P&H High Court: Criminal Case Unrelated to Service Can’t Justify Withholding Gratuity Under PCS Rules
Safiya Malik
The High Court of Punjab and Haryana Single Bench of Justice Jagmohan Bansal directed the State to release the death-cum-retirement gratuity and regularize pension/family pension of a deceased government employee within three months. The Court held that pending criminal appeal before the Supreme Court does not justify the continued withholding of gratuity, especially after the employee had been acquitted by the High Court and had subsequently passed away. The judgment clarified that judicial proceedings cannot continue against a deceased person, and hence, no valid ground exists to deny the release of statutory retiral benefits.
In a comprehensive verdict, the Court further imposed an interest of 7.5% per annum on the withheld gratuity from the date of filing of the writ petition until payment. An additional 2.5% per annum interest was mandated in case of delayed compliance. The judgment distinctly differentiated between cases where judicial or departmental proceedings are pending and the present case, where acquittal was secured during the petitioner’s lifetime and no departmental inquiry was pending.
The Court relied on statutory rules and previous judgments, including Supreme Court precedent, while clarifying the limits of governmental authority to withhold retirement benefits posthumously in such circumstances.
The petitioner, Suresh Kumar Sharma (deceased), through his legal representatives, filed a writ petition under Article 226/227 of the Constitution of India seeking the release of his death-cum-retirement gratuity. Sharma, who retired on 31.03.2004, had his pensionary benefits withheld due to the pendency of FIR No. 118 dated 13.10.2002. He was convicted and sentenced to five years imprisonment on 02.11.2013, leading the State to continue withholding gratuity even after his retirement.
After his conviction, Sharma appealed the judgment, and the High Court acquitted him on 17.10.2018. Following the acquittal, he issued a legal notice dated 04.11.2018 demanding release of his retiral dues. In response dated 15.04.2019, the State declined, citing an intention to challenge the acquittal in the Supreme Court. The petition was admitted on 29.05.2019. During the pendency of proceedings, Sharma passed away, and the matter continued through his legal representatives.
The State relied on Rule 2.2(b), 2.2(c), and 9.14 of the Punjab Civil Service Rules (Volume II) as applicable to Haryana, asserting that gratuity cannot be paid during the pendency of judicial proceedings. It was submitted that the State had filed Criminal Appeal No. 903-908/2019 against Sharma and other accused, which was still pending before the Supreme Court.
The petitioner’s counsel argued that the criminal case was not connected with Sharma’s official duties. The conviction stemmed from alleged offenses under the Transplantation of Human Organs and Tissues Act, 1994 related to his personal kidney transplant, unconnected with his government service. He further contended that as the employee was no longer alive and no departmental proceedings were pending, the appeal against acquittal had no bearing.
The judgment of the Full Bench in ‘Dr. Ishar Singh v. State of Punjab’ was cited to assert that pension must be released even if other retiral benefits are withheld during inquiry. The Court was urged to consider that the criminal appeal would abate upon the death of the accused, and Rule 2.2(b) of the Punjab Civil Services Rules could not be extended beyond its scope.
The State cited ‘The Secretary, Local Self Government Department & Ors. v. K. Chandran’ (2022) 12 SCC 104 and ‘Punjab State Civil Supplies Corporation Ltd. v. Pyare Lal’, 2012 SCC OnLine P&H 21595 to justify its actions.
Justice Jagmohan Bansal examined the rules and precedents, noting “In case of pendency of departmental or judicial proceedings, gratuity or death-cum-retirement gratuity cannot be released till the conclusion of the proceedings.” However, the Court observed that in the present case, “the petitioner was acquitted by this Court and he has passed away though appeal of the State is pending before Supreme Court.”
The Bench discussed Darshan Singh v. State of Punjab (2011), where it was held that Rule 2.2(b) could not apply where criminal proceedings were unrelated to official service. “Mere pendency of the criminal proceedings is not sufficient to withhold the retiral benefits of the petitioner in any manner particularly when the judicial proceedings are unrelated to the service misconduct of the petitioner.”
The Full Bench in Dr. Ishar Singh was cited to affirm that pension must be paid even during pendency of inquiries and that “the Government can withhold the gratuity or other retiral benefits except pension or postpone payment of the same during pendency of an enquiry.”
Regarding the State’s reliance on the Supreme Court’s judgement in K. Chandran, the Court differentiated, stating: “In K. Chandran proceedings under PC Act were pending and employee’s appeal against conviction was pending. The Court held that appeal is continuation of trial.” However, the High Court stated that in this case, the employee had already been acquitted and passed away, thereby nullifying any continuation of judicial proceedings.
The Court interpreted Rule 2.2(b) to mean that the mis-conduct or negligence must have occurred during the course of service and have relevance to official duties. The Court stated, “An offence which is totally unrelated to official duty is not contemplated by Rule 2.2(b).”
Additionally, the Bench interpreted the third proviso to Rule 2.2(b) as intending a four-year limitation period for initiating judicial proceedings post-retirement. This, the Court held, supports the view that criminal proceedings not connected to official duty fall outside the scope of pension withholding provisions.
The Court concluded: “The employee in the case in hand has passed away... he cannot be dismissed even if Hon’ble Supreme Court allows appeal of the State.” Thus, even a successful appeal would not lead to dismissal or forfeiture of benefits, rendering the pending criminal appeal legally insignificant.
The Court issued the following directives: “The respondent is directed to release gratuity and regularize pension/family pension within three months from today.”
It further directed that: “The respondent withheld gratuity on account of pending criminal proceedings. In view of findings recorded hereinabove, the respondent was bound to release gratuity on the death of employee especially in the light of the fact that before death he had already earned acquittal.”
Acknowledging the delay, the Court imposed interest: “Interest is compensatory in nature. The State has utilized dues of the petitioner. In these circumstances, it would be just, equitable and reasonable if respondent is burdened with interest @ 7.5% per annum from the date of filing petition before this court to date of payment.”
It also warned of additional penalties for non-compliance: “If the respondent fails to pay amount of gratuity within aforesaid period along with interest, it would be liable to pay additional interest @ 2.5% p.a. from the date of retirement to date of payment.”
Advocates Representing the Parties:
For the Petitioner: Mr. Dhiraj Chawla, Advocate
For the Respondents: Mr. Suneel Ranga, Deputy Advocate General, Haryana
Case Title: Suresh Kumar Sharma (Deceased) through LRs v. State of Haryana and Ors.
Neutral Citation: 2025: PHHC:093236
Case Number: CWP-15069-2019 (O&M)
Bench: Justice Jagmohan Bansal
