Bharat Sanchar Nigam Limited And 4 ... vs Rameshwar Dayal
2017 Latest Caselaw 2927 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

AFR
 
Reserved on 04.04.2017
 
Delivered on 03.08.2017
 
Court No. - 3
 

 
1.	Case :- SERVICE BENCH No. - 1682 of 2013
 

 
	Petitioner :- Bharat Sanchar Nigam Limited and others
 
	Respondent :- Rameshwar Dayal
 
	Counsel for Petitioner :- Asit Kumar Chaturvedi, Pratul Kr. 	Srivastava
 
	Counsel for Respondent :- R.C. Saxena, Yogesh Saxena
 
 
 
2.	Case :- SERVICE BENCH No. - 2214 of 2016
 

 
	Petitioner :- Bharat Sanchar Nigam Ltd. thorough Chairman 	Cum Managing Director and others
 
	Respondent :- Siya Ram Agrahari S/o Late Mewa Lal Agrahari
 
	Counsel for Petitioner :- Pratul Kumar Srivastava
 
	Counsel for Respondent :- Asim Kumar Singh, R.C. Saxena
 

 
Hon'ble Sudhir Agarwal,J.

Hon'ble Virendra Kumar-II,J.

(Delivered by Hon'ble Sudhir Agarwal, J.)

1. Heard Sri Asit Kumar Chaturvedi, Senior Advocate, assisted by Sri Pratul Kumar Srivastava, learned counsel for petitioners and Sri R.C. Saxena, learned counsel for respondent(s).

2. In these matters though individual facts are different but issues and questions of law involved are same, therefore, both have been heard together and are being decided by this common judgment.

3. Writ Petition No. 1682 (S/B) of 2013 (hereinafter referred to as "First Petition") has been filed by Bharat Sanchar Nigam Limited and its authorities (hereinafter referred to "BSNL") being aggrieved by judgment and order dated 24.10.2013 passed by Central Administrative Tribunal, Lucknow Bench, Lucknow (hereinafter referred to as "Tribunal") in Original Application (hereinafter referred to "O.A.") No. 504 of 2012.

4. Tribunal has allowed aforesaid O.A. and quashed order dated 29.02.2012 and also directed petitioners to release admissible pension and other retiral dues to applicant-respondent-1, Rameshwar Dayal, within a period of one month from the date of receipt of copy of order. Rest of the reliefs sought in O.A., by applicant-respondent-1, have been rejected.

5. Writ Petition No. 2214 (S/B) of 2016 (hereinafter referred to as "Second Petition") has been filed by BSNL and its authorities, assailing judgment and order dated 21.08.2015 passed by Tribunal in O.A. No. 545 of 2013. Tribunal has directed petitioners to release regular pension, commuted amount of pension and gratuity to applicant-respondent-1, Siya Ram Agrahari, without interest within two months from the date of receipt of copy of order. It has left open to petitioners to take action against applicant-respondent-1 subject to provisions of Rule 8 of Central Civil Services (Pension) Rules, 1972 (hereinafter referred to as "Rules, 1972").

6. Before proceeding further, it will be appropriate to have a bird eye view of relevant facts involved in both cases.

Brief facts in First Petition:-

7. Applicant-respondent-1, Rameshwar Dayal, was appointed as Junior Engineer (Electrical), (re-designated as Junior Telecom Officer (Electrical), (hereinafter referred to as "JTO(E)") in the pay-scale of Rs. 425-700 (revised to 1400-2300 w.e.f. 22.03.1986). He was promoted as Sub Divisional Engineer (Electrical) (hereinafter referred to as "SDE(E)") in the pay-scale of Rs. 650-1200; revised to Rs. 2000-3500 and further to Rs. 6500-10500 w.e.f. 01.01.1997. He was granted financial up-gradation under Assured Career Progression Scheme (hereinafter referred to as "ACPS") in the scale of Rs. 10000-15200 w.e.f. 03.10.2000. He was further promoted as Executive Engineer (Electrical) (hereinafter referred to as "EE(E)") in the pay-scale of Rs. 10000-15200 w.e.f. 23.10.2001.

8. After creation of BSNL, on bifurcation of Department of Telecommunication, in the shape of BSNL, applicant-respondent-1 also stood transferred and ultimately absorbed vide order dated 19.02.2004 w.e.f. 01.10.2000 on the terms and conditions mentioned therein. Terms and conditions with regard to pension and other retiral benefits as well as leave, mentioned in absorption order, read as under:-

"Pension/Gratuity:- Shri Rameshwar Dayal (SC) shall be eligible for pensionary benefits including gratuity as per the provisions of Rule 37-A of the CCS (Pension) Rules, 1972, as amended from time to time.

Family Pension:- The family of Shri Rameshwar Dayal (SC) shall be eligible for family pension as per provisions of Rule 37-A read with Rule 54 (13-B) of CCS (Pension) Rules, 1972, as amended from time to time.

Regulation of Pay on absorption:- To be regulated in terms of Para 4 of DOP&PW O.M. No. 4/18/87-P&PW (D) dated 05.07.1989.

