Gratuity Can Be Withheld While Retired Employee's Criminal Appeal Is Pending: Delhi High Court

The respondent, a Tax Assistant in the Office of the Commissioner of Income Tax, retired on 31 December 2011. Criminal proceedings instituted while he was in service ended in his conviction and sentence by the Special Judge, CBI, on 23 January 2012; his Criminal Appeal 344/2012 is pending in the High Court, which suspended the sentence (paras 5-6). He complained that his gratuity and leave encashment had been withheld; the leave encashment was later released, leaving only the gratuity in issue (paras 7-9). On 26 October 2018 the Tribunal, in OA 3437/2017, directed payment because no disciplinary proceedings had been instituted and Rule 9(2)(b) barred them more than four years after retirement (paras 1-2, 11-12).

A Division Bench of Justices C. Hari Shankar and Vinod Kumar held that the only question was the application of Rule 69(1)(c), under which no gratuity is paid "until the conclusion of the departmental or judicial proceedings and issue of final orders thereon" (paras 4, 9-10). The Tribunal had not noticed that the rule covers pending judicial proceedings as well as departmental ones (paras 13, 18). The Bench held that the issue was no longer res integra after Bikram Chand Rana v. Himachal Pradesh Road Transport Corporation, 2026 SCC OnLine SC 535, where the Supreme Court read the disjunctive ‘or’ as a bar operating while either kind of proceeding is pending (paras 15-16). Even otherwise, the rule's text keeps the bar in place until the judicial proceedings end (para 16). "Judicial proceedings" indisputably include the respondent's pending Criminal Appeal 344/2012 (para 17). The Tribunal therefore erred in confining itself to the absence of disciplinary proceedings and ignoring the pending judicial proceedings (para 18). Withholding the gratuity while the appeal is pending was lawful, but once the appeal is disposed of "one way or the other", the respondent's claim would revive (paras 19-20).