Citation Codes

Equivalent Citations

citation codes

Case Number

O.A. No. 872 of 2014

Advocates

Advocate: E.J. Verghese
Advocate: Mr. K.M. Singh

Judges

Raj Vir Sharma, Member (Judicial)

Acts

provisions of Part A (Introductory) of Appendix-5 to Government Accounting Rules, 1990,
Rules 56 to 76 of the CCS (Pension) Rules,1972,

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The applicant retired from the Kendriya Vidyalaya Sangathan on superannuation on 31.7.1997. The respondents initially did not count the applicant's previous service with the Madhya Pradesh Government from 15.12.1955 to 28.8.1972 for pensionary benefits on grounds that the applicant had not exercised an option and a one-time pro rata pension liability under an OM dated 29.8.1984 had not been discharged. The applicant filed OA No.1799 of 2010 challenging that refusal.

The Tribunal, by order dated 18.11.2010 in OA No.1799 of 2010, set aside the earlier order and directed the respondents to count the erstwhile Madhya Pradesh service and to recalculate pensionary benefits with arrears from the date of retirement, with compliance directed within two months. The respondents did not immediately implement that order; contempt petitions were filed. The respondents then filed a writ petition in the Hon'ble High Court of Delhi on 5.12.2012 challenging the Tribunal's order, and stated they would comply with the Tribunal's order subject to the outcome of that writ petition.

Subsequently, the respondents recalculated the applicant's pension by counting prior service (total service restricted to 33 years) and released DCRG arrear of Rs.34,568 by letter dated 13.12.2012, but deducted Rs.9,502 from the gratuity as alleged pro rata pension liability which had not been paid by the applicant's previous employer.

The applicant filed the present Original Application seeking, among other reliefs: (a) penal interest @12% p.a. on arrears of pension and gratuity from 01.08.2007 until actual payment; (b) refund of Rs.9,502 withheld as pro rata pension with penal interest @12% p.a.; (c) quashing the order dated 13.12.2012 insofar as it withheld Rs.9,502; and (d) costs. The matter was heard by the Tribunal after hearing counsel for both sides.

Legal Issues Presented

Whether the respondents should be directed to pay penal interest at the rate of 12% per annum on the arrears of pension and gratuity from 01.08.2007 until the date of actual payment.
Whether the respondents should be directed to refund Rs.9,502 withheld from the applicant's DCRG as pro rata pension contribution, with penal interest at 12% per annum until actual payment.
Whether the order dated 13.12.2012 should be quashed and set aside to the extent it withheld/deducted Rs.9,502 from the applicant's DCRG.
Whether the applicant is entitled to costs and any other reliefs claimed in the OA.

Arguments of the Parties

Applicant's Arguments (as advanced by Mr. E.J. Verghese)

The applicant relied on administrative instructions: Ministry of Finance, Dept. of Expenditure O.M. No.14/(5)/86/TA/1029 dated 9.10.1986 and Dept. of Pension & Pensioners' Welfare O.M. No.28/10/95-P&PW(B) dated 25.10.1996 (referring to Appendix-5 to Government Accounting Rules, 1990), to submit that liability for pension including gratuity should be borne in full by the Central or State Government to which the Government servant permanently belongs at the time of retirement, and no proportionate recovery should be made from the Central or State Government under whom he had served.
The applicant relied on DP&PW O.M. dated 1.5.2012 which instructs that pensioner dues are to be settled following the CCS (Pension) Rules, 1972 (Rules 56–76) and that once gratuity is decided for payment it should be paid immediately pending a decision on interest.
The applicant invoked Supreme Court decisions: State of Kerala & others v. M. Padmanabhan Nair, AIR 1985 SC 356 (holding pension/gratuity are valuable rights and delay attracts penal interest at current market rate commencing after expiry of two months from retirement) and Vijay L. Mehrotra v. State of U.P. & others, 2000(2) SLR 686 (where the Court directed payment of simple interest at 18% from date of retirement till payment) to support entitlement to penal interest on arrears.
Consequently, the applicant contended the respondents should not have deducted Rs.9,502 from gratuity and should refund that amount with interest, and the applicant is entitled to interest @12% p.a. on arrears of pension and gratuity from 1.8.2007 until actual payment.