Leave:- The Earned Leave and Half Pay Leave at the credit of Shri Rameshwar Dayal (SC) funds transferred to Bharat Sanchar Nigam Limited on the date of absorption as provided for under Sub-rule 24(b) of Rule 37-A the CCS (Pension) Rules.

Provident Fund:- The amount of subscription together with interest there on standing to the credit of Shri Rameshwar Dayal (SC) in the General Provident Fund account will be transferred to his/her new Provident Fund account under the Bharat Sanchar Nigam Limited as provided for under Sub-rule 24(a) of Rule 37-A of the CCS (Pension) Rules, as amended from time to time."

(emphasis added)

9. In BSNL, pay of applicant-respondent-1 as EE(E) was fixed in the pay-scale of Rs. 14500-18700 w.e.f. 01.10.2000. He was granted 2nd financial up-gradation in the scale of Rs. 16000-20800 (revised to Rs. 32900-58000) w.e.f. 03.10.2005. He was also granted 3rd financial up-gradation in the scale of Rs. 36600-62000 w.e.f. 03.10.2010. Applicant-respondent-1 was posted as EE(E), BSNL Electrical Division, Gorakhpur on 29.04.2000.

10. On 18.11.2011, he was arrested in a criminal case, i.e., RC No. 27(A) of 2011 under Section 120B IPC read with Section 7/13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 (hereinafter referred to as "PC Act, 1988") by Central Bureau of Investigation (hereinafter referred to as "CBI") as informed by Inspector, CBI, Anti Corruption Branch, Lucknow through letter dated 18.11.2011.

11. He was suspended vide order dated 21.11.2011, initially by Superintending Engineer (Electrical) U.P. (East) Electrical Circle, Lucknow and thereafter, this order was ratified vide order dated 24.11.2011, issued by Chief General Manager (Telecom), BSNL, U.P. (East) Telecom Circle, Lucknow w.e.f. 18.11.2011 in terms of Rule 30(2) of BSNL (Conduct, Discipline and Appeal) Rules, 2006 (hereinafter referred to as "BSNL (CD&A) Rules, 2006").

12. Applicant-respondent-1 was granted bail by Special Judge, CBI Court, Lucknow vide order dated 01.12.2011. He submitted joining report dated 08.12.2011 which was received in the Office of petitioners on 16.12.2011. Since no place of attachment on suspension was mentioned in the suspension orders dated 21.11.2011 and 24.11.2011, applicant-respondent-1 continued to remain attached with the Office of EE(E), BSNL Electrical Division, Gorakhpur during period of suspension.

13. Applicant-respondent-1 made a representation dated 19.12.2011 seeking revocation of suspension order on the ground that he has been released on bail by Court and is going to retire on 29.02.2012 and also running in financial hardship. Thereafter, he also made a request to change his Headquarter to Lucknow vide letters dated 21.12.2011 and 03.01.2012. While aforesaid letters remained unanswered, applicant-respondent-1 retired on attaining the age of superannuation on 29.02.2012. He was sanctioned subsistence allowance by CGM (Telecom) vide order dated 22.02.2012 and consequential orders were issued by EE(E), BSNL, Electrical Division, Gorakhpur on 28.02.2012 and 02.03.2012.

14. Applicant-respondent-1 was paid subsistence allowance from 18.11.2011 to 29.02.2012. After retirement, applicant-respondent-1 was paid leave encashment as per sanction order dated 21.08.2012, revised vide order dated 31.10.2012. He was also paid General Provident Fund as per sanction order dated 13.06.2012, Group Insurance in terms of letter dated 18.09.2012 and Provisional Pension in terms of Provisional Pension Payment Order dated 07.05.2012, issued by Controller of Communication (Accounts) in terms of Rule 69 of Rules, 1972.

15. In the criminal case, CBI filed charge-sheet in CBI Court on 30.03.2012. Vide letter dated 28.04.2012, applicant-respondent-1 was informed of 351 Earned Leave in credit of leave account. Office order was revised calculating leave encashment of 300 days Earned Leave. Petitioners withheld 14 days leave salary of applicant-respondent-1 since entire pensionary benefit was not made available to him. Applicant-respondent-1 filed aforesaid O.A. seeking following reliefs:-

"(i) Quash the adverse portion of the order dated 29.02.2012 i.e. "Vigilance Clearance of Sri Rameshwar Dayal (Staff No. 95165/HR No. 197606179) has been withheld vide vigilance cell BSNL Corporate Office, New Delhi letter No. 22-10/2011-VA-PL dated 29.02.2012. Now, therefore, Sri Rameshwar Dayal shall be eligible for "provisional pension" as contained in Annexure No. 1 and order dated 24.11.2011 as contained in Annexure No. 2.

(ii) issue a direction to pay gratuity with interest @ 18%.

(iii) issue a direction to pay full salary w.e.f. 19.11.2011 to 29.02.2012 with 18% interest.

(iv) issue any other order which this Hon'ble Tribunal deems just and proper."

16. Tribunal formulated two questions:-

"(i) whether after charge-sheet filed by CBI, the amount of gratuity and other retiral benefits can be withheld?

(ii) whether applicant-respondent-1 is entitled for salary for the period from 19.11.2011 to 29.02.2012?"

