CH. CUM MAN. DIRECTOR MAHANADI COALFIELD LTD.versusRABINDRANATH CHOUBEY

                    [2013] 11 S.C.R. 513


CH. CUM MAN. DIRECTOR MAHANADI COALFIELD LTD.                    A
                              V.
               RABINDRANATH CHOUBEY
             (Civil Appeal No. 9693 OF 2013)
                   OCTOBER 29 , 2013
                                                                 B
    · [K.S. RADHAKRISHNAN AND A.K. SIKRI, JJ.)

     Payment of Gratuity Act, 1972 - s.4(6)(a) and (b) -
Employer's right to withhold gratuity pending departmental
enquiry - Held: A three Judge Bench judgment of Supreme          C
Court passed in *Ram Lal Bhaskar's case is contrary to the
dicta laid down in **Jaswant Singh's case passed by a Division
Bench of Supreme Court which laid down that employer does
not have right to withhold gratuity pending departmental
enquiry - Hence matter refe"ed to larger Bench.                  D

    The question for consideration, in the present appeal
was whether gratuity can be withheld in the wake of r. 34
of Conduct, Disciple and Appeal Rules, 1978 of the
appellant-employer, when examined in juxtaposition with
                                                                 E
the provisions of Payment of Gratuity Act, 1972.

    Referring the appeal to larger Bench, the Court

     HELD: In **Jaswant Singh Gill's case, a Two Judge
Bench of Supreme Court directly answered the question            F
that gratuity has to .be necessarily released to the
concerned employee on his retirement even if
departmental proceeding are pending against him. The
said judgment proceeds on the basis that after the
retirement of an employee, penalty of dismissal cannot           G
be imposed upon the retired employee. However, in
*Ram Lal Bhaskar's case, penalty of dismissal, even after
the retirement, was upheld by Three Judge Bench of
Supreme Court. This goes contrary to the dicta laid down
                             513                                 H
    514     SUPREME COURT REPORTS                [2013] 11 S.C.R.


A in ** Jaswanf Singh Gill's case which took the view that no
  major penalty is permissible after retirement. If the view
  laid down in ** Jaswant Singh Gill's case is not correct
  and the imposition of penalty of dismissal is still
  permissible, employer will get the right to forfeit the
B gratuity of such an employee in the eventualities provided
  u/ss. 4(1) & 4 (6) of the Payment of Gratuity Act. [Paras
  22 and 23] [526-B-C, D-F]

         2. For invoking s. 4(6) (a) and (b) of Payment of
C   Gratuity Act, necessary pre-condition is the termination
    of service on the basis of departmental enquiry or
    conviction in a criminal case. This provision would not
    get triggered if there is no termination of services. It is the
    case of the appellant that in the charge-sheet served
    upon the respondent, there are very serious allegations
D   of misconduct alleging dishonestly causing coal stock
    shortage amounting to Rs. 31.65 crores, and thereby
    causing substantial loss to the employer. If such a charge
    is proved and punishment of dismissal is given
    thereupon, the provisions of s. 4(6) of the Payment of
E   Gratuity would naturally get attracted and it would be
    within the discretion of the appellant to forfeit the gratuity
    payable to the respondent. As a corollary, one can say
    that the employer has right to withhold the gratuity
    pending departmental inquiry. However, this course of
F   action is available only if disciplinary authority has
    necessary powers to impose the penalty of dismissal
    upon the respondent even after his retirement. Therefore,
    the issue needs to be considered authoritatively by a
    larger Bench. Hence, the appeal needs to be decided by
G   a Bench of three Judges. [Paras 24 and 25] [528-8-F]

         **Jaswanf Singh Gill vs. Bharat Coking Coal Ltd. and Ors.
    (2007) 1 SCC 663: 2006 (8) Suppl. SCR 1064; *State Bank
    of India vs. Ram la/ Bhaskar and Anr. 2011(10) SCC 249:

H
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 515
       LTD. v. RABINDRANATH CHOUBEY
2011 (12) SCR 1036; UCO Bank and Anr. vs. Rajinder Lal              A
Capoor 2007 (6) SCC 694: 2007 (7) SCR 543 - referred to.
                      Case Law Reference:
    2006 (8) Suppl. SCR 1064          referred to     Para 13
                                                                    8
    2011 (12) SCR 1036                referred to     Para 14
    2007 (7) SCR 543                  referred to     Para 20

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
9693 of 2013.                                                       c
    From the Judgment & Order dated 17.07.2013 of the High
Court of Orissa, Cuttack in W.A. No. 115 of 2012.

