STATE OF UTTAR PRADESH AND OTHERSversusDHIRENDRA PAL SINGH

                        [2016] 9 S.C.R. 463


          STATE OF UTTAR PRADESH AND OTHERS                            A
                                 v.
                     DHIRENDRA PAL SINGH
                  (Civil Appeal No. I 0866of2016)
                                                                       B
                      NOVEMBER 15, 2016
    [J. CHELAMESWAR AND PRAFULLA C. PANT, JJ.]
      Service Law:
       Pension and gratuity - Withholding of - Propriety, in absence C
of departmental enquiry or any proceedings u!Art. 351A, UP
Regulations - Respondent, an Assistant Store Superintendent with
the Irrigation Department of appellant-State - Discrepancies in the
stock of the Departmental Store- Part of respondents pension and
gratuity withheld on the ground of alleged misconduct committed D
by him resulting in loss to the public exchequer - Recovery order
quashed by High Court - On appeal, held: Admittedly, no
departmental enquiry was initiated against the respondent for the
misconduct, if any, nor any proceedings were drawn as provided in
Art.351A - The document which was the basis of enquiry and was
relied upon by the State authorities itself reflected that the document E
showing discrepancy in the stock was dated about more than five
months after the retirement of the respondent-Therefore, High Court
;ustified in quashing the recovery order - UP Civil Service
Regulations - Art. 351A.

      Payment of Gratuity Act, 1972 - s. 7(3-A) - Interest on delayed F
payment of gratuity not to be given if the delay is due to the fault of
employee and the employer has obtained permission in writing, from
the controlling authority, for the delayed payment on this ground -
Held: On facts, appellants-employer had not sought any permission
from controlling authority - Further, there was no delay on part of G
employee as he made representations where after he filed a suit
with respect to withheld amount of gratuity and pension - Direction
given for payment of interest @ 6% p.a. on unpaid amount of
pension and interest @ 8% p.a. on unpaid amount of gratuity.

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                                463
464            SUPREME COURT REPORTS                          [2016] 9 S.C.R.


A          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10866
      of2016.
            From the Judgment and Order dated 31.05.2016 of the High Court
      of Judicature at Allahabad in SAD No. 408 of2016.
            Vishwajit Singh, Ardhendumauli Kumar Prasad, Aishwarya
B     Pathak, Advs., for the Appellants.
            V. K. Garg, Sr. Adv., Niraj Kr. Sharma, Mrs. Noopur Dubey,
      Mrs. Priyanka Dixit, Ajay Kumar Singh, Advs., for the Respondent.
            The following Order of the Court was delivered
 c                                  ORDER
            I. Leave granted.
             2. This appeal is directed against order dated 31.05.2016, passed
      by the High Court of Judicature at Allahabad, in Special Appeal Defective
 D    No. 408 of2016, whereby the intra-court appeal was dismissed affirming
      the order dated 10.12.2015 passed by the learned single Judge in Writ-A
      No. 49921 of2015.
              3. Brief facts of the case are that respondent Dhirendra Pal Singh
      was Assistant Store Superintendent with the Irrigation Department of
      the State ofUttar Pradesh: He stood retired on 30.06.2009 on attaining
 E    the age of superannuation. At the time of his retirement GPF, leave
      encashment and 70% of gratuity and pension were cleared, but rest of
      the 30% of gratuity and computation of pension were held up. The
      stand of the appellants is that there were some discrepancies in the
      stock in the store of the department and some enquiries were going on
 F    as to loss caused to the public exchequer. After making representations
      when the remaining amount of gratuity and pension was not cleared, the
      respondent filed Civil Suit No. 338 of 2012. However, the same was
      dismissed as withdrawn as the appellants/State authorities, vide order
      dated 23 .07.2015 finally, on the basis ofalleged discrepancies withheld
      the remaining part of gratuity and pension of the respondent and, vi de
 G    order dated 06.08.2015, directed recovery ofRs.7,26,589/-, from the
      retiral dues payable to the respondent~ which was challenged in the writ
      petition.
            4. There was no departmental enquiry initiated against the
      respondent and after about more than six years order as to finally
 H
      STATE OF UTTAR PRADESH AND OTHERS v. DHIRENDRA                              465
                         PAL SINGH

     withholding of remaining pension on the ground of alleged misconduct         A
     and the recovery was directed to be made from the respondent after
     serving a notice on him. Learned single Judge of the High Court found
     that the orders challenged in the writ petition cannot be sustained in law
     as neither recourse of Article 351-A of UP Civil Service Regulations
     was resorted to, nor any departmental enquiry was held. Learned single
                                                                                  B
     Judge further directed that the remaining amount of gratuity and pension
     of the respondent shall be released with interest at the rate of I 0% p.a.
     on the s.um withheld by the State authorities. The Division Bench, in
     special appeal filed by the State, found no illegality in the order passed
     by the learned single Judge.
           5. We have heard learned counsel for the appellants and the             c
.,   respondent.
           6. Article 351-A of UP Civil Service Regulations reads as under: -
           "351-A. The Governor reserves to himself the right of
           withholding or withdrawing a pension or any part of it,                 D
           whether permanently or for a specified period and the right
           of ordering the recovery from a pension of the whole or
           part of any pecuniary loss caused to Government, if the
           pensioner is found in departmental or judicial proceedings
           to have been guilty of grave misconduct, or to have caused
           pecuniary loss to Government by misconduct or negligence,               E
           during his service, including service rendered on re-
           employment after retirement.
            Provided that:
            (a) such departmental proceedings, if not instituted while
                                                                                   F
            the officer was on duty either before retirement or during
            re-employment -
               (i) Shall not be instituted with the sanction of the
               Governor,
               (ii) shall be in respect of event which took place not              G
               more than four years before the institution of such
                                                   I
               proceedings, and
               (iii) shall be conducted by such authority and in such
               place or places as the Governor may direct and in
               accordance with the procedure applicable to proceedings             H
466           SUPREME COURT REPORTS                           [2016] 9 S.C.R.