17. Tribunal has answered above questions in favour of applicant-respondent-1 and quashed order dated 29.02.2012 as prayed in para 8(1) of O.A. It has also directed petitioners to release admissible pension and other retiral dues to applicant-respondent-1.

18. Challenging aforesaid judgment of Tribunal, during the course of arguments, learned counsel for parties have referred to Rules 9(4), 69 of Rules 1972, Rules 30 and 31 of BSNL (CD&A) Rules, 2006 and Section 4(1) of Payment of Gratuity Act, 1972 (hereinafter referred to as "PG Act, 1972").

Brief facts in Second Petition:-

19. Applicant-respondent-1, Siya Ram Agrahari, was initially appointed as Technician in 1978, promoted as Wireless Operator in 1984 and JTO in 1996. He was also absorbed in BSNL w.e.f. 01.10.2000. Applicant-respondent-1 was posted as JTO and had independent charge of Telephone Exchange, Bansgaon, Telecom District Gorakhpur. He was carrying out all functions of Exchange like Executive Command, opening and closing numbers of exchange, and all other associated functions.

20. General Manager, BSNL, Telecom District, Gorakhpur sent letter dated 06.01.2005 allowing analysis report of unauthorized calls for the period September, 2003 to October, 2004 to CGM (Telecom). Between September, 2003 to February, 2004, Sri G.C. Chaurasia was SDE and from February, 2004 and onwards, Sri Hari Ram Shukla was SDE. Applicant-respondent-1 received charge-sheet dated 04.06.2007 and Corrigendum dated 13.03.2008.

21. Sri S.C. Tiwari was appointed as Inquiry Officer vide letter dated 10.07.2007. Applicant-respondent-1 nominated Sri B.L. Sharma as Defence Assistant who was permitted vide letter dated 05.09.2007 to work as "Defence Assistant" of applicant-respondent-1.

22. Applicant-respondent-1 changed his Defence Assistant by nominating Sri S.A. Khan who was permitted vide letter dated 04.10.2008. Preliminary hearing started on 05.09.2007 and disciplinary inquiry completed on 27.05.2009.

23. Evidence relied on by petitioners included sixty-eight documents and four witnesses. Defence evidence of applicant-respondent-1 included twenty-two documents and one witness.

24. Written brief was submitted personally on 20.06.2009 and applicant-respondent-1's defence was submitted on 01.08.2009. Inquiry report was submitted by Sri S.C. Tiwari on 18.12.2009/25.01.2010 alongwith letter dated 21.07.2010. Copy of inquiry report was served upon applicant-respondent-1 requiring him to submit representation, if any. Ultimately, punishment of reduction of pay by one stage for a period of two years with cumulative effect was imposed upon applicant-respondent-1 vide order dated 04.10.2010. It was also provided that he shall not earn future increment on pay and after expiry of two years, reduction will have cumulative effect.

25. Applicant-respondent-1 preferred an appeal on 22.01.2011 which was rejected vide order dated 28.04.2011. Thereafter, he filed O.A. No. 500 of 2011 challenging punishment and appellate orders dated 04.10.2010 and 28.04.2011 and same is pending.

26. During pendency of departmental inquiry, CBI registered FIR dated 18.09.2008 against applicant-respondent-1, Sri Hari Ram Shukla and Sri G.C. Chaurasia who were also punished after disciplinary inquiry conducted pursuant to charge-sheet dated 21.06.2007. Punishment orders were passed on 26.04.2008 in respect of Sri G.C. Chaurasia and 29.04.2010 in respect of Sri Hari Ram Shukla.

27. Aforesaid FIR was filed under Sections 120B and 420 IPC as well as Section 13(2) read with Section 13(1)(d) of P.C. Act, 1988. CGM (Telecom) sanctioned prosecution vide order dated 19.04.2010. Applicant-respondent-1 was arrested on 22.04.2011 by CBI resulting in his suspension vide order dated 22.04.2011 under Rule 30(2) of BSNL (CD&A) Rules, 2006. He was released on bail on 04.08.2011 and suspension order was revoked vide order dated 11.10.2011.

28. Criminal case is still pending in CBI Court in Case Crime No. 10 of 2010. Since applicant-respondent-1 was going to retire on 31.01.2013 and trial in CBI Court was pending, vide order dated 31.01.2013, applicant-respondent-1 was allowed provisional pension but gratuity and commuted value of pension, etc. were withheld till the decision in Case Crime No. 10 of 2010 pending in CBI Court.

29. As per Rules 69 of Rules, 1972, he has been paid Group Insurance on 30.04.2013. Provisional Pension Payment Order was issued on 28.02.2013 w.e.f. 01.02.2013.

30. Learned Senior Counsel appearing for petitioners has argued that withholding of gratuity and commuted pension was in accordance with law and Tribunal has erred in taking an otherwise view. Sri Chaturvedi, learned Senior Counsel placed reliance on Government of NCT (Delhi) Vs. K. Srivatsan 2014 (15) SCC 476.

31. Challenging order dated 31.01.2013 whereby final pension as well as gratuity and commuted value of pension was withheld, O.A. No. 545 of 2003 was filed by applicant-respondent-1. He had also sought a direction that all retiral benefits should be paid alongwith interest which has been allowed by Tribunal vide impugned judgment dated 21.08.2015.

