Holding

In the absence of a specific provision, the Corporation had no legal authority to continue the disciplinary enquiry after superannuation or to reduce the appellant’s retiral benefits; the enquiry lapsed and the appellant was entitled to full benefits.

Summary

The appellant, a long‑serving employee of the Orissa State Financial Corporation, was suspended in 1992 and a disciplinary enquiry was started under Regulation 44 of the Corporation’s Staff Regulations. The enquiry was not completed before his superannuation on 30 June 1995, yet the Corporation continued the proceedings after retirement in order to reduce his retiral benefits. The appellant challenged this by filing a writ petition, which the Orissa High Court dismissed. On appeal, the Supreme Court held that the Corporation’s regulations contained no provision permitting continuation of a disciplinary enquiry after superannuation nor allowing deduction from retiral benefits for misconduct discovered thereafter. Consequently, the enquiry was deemed to have lapsed and the appellant was entitled to full retiral benefits and arrears of salary (after deducting the suspension allowance). The Court set aside the High Court’s order and allowed the appeal.

Issues considered

Can a disciplinary enquiry be continued after an employee’s superannuation/retirement?
Does the employer have authority to reduce retiral benefits on the basis of misconduct established after retirement in the absence of a specific rule?
Do the Provident Fund Regulations permit deduction from the employee’s fund for misconduct?
Is the precedent set in T.S. Mankad v. State of Gujarat applicable to the present case?

Subjects

disciplinary enquirysuperannuationretirement benefitsreduction of pensionstatutory authorityemployee misconductprovident fundregulationcontinuation of proceedings after retirement

Judgment

A BHAGIRA THI JENA
v.
BOARD OF DIRECTORS, O.S.F.C. AND ORS.
--
MARCH 31, 1999

B [M. JAGANNADHA RAO AND S.S. MOHAMMED QUADRI, JJ.]

Orissa Financial State Corporation Staff Regulations, 1975: Regulation
-
44 . •

C Service Law-Disciplinary .proceedings continuance after
superannuation-permissibility of-Power of employer to make reduction in
retiral benefits.

Orissa State Financial Corporation-Employee-Alleged misconduct-
Suspension-Departmental enquiry-Superannuation before conclusion of
D enquiry-Continuation of proceedings subsequent to superannuation and
reduction of retiral benefit-Writ Challenging-Dismissal of-Appeal-Held
in the absence of a provision in the. regulations the Corporation hdd no legal
authority to make any reduction in the retiral benefits of the appellant or
to conduct disciplinary enquiry dfter retirement of the appellant-In the
E absence of such authority the enq~iry had lapsed and the appellant was
entitled to full retiral benefits on retirement-Direction to the Corporation
to pay arrears of salary and allowances payable to him during the period
of suspension upto the date of superannuation after deducting the suspension
allowance paid to him for the said period

F T.S. Mankad v. State of Gujarat reported in, (1989) Suppl. 2 sec 110,,
held inapplicable.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2101 of
,}·
1999.

G From the Judgment and Order dated 13.02.98 of the Orissa High Court
in O.J.t. No. 531of1995.
I
Ms. Indira Jaisingh, Bharat Sangal, Anand Pandey and Ms. Asha Pathak ---=
for the Appellant.

H S.S. Javali and Ms. Kirti Misra for the Respondents.
354
BHAGIRATHI JENA. v. BOARD OF DIRECTORS O.S.F.C 355
The following Order of the Court was delivered : A
Special leave granted.

This is an appeal preferred by the appellant who was an employee of
the respondent Corporation. The appellant joined as a Junior Clerk in 1962
and by the year 1986 he was working as Joint General Manager. He was B
issued a charge sheet on 22.7.92 in respect of various items of alleged
misconduct. The disciplinary proceedings were initiated on the same day
under Regulation 44 of the Orissa Financial State Corporation Staff Regulations,
1975 and the appellant was suspended with immediate effect. For various
reasons, which it is not necessary to mention here, the disciplinary enquiry C
was not concluded before the date of the appellant's superannuation, which
took place on 30th June, 1995.

