Central Administrative Tribunal - Bangalore
N Gangadhara vs Employees Providend Fund Organisation ... on 27 February, 2025
1 OA 412/2024/CAT/BANGALORE BENCH
CENTRAL ADMINISTRATIVE TRIBUNAL
BANGALORE BENCH, BENGALURU
ORIGINAL APPLICATION NO.170/00412/2024
ORDER RESERVED : 14.02.2025
DATE OF ORDER : 27.02.2025
HON'BLE MRS. JUSTICE S. SUJATHA ...MEMBER(J)
Shri N.Gangadhara,
S/o late Janappa Bhadary Group 'B'
Aged 66 years, Retired EO/AO, EPFO,
Residing at #MIG-548, (Flats),
Kaveri apartments, Sharadadevi Nagar,
Mysore-570033. ....Applicant,
(By Advocate, Shri Narayana Kamma)
Vs.
1. The Union of India,
Through Secretary, Government of India,
Ministry of Labour and Employment,
Shram Shakti Bhavan, Rafi Marg,
New Delhi -110001.
2. The Central Provident Fund Commissioner,
Employees Provident Fund Organisation Hqrs.,
Tower 2, NBCC, Ansarinagar,
East Kidwai Nagar,
New Delhi -110023. ...Respondents
(By Advocate, Shri Sayed S.Kazi for Respondent-1 and Smt.
Shwetha Anand for Respondent No.2)
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
2 OA 412/2024/CAT/BANGALORE BENCH
ORDER
The applicant has filed this original application under Section 19 of the Administrative Tribunals Act, 1985 seeking the following reliefs:
"a. Direct the respondents to release the leave encashment as provided under Rule 39(2)(a) of the leave Rules, 1972.
b. Direct the respondents to pay interest at GPF rates on the leave encashment from 01.06.2018 till the date of payment of the leave encashment.
c. Any other order or direction deemed fit and proper in the facts and circumstances of the case may also kindly be issued in favour of the applicant.
d. Costs of the Original Application be allowed in favour of the applicant.
2. Briefly stated the facts as narrated by the applicant are that he joined Employees Provident Fund Organisation (`EPFO' for short) on 21.04.1983 as Lower Division Clerk and was promoted to S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 3 OA 412/2024/CAT/BANGALORE BENCH the post of Enforcement Officer/Accounts Officer on 13.07.2012.
The applicant retired on superannuation on 31.05.2018.
3. A charge memorandum dated 03.07.2017 was issued by the Central provident Fund Commissioner, EPFO through RPFC, Karnataka which culminated in penalty order of punishment dated 30.03.2022 imposing cut in pension at the rate of 30% for a period of 7 years. It is the grievance of the applicant that no payment of leave encashment has been made despite several representations submitted by him to which he is legally entitled to. Being aggrieved, the applicant has preferred this OA.
4. Learned Counsel Shri Narayana Kamma representing the applicant, placing reliance on Rule 39(2)(a) of CCS (Leave) Rules, 1972, submitted that despite the conclusion of the disciplinary proceedings in March, 2022, the leave encashment has been withheld by the respondents without authority and in derogation of Rule 39(2) of Leave Rules. Non release of leave encashment to the applicant is attributable to the negligence and lethargic attitude of the respondents towards the retired officer who gave about 34 years S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 4 OA 412/2024/CAT/BANGALORE BENCH of his life to the organisation. Placing reliance on the orders passed by this Tribunal in OA No.11/2022 [(DD:02.08.2023) - P.Sudhakar Babu vs. Union of India and another], learned Counsel submitted that withholding of leave encashment of the applicant to which he is legally entitled, is illegal. The reasoning given by the respondents for denial of leave encashment that some disciplinary proceedings and criminal cases are pending against the applicant is unjustifiable. There being no likelihood of any recovery from leave encashment even on the conclusion of proceedings pending before the CBI Court against the applicant, withholding of leave encashment amount is arbitrary and calls for interference. Learned Counsel further submitted that the applicant is entitled for interest on the leave encashment amount from 01.06.2018 till the date of payment. Reliance is also placed on the judgment of the Hon'ble Apex Court in Dr.A.Selvaraj vs. C.B.M.College and others in Civil appeal No.1698/2022 (DD:04.03.2022). Accordingly seeks for the reliefs claimed.
