State Can Withhold DCRG Benefits Of Convicted Employee Despite Pendency Of Criminal Appeal: Supreme Court Sets Aside Kerala HC Full Bench Judgment

The Supreme Court has held that pendency of the appeal by a convicted employee cannot disentitle the State from withholding the his Death-cum Retirement Gratuity (DCRG).

The bench comprising Justices Sanjay Kishan Kaul and MM Sundresh set aside the judgment of a Full bench of Kerala High Court which held that the recovery under Rule 3 of the Kerala Service Rules (KSR) could only be against pension and not DCRG. Rule 3A insofar as it permitted DCRG to be withheld was struck down by the High Court.

Rule 3A reads as follows : Where any departmental or judicial proceedings is instituted under Rule 3 or where a departmental proceeding is continued under clause (a) of the proviso thereto, against an employee who has retired on attaining the age of compulsory retirement or otherwise he shall be paid during the period commencing from the date of his retirement to the date on which, upon conclusion of such proceeding final orders are passed, a provisional pension not exceeding the maximum pension which would have been admissible on the basis of his qualifying service up to the date of retirement, or if he was under suspension on the date of retirement up to the date immediately preceding the date on which he was placed under suspension, but no gratuity or death-cum-retirement gratuity shall be paid to him until the conclusion of such proceeding and the issue of final orders thereon. (the underlined part was struck down by the High Court)

Before the Apex Court, the State contended that the High Court proceeded on a wrong premise that Rule 3A was only for effective implementation of Rule 3. It contended that that Rule 3A is necessary for temporary forfeiture of DCRG during pendency of departmental proceedings.

The issue thus considered by the Court was this: On the conviction in a criminal case for violation of integrity norms in performance of official duties and an appeal pending before the High Court, is the employee still entitled to the release of his Death-cum Retirement Gratuity ?

The court first noted the objectives of holding back pension or the DCRG.

"One can be to recover the amounts found due from the delinquent employee of any nature whatsoever after appropriate notice and proceedings. The second eventuality is if an employee is dismissed from service. It can hardly be doubted that in the second eventuality of the dismissal from service the employee would lose all retirement benefits.", the court noted.

Disagreeing with the High Court view, the bench said that  Rule 3A cannot be read in isolation. The court said:

"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."

While allowing the appeal, the bench said :

"We also believe that it is a very restrictive view to disburse DCRG on account of the proceedings against a pensioner coming to an end, even where a conviction has arisen. This is especially so where the convicted person has availed of the remedy of appeal. An appeal is a continuation of the proceedings in trial and would be, thus, a continuation of judicial proceedings. For example, if no appeal had been filed, can it be said that despite conviction in the criminal case, the State is without authority of forfeiting the DCRG or pension for that matter? If it is not so, as we believe, then 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."

Headnotes

Kerala Service Rules ; Rule 3 and 3A- Death Cum Retirement Gratuity - The pendency of the appeal cannot disentitle the State from withholding the DCRG - Rule 3A cannot be read in isolation 25 nor the latter part of it struck down as done by the High Court. 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- Set aside Full Bench judgment of Kerala High Court in K. Chandran vs Local Self Government Department 2020 (5) KLT 669 (FB) (Para 37,39)

Case details

Local Self Government Department vs K Chandran | 2022 LiveLaw (SC) 285 | CA 7437-7438 OF 2021 | 15 March 2022

Coram: Justices Sanjay Kishan Kaul and MM Sundresh