    Mahabir Singh, Gp. Capt. Karan Singh Bhati, Monika
Sharma, Ayushi Mittal for the Appellant.                            D

    Anukul Chand Pradhan, Kamal Said, Saurabh Mishra for
the Respondent.

    The Judgment of the Court was delivered by
                                                                    E
    A.K. SIKRI, J. 1. Leave granted.

     2. The respondent was working as Chief General Manager
(Production) since 17.2.2006 at Rajmahal area under Mahanadi
Coalfields Ltd., the appellant herein. A memo containing articles   F
of charge was issued to him on 1.10.2007 alleging that there
was shortage of stock of coal in Rajmahal Group of mines
which was under his management and enquiry was proposed
to be conducted under Rule 29 of the Conduct, Discipline &
Appeal Rules.
                                                                    G
     3. During the pendency of the departmental proceeding,
the Respondent was allowed to retire on 31.7.2010 on attaining
the age of superannuation. The Respondent submitted an
application on 21.9.2010 to the Director (Personnel) for
payment of gratuity. On the same date, he also submitted an         H
    516     SUPREME COURT REPORTS                 [2013] 11 S.C.R.


A   application before the Controlling Authority under Payment of
    Gratuity Act cum-Regional Labour Commissioner for payment
    of gratuity.

         4. Notice was issued to the Appellant to appear. The
    appellant appeared and stated that the payment of gratuity was
8
    withheld due to reason that disciplinary case is pending against
    him. The controlling authority held that the claim of the
    Respondent was pre-mature.

        5. The respondent challenged the order by filing the writ
C petition. The single Judge dismissed the writ petition holding
  that in view of the existence of an appellate forum against the
  order passed by the Authority, the Respondent may file an
  appeal before the Appellate Authority within 21 days from the
  date of passing of the impugned order.
D
        6. The Respondent then filed Intra Court Writ Appeal. The
  Division Bench of the High Court has held that writ petition was
  maintainable. On merits, it ruled that the disciplinary
  proceedings against the respondent were initiated prior to
E attaining the age of superannuation. The respondent retired
  from service on superannuation and hence the question of
  imposing a major penalty of removal or dismissal from service
  would not arise as per the decision of the Supreme Court in
  Jaswant Singh Gill vs. Bharat Coking Coal Ltd. & Ors. (2007)
  1 SCC 663. The High Court has further held that the power to
F withhold payment of gratuity as contained in Rule 34(3) of the
  Rules, 1978 shall be subject to the provisions of the Payment
  of Gratuity Act, 1972. Therefore, the statutory right accrued to
  the Respondent to get gratuity cannot be impaired by reason
  of the Rules framed by the Coal India Ltd. which do, not have
G the force of a statute. On that basis, direction is given to the
  appellant to release the amount of gratuity payable to the
  respondent.

       7. In the aforesaid circumstances, the question which falls
H for consideration is as to whether it is permissible in law for
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 517
 LTD. v. RABINDRANATH CHOUBEY [A.K. SIKRI, J.]
the appellant to withhold the payment of gratuity to the             A
respondent, even after his superannuation from service,
because of the pendency of disciplinary proceedings against
him:                        ·        '

      8. Before we proceed to answer this question in the light      B
of arguments advanced by Counsel on either side, we would
like to point out that the question of maintainability of the writ
petition against the order of the Controlling Authority under the
Payment Gratuity Act was not raised before us by the learned
Counsel for the. appellant. Thus, the learned Counsel did not        C
challenge the approach of the writ appeal Court in entertaining
the writ appeal on merits by giving the reason that it was so
doing to avoid confusion and ambiguity, more so when there
were no disputed facts involved and the issue involved was
pure question of law. We are, therefore, not called upon to
decide as to whether the approach of the Division Bench in           D
entertaining the writ appeal on merits was erroneous or not.

