Director of Urban Affairs, SwaraJ Bhavan, Thiruvananthapuram and The Secretary, Local Self Government Department v. C. Vijayamohanan and The Kerala Lok Ayukta

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** ## **&** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY, THE 22[ND] DAY OF JUNE 2022 / 1ST ASHADHA, 1944 WP(C) NO. 18451 OF 2017** **PETITIONER/S:** - **1 DIRECTOR OF URBAN AFFAIRS, SWARAJ BHAVAN, NANDANCODE, THIRUVANANTHAPURAM695001.** - **2 THE SECRETARY, LOCAL SELF GOVERNMENT DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001. BY ADV V. TEKCHAND, SR. GOVERNMENT PLEADER** **RESPONDENT/S:** **1 C. VIJAYAMOHANAN, (RTD. MUNICIPAL SECRETARY), VIJAYAGEETHAM, T.C.37/3224, PUMP HOUSE LANE, KUNDAMANGKADAVU, THIRUVANANTHAPURAM-13. 2 THE KERALA LOK AYUKTA, OFFICE OF THE KERALA LOK AYUKTA, LEGISLATIVE COMPLEX, THIRUVANANTHAPURAM-695001, REPRESENTED BY ITS SECRETARY. BY ADVS. SRI.ATHUL SHAJI SMT.K.P.SHEEBA SMT. RENU D.P.** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W. P. (C) No. 18451 of 2017 -2- ## **J U D G M E N T** S. Manikumar, C. J. Alleging that the pensionary benefits, DCRG as well as commuted value of pension, were not given, Mr. C. Vijayamohanan, the 1[st] respondent, has preferred complaint No. 1085 of 2015 before the Kerala Lok Ayukta, the 2[nd] respondent, for the following reliefs:- “(1) To give strict direction to the 1[st] Opposite Party, to give N.L.C. to the complainant to enable him to draw the D.C.R.G. and C.V.P granted and/or sanctioned to him by the Accountant-General, on the complainant having retired from service with effect from 31[st] day of August, 2013, as Municipal Secretary. (2) On the basis of the recommendation made by the Director of Vigilance (VACB), in a case which is alleged to involve corruption to the tune of Rs.2.26,700 and in which the complainant is the 2[nd] accused, which recommendation has been made to the Additional Chief Secretary (Vigilance), direct the Government to issue necessary orders for disbursal of all the pensionary benefits to the complainant, including DCRG, for which recommendation had been made legally to the 1[st] Opposite Party, but he, in turn, sought a clarification, deliberately and unauthorisedly, with a view to cause harm to the complainant, in W. P. (C) No. 18451 of 2017 -3- view of personal grudge against him, and thus having obtained a classificatory illegal order, denied the pensionary benefits to the complainant, for which action is to be taken against the 1[st] Opposite Party and for which the Chief Secretary should be given directions; (3) To issue strict orders to the 1[st] Opposite Party, to pay interest on the amount due to the complainant, totalling to Rs.14,03,762 (Fourteen lakhs, three thousand seven hundred and sixty-two) at the rate of 12% per annum from August, 2013 until the disbursal of the amount to the complainant; (4) It is also humbly prayed, that interim orders may be issued, for disbursal of DCRG and CVP in accordance with Rule 124 of K.S.R. Part III, pending disposal of this complaint; (5) It is further prayed that this Hon'ble Lok Ayuktha may be pleased to issue suitable orders as it deems fit and proper in the interests of justice as an interim measure, and also direct the Chief Secretary to take necessary disciplinary action as against the 1[st] Opposite Party.” 2. Having regard to the averments and the material on record, Kerala Lok Ayukta, on 30.06.2016, passed the following interim order:- “Heard Sri. K. K. Mohandas, learned counsel for the complainant, and Sri. N. Anilkumar, learned Spl. Government W. P. (C) No. 18451 of 2017 -4- Pleader, for some time. The matter requires further hearing. But on the basis of the submissions addressed before us, we find every justification for passing an interim order. It is clear and it was practically conceded before us by the Spl. Government Pleader that withholding of commuted value of pension is unwarranted. Hence, we issue the following interim order: The 1[st] respondent is directed to facilitate immediate payment of a total amount of Rs.9,03,762/-, the commuted value of pension authorized by the Accountant General as per Ext.P3(c), to the complainant. Payment, as directed above, shall be made within a period of three weeks of receiving this order. A copy of Ext.P3(c) will be annexed to this order. Communicate this order to the 1[st] respondent forthwith. The complaint is posted for compliance report based on the above order on 25/08/2016.” 