Respondents' Arguments (as advanced by Mr. K.M. Singh)

The respondents submitted that they paid arrears of pension and gratuity in compliance with the Tribunal's order dated 18.11.2010 in OA No.1799 of 2010, but did so subject to the outcome of a writ petition they had filed in the Hon'ble High Court of Delhi challenging that Tribunal order.
The respondents pointed out that the Tribunal's order dated 18.11.2010 did not direct payment of interest on the arrears; therefore, the present OA could not be used to claim interest on those arrears.
They emphasized that the question whether the applicant's previous service would be counted in the absence of an exercised option and where pro rata liability was not discharged is sub judice in their writ petition; hence, refunding Rs.9,502 at this stage would be inappropriate while the legal question remains pending before the High Court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
State of Kerala & others v. M. Padmanabhan Nair, AIR 1985 SC 356	Holds that pension and gratuity are valuable rights/property and culpable delay in settlement/disbursement attracts penal interest at the current market rate; liability to pay penal interest commences after expiry of two months from date of retirement.	The Tribunal noted the decision but held that it does not support the applicant's claim for interest in the present proceedings because the arrears were determined in compliance with the Tribunal's earlier order which is itself the subject of a writ petition; the Tribunal observed it was not appropriate to grant interest here.
Vijay L. Mehrotra v. State of U.P. & others, 2000(2) SLR 686	Confirmed that where there is no justification for withholding retiral benefits, the court may direct payment with interest (in that case simple interest at 18% from date of retirement until payment).	The Tribunal observed the decision but concluded it does not aid the applicant's claim for interest on arrears in the present facts because the arrears were paid pursuant to a Tribunal order now under challenge before the High Court.

Court's Reasoning and Analysis

The Tribunal proceeded by examining the Tribunal order dated 18.11.2010 in OA No.1799 of 2010 and the sequence of events thereafter. It found that the earlier Tribunal order directed counting of the applicant's prior Madhya Pradesh service and recalculation of pensionary benefits with arrears from the date of retirement, but did not direct payment of interest on those arrears. On that basis the Tribunal stated it would not entertain a claim for interest in the present proceeding.

Regarding the deduction of Rs.9,502 from the DCRG as alleged pro rata pension liability, the Tribunal observed that the respondents had challenged the Tribunal's order before the Hon'ble High Court of Delhi and had implemented the Tribunal's directions subject to the outcome of that writ petition. Given that the question whether the applicant's previous service should be counted in the absence of an exercised option and without discharge of pro rata liability is sub judice before the High Court, the Tribunal considered it inappropriate to adjudicate or express a view on that liability in the present OA.

The Tribunal expressly considered the authorities and administrative OMs cited by the applicant (including the Padmanabhan Nair and Vijay Mehrotra decisions and DP&PW O.M. dated 1.5.2012), and concluded that, on the facts of this case—where the arrears were awarded under a Tribunal order which is itself under challenge—the cited decisions and OMs did not support granting interest or directing refund at this stage.

However, the Tribunal clarified that if the respondents do not succeed in their writ petition before the High Court, they would be liable to refund Rs.9,502 to the applicant, subject to any direction/order the High Court might pass in that writ petition.

Holding and Implications

DISMISSED

Holding (core ruling): The Original Application was dismissed as devoid of merit. The Tribunal declined to award penal interest on the arrears of pension and gratuity in the present proceedings and declined to order refund of the Rs.9,502 deducted from the applicant's gratuity while the legality of the underlying Tribunal order is pending before the Hon'ble High Court of Delhi. No costs were awarded.

Implications:

Direct effect on the parties: The applicant's claim for interest (12% p.a.) and immediate refund of Rs.9,502 is refused in this OA. The respondents' deduction of Rs.9,502 stands pending the outcome of the writ petition in the High Court.
Conditional consequence noted by the Tribunal: If the respondents do not succeed in the writ petition before the Hon'ble High Court, they shall be liable to refund Rs.9,502 to the applicant, subject to any directions that the High Court may issue.
No new legal precedent was established by this order; the Tribunal applied existing authorities and administrative instructions to the particular procedural and factual posture where a prior Tribunal order awarding arrears is itself under challenge in a higher court.