     9. Reverting to the issue framed above, before we
examine the same, we would also like to narrate some more
facts for clear understanding of the issue involved. The             E
appellant- Ch.-cum-Man. Director Mahanadi Coalfield Limited
(CIL) has framed the Conduct Discipline and Appeal Rules,
1978 (hereinafter to be referred as 'CDA Rules'). These are
applicable to the employees of the appellant company as well.
                                                                     F
     10. Rule 27 of these CDA Rules mentions the authorities
who are empowered to impose various punishments which are
specified in column Ill of the Schedule attached to these Rules.
Rule 29 enlists the procedure for imposing major penalties for
misconduct and misbehaviour. The CDA Rules are not statutory
in nature. However, they govern the employees of the appellant.      G

    11. When the respondent was served with charge sheet
dated 1.10.2007, he was posted as Chief General Manager,
Rajmahal, Group of Mines, ECL. Shortly, after the service of
charge sheet, respondent was made to join as Chief General           H
    518     SUPREME COURT REPORTS                (2013] 11 S.C.R.


A Manager, Mining in M-3 Grade on transfer and was posted as
  Chief General Manager, Production, MCL. On 9.2.2008, he
  was suspended from service under Rule 24.1. of the CDA
  Rules, pending departmental inquiry against him. This
  suspension, however, was revoked from 27.2.2009 without
B prejudice to the departmental inquiry. On completion of 60 years
  of age, the respondent was superannuated with effect from
  31.7.2010 for which notice for retirement on superannuation
  was given by the appellantto the respondent vide letter dated
  8.2.2010.
c      12. It would also be pertinent to mention that the inquiry
  against the respondent was concluded on 25.3.2009. However,
  thereafter nothing has been heard by the respondent. It is not
  known as to whether the Inquiry Officer has submitted the report
  on the said inquiry and if a report is suomitted whether he has
D exonerated the respondent or held him guilty of the charges.
  Be as it may even if there is any report, no further action has
  been taken on the said report by the disciplinary authority till
  date and more than 4 Y:z years have lapsed in the meantime.

E      13. On the aforesaid facts, the case of the respondent
  before the courts below was that his statutory rights to receive
  the gratuity could not be interdicted and as per the provisions
  of Payment of Gratuity Act he was entitled to have the payment
  of gratuity on his superannuation. Since, the appellant had
F referred to the Rules framed under which gratuity could be
  withheld pending inquiry, this position was sought to be
  countered by the respondent with a submission that such Rules
  which were non-statutory in nature could not thwart the right of
  the respondent to claim the gratuity which was statutorily
G recognised in his favour under the Payment of Gratuity Act,
  1972. As noted above, while giving brief narration of facts, the
  High Court has accepted the aforesaid plea of the respondent
  and while doing so it has referred to the judgment of this Court
  in the case of Jaswant Singh Gill v. Bharat Coking Coal Ltd.
  and Ors. (supra). Some of the judgments cited by the appellant
H
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 519
 LTD. v. RABINDRANATH CHOU BEY [A.K. SIKRI, J.]
before the High Court, which would be referred to at a later           A
stage, have been distinguished by the High Court holding that
they are not applicable.

     14. The arguments of the learned Counsel for the
respondent were same which were addressed before the High              B
Court. Likewise, learned Counsel for the appellant also made
the very same submissions. He argued that in view of Rule 34
of the CDA Rules, the management had a right to withhold
payment of gratuity. He also submitted that this rule was not
contrary to any provisions of the Payment of Gratuity Act. The
submission in this behalf was that in Payment of Gratuity Act          C
there is no provision that gratuity has to be released even when
departmental proceedings are pending against an employee.
The learned Senior Counsel for the appellant placed strong
reliance on the judgment of this Court in State Bank of India
vs. Ram Lal Bhaskar and Anr. ; 2011 (11 )SCALE 589;                    D
2011 (1 O)SCC249.

