IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. C.W.P. (T) No. 15921 of 2008. Reserved on: 22.06.2011. Decided on 12.07.2011. _____________________________________________________ O.P. Mukhija. …Petitioner. -Versus- H.P. State Cooperative Milk Producers’ Federation and another. …Respondents. Coram: The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. __________________________________________________________ For the petitioner. : Mr. Vikas Bhardwaj, Advocate. For respondent No. 1. : Mr. M.R. Verma, Advocate. Respondent No. 2 already ex parte. ---------------------------------------------------------------------------------------- Rajiv Sharma, Judge: A memorandum was issued to the petitioner on 24th May, 2004 vide Annexure A-2. He was also supplied the statement of articles of charges and statement of imputation of misconduct. He filed reply to the same. Thereafter, the Inquiry Officer was appointed. Petitioner retired as Plant Engineer from the respondent-Federation on 31st May, 2006. He made a representation to the Inquiry Officer on 21.08.2007, bringing to his notice that since he has retired from service, the disciplinary proceedings should be closed. The same prayer was reiterated on 7th September, 2007. 2. Respondents have not chosen to file any reply. 3. Mr. Vikas Bhardwaj, learned counsel for the petitioner has strenuously argued that the disciplinary proceedings could 1 Whether the reporters of the local papers may be allowed to see the judgment?. Yes. - 2 - not continue after the petitioner has been permitted to retire on 31.05.2006 vide Annexure A-1. He then argued that there is no provision either in the byelaws framed by the respondent- Federation nor in the H.P. State Cooperative Milk Producers’ Federation Limited Employees Service Rules, 1983 to continue the disciplinary proceedings after retirement. 4. Mr. M.R. Verma, learned counsel for respondent No. 1 has strenuously argued that the disciplinary proceedings could be continued even after the petitioner has been permitted to retire on 31.05.2006. 5. I have heard the learned counsel for the parties and gone through the pleadings carefully. 6. Respondent-Federation has framed the Rules called ‘the H.P. State Cooperative Milk Producers’ Federation Limited Employees Service Rules, 1983’ (hereinafter referred to as ‘the Rules’) to regulate the recruitment and conditions of service of the employees employed under the Federation. Rule-2.17 provides the superannuation and retirement, which reads thus: “2.17 a) Every employee appointed to the service shall ordinarily retire on attaining the age of 58 years. b) Notwithstanding anything contained in clause (a) above, any employee may be retired by the appointing authority or permitted at his own request to retire from the service on attaining the age of 50 years or after 20 years of service. c) Notwithstanding anything contained in clause (a) and (b) the appointing authority shall if it is of the opinion that it is in the interest of the Federation to do so, have the absolute right, by giving an employee prior notice in writing to retire him on the date on which he completes twenty years of service or attains - 3 - 50 years of age or any date thereafter to be specified in the notice. Provided that the period of such notice shall not be less than three months. Provided further that there atleast three months notice is not given or notice for a period of less than three months in given the employee shall be entitled to claim remuneration equivalent to the amount of his pay and allowances at the same rates at which he was drawing the same immediately before the date of retirement for a period of three months or for the period by which such notice falls short of three months as the case may be.” 7. According to Rule-2.17, notwithstanding anything contained in any other regulation and without prejudice to such action to which employee becomes liable under any other law or regulation, the employee of the federation shall be governed by the discipline, punishment and appeal rules given in Appendix-C. 8. The manner in which the penalty is to be imposed has been provided under Rule-1.1, which reads thus: “1.1 Not-withstanding anything contained in any other regulation and without prejudice to such action to which an employee becomes liable under any other law or regulations for the time being in force, any or all the following penalties may be imposed for good and sufficient reasons on any member of the services: MINOR PENALTIES. i) Censure. ii) Withholding of increment of pay with or without accumulate effect. iii) Withholding of promotion. - 4 - iv) Recovery of Amounts in full or part of any pecuniary loss caused by the employee to the federation by negligence or otherwise. MAJOR PENALTIES. v) Reduction to a lower stage in the time scale of pay. vi) Reduction to a lower category or posts. vii) Compulsory retirement. viii) Termination from service. ix) Dismissal from service. 9. Rule-1.4 prescribes the authority which is competent to impose punishment. There is no provision under the service Rules which permits the Federation to continue with the disciplinary proceedings after retirement of an employee. As per Rule-2.17 (a), an employee has to retire on attaining the age of 58 years. There is no stipulation in Rule 2.17 that an employee cannot be permitted to retire if the disciplinary proceedings are pending against him. There is no provision like Rule-9 of the CCS(Pension) Rules, which permits holding of disciplinary proceedings against an incumbent even if he has retired, permitting the employer to withhold pension or retiral benefits. 10. Learned Single Judge of Karnatka High Court in G.K. Thirunarayana Iyengar Versus State of Karnatka and others, 1992 Labour & Industrial Cases has held that in absence of rule permitting continuance or initiation of fresh proceedings having regard to monetary loss caused by his misconduct, the - 5 - continuance of disciplinary proceedings after superannuation were declared illegal. 11. Their Lordships of the Hon’ble Supreme Court in Bhagirathi Jena versus Board of Directors, O.S.F.C. and others (1999) 3 Supreme Court Cases 666 have held that the inquiry would lapse in the absence of specific provision for its continuance after retirement. Their Lordships have further held that the respondent-Corporation could not continue it even for the purpose of effecting recovery from the appellant’s provident fund and the appellant was held entitled to all retirement benefits including full salary for the suspension period preceding the retirement. Their Lordships have held as under: “6. It will be noticed from the abovesaid regulations that no specific provision was made for deducting any amount from the provident fund consequent to any misconduct determined in the departmental enquiry nor was any provision made for continuance of the departmental enquiry after superannuation. “7. In view of the absence of such a provision in the abovesaid regulations, it must be held that the Corporation had no legal authority to make any 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 retiral benefits. Once the appellant had retired from service on 30.06.1995, there was no authority vested in the Corporation for continuing the departmental enquiry even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority, it must be held that the - 6 - enquiry had lapsed and the appellant was entitled to full retiral benefits on retirement. 