32. Tribunal has referred to Rules 9 and 69 of Rules, 1972 as well as Section 4(1) of PG Act, 1972.

33. Now, we have to examine "whether the view of Tribunal that pension and gratuity could not be withheld, is in consonance with statutory provisions applicable to service of applicant-respondents-1".

34. Rules, 1972 have been framed by President of India in exercise of powers under proviso to Article 309 of Constitution of India. Same are applicable to all Government servants appointed substantively to civil services and posts in connection with affairs of Union which are borne on "pensionable establishments". Certain categories to which Rules, 1972 are not applicable are also provided in Rule 2 and it reads as under:-

"(a) railway servants;

(b) persons in casual and daily rated employment;

(c) persons paid from contingencies;

(d) persons entitled to the benefit of a Contributory Provident Fund;

(e) members of the All India Services;

(f) persons locally recruited for service in diplomatic, Consular or other Indian establishments in foreign countries;

(g) persons employed on contract except when the contract provides otherwise, and

(h) persons whose terms and conditions of service are regulated by or under the provisions of the Constitution or any other law for the time being in force." (emphasis added)

35. Admittedly, none of the applicant-respondents-1 comes within the excluded class of employees under Rule 2 of Rules, 1972.

36. Rules, 1972 are applicable to Government servants appointed substantively to Civil Services and posts in connection with affairs of Union. BSNL is neither a Department of Government of India nor applicant-respondents-1, in both matters, after their absorbtion can claim themselves to be Government servants appoionted to Civil Services and Posts in connection with affairs of Union. Therefore, Rules, 1972, as such, in our view, are not applicable to BSNL and its employees unless it can be shown that those Rules in substance have been adopted to be applied to employees of BSNL and specific provisions in this regard have been made. No such provisions made by BSNL for adoption of Rules, 1972 so as to apply in entirety to employees of BSNL including those who are absorbed therein, have been placed before us.

37. Learned counsel for petitioners, however, placed before us various Rules of Rules, 1972 to show that thereunder provisions have been made to withhold gratuity and pension if a departmental proceeding or judicial proceeding is initiated and pending. For the time being, we may examine these provisions also which have been referred and addressed to this Court.

38. The term 'gratuity' has been defined in Rule 3(1)(j) of Rules, 1972 and reads as under:-

"3(1)(j) 'gratuity' includes-

(i) 'service gratuity' payable under Sub-rule (1) of Rule 49;

(ii) 'retirement/gratuity' death gratuity/payable under Sub-rule (1) of Rule 50, and

(iii) 'residuary gratuity' payable under Sub-rule (2) of Rule 50;"

39. Rule 9 of Rules, 1972 confers power upon President to withhold or withdraw 'pension' and reads as under:-

"9. Right of President to withhold or withdraw pension. (1) The President reserves to himself the right of withholding a pension or gratuity, or both, either in full or in part, or withdrawing a pension in full or in part, whether permanently or for a specified period, and of ordering recovery from a pension or gratuity of the whole or part of any pecuniary loss caused to the Government, if, in any departmental or judicial proceedings, the pensioner is found guilty of grave misconduct or negligence during the period of service, including service rendered upon re-employment after retirement :

Provided that the Union Public Service Commission shall be consulted before any final orders are passed :

Provided further that where a part of pension is withheld or withdrawn the amount of such pensions shall not be reduced below the amount of rupees three thousand five hundred per mensem.

(2)(a) The departmental proceedings referred to in sub-rule (1), if instituted while the Government servant was in service whether before his retirement or during his re-employment, shall, after the final retirement of the Government servant, be deemed to be proceedings under this rule and shall be continued and concluded by the authority by which they were commenced in the same manner as if the Government servant had continued in service :

Provided that where the departmental proceedings are instituted by an authority subordinate to the President, that authority shall submit a report recording its findings to the President.

(b) The departmental proceedings, if not instituted while the Government servant was in service, whether before his retirement, or during his re-employment,-

(i) shall not be instituted save with the sanction of the President,

(ii) shall not be in respect of any event which took place more than four years before such institution, and

(iii) shall be conducted by such authority and in such place as the President may direct and in accordance with the procedure applicable to departmental proceedings in relation to the Government servant during his service.

(3) Deleted by Notification No. 38/189/88 (F), dated 04.02.1992.

(4) In the case of Government servant who has retired on attaining the age of superannuation or otherwise and against whom any departmental or judicial proceedings are instituted or where departmental proceedings are continued under sub-rule (2), a provisional pension as provided in Rule 59 shall be sanctioned.