     15. In so far as rule position is concerned, it is not in doubt
that Rule 34 permits the management to withhold the gratuity
during the pendency of the disciplinary proceedings. Rule 34.2         E
and 34.3 of the CDA Rules are relevant in this behalf which
make the following reading:

     "34.2. Disciplinary proceeding, if instituted while the
     employee was in service whether before his retirement or
     during his re-employment shall, after the final retirement of     F
     the employee, be deemed to be proceeding and shall be
     continued and concluded by the authority by which it was
     commenced in the same manner as if the employee had
     continued in service.
                                                                       G
     34.3. During the pendency of the disciplinary proceedings,
     the Disciplinary Authority may withhold payment of gratuity,
     for ordering the recovering from gratuity of the whole or
     part of any pecuniary loss caused to the company if have
     been guilty of offences/ misconduct as mentioned in Sub-          H
    520       SUPREME COURT REPORTS                 [2013) 11 S.C.R.


A        section (6) of Section 4 of the payment of gratuity act,
         1972 or to have caused pecuniary loss to the company by
         misconduct or negligence, during his service including
         service rendered on deputation or on re-employment after
         retirement. However, the provisions of Section 7(3) and
s       ·7(3A) of the Payment of Gratuity Act 1972 should be kept
         in view in the event of delayed payment in the case the
         employee is fully exonerated."

       16. The bone of contention is as to whether this rule is
  contrary to the provisions of the Payment of Gratuity Act and,
C therefore, this rule being non-statutory is to be ignored and the
  provisions of the Gratuity Act are to be preferred. In this behalf
  we will have to examine the scheme of the Gratuity Act to find
  whether as per the Gratuity Act, such a person like the
  respondent, would become entitled to receive the gratuity under
D this Act.

       17. It is because of the reason that a statutory right accrued,
  thus, cannot be impaired by reason of a rule which does not
  have the force of statute. It will bear repetition to state that the
E Rules framed by Respondent No. 1 or its holding company are
  not statutory in nature.

       18. It would be of interest to note that the inter play of these
  very CDA Rules, 1978 of CIL and the Provisions of Gratuity
  Act came for consideration in the case of Jaswant Singh Gill
F (supra) and this Court explained the legal position of CDA
  Rules vis-a-vis Gratuity Act/ gratuity of an employee in the
  following manner:-

          "The Act was enacted with a view to provide for a scheme
G         for payment of gratuity to employees engaged inter alia in
          mines. Section ~ of the Act provides for appointment of
          an officer to be the controlling authority. Controlling
          authority is to be responsible for administration of the act.
          Different authorities, however, may be appointed for
H         different areas. Section ~ of the Act entitles an employee
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 521
 LTD. v. RABINDRANATH CHOUBEY [A.K. SIKRI, J.]
  to gratuity after he has rendered continuous service for not     A
  less than five years inter alia on his superannuation. Sub-
  section (6) of Section 1 contains a non-obstante clause
  stating:

         (a) the gratuity of an employee, whose services           8
         have been terminated for any act, willful omission
         or negligence causing any damage or loss to, or
         destruction of, property belonging to the employer,
         shall be forfeited to the extent of the damage or loss
         so caused;
                                                                   c
         (b) the gratuity payable to an employee may be
         wholly or partially forfeited

                (i) if the services of such employee have
                been terminated for his riotous or disorderly      D
                conduct or any other act or violence on his
                part, or

                (ii) if the services of such employee have
                been terminated for any act which constitutes
                an offence involving moral turpitude, · E
                provided that such offence is committed by
                him in the course of his employment.

  9. The Rules framed by the Coal India Limited are not
  statutory rules. They have been made by the holding              F
  company of Respondent No. 1. The provisions of the Act,
  therefore, must prevail over the Rules. Rule 27 of the Rules
  provides for recovery from gratuity only to the extent of loss
  caused to the company by negligence or breach of orders
  or trust. Penalties, however, must be imposed so long an         G
  employee remains in service. Even if a disciplinary
  proceeding was initiated prior to the attaining of the age
  of superannuation, in the event, the employee retires from
  service, the question of imposing a major penalty by
  removal or dismissal from service would not arise. Rule
                                                                   H
    522       SUPREME COURT REPORTS                  [2013) 11 S.C.R.