12. Similarly, a Division Bench of Bombay High Court in Ramdas Govind Bakhle Versus Maharashtra State Financial Corporation 2000(1) Labour Law Journal, 1307 has held that in absence of any provision for continuing disciplinary proceedings (after superannuating) in the regulations, such continuance was declared illegal. Their Lordships have held as under: “9. We were apprised of the Staff Regulations styled as ‘Bombay State Financial Corporation (Staff) Regulations, 1954’ which deal with disciplinary matters. The learned counsel for the respondent cited Regulation Nos. 25, 26 and 40 and contended that these empower the respondent-Corporation to withhold provident fund and gratuity. We are unable to read in these regulations any such power to take action after the employee has ceased to be in service. Regulation 40 empowers the Corporation to recover from the pay of the whole or part of any pecuniary loss caused to the Corporation by negligence or misconduct. Learned counsel Shri Ramani invited our attention to Payment of Gratuity Regulations, particularly Regulation No. 7. This regulation is relevant and reads as under: “Notwithstanding anything contained in the foregoing Regulations, the Corporation may, while determining the amount of gratuity payable to an employee, take into account any financial loss caused to the Corporation by reason of inefficiency or misconduct of such employee and grant reduced amount of gratuity: Provided that the difference between the amount of gratuity ordinarily admissible under the foregoing Regulations and the amount of - 7 - gratuity so reduced shall not exceed the amount of the financial loss caused to the Corporation.” 10. Learned counsel Shri Ramni contended that the Corporation has a right under these Regulations to deduct from the gratuity amount payable to the petitioner such amount not exceeding the financial loss to the Corporation caused on account of inefficiency of the petitioner. Can the power under Section 7 of the Gratuity Regulations be exercised to hold an employee guilty of misconduct without holding a disciplinary enquiry. Our answer is a categorical no. Regulation 7 can only be consequent to a disciplinary enquiry holding an employee guilty of misconduct. Second question is, whether the Corporation is entitled to continue the disciplinary enquiry beyond the date on which the employee cases to be in service. Neither in the Service Regulations nor in the Gratuity Regulations is there any provision that the disciplinary enquiry commenced while the employee was in service can be continued even after he cases to be in service. Learned counsel for the petitioner contends that the decision in Bhargirathi Jena’s case (supra) applies to this case. Once the petitioner retired from his service on May 31, 1997, all proceedings held thereafter must therefore be held invalid. The continuation of the disciplinary enquiry after ay 31, 1997, and the final order dated September 10, 1997 directing withholding of certain amounts of provident fund and gratuity payable to the petitioner are both illegal and unsustainable.” 13. Their Lordships of the Hon’ble Supreme Court in Chandra Singh and others Versus State of Rajasthan and another (2003)6 Supreme Court Cases 545 have held that a departmental proceeding can continue so long as the employee is - 8 - in service. In the event, a disciplinary proceeding is kept pending by the employer the employee cannot be made to retire. 14. There must exist specific provision in the pension rules in terms whereof, whole or a part of the pension can be withheld or withdrawn wherefor a proceeding has to be initiated. Since no rule has been brought to the Court’s notice providing for continuation of such proceeding despite permitting the employee concerned to retire. In the instant case, Mr. M.R. Verma, learned counsel for respondent No. 1 has failed to point out any provisions permitting the Federation to continue with the departmental proceedings after the petitioner had retired on 31.05.2006. He has also not brought to the notice of the Court any provisions under which the retiral benefits of the petitioner can be withheld or withdrawn. 15. Mr. M.R. Verma, learned counsel for respondent No. 1 has relied upon Secretary, Forest Department and others Versus Abdur Rasul Chowdhury (2009) 7 Supreme Court Cases 305 in support of his contention that the departmental proceedings could continue in the present case. However, the judgment relied upon by Mr. M.R. Verma, learned counsel is distinguishable. In this case, there was an enabling provision for continuance of enquiry after retirement, therefore, it was permissible to continue with the inquiry. Their Lordships have clarified that such continuance was for imposition of penalty like withholding or withdrawing of pension mentioned in relevant rules. 16. The second judgment cited by Mr. M.R. Verma, learned counsel for respondent No. 1, i.e., V. Padmanabham - 9 - Versus Government of Andhra Pradesh and others, (2009) 15 Supreme Court Cases 537 is also distinguishable. In this case also, there was a provision under Rule 9(2) of Andhra Pradesh Pension Code, whereby the disciplinary proceedings initiated against the appellant could continue. 17. What emerges from the observations and discussions made hereinabove, is that there is no provision under the service Rules which permits the continuance of the departmental proceedings after the retirement of an employee of the Federation. There is no rule which is akin to Rule-9 of the CCS (Pension) Rules, permitting the withholding or withdrawing of pension after holding an inquiry. 18. Accordingly, in view of the observations and discussions made hereinabove, the petition is allowed. Annexure A-2, dated 24.05.2004 is quashed and set aside. Respondents are directed to release the retiral benefits to the petitioner within a period of six weeks from the date of production of a certified copy of this judgment by the petitioner. The pending application(s), if any, also stands disposed of. No costs. (Rajiv Sharma) Judge July 12, 2011. (bhupender) - 10 - `