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
5 OA 412/2024/CAT/BANGALORE BENCH
5. Learned Counsel Smt.Shwetha Anand appearing for Respondent No.2 - contesting party, submitted that the final order in the disciplinary proceedings initiated against the applicant has been passed on 30.03.2022 and communicated to the applicant on 12.04.2022. Crime No.CBI RC No.15/2016 registered against the applicant is still pending. In the event of a conviction, all retiral benefits including gratuity and leave encashment may be frozen. Conversely in the event of exoneration, the release benefits will be released to the applicant. Learned Counsel pointed out that the proceedings pending in CBI Court comes under the purview of the Prevention of Corruption Act, 1988. Placing reliance on the Rule 39(3) of the Leave Rules, learned Counsel submitted that competent authority has power to withhold either whole or a part of cash equivalent to earned leave of a Government servant who retires from service while under suspension or while disciplinary or criminal proceeding are pending against him. Provisional pension has been sanctioned to the applicant immediately with the penalty of 30% cut in pension and as judicial proceedings are pending no order has been issued to release the retirement gratuity and leave S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 6 OA 412/2024/CAT/BANGALORE BENCH encashment. Learned Counsel has placed reliance on the following judgments:
1) Arvind Kumar Singh vs. The State of Bihar and others in Civil Writ Jurisdiction Case No.15328/2016 (DD:02.05.2018) - Hon'ble High Court of Judicature at Patna.
2) P.Yohan vs. The Union of India and others in OA No.020/00988/2019 (DD: 19.01.2021) - Central Administrative Tribunal, Hyderabad Bench.
3) Shailendra Kumar Mishra vs. The Union of India and others in OA No.050/00455/2022 (DD: 02.07.2024)
4) The order dated 24.07.2017 passed in Spl. C.C. No.451/2016 by the XLVI Additional City Civil Sessions Judge and Special Judge for CBI Cases, Bangalore (CCH-47).
Thus, learned Counsel argued that during the pendency of the proceedings before the CBI Court, the applicant is not entitled to payment towards leave encashment. Learned Counsel further made an endeavour to distinguish P.Sudhakar Babu supra. Accordingly seeks for dismissal of the OA.
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
7 OA 412/2024/CAT/BANGALORE BENCH
6. After hearing the learned Counsel appearing for the parties and perusing the material on record, the sole point that arises for consideration of this Tribunal is, whether the applicant is entitled for the release of leave encashment amount with interest withheld by the respondents, during the pendency of Crime No. Spl.CC No.451/2016 pending against the applicant before the CBI Court?
7. Rule 39(2)(a) and 39(3) of the CCS (Leave) Rules, 1972 reads thus:
"39(2)(a) Where a Government servant retires on attaining the normal age prescribed for retirement under the terms and conditions governing his service, the authority competent to grant leave shall, suo motu, issue an order granting cash equivalent of leave salary for both earned leave and half pay leave, if any, at the credit of the Government servant on the date of his retirement subject to a maximum of 300 days;
39(3). The authority competent to grant leave may withhold whole or part of cash equivalent of earned leave in the case of a Government servant who retires from service on attaining the age of retirement while under suspension or while disciplinary or criminal proceedings are pending S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00'
8 OA 412/2024/CAT/BANGALORE BENCH against him, if in the view of such authority there is a possibility of some money becoming recoverable from him on conclusion of the proceedings against him. On conclusion of the proceedings, he will become eligible to the amount so withheld after adjustment of Government dues, if any."
8. Before proceeding further, it is apt to refer to the citations referred to by the learned counsel appearing for both sides.
9. The issue that fell for consideration before the CAT, Patna Bench in Shailendra Kumar Mishra supra, is quoted hereunder for ready reference:
"Whether impugned order dated 11.02.2022 is justified and applicant is entitled for release of retirement gratuity, full pension, Pension Payment Order and amount of commuted value of pension during pendency of criminal case, CBI No.04/2014 before Special Court, CBI Patna relating to offences punishable under Section 120 B, 420, 468, 471 of the IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 and after departmental enquiry, penalty inflicted for grave misconduct?"
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
9 OA 412/2024/CAT/BANGALORE BENCH
10. In conclusion it has been held thus:
"37. In view whereof, issue is decided against the applicant. The impugned order dated 11.02.2022, withholding of gratuity until conclusion of the judicial proceedings and issue of final order thereto in present OA is upheld being justified and same does not suffer from any infirmity, remains unassailable and applicant is not entitled to the relief sought in the O.A."