A         34.2 no doubt provides for continuation of a disciplinary
          proceeding despite retirement of employee if the same
          was initiated before his retirement but the same would not
          mean that although he was permitted to retire and his
          services had not been extended for the said purpose, a
B         major penalty in terms of Rule 27 can be imposed. Power
          to withhold penalty contained in Rule 34.3 of the Rules
          must be subject to the provisions of the Act. Gratuity
          becomes payable as soon as the employee retires. The
          only condition therefore is rendition of five years
c         continuous service. A statutory right accrued, thus, cannot
          be impaired by reason of a rule which does not have the
          force of a statute. It will bear repetition to state that the
          Rules framed by Respondent No. 1 or its holding company
          are not statutory in nature. The Rules in any event do not
          provide for withholding of retrial benefits or gratuity.
D
          10. The Act provides for a closely neat scheme providing
          for payment of gratuity. It is a complete code containing
          detailed provisions covering the essential provisions of a
          scheme for a gratuity. It not only creates a right to payment
E         of gratuity but also lays down the principles for
          quantification thereof as also the conditions on which he
          may be denied therefrom. As noticed hereinbefore, Sub-
          section (6) of Section 1 of the Act contains a non- obstante
          clause vis. Sub-section (1) thereof. As by reason thereof,
F         an accrued or vested right is sought to be taken away, the
          conditions laid down thereunder must be fulfilled. The
          provisions contained therein must, therefore, be
          scrupulously observed. Clause (a) of Sub-section (6) of
          Section 1 of the Act speaks of termination of service of
G         an employee for any act, willful omission or negligence
          causing any damage. However, the amount liable to be
          forfeited would be only to the extent of damage or loss
          caused. The disciplinary authority has not quantified the
          loss or damage. It was not found that the damages or loss
          caused to Respondent No. 1 was more than the amount
H
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 523
 LTD. v. RABINDRANATH CHOUBEY [A.K. SIKRI, J.]
    of gratuity payable to the appellant. Clause (b) of Sub-          A
    section (6) of Section 1 of the Act also provides for
    forfeiture of the whole amount of gratuity or part in the event
    his services had been terminated for his riotous or
    disorderly conduct or any other act of violence on his part
    or if he has been convicted for an offence involving moral        B
    turpitude. Conditions laid down therein are also not
    satisfied. Termination of services for any of the causes
    enumerated in Sub-section (6) of Section 1 of the Act,
    therefore, is imperative."

    19. The principles which are laid down in the aforesaid           C
judgment are recapitulated below:-

     (i)    No doubt, Rule 34.2 of CDA Rules provides for
            continuation of disciplinary proceedings despite
            retirement of an employee if the same was initiated       D
            before his retirement However, after his retirement,
            major penalty in terms of Rule 27 cannot be
            imposed. We may state here that rule 27 of CDA
            Rules provides for the nature of penalties including
            'recovery from pay or gratuity of the whole part of       E
            any back loss cause to the company by negligence
            or breach of orders for trust'. Major penalties which
            are prescribed under Rule 27 are reduction to a
            lower grade, compulsory retirement, removal from
            service and dismissal. The Court thus, held that          F
            these major penalties canr.ot be imposed upon a
            retired employee.

     (ii)   Gratuity Act gives right to an employee to receive
            gratuity on rendition of 5 years continuous service.
            Gratuity become payable as soon as the employee           G
            retires. This statutory right which accrues to an
            employee cannot be impaired by reason of a rule
            which does not have the force of a statute.
            Therefore, Rule 34.3 of the CDA Rules, which is
                                                                      H
    524      SUPREME COURT REPORTS                  [2013) 11 S.C.R.


A               non-statutory in nature, is contrary to the provisions
                of the Gratuity Act. As such, gratuity cannot be
                withheld on the retirement of an employee even if
                departmental proceedings were initiated against
                him before his retirement and are pending at the
B               time of retirement.

