The Kerala High Court recently observed that as per the provisions of the Railway Services (Pension) Rules, 1993, a railway servant compulsorily retired from the service as a penalty has no vested right to stake a claim for the entire pension or gratuity, as the quantum of pension and gratuity to be granted is at the absolute discretion of the employer.
A division bench consisting of Justice A K Jayasankaran Nambiar and Mohammed Nias C P, further observed that past service can be forfeited or pension can be withheld to the extent which the Regulations permit, and this exercise of discretion cannot be termed as a secondary punishment.
A reading of the above rules (Rule 40, 41 and 64 of the 1993 Rules) would clearly indicate that, a railway servant compulsorily retired from service as a penalty may be granted pension or gratuity or both at the rate not less that 2/3rd and not more than full compensation pension or gratuity, which clearly shows that the quantum is completely at the discretion of the competent authority to grant either 2/3rd or full pension and within the band of 2/3rd to full which is an absolute discretion of the employer and the applicant does not have any vested right to stake claim for the entire pension or gratuity in cases where he is imposed a penalty of compulsory retirement. Thus, past service can be forfeited or pension withheld to the extent the Regulations so permit. This exercise of discretion under the rules cannot be termed as a second punishment...
The petition was moved by the General Manager of Southern Railway and its officials challenging the setting aside of the order sanctioning 2/3rd pension and 2/3rd gratuity and directing the Southern Railway to pay the applicants' full pension from the date of compulsory retirement.
The respondent in the instant case was working as a Senior Clerk in Southern Railway and was given a penalty of compulsory retirement from service with effect from October 2004, pursuant to a disciplinary proceeding that alleged that the applicant had obtained employment in the railways under the Sports Quota by producing a fraudulent sports certificate.
The orders restricting the pension and gratuity were challenged before the CAT by the respondent and relying on a Kerala High Court decision, in which the Court had held that the grant of compulsory retirement pension ought to have been simultaneously made along with the order of compulsory retirement, and since that not having been done, it must be treated that the applicant is entitled to full pension as the disciplinary authority did not choose to pass any orders reducing the pension.
Deputy Solicitor General S Manu, however, submitted before the Court that the Tribunal has based its order on a 2006 Kerala High Court decision which was held to be per in curium by a subsequent decision. Deputy Solicitor General further submitted that the Kerala High Court order in this regard had clearly found that the petitioner ought to have been granted the punishment of dismissal and that leniency was shown by the petitioners herein while granting a lesser punishment of compulsory retirement. DSG also argued that nothing in Rule 64 contemplates the passing of orders under the said Rule simultaneously with the order of the disciplinary authority.
Counsel appearing for the respondent, Advocate Martin G.Thottam, contended that the punishment of compulsory retirement given is distinct from dismissal or removal, and therefore it cannot lead to forfeiture of past service. Reliance is placed on Rule 41 and 42 of the Rules, 1993. The Counsel further contended that there is no provision for forfeiting past service in cases of compulsory retirement, and in the absence of the disciplinary authority reducing the pension while imposing punishment, a second exercise of power under Rule 64 tantamounts to a second punishment and, therefore the said action of reducing the pension is illegal as Rule 64 can only be interpreted as an enabling provision which confers the power on the disciplinary authority to give more rigour to the punishment by reducing the pension and gratuity up to 2/3rd to which one is normally entitled as per the qualifying service.
On the facts of the case, the Counsel averred that the disciplinary authority had chosen not to reduce the pension while passing order in 2004; and the impugned order reducing the pension was passed only after 11 years of imposition of compulsory retirement and much after the cessation of the jural relationship is impermissible and virtually inflicting a second enhanced punishment. He also contended that he is entitled to a full pension and that the order of the Tribunal need not be interfered with.
The Court, after hearing the contentions raised by both the counsels and going by wordings of Rule 40, 41 and 64 of Railway Services (Pension) Rules, 1993, observed that a railway servant compulsorily retired from service as a penalty may be granted pension or gratuity or both at the rate not less than 2/3rd and not more than full compensation pension or gratuity, which clearly shows that the quantum is completely at the discretion of the competent authority to grant either 2/3rd or full pension and within the band of 2/3rd to full which is an absolute discretion of the employer and the applicant does not have any vested right to stake a claim for the entire pension or gratuity in cases where he is imposed a penalty of compulsory retirement.
Thus, the Court observed that past service can be forfeited or pension withheld to the extent the Regulations so permit and this exercise of discretion under the rules cannot be termed as a second punishment.
On the other issue raised in the petition, that the imposing of punishment and the exercise of discretion determining the quantum payable as pension or gratuity need to be passed at the same time, the Court rejected the contention of the respondents that not imposing a reduction in pension or gratuity at the time of inflicting the punishment should mean that he is entitled to a full pension. It held that the imposing of punishment and the exercise of discretion determining the quantum payable as pension or gratuity need not be simultaneous.
Thereby, the Court allowed the petition and set aside the impugned judgment passed by the Tribunal.
Case Title: The General Manager South Railway v. R. Haridrakumar
Citation: 2022 LiveLaw(Ker) 512
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