11. The aforesaid case deals with withholding of gratuity until conclusion of judicial proceedings. Hence the said order would not come to the aid of the respondents.
12. In P.Yohan supra, Hyderabad Bench of this Tribunal regarding leave encashment observed thus:
"VI. Similarly, in case of leave encashment, it can be withheld if a criminal case/disciplinary proceeding is pending against the employee/ pensioner, as held by the Hon'ble Patna High Court in Arvind Kumar Singh v. State of Bihar; 2018 SCC OnLine Pat 749; dated 02-05-2018, as under:
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
10 OA 412/2024/CAT/BANGALORE BENCH
The High Court stated that if an employee is facing a criminal case or a departmental proceeding at the time of his retirement, the government has the power to withhold leave encashment. Therefore, by stating the case of Vijay Kumar Mishra v. State of Bihar; 2017 (1) PLJR 575, it was held that leave encashment of a Government employee can be withheld and its withholding by executive instructions is permissible.
Time is a non spatial continuum that is measured in terms of events which succeed one another from past through present to future. The Hon'ble High Court has not used the expression at ―that point of time in its order supra to refer to the date of retirement. Hence, any criminal case filed after the retirement will also be a good ground to withhold the leave encashment.
VII. Therefore, the action of the respondents is as per rules and we find no error in their decision to withhold the pensionary benefits till the criminal proceedings are finalised. Hon'ble Supreme Court has held that the rules are to be scrupulously followed in the following judgments.
The Hon‟ble Supreme Court observation in T.Kannan and ors vs S.K. Nayyar (1991) 1 SCC 544 held that "Action in respect of matters covered by rules should be regulated by rules". Again in Seighal's case (1992) S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 11 OA 412/2024/CAT/BANGALORE BENCH (1) supp 1 SCC 304 the Hon‟ble Supreme Court has stated that "Wanton or deliberate deviation in implementation of rules should be curbed and snubbed." In another judgment reported in (2007) 7 SCJ 353 the Hon‟ble Apex court held " the court cannot de hors rules."
13. In Arvind Kumar Singh supra, the legal question that fell for consideration before the Hon'ble Patna High Court, pertains to the right of the State Government in withholding full gratuity and encashment of earned leave in cases of employees against whom, at the time of superannuation departmental or criminal proceedings were pending. With regard to the divergent views taken by two Division Benches in the case of Vijay Kumar Mishra vs. State of Bihar and others (2017 (1) PLJR 575) and Bajrang Deo Narain Sinha vs. State of Bihar (1999(3) PLJR 949), it has been categorically observed as under:
"27. As far as leave encashment is concerned, we find that there is no statutory provision rule or regulation providing for encashment of Earned Leave. During the course of hearing, we had asked specific questions to the counsel appearing in the matters and we were informed that there is no statutory rule governing grant of leave S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 12 OA 412/2024/CAT/BANGALORE BENCH encashment. It was stated that it is based on executive instructions and the statutory provision is only for granting Earned Leave to a Government employee.
28. The Bihar Service Code, Chapter-VI deals with general conditions of leave and from Rule 149 onwards, provisions have been made for grant of various kinds of leave like Casual Leave, Special Leave, Medical Leave, Extraordinary Leave, Hospital Leave etc. and under this Chapter from Rule 227 onwards provisions have been made for grant of Earned Leave. Under Rule 227 (1) it is stipulated that the Earned Leave admissible to a Government servant in permanent employment shall be in accordance to Clause (a) and (b) stipulated therein and under sub-section 2 it is contemplated that a Government servant shall cease to earn such leave when the Earned Leave due to him has reached a particular level. The method and principle for calculating Earned Leave etc. are provided in the Patna High Court CWJC No.15328 of 2016 dt.02.05.2018 Rule. Nowhere in this rule is there a provision for permitting leave encashment. It is for the first time by an executive instruction bearing No. 4564 dated 6th of July, 1993, that a provision has been made for encashment of unused Earned Leave after retirement and in this circular in Paragraph 2 the following stipulations have been made:-
.............................................................................................
