KJ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1322 OF 2008 1) Bazlur Rahman Fazlur Rahman ) Indian inhabitant, Muslim, ) aged : 59 years, residing at ) 7/823, Moon Rick, New Hall Road) Kurla, Mumbai-400 070 )..Petitioner V/s. 2) Municipal Corporation of Brihan) Mumbai, a Body constituted ) under Bombay Municipal ) Corporation Act, 1888, as ) amended, having its office at ) Mahapalika Marg, Mahapalika ) Building, Fort, Mumbai-400 001 ) 2) The Municipal Commissioner ) Municipal Corporation of Brihan) Mumbai, Mahapalika Bldg., Fort,) Bombay-400 001. ) 3) The Education Officer, B.M.C. ) having his office at Hindu ) Colony, Municipal School Bldg.,) Opp. Raja Shivaji Vidyalaya, ) Lakhamsi Nappu Road, Dadar (E),) Mumbai-400 014. )..Respondents ---- Mr.S.P.Ghaste for the petitioner. Mrs.P.A.Purandare AGP for the respondents. ---- Coram : F.I.Rebello & R.S.Mohite,JJ Date : 21.11.2008. Judgment :- ( Per : F.I.Rebello,J) 1. Rule. By consent heard forthwith. 2. The petitioner was an employee of respondent : 2 : no.1/Municipal corporation. The petitioner superannuated with effect from 1st May, 2007 before office hours. According to the petitioner on his superannuation he was entitled to the following retiral benefits :- (i) Gratuity = Rs.3,50,000/- (ii) Encashment of leave at credit on 30.4.2007 = Rs.3,13,270/- (iii) Leave Travel Concession on retirement = Rs. 6,000/- (iv) Pension Commutation value = Rs.3,38,151/- ----------------- Total Rs.10,07,421/- ----------------- 3. The petitioner had initially joined the office of respondent no.1 on 1.8.1972 on the post of Municipal Primary Teacher, and ultimately retired as Deputy Education Officer. According to the petitioner in terms of the Municipal Corporation of Greater Mumbai Pension Rules (1953) (hereinafter referred to as the "Pension Rules"), Petitioner was entitled to payment of his regular municipal pension as also commutation of pension. Presently the petitioner is being paid provisional pension. As commutation was not permitted and the final pension determined he is entitled to interest on the date of payments. Also according to the petitioner, the respondents are legally duty bound under sub-section : 3 : 3 of Section 7 of the Payment of Gratuity Act, 1972, to pay gratuity. As the petitioner was not paid his retiral benefit as set out earlier, he has made various representations. By his communication dated 27.7.2007 addressed to Education officer with copies endorsed to various officers, he drew their attention to his grievances. Petitioner was orally informed in the office of respondent no.3 that the provisions contained in circulars of the respondent bearing No.DPAR/FGR/8 dated 26th June, 2000 and No.DPAR/FGR/25 dated 18th December, 2000 would apply to him as there were preliminary enquiries against him and as such he would only be paid provisional pension and other dues would be paid after completion of the enquiries. According to the petitioner the said circulars are not applicable to his case and on failure to make payment, he would be compelled to initiate legal proceedings. 4. The petitioner was informed by a letter dated 13.8.2007 that payment of provisional pension has been started in the month of August-2007. Petitioner was fully informed that remarks of Deputy Accountant-II were called whether retiral benefits can be withheld when preliminary enquiries are pending considering circulars dated 26.6.2000 and 18.12.2000. As the petitioner is not being paid his retiral benefits, the present petition. : 4 : 5. Reply has been filed on behalf of the respondents by Shri Thakare Arun Jagannath, Education officer. It is pointed out that the petitioner was served with two charge-sheets dated 17.3.2008 and 26.3.2008 with due sanction of the Additional Municipal Commissioner. Enquiry is in progress. In terms of the Pension Rules the amount of gratuity and commutation of pension have been withheld. The pension of the petitioner has already been started w.e.f. 1.5.2008 and the amount of N.C.P.F. in the sum of Rs.9,58,345/- has been paid. Encashment of leave has been withheld as full fledged departmental enquiries are pending against the petitioner. Respondents therefore contend that the petition be dismissed. 6. From the averments, the following three retiral benefits are due and payable which according to the petitioner are not being paid to the petitioner :- (a) Permitting the petitioner to commute his pension as also getting regular pension instead of provisional pension ; (b) Payment of withheld gratuity ; (c) Encashment of leave existing to his credit on : 5 : the date of his retirement. 7. The following questions arise for consideration (1) In the event preliminary investigation was pending before superannuation though no show cause notice was issued at that stage and departmental proceedings have been initiated after superannuation, is the petitioner entitled to commutation of pension and also entitled for regular pension before the departmental proceedings are conducted. (2) Whether pension is payable to the petitioner under the provisions of the Payment of Gratuity Act in view of the departmental proceedings which are pending. (3) Is it open to the respondents to withhold encashment of leave to the petitioner’s credit merely because departmental enquiry has been commenced after his superannuation. 