Presiding Judicial Member: RAJ VIR SHARMA

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Ram Prasad Gupta v. Union Of India

The applicant has filed the present O.A. seeking the following reliefs: (a) Direct the respondents to pay penal interest @12% per annum on the arrears of Pension and Gratuity with effect from 01/08/2007 till the date of actual payment. (b) Direct the respondents to refund the amount of Rs.9502/- withheld as pro rata pension as share from the Madhya Pradesh Govt. with penal interest @ 12% per annum till the date of actual payment. (c ) Quash and set aside the order dated No.18(2544)2444/97/KVS/P&I dated 13/12/2012 only to the extent of withholding/deducting Rs.9502/- from the DCRG of the applicant as pro rata pension. (d) Grant the costs (e) Any other relief this court may deem fit and proper in the facts and circumstances of the case.

2. I have perused the records and have heard Mr.E.J.Verghese, learned counsel appearing for the applicant, and Mr.K.M.Singh, learned counsel appearing for the respondents.

3. The applicant had retired from service of the Kendriya Vidyalaya Sangathan on attaining the age of superannuation on 31.7.1997. Being aggrieved by the order dated 3.11.2009 passed by the respondents, whereby his previous service from 15.12.1955 to 28.8.1972 with Madhya Pradesh Government had not been counted by the respondents for pensionary benefits on the grounds that he had failed to exercise the option and that one time liability on pro rata pension as per OM dated 29.8.1984 had not been discharged by him, the applicant had earlier filed OA No.1799 of 2010. The Tribunal, by order dated 18.11.2010, had allowed the said O.A. and set aside the order dated 3.11.2009 ibid. The Tribunal had directed the respondents to count the erstwhile service rendered by the applicant with Madhya Pradesh Government from 15.12.1955 to 28.8.1972 and recalculate the pensionary benefits with arrears from the date the applicant had retired from service on superannuation. The Tribunal had also directed the respondents to comply with the said directions within two months from the date of receipt of a copy of the order dated 18.11.2010 ibid. Due to non-implementation of the Tribunals order dated 18.11.2010 ibid, the applicant had filed Contempt Petitions against the respondents. Challenging the Tribunals order dated 18.11.2010 ibid, the respondents had filed writ petition before the Honble High Court of Delhi on 5.12.2012. They also decided to comply with the Tribunals order dated 18.11.2010 ibid, subject to the outcome of the said writ petition. Accordingly, the applicants pension was revised, taking into account his previous service (16 years and 08 months) + 24 years 10 months in KVS = total 41 years and 06 months 21 days, which were restricted to 33 years, vide order dated 12.12.2012 and DCRG arrear to the tune of Rs.34,568/- was also released, vide letter dated 13.12.2012. An amount of Rs.9502/- was deducted from the arrear of gratuity on account of pro rata pension liability, which was still not received from his previous employer till the payment of DCRG.

3. Mr.E.J.Verghese, learned counsel appearing for the applicant, submitted that as per Ministry of Finance, Department of Expenditure, O.M.No.14/(5)/86/TA/1029 dated 9.10.1986, the liability of pension including gratuity will be borne in full by the Central or State Governemnt, to which the Government servant permanently belongs at the time of retirement, and no recovery of proportionate pension will be made from Central or State Government under whom he has served. The Department of Pension and Pensioners Welfare, vide O.M.No.28/10/95-P&PW(B) dated 25.10.1996, has also clarified that according to the provisions of Part A (Introductory) of Appendix-5 to Government Accounting Rules, 1990, the liability for pension including gratuity should be borne in full by Central/State Government to which the Government servant permanently belongs at the time of retirement. In view of this, the respondents ought not to have deducted Rs.9502/- from the arrear of gratuity payable to the applicant towards pro rata pension liability and, therefore, the said amount should be refunded to him with interest, and the applicant is entitled to be paid interest @ 12% per annum on the arrears of pension and gratuity with effect from 1.8.2007 till the date of actual payment. In support his contentions, Mr.E.J.Verghese, learned counsel, invited our attention to the decisions of the Honble Supreme Court in State of Kerala and others v. M.Padmanabhan Nair, AIR 1985 SC 356, and Vijay L.Mehrotra v. State of U.P. & others, 2000(2) SLR 686. He also invited our attention to the Department of Pension & Pensioners Welfare, O.M. dated 1.5.2012, in support of the applicants claim for being paid interest on the arrears of pension and gratuity. 3.1 In V.Padmanabhan Nairs case (supra), the Honble Supreme Court has held that pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement but are valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with penalty of payment of interest at the current market rate till actual payment. The liability to pay penal interest on these dues at the current market rate commences at the expiry of two months from the date of retirement. 3.2 In Vijay L.Mehrotras case (supra), the Honble Supreme Court observed that there was absolutely no reason or justification for not making the payment of retiral benefits to the appellant in that case. Accordingly, the Honble Court directed the respondent to pay to the applicant, within 12 weeks from the date of the judgment, simple interest at the rate of 18 per cent with effect from the date of her retirement, i.e., 31.8.1997 till the date of payments. 3.3 In DP&PWs O.M. dated 1.5.2012 (ibid), it has, inter alia, been stipulated that all pensioners dues are to be settled by strictly following the procedure laid down in Rules 56 to 76 of the CCS (Pension) Rules,1972, and that once it is decided to pay gratuity, the amount should be paid immediately pending a decision regarding payment of interest.

