Prasad A.A. v. State of Kerala and Director of Agriculture, Department of Agricultural Development and Farmers Welfare

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **THURSDAY, THE 17TH DAY OF OCTOBER 2019 / 25TH ASWINA, 1941** ## **OP(KAT).No.398 OF 2019** **AGAINST THE ORDER IN OA (EKM) 743/2019 DATED 17-06-2019 OF KERALA ADMINISTRATIVE TRIBUNAL, THIRUVANANTHAPURAM** ## **PETITIONER/APPLICANT IN O.A:** **PRASAD A.A. AGED 57 YEARS S/O. A.R. APPUKUTTAN RESIDING AT 102 ADITHYA APARTMENTS, MR. VASU ROAD, AYYANTHOLE, THRISSUR 680 003, FOR MERLY WORKING AG AGRICULTURE ADDITIONAL DIRECTOR, KERALA STATE SEED DEVELOPMENT AUTHORITY, AYYANTHOLE, THRISSUR KERALA 680 003.** **BY ADVS. SRI.BIJO FRANCIS SRI.JOSE KURIAKOSE (VILANGATTIL)** ## **RESPONDENTS/RESPONDENTS IN O.A:** **1 STATE OF KERALA REPRESENTED BY THE SECRETARY, DEPARTMENT OF AGRICULTURE DEVELOPMENT AND FARMERS WELFARE, VIKAS BHAVAN, THIRUVANANTHAPURAM 695 033. 2 DIRECTOR OF AGRICULTURE. DEPARTMENT OF AGRICULTURAL DEVELOPMENT AND FARMERS WELFARE, VIKAS BHAVAN, THIRUVANANTHAPURAM 695 033, KERALA.** **R1-2 BY GOVERNMENT PLEADER OTHER PRESENT:** ## **GP SRI.ANTONY MUKKATH** **THIS OP KERALA ADMINISTRATIVE TRIBUNAL HAVING BEEN FINALLY** **HEARD ON 17-10-2019, THE COURT ON 17-10-2019 DELIVERED THE** **FOLLOWING:** O.P.(KAT) No.398 of 2019 2 ## **“CR”** ## **JUDGMENT** Dated this the 17[th] day of October 2019 ## **V.G.ARUN, J.** The petitioner retired from the post of Additional Director in the Department of Agriculture Development and Farmers' Welfare on 30.6.2018. By intimation slip dated 17.4.2018, the Principal Accountant General (A&E) communicated the petitioner's Pension Payment Order and Commutation Payment Order to the District Treasury Office, Thrissur. Along with the intimation slip, a verification report was also appended, noting the DCRG due to the petitioner as Rs.14,00,000/-. Even though the petitioner started receiving regular monthly pension on his retirement, the DCRG amount O.P.(KAT) No.398 of 2019 3 was not disbursed. Repeated representations requesting disbursal of DCRG remained unanswered and in the meanwhile, on coming to know that a sum of Rs.1,626/- was noted as his liability, petitioner remitted the amount at the District Treasury on 6.7.2018. An indemnity bond, undertaking to refund the liability, if any, found in the audit, was also submitted by the petitioner. In spite of all such efforts, the respondents failed to disburse the death-cumretirement gratuity due to the petitioner and hence, the petitioner approached the Kerala Administrative Tribunal in O.A.(EKM) No. 743 of 2019, seeking a direction to the respondents to pay his DCRG with interest at the rate of 12% per annum from 17.4.2018 till date of payment. 2. The Tribunal disposed of the original application taking into account the submission made on behalf of the O.P.(KAT) No.398 of 2019 4 respondents that the liability certificate of the petitioner was issued on 12.6.2019, wherein an amount of Rs.4,509/- was fixed as the petitioner's liability and directed the respondents to ensure that the DCRG amount, less the liability, is disbursed to the petitioner within one month from the date of receipt of a copy of the order. 3. The original petition is filed, aggrieved by the nonconsideration of the petitioner's prayer for interest for the delayed payment of gratuity. The learned Counsel for the petitioner contended that retirement benefits are not bounty to be disbursed at the will and pleasure of the employer. Rather it is the right accrued on the employee based on the service rendered by him. It is contended that the right to receive DCRG arises on the day of retirement itself and any unexplained delay in disbursing the DCRG will entail in O.P.(KAT) No.398 of 2019 5 interest on the amount due, which fact has not been considered by the Tribunal. 4. The learned Senior Government Pleader countered the contentions by placing reliance on Ruling No.5 of Rule 116 of Part III of the Kerala Service Rules, wherein a period of one year from the date of retirement of the Government employee is provided to assess and adjust the recoverable dues, in cases where the liabilities could not be assessed and fixed before the retirement of the Government employees. It is pointed out that the petitioner retired on 30.6.2018 and the non liability certificate (NLC) was issued on 12.6.2019, whereby the requirement of finalising the assessment and fixing liability within a period of one year stood satisfied. It was hence contended that the question of payment of interest does not arise. O.P.(KAT) No.398 of 2019 6 5. Even though the contentions put forward by the learned Senior Government Pleader sound attractive at first blush, a detailed scrutiny of the relevant provisions of the KSR pertaining to pension indicate otherwise. Chapter VII of Part III KSR prescribes the procedure relating to grant of pensions. Rule 108 (1) therein stipulates that the rules shall apply to all Government employees applying for pension under the Kerala Service Rules. As per Sub-rule (2) of Rule 108, “gratuity” means death-cum-retirement gratuity under Rule 66 and includes service gratuity under Rule 64. Rule 109 mandates that every Head of Department shall have a list prepared every six months, on the 1[st] January and the 1[st] July each year, of all gazetted and non-gazetted government employees who are due to retire within the next 12 to 18 months of that date. The Rule also mandates that a copy of every such list shall be O.P.