8. No departmental enquiry was pending at the time of superannuation of the petitioner, though a preliminery enquiry was being conducted and petitioner was allowed to superannuate. The show cause notice and the chargesheet have admittedly : 6 : been served on the petitioner after superannuation. The petitioner in the present petition has not challenged the validity of the departmental proceedings initiated against him after superannuation. In fact, the petitioner has been participating in the said proceedings. In the light of these facts and the earlier stated facts, the questions raised need to be answered. 9. The respondent no.1 Corporation and its officers are governed by the provisions of The Mumbai Municipal Corporation Act, 1888 (which hereinafter shall be referred to as the Act) and the various rules regulations and bye-laws made thereunder. Section 81 confers a power on the standing committee to frame regulations for grant of leave etc. Section 81(f) reads as under :- " Determining the conditions under which the said officers and servants, or any of them, shall on retirement or discharge receive pensions, gratuities or compassionate allowances and under which [the surviving spouse or children and in the absence of the surviving spouse or children the parents brothers and sisters if any,] dependent on any of the said officers and servants, shall, after their : 7 : death, receive compassionate allowances and the amounts of such pensions, gratuities or compassionate allowances." . Regulations made in terms of section 81(2) of the Act have to be confirmed by the Corporation and in so far as clause-(f), it has to be confirmed by the State Government. The pension rules, it is submitted, have been made pursuant to the powers conferred under the aforesaid section and these have been confirmed by the State Government. 10. Under rule 45-A of Pension Rules in respect of municipal employees governed by rule 45-(b), the competent authority has to sanction provisional pension and this has to be renewed after every six months upto and including the date on which, after the conclusion of departmental or judicial proceedings final orders are passed by the competent authority. The provisional pension is to be adjusted against final retirement benefits. 11. The first issue is commutation of pension and payment of regular pension and interest thereon for failure to pay in time. Under rule 60 of the Pension Rules, except cases covered by regulation : 8 : 61, a pension shall be payable from the date on which the petitioner ceases to be in municipal service. The next relevant provision is rule 14(B). Which reads as under :- "Rule 14B (1) Competent authority may, by order in writing, withhold or withdraw a pension or any part of it whether permanently or for specified period and also order the recovery from such pension, the whole or part of any pecuniary loss caused to the Corporation if, in any departmental or judicial proceedings, the pensioner is found guilty of grave misconduct or negligance during a period of his service including service rendered upon re-employment after retirement. Provided that a part of pension is withheld or withdrawn the amount of remaining pension shall not be reduced below the minimum pension fixed." (emphasis supplied) . This rule would contemplate that pension can be withheld or withdraw permanently or for a specified period and also an order for recovery can be ordered from such pension, the whole or part of any pecuniary loss caused to the Corporation if any : 9 : departmental or judicial proceedings if the pensioner is found guilty of grave misconduct or negligance during a period of his service. It is an enabling power of the Corporation even if an employee has retired to pass an order. In terms of rule 14-B 2(b) of the Pensions Rules, if departmental proceedings are not initiated by the municipal employee in service before retirement or during re-employment they shall not be instituted save with the sanction of the competent authority and shall not be in respect of any event which took place more than four years before such institution. There are some other requirements. Therefore, it is open to the respondents even on superannuation of an employee to commence departmental proceedings. The only limitation being in the matter of limitation for commencement of proceedings. 12. The next relevant Pension Rule is rule 67-A (ii) which reads as under :- " No Municipal employee against whom departmental/judicial proceedings have been instituted/continued or who is under investigation before the date of retirement or a pensioner against whom such proceedings are instituted, shall be eligible to commute a fraction of his : 10 : provisional pension or pension during the pendency of such proceedings." (emphasis supplied) . The application for commutation of pension has to be made after the date of retirement but not later than one year of the date of retirement or issue of final order in respect of those facing departmental proceedings. There is no averment in thepetition that the petitioner on his superannuation has applied for commutation of pension. The rule therefore, provides for situations under which commutation can be withheld. Firstly when departmental proceedings have been instituted and/or continue before superannuation ; secondly if against a municipal employee investigations are on before the date of retirement and thirdly against a pensioner against whom departmental proceedings are instituted. Therefore even if we consider only for the sake of argument that the preliminary enquiry at the time of superannuation does not fall under the expression investigation, without answering this issue, in the instant case admittedly departmental proceedings have been instituted against the pensioner. The distinction between the 1st and 3rd situation is that the 1st is against the municipal employee and the third is against a pensioner meaning a person who has superannuated. A : 11 : harmonious interpretation of the provisions would result in holding that if on superannuation departmental proceedings are commenced against the pensioner, then considering rules 67-A (ii) such pensioner is not entitled for commutation of the pension. 