The appellant was relieved on 1st July, 1975 by the Corj:>oration "without
prejudice to the claims of the Corporation." Thereafter the question arose in
regard to the continuance of the disciplinary enquiry for the purpose of D
reduction ofretiral benefits payable to the appellant. The appellant filed a writ
petition in the High Court of Orissa contending that once the appellant had
retired on 30.6.95, the disciplinary proceedings could not be continued even
for the purpose of making reduction of the retiral benefits inasmuch as there
were no statutory regulations made by the Corporation for such reduction of
retiral benefits. The High Court of Orissa dismissed the writ petition by E
judgment dated 30.6.98. Thereafter the appellant has filed this appeal by
special leave.

Learned senior counsel for the respondent Corporation invited our
attention to the Regulation-17 of the Orissa State Financial Corporation
Employees Provident Fund Regulations, 1959. It reads thus ; F
"The sum standing to the credit of a subscriber shall become
payable on the termination of his/her service or on his/her death,
provided that there may ifthe Board so directs the Administrators, be
deducted there from and paid to the Corporation-
G
(a) any amount due under a liability incurred by the subscriber to
the Corporation up to the total amount contributed by the Corporation
to his/her account, including the interest credited in respect thereof:"

Learned senior counsel for the respondents also relied upon Clause
(3) (c) of the Regulation-44 of the Orissa State Financial Corporation H
356 SUPREME COURT REPORTS [l 999] 2 S.C.R.

A Staff Regulations, 197 5. It reads thus ;

"When the employee who has been dismissed, removed or suspended
is reinstated, the Board shall consider and make a specific order :-
--
(i) Regarding the pay and allowances to be paid to the employees
B for the period of his absence from duty, and

(ii) Whether ?r not the said period shall be treated as a period on
duty."
--
It will be noticed from the abovesaid regulations 'that no specific provision
was made for deducting any amount from the provident fund consequent to
C any misconduct determined in the departmental enquiry nor was any provision
made for continuance of departmental enquiry after superannuation.

In view of the absence of such provision in the abovesaid regulations,
it must be held that the Corporation had no legal authority to make any
D reduction in the retiral benefits of the appellant. There is also no provision
for conducting a disciplinary enquiry after retirement of the appellant and nor
any provision stating that in case misconduct is established, a deduction
could be made from rntiral benefits. Once the appellant had retired from
service on 30.6.95, there was no authority vested in the Corporation or
continuing the departmental enquiry even for the purpose of imposing any
E reduction in the retiral benefits payable to the appellant. In the absence of
such authority, it must be held that the enquiry had lapsed and the appellant
was entitled to full retiral benefits on retirement.

Learned senior counsel for the respondent placed reliance on the
judgment of this Court in T.S. Mankadv. State of Gujarat reported in, [1989]
F Suppl. 2 SCC 110. It is true that that was a case of imposing a reduction in
the pension and gratuity on account of unsatisfactory service of the employee
as determined in an enquiry which was extended beyond the date of
superannuation. But the above decision cannot help the respondent inasmuch
as in that case there was a specific rule namely Rule 241-A of the Junagadh
G State Pension and Parwashi Allowance Rules, 1932 which enabled the
imposition of a reduction in the pension or gratuity of a person after retirement.
Further, there were rules in that case which enabled the continuance of
departmental enquiry even after superannuation for the purpose of finding
out whether any misconduct was established which could be taken into
account for the purpose of Rule 241-A. In the absence of a similar provision
H with Regulations of the respondent Corporation, the above judgment of
BHAGIR;,\THI JENA. v. BOARD OF DIRECTORS O.S.F.C 357
Mankad's case cannot help the respondent. A
./

The question has also been raised in the appeal in regard to the
payment of arrears of salary and other allowances payable to the appellant
during the period he was kept under suspension and upto the date of
superannuation. Inasmuch as the enquiry had lapsed, it is, in our opinion,
obvious that the appellant would have to get the balance of the emoluments B
payable to him after deducting the suspension allowance that was paid to him
during the abovesaid period.

The appeal is therefore allowed directing the respondent to pay arrears
of salary and allowances payable to him during the period of suspension upto C
the date of superannuation after deducting the suspension allowance paid to
him for the said period and also to pay the appellant, all the retiral benefits
otherwise payable to him in accordance with the rules and regulations
applicable, as if there had been no disciplinary enquiry or order passed
therein.
D
In the circumstances the judgment and order of the High Court is set
aside. The writ petition of the appellant is allowed in tenns of the directions
given above. No order as to costs.

T.N.A. Appeal allowed.