Payment Of Gratuity: Employer Has A Right To Withhold Gratuity During Pendency Of The Disciplinary Proceedings

SUPREME COURT OF INDIA

FULL BENCH

CHAIRMAN-CUM-MANAGING DIRECTOR, MAHANADI COALFIELDS LIMITED — Appellant

Vs. SRI RABINDRANATH CHOUBEY — Respondent

( Before: Arun Mishra, M.R. Shah and Ajay Rastogi, JJ. )

Civil Appeal No. 9693 of 2013

Decided on: 27-05-2020

Download: Full Judgement

A. Conduct, Discipline and Appeal Rules, 1978 – Rule 34.3 – Payment of gratuity – Employer has a right to withhold gratuity during pendency of the disciplinary proceedings. (Para 28)

B. Payment of Gratuity Act, 1972 – Section 4(6) – Conduct, Discipline and Appeal Rules, 1978 – Rules 27, 34.2 and 34.3 – Whether the penalty of dismissal could be imposed after the employee stood retired from service? – Held, After conclusion of the disciplinary inquiry, if held guilty, indeed a penalty can be inflicted upon an employee/delinquent who stood retired from service and what should be the nature of penalty is always depend on the relevant scheme of Rules and on the facts and circumstances of each case, but either of the substantive penalties specified under Rule 27 of the Rules, 1978 including dismissal from service are not open to be inflicted on conclusion of the disciplinary proceedings and the punishment of forfeiture of gratuity commensurate with the nature of guilt may be inflicted upon a delinquent employee provided under Rule 34.3 of Rules, 1978 read with subsection (6) of Section 4 of the Act, 1972. (Para 28)

C. Conduct, Discipline and Appeal Rules, 1978 – Rule 34.2 and 34.3 – Termination – Disciplinary proceedings – Many a times ‘termination’ and ‘dismissal’ are held to be synonymous but the difference between ‘termination’ and ‘dismissal’ is that dismissal could be on account of misconduct with loss of future employment involving dishonesty or criminality and penal in character but that is not in the case of termination – The “termination” as per Black’s Law Dictionary is the complete severance of relationship of employer and employee which in the instant case could be saved during pendency of the disciplinary proceedings in view of Rule 34.2 of the Rules, 1978 which clearly envisaged that disciplinary proceedings, if instituted while the employee was in service, shall be deemed to be pending and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service and by legal fiction, the relationship of employer and employee shall be deemed to continue for the limited purposes of conclusion of the disciplinary proceedings and the delinquent employee becomes qualified to claim gratuity subject to the outcome of the disciplinary proceedings in terms of Rule 34.3 of the Rules, 1978 read with subsection (6) of Section 4 of the Act, 1972. (Para 21)

Counsel for Appearing Parties

Ms. Chitrangda Rashtravara Advocate Mr. Gp. Capt. Karan Singh Bhati Advocate for the Appellant; Mr. Saurabh Mishra Advocate for the Respondent.

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