3. Subsequently, the Director of Urban Affairs, Thiruvananthapuram, the 1[st] petitioner / 1[st] respondent therein, has filed a statement dated 01.09.2016, stating that the Government by letter No. EU-1/245/15/LSGD dated 29.06.2015, have directed not to release the commuted value of pension, as there is a vigilance case pending against the complainant. 4. It is further stated that though the Director of Urban Affairs, W. P. (C) No. 18451 of 2017 -5- Thiruvananthapuram, the 1[st] petitioner / 1[st] respondent therein, wrote letter dated 19.07.2016 to the Government, for sanction to release the commuted value of pension, on the basis of the interim order of the Lok Ayukta, Government by letter No. 245/EU1/15/LSGD dated 25.08.2016, expressed their inability to accord sanction to release commuted value of pension of the complainant, as rules do not permit the same, citing pendency of the vigilance case. 5. In the abovesaid circumstances, the Kerala Lok Ayukta, the 2[nd] respondent, has passed another order on 20.12.2016, as hereunder:- “Heard Sri. K. K. Mohandas, learned counsel for the complainant and Sri. N. Anilkumar, learned Spl. Government Pleader. We perused Ext.P3(b) letter from the Secretary to Government, L.S.G.D., inter alia, to the Director of Urban Affairs, Thiruvananthapuram and status report submitted by the VACB. The VACB in their letter No.E26(SJK) 4144/10 dated 4/11/2016 have informed that they have already recommended the Government to release the pensionary benefits of Sri. Vijayamohan including commuted value of pension vide letter No.C5(SJK) 4144/10 dated 1/8/2014 and 30/10/2014 vide GL No.81111/EU1/14/LSGD dated 31/12/14. Under Ext.P3(b) the Government has noticed the stand taken by the VACB and ordered that the pensionary benefits due to the complainant Sri. W. P. (C) No. 18451 of 2017 -6- Vijayamohan can be released and recovery of loss can be made through revenue recovery or civil proceedings on conclusion of the vigilance enquiry. 2. Having regard to the rival submissions addressed at the Bar, we are of the view that there is no justification at all for not releasing to the complainant his retiral benefits especially as three years have elapsed since the complainant retired from service in view of Rule 3A(a) of the Part III K.S.R. Hence, we issue the following interim order noticing G.O.(P) No.185/2012/Fin. Dated 27/3/2012: Respondents 1 and 2 are directed to release to the complainant all pensionary benefits due to him - DCRG as well as commuted value of pension - at the earliest, at any rate within one month of receiving this order. We clarify that this order will not stand in the way of recovery through revenue recovery proceedings or civil proceedings on conclusion of the trial of CC No.24/2010, if warranted. 6. Challenging Ext. P5 order of the Kerala Lok Ayukta dated 20.12.2016, instant writ petition is filed. 7. Short facts leading to the filing of the writ petition are as hereunder:- a) According to the writ petitioners, they are aggrieved by the W. P. (C) No. 18451 of 2017 -7- order passed by the Kerala Lok Ayukta, the 2[nd] respondent, directing to release DCRG as well as commuted value of pension to Mr. C. Vijayamohanan, the 1[st] respondent, disregarding the pendency of vigilance case registered against the 1[st] respondent, in total violation of Rule 3A(a) of Part III of Kerala Service Rules, 1959. b) Petitioners have submitted that the 1[st] respondent approached the Kerala Lok Ayukta, after his retirement, seeking direction to the petitioners to release pensionary benefits, including commuted value of pension and DCRG. It is contended by the 1[st] respondent before the Lok Ayukta that in spite of pendency of vigilance case registered against him for the offence under the P. C. Act, the Vigilance Department has recommended for the release of the pensionary benefits. Petitioners have appeared before the 2[nd] respondent and filed a statement contending that in view of the specific bar under Rule 3A of Part III KSR, the 1[st] respondent is not entitled for the release of DCRG and other benefits during the pendency of the vigilance case. c) It is further submitted that the Kerala Lok Ayukta, without considering the true meaning of Rule 3A of Part III KSR, directed the W. P. (C) No. 18451 of 2017 -8- release of DCRG and commuted value of pension to the 1[st] respondent. The order passed by the Lok Ayukta is totally against the judgment of this Court in **State of Kerala and Another v. Muraledharan Nair** in **2015 (3) KHC 375 (DB)** . 