13. Regular pension can also not be finalised as the proceedings are pending against the petitioner. In our opinion, therefore, the petitioner is not entitled to any relief seeking commutation of pension or final or regular pension. The 1st contention as raised on behalf of the petitioner, therefore, must be rejected. 14. The next contention urged on behalf of the petitioner is for gratuity which it is contended must be paid under provisions of Payment of Gratuity Act. Under The Payment of Gratuity Act, 1972 (hereinafter referred to as the "Gratuity Act") the provisions of the Gratuity Act apply apart from a factory to shops or establishments within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months. It can also apply to other establishment in respect of which the Central Government by a Notification : 12 : specified as set out in section 3(c) of the Payment of Gratuity Act. There is no notification by the Central Government covering employee of the Corporation. 15. Under the Bombay Shops and Establishments Act,1948, shop is defined under section 2-A to be a shop, commercial establishments, residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment and other establishments and for certain other purposes or entertainment to which the act applies and includes such other establishments as the State Government by their notification in the official gazattee declare to be an establishment for the purpose of the Act. Shop has been defined under section 2(27) to be any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store-room, godown, warehouse or work place, whether in the same premises or otherwise, in connection with such trade or business but does not include a factory, a commercial establishment, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment etc. Factory is defined to mean any premises within the meaning of the provisions of the Factories Act. Local authority has been defined to mean the body : 13 : specified in schedule 1-A and includes any other body which the State Government may, by notification in the Official Gazette, declare to be a local authority for the purposes of this Act under Section 2(15). Under schedule 1-A are set out the Corporation and municipalities, would therefore, be clear that a local authority does not fall either with the meaning of its expression, establishment, factory or shops and consequently considering section 1(3) is not applicable to the local authorities. 16. The answer to this question being in the negative ordinarily the claim of the petitioner for gratuity would have to be rejected. However, section 81(f) provides for grant of terminal benefits pursuant to which the pension rules have been made by respondent no.1. Under rule 57 a municipal employee is entitled to death-cum-retirement gratuity. The rate of gratuity is also set out in rule-57. Rule 45-A (3) reads as under :- " No gratuity shall be paid to the municipal employee until the conclusion of departmental judicial proceedings and issue of final orders thereon." : 14 : . Therefore, though a municipal employee is entitled to death-cum-retirement gratuity in the event there are departmental proceedings, then gratuity is not payable until the conclusion of such proceedings and issuance of final order thereon. 17. The last issue for consideration is in the matter of encashment of leave. The respondent/corporation has framed what are known as Bombay Municipal Corporation (Service) Regulations, 1989. Regulation-169 provides that earned leave and half pay leave is entitled to be the cash equivalent of leave salary which includes dearness allowance on superannuation or premature voluntary retirement and in case of death while in service and resignation. On behalf of the respondents learned Counsel has not brought to our attention any provision whereby leave encashment can be withheld at the time of superannuation on the ground that a preliminary enquiry is going on and/or that on superannuation a departmental enquiry has been initiated. In the absence of such a power, it is not open to the respondents to withhold the encashment of leave lying to the credit of the employee at the time of superannuation. The respondents in withholding the same has acted without jurisdiction. Consequently, the petitioner is entitled to encashment of the leave lying to his account. : 15 : 18. Under these circumstances, rule made partly absolute in as much as the respondents are directed to forthwith release the cash equivalent of the leave lying to the credit of the petitioner at the time of his superannuation and in terms of regulation 169 of the service regulations. . Under the circumstances of the case, each party to bear their own costs. (R.S.Mohite,J) (F.I.Rebello,J)