Illegal To Withhold Employee's Pension, Gratuity Particularly When Already Enrolled In An Old Pension Scheme: Rajasthan High Court

The Rajasthan High Court recently directed a Municipal Corporation to release an employee's pension and gratuity payments holding that withholding such benefits was illegal, unjust and arbitrary.   

Justice Anoop Kumar Dhand added that the Corporation asking him to choose between the New Pension Scheme and Old Pension Scheme, given the petitioner's prior enrolment in the Old Pension Scheme was a compelling reason to hold its action illegal. 

"During, the pendency of this petition, the respondents issued notices to the petitioner on 28.12.2017 directing him to submit his option whether he is ready to receive the pension as per the New Pension Scheme or not. This Court failed to understand that under which provision, the respondents are seeking such option from the petitioner, when the petitioner was appointed way back in the year 1982 and was a part of the Old Pension Scheme. Hence, under these circumstances, the action of the respondents of withholding the pension and gratuity amount of the petitioner is highly unjustified, arbitrary and illegal." 

The petitioner, initially appointed as a driver on 14.11.1982, had his services terminated in 1985. Subsequently, he raised an industrial dispute that culminated in an award which overturned his termination and directed his reinstatement with service continuity.

The Corporation challenged the award but it was dismissed. Following this, the Corporation filed an appeal which was partially allowed and limited the back wages to the date of the petitioner's appointment. The petitioner was reinstated on 08.02.2001, effective from 13.04.1994, and granted a regular pay scale on 19.01.2006.

Unfortunately, this order was revoked on 05.07.2006, prompting the petitioner to file a civil petition in 2006. The court allowed this petition on 16.12.2008, and subsequently, the Corporation reinstated the 19.01.2006 order, signifying the petitioner's status as a regular employee.

After qualifying service, the petitioner retired on 31.12.2016, upon reaching the age of superannuation. However, despite the passage of a substantial amount of time, the Corporation failed to disburse the petitioner's retiral dues, including his pension and gratuity.

Aggrieved by this, the petitioner approached the court under Article 226 of the Constitution.

During the legal proceedings, the Corporation sent notices to the petitioner on 28.12.2017, asking for his preference regarding the receipt of pension under the New Pension Scheme.

This raised concerns as the petitioner had been appointed in 1982 and was governed by the Old Pension Scheme, making the Corporation's request confusing.

Consequently, the court found the Corporation's actions in withholding the petitioner's pension and gratuity unjust, arbitrary, and illegal.

The petitioner was thus found entitled to receive gratuity and pension in accordance with the provisions of the Old Pension Scheme, along with interest at a rate of 9% per annum as per Rule 89 of the Rajasthan Civil Services (Pension) Rules, 1996.

As such, the court allowed the writ petition, instructing the Corporation to promptly release the petitioner's pension and gratuity, including interest at a rate of 9% per annum from the due date until the actual payment within three months.

Case Title: Ramesh Kumar v. State of Rajasthan & Ors.

Appearance For Petitioner: Advocate Sunil Samdharia

Appearance For Respondents: Advocate B.K. Sharma

Click Here To Read/Download The Order