8. Order of the Lok Ayukta dated 20.12.2016 in complaint No. 1085 of 2015, is challenged on the following grounds:- A. Rule 3A of Part III KSR provides that where any departmental or judicial proceeding is continued against the employee at the time of his retirement, he shall be paid during the period commencing from the date of his retirement, the provisional pension and that DCRG shall not be paid to him until the conclusion of such proceedings and issue final orders thereon. Though the Vigilance Department has recommended no objection for releasing all the pensionary benefits to the 1[st] respondent, such recommendation is against the provision of law and is not binding on the Government. B. The Lok Ayukta failed to consider the true meaning of Rule 3A of Part III KSR, particularly, in view of the fact that this Court has considered the effect of Rule 3 A of Part III KSR, in a recent judgment W. P. (C) No. 18451 of 2017 -9- reported in **State of Kerala and Another v. R. Muraleedharan Nair [2015 (3) KHC 375 (DB)]** . Muraleedharan Nair's case was a referred case before a Hon'ble Division Bench, which involves the interpretation and application of Rule 3A (a) of Part III KSR and the correctness of the in **Aravindaksha Panicker v.** judgment **Accountant General [2007 (4) KLT 1031]** . It is held by the Court in unequivocal terms that Rule 3 and 3A operates in two different fields and Rule 3A (a) operates where a departmental or judicial proceedings is instituted in terms of Rule 3 and continues against an employee who had retired and during the pendency of such proceedings, no gratuity or DCRG shall be paid to him until the conclusion of such proceedings. The Hon'ble Division Bench disapprove the findings of the learned Single Judge in Aravindaksha Panicker's case that the interdiction against the payment of DCRG as contemplated by Rule 3A(a) will apply only for a period of 3 years from the date of which the Government servant becomes a pensioner as contemplated under Rule 3 Note 3. C. The order passed by the Lok Ayukta is totally against the principles laid down by the Court in the above referred judgment. W. P. (C) No. 18451 of 2017 -10- Therefore, Exts. P3 and P5 orders passed by the Lok Ayukta are liable to be set aside invoking the extra ordinary jurisdiction of the Court under Article 226 of the Constitution of India. 9. On this day, when the matter came up for hearing, by inviting the attention of this Court to the judgment of the Hon'ble Supreme Court in **Secretary, Local Self Government Department v. Chandran,** reported in **[2022 (2) KLT 370 (SC)]** , Mr. V. Tekchand, learned Senior Government Pleader, submitted that the stand of the Government, as projected in the writ appeal, has been upheld by the Hon'ble Supreme Court. 10. Relevant paragraphs of the judgment of the Hon'ble Supreme Court in the abovesaid decision, are reproduced:- ## “ **Our view:** 27. We have given thought to the matter and find it difficult to sustain the judgment of the High Court on the interpretation of the Rules. 28. We must keep in mind the very objectives of holding back pension or the DCRG. One can be to recover the amounts found due from the delinquent employee of any nature W. P. (C) No. 18451 of 2017 -11- whatsoever after appropriate notice and proceedings. The second eventuality is if an employee is dismissed from service. It can hardly be doubted that in the second eventuality of the dismissal from service the employee would lose all retirement benefits. 