(5) Where the President decides not to withhold or withdraw pension but orders recovery of pecuniary loss from pension, the recovery shall not ordinarily be made at a rate exceeding one-third of the pension admissible on the date of retirement of a Government servant,

(6) For the purpose of this rule,

(a) departmental proceedings shall be deemed to be instituted on the date on which the statement of charges is issued to the Government servant or pensioner, or if the Government servant has been placed under suspension from an earlier date, on such date; and-

(b) judicial proceedings shall be deemed to be instituted -

(i) in the case of criminal proceedings, on the date on which the complaint or report of a police officer, of which the Magistrate takes cognizance, is made, and

(ii) in the case of civil proceedings, on the date the plaint is presented in the Court." (emphasis added)

40. Sub-rule 1 of Rule 9 confers power to withhold full or part pension or gratuity or both, permanently or for specific period or order of recovery or any pecuniary loss caused to Government if in departmental or judicial proceedings, pensioner is found guilty of grave misconduct or negligence during the period of service, including service rendered upon reemployment after retirement. Obviously, Rule 9(1) is not applicable and attracted in the case in hand since it is not the case of petitioners that applicant-respondents-1, in both matters, have been found guilty of any grave misconduct or negligence during the period of service in any departmental or judicial proceedings. Applicant-respondent-1, Siya Ram Agrahari, was already punished vide order dated 04.10.2010, hence there was no occasion to pass order under Rule 9(1) of Rules, 1972.

41. Rule 9(2) provides that departmental proceedings if instituted while Government servant was in service shall be deemed to continue after retirement treating as if a Government servant had continued in service.

42. Rule 9(2)(b) provides departmental proceedings, if not instituted while Government servant was in service, same can be initiated provided sanction of President is obtained, and relates to an event which has taken place within four years before such institution. Such inquiry, if initiated, would be conducted in accordance with procedure applicable to departmental proceedings in relation to Government servant during his service.

43. Rule 9(4) provides that a Government servant who has retired on attaining age of superannuation or otherwise against whom any departmental or judicial proceedings are instituted or departmental proceedings are continued under sub-rule (2), shall be sanctioned provisional pension as provided in Rule 59.

44. Sub-rule (6) of Rule 9 explains that departmental proceedings shall be deemed to be instituted on the date on which statement of charges is issued to Government servant or pensioner, or if the Government servant is placed under suspension, from a such date. Judicial proceedings shall be deemed to be instituted in the case of criminal proceedings, on the date on which complaint or report of police officer, of which Magistrate takes cognizance, is made, and in the case of civil proceedings, on the date plaint is presented in the Court.

45. Rule 69 talks of provisional pension where departmental or judicial proceedings may be pending and reads as under:-

"69. Provisional pension where departmental or judicial proceedings may be pending.- (1)(a) In respect of a Government servant referred to in sub-rule (4) of Rule 9, the Accounts Officer shall authorize the provisional pension equal to the maximum pension which would have been admissible on the basis of qualifying service up to the date of retirement of the Government servant, or if he was under suspension on the date of retirement up to the date immediately preceding the date on which he was placed under suspension.

(b) The provisional pension shall be authorized by the Accounts Officer during the period commencing from the date of retirement up to and including the date on which, after the conclusion of departmental or judicial proceedings, final orders are passed by the competent authority.

(c) No gratuity shall be paid to the Government servant until the conclusion of the departmental or judicial proceedings and issue of final orders thereon :

Provided that where departmental proceedings have been instituted under Rule 16 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965, for imposing any of the penalties specified in Clauses (i), (ii) and (iv) of Rule 11 of the said rules, the payment of gratuity shall be authorized to be paid to the Government servant.

(2) Payment of provisional pension made under sub-rule (2) shall be adjusted against final retirement benefits sanctioned to such Government servant upon conclusion of such proceedings but no recovery shall be made where the pension finally sanctioned is less than the provisional pension or the pension is reduced or withheld either permanently or for a specified period."

(emphasis added)

46. A bare perusal of Rule 69(1)(c) makes it clear that it dis-entitles a Government servant to claim 'gratuity' until the conclusion of departmental or judicial proceedings and issue of final orders thereon.

47. Rule 9(4) read with 69 of Rules, 1972 no doubt authorizes Government to pay provisional pension and withhold gratuity when a departmental or judicial proceeding has been initiated or pending till final order passed therein but moot question is whether aforesaid Rules are at all applicable to BSNL and its employees. Rules, 1972 on their own are not applicable since the same applied to Government servants including Civilian Government servants in Defence Services appointed substantively to Civil Service post in connection with affairs of Union which admittedly BSNL and its employees are not.

48. Then comes Section 4 of PG Act, 1972 which talks of gratuity payable to an employee on termination of his employment and reads as under:-

"4. Payment of gratuity.- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.

Explanation.-- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season.

Explanation.-- In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.

(3) The amount of gratuity payable to an employee shall not exceed ten lakh rupees.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1),--

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused;

(b) the gratuity payable to an employee may be wholly or partially forfeited-

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment." (emphasis added)

49. Section 4 of PG Act, 1972 explains nature of termination of employment when gratuity would be payable to an employee, the method of computation of pension, the maximum amount of gratuity payable and the circumstances when it can be forfeited. Sub-section 6 of Section 4 of PG Act, 1972 which commences with non-obstante clause talks of forfeiture of gratuity of an employee in certain conditions.

50. Aforesaid provision nowhere deals with a situation where departmental or judicial proceedings are pending, no final decision has been taken, whether for the time being, gratuity even if payable to an employee under Section 4 of PG Act, 1972 can be withheld or not. To this effect, we find a specific provision under Rule 69(1)(c) read with Rule 9 of Rules, 1972.