A             on which an order of dismissal from service may be
              made.
           (b) Judicial proceedings, ifnot instituted while the officer
           was on duty either before retirement or during re-
           employment, shall have been instituted in accordance with
B          sub-clause (ii) of clause (a), and
           (c) the Public Service Commission, U.P., shall be consulted
           before final orders are passed.
           Explanation - For the purposes of this article -

c          (a) departmental proceedings shall be deemed to have been
           instituted when the charges framed against the pensioner
           are issued to him, or, ifthe officer has been placed under
           suspension from an earlier date, on such date; and
           (b) judicial proceedings shall be deemed to have been
D          instituted:
              (i) in the case of criminal proceedings, on the date on
              which complaint is made, or a charge-sheet is submitted,
              to a criminal court; and
              (ii) in the case of civil proceedings, on the date on which
 E            the plaint is presented or, as the case may be, an
              application is made to a civil court."
          7. Admittedly, no departmental enquiry was initiated in the present
  case against the respondent for the misconduct, if any, nor any
  proceedings drawn as provided in Article 351-A of UP Civil Service
F Regulations. Learned single Judge of the High Court has observed that
  the document which is the basis of enquiry and relied upon by the State
  authorities, copy of which was Annexure C.A. l to counter affidavit filed
  in the writ petition, itself reflected that the document showing discrepancy
  in the stock was dated 26.12.2009, i.e. after about more than five months
G ofretirement of the respondent. In the circumstances, keeping in view
  Article 351-A of UP Civil Service Regulations, we agree with the High
  Court that the orders dated 23.07.2015 and 06.08.2015 were liable to be
  quashed and, to that extent, we decline to interfere with the impugned
  order.
           8. Learned counsel for the appellants argued that the High Court
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      STATE OF UTTAR PRADESH AND OTHERS v. DHIRENDRA                                 467
                                    PAL SINGH

     has erred in awarding interest at the rate of 10% per annum on the sum A
     due to the respondent. In this connection, it is submitted that the suit
     was filed by the respondent only in 2012 and that too was withdrawn.
           9. We have considered the submissions ofleamed counsel forthe
     appellants and reply given by learned counsel for the respondent.
             10. In State of Kera/a and ot/iers v. M. Padmanablian Nair 1,            B
     this Court has held that pension and gratuity are no longer any bounty to
     be distributed by the Government to its employees on the retirement but
     are valuable rights in their hands, and any culpable delay in disbursement
     thereof must be visited with the penalty of payment of interest. In said
     case the Court approved 6% per annum interest on the amount of pension           C
     decreed by the trial court and affirmed by the High Court. As to the rate
     of interest on amount of gratuity Section 7(3-A) of Payment of Gratuity
     Act, 1972, it is provided that ifthe amount of gratuity payable is not paid
     by the employer within the period specified in sub-section (3 ), the employer
     shall pay, from the ·date on which gratuity becomes payable to the date
     on which it is paid, simple interest at such rate, not exceeding the rate        D
     notified by the Central Government from time to time for repayment of
      long term deposits, as that Government may by notification specify. It
     further provides that no such interest shall be payable if the delay in
      payment is due to the fault of the employee, and the employer has
      obtained permission in writing from the controlling authority for the           E
      delayed payment on this ground. In the present case, there is no plea
      before us that the appellants had sought any permission in writing from
      the controlling authority. As to the delay on the part of employee, it has
      come on the record that he made representations, whereafter he filed a
-~    suit in respect of withheld amount of gratuity and pension. In Y.K.
      Sing/av. Punjab National Bank and otliers1, this Court, after discus~ing        F
      the issue relating to interest payable on the amount of gratuity not paid
      within time, directed that interest at the rate of 8% per annum shall be
      paid on the amount of gratuity.
            11. In the light of law laid down by this Court, as above, and
     further considering the facts and circumstances of the case, we modify           G
     the impugned order passed by the High Court in respect of interest
     directed to be paid on the amount of withheld gratuity and pension. We
     direct that the appellants shall pay interest at the rate of 6% per annum
      1 (1985) 1sec429

      '(2013) 3 sec 472
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468             SUPREME COURT REPORTS                        [2016] 9 S.C.R.



A     on the unpaid amount of pension from the date it had fallen due and
      interest at the rate of 8% per annum on the unpaid amount of gratuity
      from the date of retirement of the employee.
             12. With the modification, as above, in the impugned order passed
      by the High Court, this appeal stands disposed of. No order as to costs.
B

      Divya Pandey                                            Appeal disposed of.