

pension decreed by the trial court and affirmed by the High

Court.  As to the rate of interest on amount of gratuity Section

7(3-A) of Payment of Gratuity Act, 1972, it is provided that if

the amount of  gratuity payable is not paid by the employer 1 (1985) 1 SCC 429

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within  the  period  specified  in  sub-section  (3),  the  employer

shall pay, from the date on which gratuity becomes payable to

the date on which it is paid, simple interest at such rate, not

exceeding the rate notified by the Central  Government from

time  to  time  for  repayment  of  long  term  deposits,  as  that

Government may by notification specify.  It further provides

that no such interest shall be payable if the delay in payment

is  due  to  the  fault  of  the  employee,  and the  employer  has

obtained permission in writing from the controlling authority

for the delayed payment on this ground.  In the present case,

there is no plea before us that the appellants had sought any

permission in writing from the controlling authority.  As to the

delay on the part of employee, it has come on the record that

he made representations, whereafter he filed a suit in respect

of withheld amount of gratuity and pension.  In Y.K. Singla v.

Punjab  National  Bank  and  others2,  this  Court,  after

discussing  the  issue  relating  to  interest  payable  on  the

amount of gratuity not paid within time, directed that interest

2 (2013) 3 SCC 472

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at the rate of 8% per annum shall be paid on the amount of

gratuity.

11. In the light of law laid down by this Court, as above, and

further considering the facts and circumstances of the case,

we modify the impugned order passed by the High Court in

respect  of  interest  directed  to  be  paid  on  the  amount  of

withheld gratuity and pension.  We direct that the appellants

shall 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.

12. With the modification, as above, in the impugned order

passed by the High Court, this appeal stands disposed of.  No

order as to costs.

……………………………....J. [J. Chelameswar]

………………………..……..J.  [Prafulla C. Pant]

New Delhi; November 15, 2016.