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
13 OA 412/2024/CAT/BANGALORE BENCH
29. From the aforesaid, it is clear that as far as leave encashment is concerned, leave encashment is not provided for in the Pension Rule. Under the Bihar Service Code, a provision has been made for grant of Earned Leave and by an executive instruction issued on 6th of July, 1993, a provision is made for encashment of Earned Leave and while making the said provision a condition is stipulated that an employee shall not be granted encashment of Earned Leave till finalization of the departmental inquiry or the judicial proceeding. When the terms and conditions with regard to encashment of leave is not governed by any statutory provision and when the same is granted by an executive or administrative decision of the State Government so long as the administrative decision to withhold encashment of Earned Leave subsists, then on the happening of such circumstances, as are contemplated, we see no reason to hold that leave encashment can be granted even in cases where the employee at the time of retirement is facing departmental or judicial proceeding. The law laid down in this regard in the cases referred to hereinabove do not consider this aspect of the matter, all the cases proceeded under the mistaken assumption that the leave encashment is provided for in the Pension Rules, and, therefore, we have no hesitation in holding that when an employee is facing a criminal case or a departmental S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00'
14 OA 412/2024/CAT/BANGALORE BENCH proceeding, at the time of his retirement, the Government is well within its power in withholding leave encashment.
30. Accordingly, we answer the questions referred to us in C.W.J.C. No. 15328/2016 in the following manner:-
(1). The law laid down by the Bench of this Court in the case of Vijay Kumar Mishra (supra) holding that Leave Encashment of a Government employee can be withheld, is a correct proposition of law, however, we clarify that withholding of the leave encashment is not by virtue of the provisions of the Bihar Pension Rules or the leave rules, but, encashment of leave, being governed by executive instructions, its withholding by executive instruction is permissible and is in accordance with law. To that effect, the findings recorded and the observations made in the case of Vijay Kumar Mishra (supra) may be treated as incorrect and not indicating the correct position."
14. In Sudhakar Babu supra, though the disciplinary proceedings against the applicant therein, had been concluded on 22.11.2019 with the passing of the final order, no retirement gratuity as well as leave encashment was paid which constrained the applicant therein, to file OA No.343/2021 before this Bench S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 15 OA 412/2024/CAT/BANGALORE BENCH wherein a direction was issued to the respondents to pay leave encashment and gratuity which indeed was paid without any interest for the delayed period as such the applicant therein, had preferred OA No.11/2022. In that context it has been observed thus:
"7. The respondents have stated that there were ongoing disciplinary proceedings against the applicant which concluded on 22.11.2019. The delay from the date of conclusion of the disciplinary proceedings i.e. 22.11.2019 to the date on which payment was made i.e., 21.10.2021, has been justified by the respondents on the grounds that after concluding of the disciplinary proceedings, Administrative Services Division was required to examine the matter in consultation with Vigilance Wing, DAR Section as well as with Regional office, Bangalore Central with regard to ascertaining of complete vigilance status as well as status of implementation of penalty order. It has been further stated that due to sudden lock down in early 2020 the functioning of the offices throughout India got affected. The matter regarding release of retiral dues to applicant was examined from all aspects and after adjustment of penalty order, all retiral dues were paid to the applicant on 22.10.2021.
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'
16 OA 412/2024/CAT/BANGALORE BENCH
8. The contention of the respondents is that the leave encashment which was due on the date of retirement, was withheld on account of the ongoing disciplinary proceedings and the criminal case against the applicant. This has to be examined in consonance with the CCS Leave Rules 1972. A careful perusal of the provision contained in Rule 39(3) of CCS Leave Rules 1972 reads as follows .....................................................
9. In the present case, the respondents have not produced any record to show whether the Disciplinary Authority had come to any conclusion that there was a possibility of any money recoverable from the applicant on conclusion of proceedings against him. The Articles of charges filed against the applicant reveal that the alleged irregularities committed were related to return of seized records from certain firms i.e. M/s Chaitanya and Nalanda Institutions, which had been seized by the Squad earlier. There was no indication in the charge sheet that this alleged lapse on the part of the applicant had resulted in any loss to the Government exchequer.
10. The final penalty order passed by the respondents does not indicate any such loss. The penalty imposed on the S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 17 OA 412/2024/CAT/BANGALORE BENCH applicant related only to a pension cut of 20% for a period of 5 years and did not envisage any recovery of any Government dues from the applicant. Hence, withholding of leave encashment for a period of more than 7 years i.e. from 01.4.2014 till 22.10.2021, is not supported under Rule 39(3) of CCS Leave Rules 1972, and cannot be justified. The applicant, on his part, is not responsible for this delay which is directly attributable to the respondents. The respondents are therefore liable to pay interest for the undue delay in release of leave encashment due to the applicant at the time of his superannuation."