51. Where a legislative Act governing terms and conditions of service of an employee has been enacted, the rules made under proviso to Article 309 of Constitution of India to the extent, provisions have been made in the principal legislation, becomes inoperative since Rules under proviso to Article 309 of Constitution of India can be made only when there is no principal legislation governing terms and conditions of service but where a principal legislation has been made which does not contain a provision dealing with certain situations. The question, whether to that extent rules framed under proviso to Article 309 of Constitution of India can be made applicable is an issue which, in our view, deserves to be answered in affirmance.

52. In Chandra Prakash Tiwari Vs. Shakuntala Shukla, AIR 2002 SC 2322, similar controversy arose before Supreme Court. While considering the above question in reference to U.P. Government Servants (Criterion for Recruitment by Promotion) Rules, 1994 (hereinafter referred to as "Rules, 1994") framed under proviso to Article 309 qua Government Order dated 05.11.1965 issued under Section 2 of Police Act, 1861 (hereinafter referred to as "Act, 1861") it held that Rules framed under proviso to Article 309 would not apply since the field is covered by the statutory order issued under Section 2 of Act, 1861. It may be noticed that before Apex Court not even a Rule framed under Act, 1861 was under consideration but only a Government Order dated 05.11.1965 was up for consideration and the question was whether such Government Order would prevail over Rules framed under proviso to Article 309. In that context, Court answered the question upholding superiority of statutory order issued under Section 2 of Act, 1861 and declined to give superiority to Rules framed under proviso to Article 309 of the Constitution.

53. This has been followed and reiterated by a Full Bench of this Court in the case of State of U.P. through Principal Secretary, Home & Ors. Vs. Rajendra Singh Anr., AIR 2016 Alld 100.

54. Learned counsel for applicant-respondent-1 have relied on two authorities of Supreme Court, i.e., Municipal Corporation of Delhi Vs. Dharam Parkash Sharma (1998) 7 SCC 221 and; State of Jharkhand and others Vs. Jitendra Kumar Srivastava and another (2013) 12 SCC 210. Reliance is also placed on a Madras High Court's judgment in Writ Petition No. 34163 of 2012 (Union of India and others Vs. V.V. Krishna Kumar and another), decided on 13.03.2015.

55. In State of Jharkhand and others Vs. Jitendra Kumar Srivastava and another (supra), Court has considered Rule 43(b) of Bihar Pension Rules, 1950. From the judgment it appears that there was no provision like Rule 69(1)(c) applicable therein. Therefore, aforesaid judgment, in our view, will not help applicant-respondents-1, in any manner, with respect to question raised in these writ petitions. Aforesaid judgment has been rendered in the context of different set of Rules applicable to Government employees of State of Bihar. This is evident from para 13 of judgment which reads as under:-

"A reading of Rule 43(b) makes it abundantly clear that even after the conclusion of the departmental inquiry, it is permissible for the Government to withhold pension, etc. only when a finding is recorded either in departmental inquiry or judicial proceedings that the employee had committed grave misconduct in the discharge of his duty while in his office. There is no provision in the Rules for withholding of the pension/gratuity when such departmental proceedings or judicial proceedings are still pending." (emphasis added)

56. In Municipal Corporation Delhi Vs. Dharam Prakash Sharma (supra), question up for consideration before Supreme Court was whether PG Act, 1972 could be made applicable to employees of Municipal Corporation of Delhi. This question was answered by Court holding as under:-

"The Payment of Gratuity Act being a special provision for payment of gratuity, unless there is any provision therein which excludes its applicability to an employee who is otherwise governed by the provisions of the Pension Rules, it is not possible for us to hold that the respondent is not entitled to the gratuity under the Payment of Gratuity Act. The only provision which was pointed out is the definition of "employee" in Section 2(e) which excludes the employees of the Central Government and State Governments receiving pension and gratuity under the Pension Rules but not an employee of the MCD. The MCD employee, therefore, would be entitled to the payment of gratuity under the Payment of Gratuity Act. The mere fact that the gratuity is provided for under the Pension Rules will not disentitle him to get the payment of gratuity under the Payment of Gratuity Act. In view of the overriding provisions contained in Section 14 of the Payment of Gratuity Act, the provision for gratuity under the Pension Rules will have no effect." (emphasis added)

57. In the present case, learned counsel for petitioners has not taken any stand to the extent that PG Act, 1972 is not applicable to employees of BSNL Establishment. Admittedly, BSNL is neither a department of Government nor itself can be said to be Central or State Government. It is a Company registered under the Companies Act, 1956 though owned by Government of India. Therefore, employees of BSNL are not excluded from the definition of 'employee' under Section 2(e) of PG Act, 1972. However, Section 4(5) of PG Act, 1972 excludes Section 4(1) where employee has a better terms of gratuity under any agreement or contract. This brings in, the letter of absorption dated 19.02.2004.

58. From Absorption Order dated 19.02.2004, in First Petition relating to Rameshwar Dayal, we find that it is only Rule 37-A of Rules, 1972 with respect to pension and gratuity and Rule 37-A read with Rule 54(13-B) of Rules, 1972 with respect to "family pension" which has been made applicable to employees absorbed in BSNL.