4. Per contra, Mr.K.M.Singh, learned counsel appearing for the respondents, submitted that the arrears of pension and gratuity became payable to the applicant in compliance with the Tribunals order, dated 18.11.2010 passed by the Tribunal in OA No.1799 of 2010, subject to the outcome of the writ petition filed by the respondents challenging the said order dated 18.11.2010. The Tribunal, in its order dated 18.11.2010 ibid, did not direct payment of interest on the arrears of pension and gratuity to be recalculated by taking into account the applicants previous service with the Government of Madhya Pradesh for the period from 15.12.1955 to 28.8.1972. Therefore, in the present O.A. the applicant cannot be allowed to claim interest on the said arrears of pension and gratuity. It was also submitted by Mr.K.M.Singh that the said writ petition is still pending before the Honble High Court of Delhi. The question as to whether, or not, in the absence of any option being exercised by the applicant and for non-discharge of liability on pro rata pension by the applicant/his previous employer, his previous service with Madhya Pradesh Government would be counted, is sub judice in the writ petition filed against the Tribunals order dated 18.11.2010 ibid. Therefore, pending final decision on the writ petition filed by the Respondents challenging the Tribunals order dated 18.11.2010 ibid, the applicants claim for refund of Rs.9502/- recovered from the arrears of gratuity cannot be acceded to.

5. I have given my anxious consideration to the facts and circumstances of the case and the rival contentions of the parties.

6. On a perusal of the order dated 18.11.2010 passed by the Tribunal in OA No.1799 of 2010, I find that Tribunal, while directing the respondents to count the erstwhile service rendered by the applicant with Madhya Pradesh Government from 15.12.1955 to 28.8.1972 and to recalculate the pensionary benefits with arrears from the date the applicant retired from service on superannuation, did not direct the respondents to pay interest on the arrears of pensonary benefits payable to the applicant. Therefore, in the present proceeding, this Tribunal is not inclined to entertain and/or accede to the applicants claim for payment of interest on the said arrears. As regards the deduction of Rs.9502/- from arrear of gratuity on account of pro rata pension liability, it is the admitted position between the parties that the respondents have already filed writ petition before the Honble High Court of Delhi, challenging the Tribunals order dated 18.11.2010 ibid. The respondents have complied with the Tribunals order dated 18.11.2010 ibid, subject to the outcome of the said writ petition. It would, therefore, be inappropriate for the Tribunal to express any view at this stage on the question of liability of the applicant/Madhya Pradesh Government for payment of pro rata pension contribution of Rs.9502/-. The applicant is free to urge the said point in the writ petition pending before the Honble High Court. On the facts and in the circumstances of the case, the decisions in M.Padmanabhan Nairs case (supra) and Vijay L.Mehrotras case (supra), and the DP&PWs O.M. dated 1.5.2012 do not support the claim of the applicant for payment of interest on the arrears of pension and gratuity determined in compliance with the Tribunals order dated 18.11.2010 ibid, which is also subject matter of challenge in the writ petition filed before the Honble High Court. However, it is made clear that in the event the respondents do not succeed in the said writ petition, they shall be liable to refund the said amount of Rs.9502/- to the applicant, subject, of course, to any other direction/order to be passed by the Honble High Court therein.

7. In the light of above discussions, I hold that the applicant has not been able to make out a case for the reliefs claimed by him. The O.A. being devoid of merit is liable to be dismissed. Accordingly, the O.A. is dismissed. No costs. (RAJ VIR SHARMA) JUDICIAL MEMBER

Ram Prasad Gupta v. Union Of India

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Applicant's Arguments (as advanced by Mr. E.J. Verghese)

Respondents' Arguments (as advanced by Mr. K.M. Singh)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Ram Prasad Gupta v. Union Of India

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