Supreme Court Upholds Withholding of Gratuity During Pending Criminal or Disciplinary Proceedings – CCS Pension Rules

The Supreme Court has observed that an employer is entitled to withhold the payment of gratuity to an employee against whom a judicial or disciplinary proceeding is pending. A bench of Justice Prashant Kumar Mishra and Justice Vipul M. Pancholi dismissed an appeal filed by an ex-Himachal Pradesh Road Transport Corporation Clerk, whose gratuity was withheld by the transport corporation because of the pendency of criminal proceedings against him.Post-superannuation, the Appellant's gratuity was withheld by the Respondent department as a result of the pendency of a criminal proceeding against him for his alleged involvement in the leak of the question paper of the Combined Pre-Medical Test, 2006.At the same time, disciplinary proceedings were ongoing. In the meantime, the Appellant was acquitted in the criminal case due to a lack of sufficient evidence. He argued that his gratuity should not be withheld, contending that Rule 69(1)(c) of the Central Civil Services (Pension) Rules, 1972 (Pension Rules) does not intend to deny gratuity where the employee has been acquitted in either the criminal or disciplinary proceedings. The Himachal Pradesh High Court refused to interfere with the Respondent's decision, justifying the withholding of the gratuity, prompting the ex-employee to appeal to the Supreme Court.Affirming the impugned order, the judgment authored by Justice Mishra referred to Rule 69(1)(c) of the Pension Rule to note that payment of gratuity can be withheld until the conclusion of the departmental or judicial proceedings and issue of final orders thereon.Rule 69(c) reads :"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.”The Appellant's interpretation of Rule 69(1)(c) of the Pension Rules that the Rule must be construed to mean that gratuity becomes payable upon the conclusion of either set of proceedings, was rejected by the Court, indicating that gratuity shall not be paid so long as either departmental or judicial proceedings are pending. “Such a submission totally misapprehends the nature of the Rule. As the learned Single Judge had rightly noted at the first instance, Rule 69(1)(c) operates as an 'embargo' or a statutory bar, not as an enabling provision. The use of the ordinary disjunctive “or” expands the scope of this bar, indicating that gratuity shall not be paid so long as either departmental or judicial proceedings are pending.”, the court remarked in response to the Appellant's submission regarding Rule 69(1)(c) of the Pension Rules. “If the appellant's interpretation were accepted, an employee could contend that once any one set of proceedings against him/her stands concluded, the embargo stands lifted and gratuity must be released. This would altogether defeat the purpose of the provision, which is to safeguard the financial interests of the State.”, the court added. Resultantly, the appeal was dismissed. Cause Title: BIKRAM CHAND RANA VERSUS HIMACHAL PRADESH ROAD TRANSPORT CORPORATIONCitation : 2026 LiveLaw (SC) 344Click here to download judgmentAppearance: For Petitioner(s) : Mr. Karan Bharihoke, AORFor Respondent(s) Mr. Himanshu Tyagi, AOR Mrs. Poonam Sharma, Adv. Mr. Kunal Tyagi, Adv. Mr. Shivam Tyagi, Adv.