59. Rule 37-A is a special provision applicable to employees of Government department absorbed in a Public Sector Undertaking dealing with the condition for payment of pension on absorption. Therein, we do not find any provision authorizing a Public Sector Undertaking to withhold 'gratuity' or pension of an employee absorbed in a Public Sector Undertaking by taking recourse to Rules 9 and 69 of Rules, 1972. It would be appropriate to reproduce Rule 37-A of Act, 1972:-

"37-A. Conditions for payment of pension on absorption consequent upon conversion of a Government Department into a Public Sector Undertaking.- (1) On conversion of a department of the Central Government into a public sector undertaking, all Government servants of that Department shall be transferred en-masse to that public sector undertaking on terms of foreign service without any deputation allowance till such time as they get absorbed in the said undertaking, and such transferred Government servants shall be absorbed in the public sector undertaking with effect from such date as may be notified by the Government.

(2) The Central Government shall allow the transferred Government servants an option to revert back to the Government or to seek permanent absorption in the public sector undertaking.

(3) The option referred to in sub-rule (2) shall be exercised by every transferred Government servant in such manner and within such period as may be specified by the Government.

(4) The permanent absorption of the Government servants as employees of the public sector undertaking shall take effect from the date on which their options are accepted by the government and on and from the date of such acceptance, such employees shall cease to be Government servants and they shall be deemed to have retired from Government service.

(5) Upon absorption of Government servants in the public sector undertaking, the posts which they were holding in the Government before such absorption shall stand abolished.

(6) The employees who opt to revert to Government service shall be re-deployed through the surplus cell to the Government.

(7) The employees including quasi-permanent and temporary employees but excluding casual labourers, who opt for permanent absorption in the public sector undertaking, shall, on and from the date of absorption, be governed by the rules and regulations or bye-laws of the public sector undertaking.

(8) A permanent Government servant who has been absorbed as an employee of a Public Sector Undertaking and his family shall be eligible for pensionary benefits (including commutation of pension, gratuity, family pension or extra-ordinary pension), on the basis of combined service rendered by the employee in the government and in the Public Sector Undertaking in accordance with the formula for calculation of such pensionary benefits as may be in force at the time of his retirement from the Public Sector Undertaking or his death or at his option, to receive benefits for the service rendered under the Central Government in accordance with the orders issued by the Central Government.

Explanation:- The amount of pension or family pension in respect of the absorbed employee on retirement from the Public Sector Undertaking or on death shall be calculated in the same way as calculated in the case of a Central Government servant retiring or dying, on the same day".

(9) The pension of an employee under sub-rule (8) shall be calculated on fifty percent of emoluments or average emoluments, whichever is more beneficial to him.

(10) In addition to pension or family pension, as the case may be, the employee who opts for pension on the basis of combined service shall also be eligible to dearness relief as per industrial Dearness Allowance pattern.

(11) The benefits of pension and family pension shall be available to quasi permanent and temporary transferred Government servants after they have been confirmed in the Public Sector Undertaking.

(12) A Permanent Government servant absorbed in a Pubic Sector Undertaking or a temporary or quasi-permanent Government servant who has been confirmed in the Public Sector Undertaking subsequent to his absorption therein, shall be eligible to seek voluntary retirement after completing ten years of qualifying service with the Government and the Public Sector Undertaking taken together, and such person shall be eligible for pensionary benefits on the basis of qualifying service.

(13) The Central Government shall create a Pension Fund in the form of a trust and the pensionary benefits of absorbed employees shall be paid out of such Pension Fund.

(14) The Secretary of the administrative Ministry of the Public Sector Undertaking shall be the Chairperson of the Board of Trustees which shall include representatives of the Ministries of Finance, Personnel, Public Grievances and Pensions, Labour, concerned Public Sector Undertaking and their employees and experts in the relevant field to be nominated by the Central Government.

(15) The procedure and the manner in which pensionary benefits are to be sanctioned and disbursed from the Pension Fund shall be determined by the Government on the recommendation of the Board of Trustees.

(16) The Government shall discharge its pensionary liability by paying in lump sum as a one time payment to the Pension Fund the pension or service gratuity and retirement gratuity for the service rendered till the date of absorption of the Government servant in the Public Sector Undertaking.

(17) The manner of sharing the financial liability on account of payment of pensionary benefits by the Public Sector Undertaking shall be determined by the Government.

(18) Lump sum amount of the pension shall be determined with reference to Commutation Table laid down in Central Civil Services (Commutation of Pension) Rules, 1981.

(19) The Public Sector Undertaking shall make pensionary contribution to the Pension Fund for the period of service to be rendered by the concerned employees under that undertaking at the rates as may be determined by the Board of Trustees so that the Pension Fund shall be self-supporting.

(20) If, for any financial or operational reason, the Trust is unable to discharge its liabilities fully from the Pension Fund and the Public Sector Undertaking is also not in a position to meet the shortfall, the Government shall be liable to meet such expenditure and such expenditure shall be debited to either the Fund or to the Public Sector Undertaking.

(21) Payments of pensionary benefits of the pensioners of a Government Department on the date of conversion of it into a Public Sector Undertaking shall continue to be the responsibility of the Government and the mechanism for sharing its liabilities on this account shall be determined by the Government.