29. In the present case separate departmental proceedings have not been concluded within the given timeframe. The State in its wisdom has deemed it appropriate to await the outcome of the criminal proceedings. The result of this would mean that the State would still be empowered to dismiss an employee from service based on the conviction in the criminal case. The State cannot have an opportunity to have separate disciplinary proceedings even if the acquittal takes place. If this were the intention, the departmental proceedings should have been concluded in the stipulated time. We are conscious of the fact that a mere acquittal in a criminal case would not imply that no action can be taken in departmental proceedings. However, the choice was with the State Government as to whether they would like to hold separate departmental proceedings or go by the final view of the criminal court, the latter is naturally based not on preponderance of probabilities but on proof beyond reasonable doubt. It is the latter course which the State has followed. Thus, an employee’s entitlement to all benefits and the right not to be now dismissed from service all inure if the criminal proceedings conclude in favour of the employee. However, were these proceedings to be concluded against the employee and the conviction upheld it cannot be said that the department would still be required to pay all the retirement benefits. The department W. P. (C) No. 18451 of 2017 -12- can also pass an order of dismissal based solely on the criminal conviction. 30. The aforesaid being the position, the question is as to what should be done in the hiatus period as per the Rules. 31. The KSR do provide for a provisional pension so that the economic sustenance requirements of an employee are taken care of. The provisional pension cannot be more than the actual pension. It is nobody’s case that the respondents-employees are not getting provisional pension. Note 1 to Rule 3 clarifies that even if the pension is finally withheld, ordinarily the withheld portion should not be more than 1/3rd of the pension originally sanctioned, as the issue of sustainability comes to the fore. However, there is no such limitation on the DCRG. The important aspect is whether Rule 3A is to be construed in the context of Rule 3 or should be read independently of itself. The High Court seeks to take a view that Rule 3A is in a sense assisting Rule 3 and does not have any independent existence. 32. We are unable to agree to this line of reasoning. 33. Rule 1 to Part III of the KSR begins with the entitlement of pension of all employees to whom the service rules apply. Rule 2 stipulates that future good conduct shall be an implied condition of every grant of a pension and there is entitlement to withhold or withdraw a pension or part thereof whether permanently or for a specified period. In terms of Rule 2(b), where a pensioner is convicted of a serious crime by a court W. P. (C) No. 18451 of 2017 -13- of law, action under clause (a) shall be taken in the light of the judgment of the court relating to such conviction. In the facts of the case it can hardly be said that the conviction on the ground of corruption would not be classified as a serious crime for a person holding a public post. In terms of clause (c) of Rule 2, in case of prima facie guilt of grave misconduct, a procedure has been prescribed to be followed, which includes as per clause (d) of Rule 2 consultation with the Public Service Commission. It is after the aforesaid Rules that Rule 3 commences where the Government reserves to themselves the right to withhold or withdraw a pension or any part of it, whether permanently or for a specified period, and all its ramifications. Certain protective provisions have been made even in that eventuality. This provision is applicable to pension is clarified by Note 2, as it is stipulated that the word ‘pension’ would not include DCRG. Thus, DCRG and pension have been dealt with as separate aspects. The three Notes are followed then by Rulings 1, 2, & 3. 34. However, Note 2 provides that the liabilities fixed against an employee or a pensioner can be recovered from DCRG without the departmental/judicial proceedings referred to in this Rule but after giving an employee or pensioner concerned a reasonable opportunity to explain. If any part of DCRG was not supposed to be available for recovery of amounts, there would be no reason of inclusion of this aspect of DCRG in Note 2 and a view to the contrary would make the latter part of Note 2 otiose. 