          20. Jaswant Singh Gill (supra) was a judgment delivered
     by two judge Bench. Mr. Mahavir Singh, learned senior counsel
     has placed strong reliance to a three Bench judgment of this
C    Court which is later in point of time. This case is known as State
    Bank of India vs. Ram Jal Bhaskar and Anr. 2011 (1 O)SCC249.
     In that case, Rule 19(3) of the State Bank of India Officers
    Service Rules, 1992 came up for interpretation which was para
    materia with rule 13.42 of the CDA Rules. Said rule 19(3) of
    SBI Officers Service Rules also permits disciplinary
D   proceedings to continue even after the retirement of an
    employee if those were instituted when the delinquent employee
    was in service. Then for the purpose of such proceedings the
    otherwise retired employee is deemed to be in service and
    those proceedings shall be continued and concluded as if the
E   employee had continued in service. Thus, such an employee
    is deemed to be in service for limited and specified purpose
    only viz. for the purposes of continuance and conclusion of the
    proceedings. In that case, charge sheet was served upon the
    respondent before his retirement. The proceedings continued
F   after his retirement and were conducted in accordance with
    relevant rules wherein charges were proved. On that basis
    punishment of dismissal was imposed. After exhausting the
    departmental remedies, the respondent filed the writ petition
    in the High Court which was allowed and order of dismissal was
G   quashed. This Court reversed the said decision of the High
    Court. However, we find that there is no direct discussion, in
    the said judgment, on the issue as to whether it is permissible
    for the disciplinary authority to impose the penalty of dismissal
    of service after the retirement of the employee. In fact the Co,urt
H   had dealt with two aspects. One question which was
 CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 525
  LTD. v. RABINDRANATH CHOUBEY [A.K. SIKRI, J.]
deliberated was as to whether inquiry could continue after the          A
retirement of the respondent from service. This question was
answered in the affirmative having regard to Rule 19(3) of the
SBI Officers Service Rules. The Court distinguished another
judgment in UCO Bank & Anr. vs. Rajinder Lal Capoor;
2007(6)SCC694 on a ground that in the said case the                     B
delinquent officer had already been superannuated and the
charge sheet was served after his retirement. In these
circumstances the court had taken the view in Rajinder Lal
Capoor's case that when an employee is allowed to
superannuate, no inquiry can be initiated against him thereafter.       c
However, if charge sheet is served before the retirement
enquiry can continue even after the retirement as per Rule 19(3).
This proposition thus stands settled viz. if the Rules permit,
enquiry can continue even after the retirement of the employee.

     21. Other aspect which was dealt with was as to whether            D
the High Court could interdict the findings of disciplinary authority
and arrive at its conclusion that the findings recorded by the
Inquiry Officer was not substantiated by any officer on record
on the basis of evidence produced. This Court held that so long
the findings of the disciplinary authority are supported by some        E
evidence, the High Court is· not empowered to re-appreciate
the evidence as an appellate authority and came to a different
and independent findings on the basis of that evidence. This
is not the issue before us in the instant case.
                                                                        F
      22. It is thus, clear that the question as to whether penalty
 of dismissal could be imposed after a retirement was not
 categorically raised or dealt with. No doubt, penalty of dismissal
was inflicted upon the employee in that case. But it was not
specifically on in clear terms contended that such a penalty            G
 could not be imposed on an employee who is already permitted
to retire. At the same time, innuendo, the judgment gives a
·semblance of indication that such a penalty is permissible
because of the reason that as per the rules, for the purposes
of enquiry, the employee shall be deemed to b~ in service-. As
                                                                        H
    526       SUPREME COURT REPORTS                    [2013) 11 S.C.R.


A   a sequittor, one can deduce the principle that when the Rules,
    by creating fiction, treat the officer still in service, albeit for the
    limited purpose of the continuance and conclusion of such
    proceedings, then any of the prescribed penalties, including
    dismissal, can be imposed However, as we have pointed out
B   above, the issue of permissibility of penalty of dismissal on such
    a retired official was neither raised nor any direct discussion
    followed thereupon. At the same time, fact remains that penalty
    of dismissal, even after the retirement, was upheld. This goes
    contrary to the dicta laid down in Jaswant Singh Gill (supra)
c   which took the view that no major penalty is permissible after
    retirement was not even referred to.