(22) Nothing contained in sub-rules (13) to (21) shall apply in the case of conversion of the Departments of Telecom Services and Telecom Operations into Bharat Sanchar Nigam Limited, in which case the pensionary benefits including family pension shall be paid by the Government.

(23) For the purposes of payment of pensionary benefits including family pension referred to in sub-rule (22), the Government shall specify the arrangements and the manner including the rate of pensionary contributions to be made by Bharat Sanchar Nigam Limited (and Mahanagar Telephone Nigam Limited) to the Government and the manner in which financial liabilities on this account shall be met.

(24) The arrangements under sub-rule (22) shall be applicable to the existing pensioners and to the employees who are deemed to have retired from the Government service for absorption in Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited and shall not apply to the employees directly recruited by Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited for whom they shall devise their own pension schemes and make arrangements for funding and disbursing the pensionary benefits.

(25) Upon conversion of a Government Department into a Public Sector Undertaking,-

(a) the balance of provident fund standing at the credit of the absorbed employees on the date of the absorption in the Public Sector Undertaking shall, with the consent of such undertaking, be transferred to the new Provident Fund Account of the employees in such undertaking;

(b) earned leave and half pay leave at the credit of the employees on the date of absorption shall stand transferred to such undertaking;

(c) the dismissal or removal from service of the Public Sector Undertaking of any employee after his absorption in such undertaking for any subsequent misconduct shall not amount to forfeiture of the retirement benefits for the service rendered under the Government and in the event of his dismissal or removal or retrenchment the decisions of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking.

(26) In case the Government disinvests its equity in any Public Sector Undertaking to the extent of fifty-one per cent or more, it shall specify adequate safeguards for protecting the interest of the absorbed employees of such Public Sector Undertaking.

(27) The safeguards specified under sub-rule (26) shall include option for voluntary retirement or continued service in the undertaking or voluntary retirement benefits on terms applicable to Government employees or employees of the Public Sector Undertaking as per option of the employees and assured payment of earned pensionary benefits with relaxation in period of qualifying service, as may be decided by the Government."

(emphasis added)

60. Learned counsel for petitioners placed reliance on the judgments of Delhi High Court in support of contention that pension could have been withheld under Rule 69 of Rules, 1972.

61. One of these judgments is G.N.C.T.D. of Delhi and another Vs. K. Srivatsan Writ Petition (C) No. 2495 of 2012, decided on 30.04.2012. The employee therein was an employee of Government of NCT of Delhi and on deputation with Municipal Corporation of Delhi. There was no dispute with regard to applicability of Rules, 1972 in entirety and employee being a Central Government Employee, was excluded from the definition of 'employee' under Section 2(e) of PG Act, 1972.

62. Aforesaid judgment, in our view, would not help petitioners since we are concerned with Public Sector Undertaking, i.e., BSNL.

63. Similarly, another judgment relied by petitioners is also of Delhi High Court in Union of India and another Vs. Shri J.P. Sharma, Writ Petition No. 6465 of 2003, decided on 04.07.2008. Therein also the employee was a Central Government employee and there was no dispute with regard to application of Rules, 1972. Employee, being Central Government Employee, was excluded from the definition of 'employee' under Section 2(e) of PG Act, 1972 and said Act was not applicable.

64. The third decision relied is D.V. Kapoor Vs. Union of India and others 1990 (4) SCC 314 but therein also dispute relates to 'employee' in Indian Foreign Services, i.e., Central Government Employee. Rules, 1972 in entirety were applicable. Even this decision does not help petitioners in the present case.

65. In view of aforesaid discussions, we have reached following conclusions:-

(i) Rules, 1972 in entirety are not applicable to employees absorbed in Public Sector Undertaking, i.e., BSNL. Their conditions of service are governed only by Rule 37-A read with 54(13-B) of Rules, 1972 and Absorption Letter of applicant-respondent-1 issued by BSNL. Therefore, power of withholding pension or gratuity conferred under Rules 9(4) and 69 of Rules, 1972 is not attracted.

(ii) The service conditions of applicant-respondent-1 with regard to entitlement for gratuity is governed by PG Act, 1972 and there is no provision for withholding of gratuity during pendency of judicial proceedings or departmental proceedings. Therefore, in absence of any such provision, gratuity or pension of applicant-respondents-1 in both cases cannot be withheld.

(iii) In a case where Rules, 1972 and PG Act, 1972 both are applicable since there is no provision in PG Act, 1972 governing a situation wherein disciplinary proceedings or judicial proceedings against employee is pending and whether in such case, pension or gratuity can be withheld, hence in absence of any such provision under PG Act, 1972, application of Rules 9 and 69 of Rules, 1972 may be resorted, provided Rules, 1972 are applicable to employer as well as the employee. However, this contingency is not attracted in both the matters in hand.

66. In view of above discussions, ultimate conclusion and inference drawn by Tribunal that applicant-respondents-1 are entitled for retiral benefits, including pension and gratuity, has to be sustained. Though we have given different reasons to some extent and, to that extent, reasons given by Tribunal would stand substituted, but since reliefs sought by petitioners for setting aside judgment of Tribunal cannot be granted, hence to that extent writ petitions stand dismissed.

67. There shall be no order as to costs.

Order Date :- 03.08.2017

Shubham