35. The aforesaid Note 2 is further clarified by Ruling W. P. (C) No. 18451 of 2017 -14- No. 3, which stipulates that Note 2 does not mean that the employee’s or pensioner’s consent should be obtained for recovering the liabilities from DCRG. What has been contemplated is only a communication of such liabilities to him so as to enable him to submit his explanation. Thus, this Ruling No.3 also deals with the DCRG. It is thereafter that Rule 3A starts which refers to the grant of provisional pension not exceeding the maximum pension which would have been admissible on retirement where departmental or judicial proceedings have been initiated under Rule 3. It is clearly stipulated that no gratuity or DCRG shall be paid to him until the conclusion of such proceedings and the issuance of final order thereof. 36. The High Court, in our view, has introduced a new legislation by undertaking the exercise of reading down. We do believe that there is absolutely no need to do so when the language of the rule is so clear conveying its intended meaning without any ambiguity. 37. We are, thus, of the view that Rule 3A cannot be read in isolation nor the latter part of it struck down as done by the High Court. Rule 3, Note 2, Ruling 3, and Rule 3A have to be read in conjunction as they provide for the treatment of the DCRG in case of disciplinary or judicial proceedings pending at the stage of retirement. Even in the absence of these proceedings in certain eventualities the amounts can be recovered from the DCRG. W. P. (C) No. 18451 of 2017 -15- 38. We are of the view that the principle as enunciated in Chairmancum-Managing Director, Mahanadi Coalfields3 would apply even though it is in the context of a different set of Rules. It would be suffice to reproduce paragraphs 11 & 11.2 and 46 & 47 of the said judgment as under: “11. Once it is held that a major penalty which includes the dismissal from service can be imposed, even after the employee has attained the age of superannuation and/or was permitted to retire on attaining the age of superannuation, provided the disciplinary proceedings were initiated while the employee was in service, subsection 6 of Section 4 of the Payment of Gratuity Act shall be attracted and the amount of gratuity can be withheld till the disciplinary proceedings are concluded.” .... .... .... .... “11.2. It is required to be noted that in the present case the disciplinary proceedings were initiated against the respondent employee for very serious allegations of misconduct alleging dishonestly causing coal stock shortages amounting to Rs.31.65 crores and thereby causing substantial loss to the employer. Therefore, if such a charge is proved and punishment of dismissal is given thereon, the provisions of subsection 6 of Section 4 of the Payment of Gratuity Act would be attracted and it would be within the discretion of the appellant employer to forfeit the gratuity payable to the respondent. Therefore, the appellant W. P. (C) No. 18451 of 2017 -16- employer has a right to withhold the payment of gratuity during the pendency of the disciplinary proceedings.” .... .... .... .... “46. Several service benefits would depend upon the outcome of the inquiry, such as concerning the period during which inquiry remained pending. It would be against the public policy to permit an employee to go scotfree after collecting various service benefits to which he would not be entitled, and the event of superannuation cannot come to his rescue and would amount to condonation of guilt. Because of the legal fiction provided under the rules, it can be completed in the same manner as if the employee had remained in service after superannuation, and appropriate punishment can be imposed. Various provisions of the Gratuity Act discussed above do not come in the way of departmental inquiry and as provided in Section 4(6) and Rule 34.3 in case of dismissal gratuity can be forfeited wholly or partially, and the loss can also be recovered. An inquiry can be continued as provided under the relevant service rules as it is not provided in the Payment of Gratuity Act, 1972 that inquiry shall come to an end as soon as the employee attains the age of superannuation. We reiterate that the Act does not deal with the matter of