        23. The issue which confronts us in the instant appeal is
  as to whether gratuity can be withheld in the wake of Rule 34
  of CDA Rules when examined in juxtaposition with .the
D provisions of the Gratuity Act. To put it otherwise, whether in
  the scheme of Gratuity Act, gratuity has to be necessarily
  released to the concerned employee on his retirement even if
  departmental proceedings are pending against him. We find
  that Jaswant Singh Gill's case directly answers this question,
E that too in the context of these very CDA Rules. However, it is
  because of the reason that the said judgment proceeds on the
  basis that after the retirement of an employee, penalty of
  dismissal cannot be imposed upon the retired employee. If this
  view is not correct and the imposition of penalty of dismissal
F is still permissible, employer will get the right to forfeit the
  gratuity of such an employee in the eventualities provided under
  Sections 4(1) & 4 (6) of the Payment of Gratuity Act which reads
  as under:-

          Section 4 - Payment of gratuity
G
          (1) Gratuity shall be payable to an employee on the
          termination of his employment after he has rendered
          continuous service for not less than five years,-

H         (a) on his superannuation, or
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 527
 LTD. v. RABINDRANATH CHOUBEY [A.K. SIKRI, J.]
  (b) on his retirement or resignation, or                       A

  (c) on his death or disablement due to accident or disease:

         Provided that the completion of continuous service
  of five years shall not be necessary where the termination
  of the employment of any employee is due to death or           B
  disablement:

        Provided further that in the case of death of the
  employee, gratuity payable to hi m shall be paid to his
  nominee or, if no nomination has been made, to his heirs,      c
  and where any such nominees or heirs is a minor, the share
  .of such minor, shall be deposited with the. controlling
  authority who shall invest the same for the benefit of such
  minor in such bank or other financial institution, as may be
  prescribed, until such minor attains majority.]                D
  Explanation.-For the purposes of this section,
  disablement means such disablement as incapacitates an
  employee for the work which he was capable of
  performing before the accident or disease resulting in such
  disablement.                                                   E



  (6) Notwithstanding anything contained in sub-section (1),-

  (a) the gratuity of an employee, whose services have been      F
  terminated for any act, wilful omission or negligence
  causing any damage or loss to, or destruction of, property
  belonging to the employer' shall be forfeited to the extent
  of the damage or loss so caused;
                                                                 G
  (b) the gratuity payable to an employee may be wholly or
  partially forfeited]-

  (i) if the services of such employee have been terminated
  for his riotous or disorderly conduct or any other act of
  violence on his part, or                                       H
    528      SUPREME COURT REPORTS                (2013] 11 S.C.R.


A         (ii) if the services of such employee have been terminated
          for any act which constitutes an offence involving moral
          turpitude, provided that such offence is committed by hi m
          in the course of his employment.

B        24. Thus for invoking Clause (a) or (b) of sub-section 6 of
    Section 4 necessary prE(!-condition is the termination of service
    on the basis of departmental enquiry or conviction in a criminal
    case. This provision would not get triggered if there is no
    termination of services.

C       25. It is the case of the appellant that in the charge sheet
  served upon the respondent herein, there are very serious
  allegations of misconduct alleging dishonestly causing coal
  stock shortage amounting to Rs. 31.65 crores, and thereby
  causing substantial loss to the employer. If such a charge is
D proved and punishment of dismissal is given thereupon, the
  provisions of Section 4(6) of the Payment of Gratuity would
  naturally get attracted and it would be within '.the discretion of
  the appellant to forfeit the gratuity payable to the respondent.
  As a corollary one can safely say that the employer has right
E to withhold the gratuity pending departmental inquiry. However,
  as explained above, this course of action is available only if
  disciplinary authority has necessary powers to impose the
  penalty of dismissal upon the respondent even after his
  retirement. Having regard to our discussion above of Jaswant
F Singh Gill (supra) and Ram Lal Bhaskar (supra), this issue
  needs to be considered authoritatively by a larger Bench. We,
  therefore, are of the opinion that present appeal be decided
  by a Bench of three Judges.
       26. We accordingly direct the Registry to place the matter
G before Hon'ble the Chief Justice for constituting a larger Bench
  to hear this appeal.

    K.K.T.                       Appeal referred to Larger Bench.