15. In the present case, indisputably at the time of superannuation of the applicant, disciplinary proceedings as well as judicial proceedings were pending. The concerned office of the respondents with the approval of the competent authority vide letter dated 25.05.2018 and 22.06.2018 has intimated to the applicant about the decision in not releasing the amount of leave encashment in exercise of powers conferred under the Rule 39(3) of the Leave Rules. Though the disciplinary proceedings have been concluded vide order dated 30.03.2022 to impose the penalty of cut in pension at the rate of 30% for a period of 7 years, upon the applicant, S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 18 OA 412/2024/CAT/BANGALORE BENCH judicial proceedings in the criminal case in Spl.CC.No.451/2016 is still pending wherein, charges were framed against the applicant for the offences punishable under Sections 7, 8 and 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 and the order on hearing before charge was pronounced on 24.07.2017 by the jurisdictional Court. The criminal case may end up in acquittal of the applicant, which will enable the applicant to receive all the benefits and if the verdict goes adverse, then all such benefits may cease together as contended by the respondents. Indeed the applicant has suppressed the pendency of the criminal proceeding before the competent jurisdictional Court and has referred only to the disciplinary proceedings concluded.
16. In Arvind Kumar Singh supra, Full Bench of the Hon'ble Patna High Court noticing that there was no statutory provision, rule or regulation providing for encashment of earned leave, the same being based on executive instructions, referring to no provision provided for, under Bihar Pension Rules and a provision has been made for grant of earned leave by an executive instruction and while making the said provision a condition was stipulated that S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 19 OA 412/2024/CAT/BANGALORE BENCH an employee shall not be granted encashment of earned leave till finalization of the departmental inquiry or the judicial proceeding, held that when an employee is facing a criminal case or a departmental proceeding, at the time of his retirement, the Government is well within its power in withholding his leave encashment. Thus, it is clear that the encashment of earned leave and the conditions for the same, both were provided under the executive instructions. In the present set of facts, provision for grant of earned leave and encashment of earned leaveare provided under the statutory leave Rules. Similarly, power to withhold whole or part of encashment equivalent of earned leave is conferred on the authority competent to grant leave as per Rule 39(3) of the Leave Rules. Hence, the legal principles enunciated in Arvind Kumar Singh supra, would be squarely applicable moreover, the statutory Rules have more weightage and gain precedence over the executive orders.
17. In my considered view, the decision rendered by this Tribunal in Sudhakar Babu supra, is distinguishable. In the said case, adjudication was focused on the interest aspect. Proceedings S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 20 OA 412/2024/CAT/BANGALORE BENCH were concluded in the said matter. Payment of leave encashment was released and the lis was only with respect to the interest portion. No prediction could be made regarding the outcome of the pending criminal proceedings. Possibility of some money becoming recoverable from the applicant on conclusion of the criminal proceedings pending against the applicant, cannot be ruled out completely. Merely on surmises and conjunctures no one can anticipate/assess/predict the outcome of the pending criminal proceeding. Thus, in the circumstances as narrated above, withholding of encashment of earned leave in terms of power conferred under Rule 39(3) of Leave Rules, until the conclusion of criminal proceedings cannot be held to be illegal.
18. In Dr.A.Selvaraj supra, the fulcrum of dispute was in respect of the interest on the delayed payment of retirement benefits. In the context of inter se dispute between the Management, Secretary and the Government, who were responsible for the delay in making the payment and/or settling the dues, it was held that the retired employee should not be made to suffer for no fault of his. There is no cavil on this legal proposition but at the S S SARALADEVI SARALADE CAT, BANGALORE 2025.03.03 VI 10:02:46-12'00' 21 OA 412/2024/CAT/BANGALORE BENCH cost of repetition, it is observed that pendency of the criminal proceeding against the applicant in the present case makes the difference. The judgments referred to by the learned Counsel for the applicant are not applicable to the facts of the present case and are distinguishable. Hence for the reasons aforesaid, OA lacks merit and deserves to be rejected.
19. Resultantly, OA stands dismissed. No order as to costs.
(JUSTICE S.SUJATHA) MEMBER(J) sd.
S S SARALADEVI
SARALADE CAT, BANGALORE
2025.03.03
VI 10:02:46-12'00'