disciplinary inquiry, it contemplates recovery from or forfeiture of gratuity wholly or partially as per misconduct committed and does not deal with punishments to be imposed and does W. P. (C) No. 18451 of 2017 -17- not supersede the Rules 34.2 and 34.3 of the CDA Rules. The mandate of Section 4(6) of recovery of loss provided under Section 4(6)(a) and forfeiture of gratuity wholly or partially under Section 4(6)(b) is furthered by the Rules 34.2 and 34.3. If there cannot be any dismissal after superannuation, intendment of the provisions of Section 4(6) would be defeated. The provisions of section 4(1) and 4(6) of Payment of Gratuity Act, 1972 have to be given purposive interpretation, and no way interdict holding of the departmental inquiry and punishment to be imposed is not the subject matter dealt with under the Act. 47. Thus considering the provisions of Rules 34.2 and 34.3 of the CDA Rules, the inquiry can be continued given the deeming fiction in the same manner as if the employee had continued in service and appropriate punishment, including that of dismissal can be imposed apart from the forfeiture of the gratuity wholly or partially including the recovery of the pecuniary loss as the case may be.” 39. We also believe that it is a very restrictive view to disburse DCRG on account of the proceedings against a pensioner coming to an end, even where a conviction has arisen. This is especially so where the convicted person has availed of the remedy of appeal. An appeal is a continuation of the proceedings in trial and would be, thus, a continuation of judicial proceedings. For example, if no appeal had been filed, can it be W. P. (C) No. 18451 of 2017 -18- said that despite conviction in the criminal case, the State is without authority of forfeiting the DCRG or pension for that matter? If it is not so, as we believe, then the pendency of the appeal cannot disentitle the State from withholding the DCRG, considering that it is a hiatus period within which certain arrangements have to be made which would be dependent on the outcome of the appeal. 40. Learned counsel for the respondent did seek to contend before us that if the appeals are pending over a long period of time it should not prejudice the respondents. That is a matter for them to take up before the High Court for disposal of the appeals, which are undoubtedly quite old. 41. We have aforesaid also clarified that there is no question of any other departmental proceedings arising independently against the respondents, as the conclusion of the criminal proceedings would entitle the State to pass appropriate orders based solely on the result of the aforesaid proceedings. ## **Conclusion:** 42. We are, thus, of the view that the impugned judgment of the Full Bench of the Kerala High Court cannot be sustained, and it cannot be opined that the DCRG would have to be released to the respondents pending consideration of the criminal appeal. 43. The impugned judgment is set aside and the appeals are accordingly allowed leaving the parties to bear their own costs.” W. P. (C) No. 18451 of 2017 -19- In the light of the decision of the Hon'ble Supreme Court stated supra, as regards the applicability of Rule 3A of Part III of the Kerala Service Rules, 1959, we are of the view that Ext. P5 order dated 20.12.2016, passed by the Kerala Lok Ayukta, the 2[nd] respondent, requires to be set aside, and accordingly, set aside. Writ petition is allowed. **Sd/S. MANIKUMAR CHIEF JUSTICE** **Sd/SHAJI P. CHALY JUDGE** Eb ///TRUE COPY/// P. A. TO JUDGE W. P. (C) No. 18451 of 2017 -20- ## **APPENDIX OF WP(C) 18451/2017** **PETITIONER EXHIBITS EXHIBIT P1 A COPY OF THE COMPLAINT NO. 1085/2015 FILED BY THE 1ST RESPONDENT BEFORE THE 2ND RESPONDENT WITH ENGLISH TRANSLATION. EXHIBIT P2 A TRUE COPY OF THE AFFIDAVIT DATED 07/09/2015 SUBMITTED BY THE 1ST RESPONDENT BEFORE THE 2ND RESPONDENT WITH ENGLISH TRANSLATION. EXHIBIT P3 A COPY OF THE INTERIM ORDER DATED 30/06/2016 OF THE HONOURABLE LOK AYUKTA. EXHIBIT P4 A COPY OF THE STATEMENT FILED BY THE 1ST PETITIONER DATED 01/09/2016. EXHIBIT P5 COPY OF THE ORDER DATED 20/12/2016 IN COMPLAINT NO.1085/15 PASSED BY THE 2ND RESPONDENT.** **RESPONDENT EXHIBITS EXHIBIT R1(A) TRUE COPY OF THE JUDGMENT AS REPORTED IN ILR 2020(4) KERALA 102**