(KAT) No.398 of 2019 7 supplied to the Audit Officer concerned, not later than the 31[st] January or the 31[st] July, as the case may be, of that year. As per Rule 110, a duty is cast on every Government employee to submit a formal application for pension at least one year in advance of the date of anticipated retirement. As per the stipulation in Rule 111, the Head Office has to send the Service Book of every gazetted Government employee to the Audit Officer at least one year in advance of the date of retirement, after satisfying himself that the certificate of verification regarding the non-gazetted service has been recorded therein and that the Service Book is complete in all respects. Rule 113 requires every Gazetted Government Employee to submit the application for pension to the Accountant General through the Pension Sanctioning Authority one year ahead of the date of superannuation. The Rule also prescribes the procedure to be O.P.(KAT) No.398 of 2019 8 followed on receipt of such application. Thus, the aforementioned provisions ensure that the procedural formalities for sanctioning pension to a Government employee are completed prior to his retirement. 6. Rule 116 comes into play in cases where a Government employee is likely to retire before his pension can be finally assessed and settled in accordance with the provisions mentioned above and provides for payment of anticipatory pension/gratuity in such cases. Sub-rule (5) of Rule 116 provides for recovery of amounts from the anticipatory gratuity/ death-cum-retirement gratuity of the employee, towards amounts to be withheld with respect to unassessed liabilities and amounts to be recovered and adjusted towards assessed liabilities. This cannot be read in isolation and deemed to be an enabling provision permitting O.P.(KAT) No.398 of 2019 9 retention of the DCRG, by the Government for an year. 7. The Rulings under Rule 116 deals with the procedure to be adopted for withholding of amounts from the anticipatory pension and death-cum-retirement gratuity in cases where the assessment and finalisation of liability could not be completed for varied reasons. Ruling No.1 deals with a situation where the liabilities are not finalised but are only estimated at the time of retirement. In such situations, pension and death-cum-retirement gratuity is to be released after accepting a surety bond or cash deposit or after withholding the estimated amount of the outstanding dues plus twenty five percent thereof from the death-cumretirement gratuity. Ruling No.2 pertains to a situation where disciplinary proceedings against an officer is being continued on the date of his retirement as provided under Rule 3 of Part O.P.(KAT) No.398 of 2019 10 III. In such cases, provisional pension will be paid and the death-cum-retirement gratuity will be withheld as provided in Rule 3A of Part III. Ruling No.3 is with respect to cases not covered by Ruling Nos.1 and 2 and provide for release of pension and death-cum-retirement gratuity, after withholding, from the employees in charge of cash/stores the full amount of DCRG and from other gazetted and non-gazetted employees, ten percent of DCRG. Ruling No.4 stipulates that in all cases where the procedure referred to in Ruling No.1 or 3 is proposed to be followed, the pension sanctioning authority has to intimate the amount or percentage of the death-cumretirement gratuity to be withheld to the Accountant General without fail within a week of retirement of the employee. Ruling No.5, on which reliance is placed by the Senior Government Pleader, to counter the claim for interest, reads as O.P.(KAT) No.398 of 2019 11 ## follows:- _“5. In all cases where the liabilities could not be assessed and fixed before retirement of the Government employees, efforts should be made to assess and adjust the recoverable dues within a period of one year from the date of retirement of the Government employee concerned. If in any case, the liability could not be assessed and adjusted within one year, the amount withheld from the death-cum-retirement gratuity or the surety bond or cash deposit accepted under paragraph (1) or (3) above will be released. Disciplinary action shall be taken against the employees responsible for the failure to assess and adjust the liabilities within the prescribed period.”_ 8. A conjoint reading of the Rulings and the provisions with respect to the procedure relating to pensions contained in Chapter VIII of Part III makes it explicit that the pension and other retirement benefits are to be granted immediately on the retirement of an employee and in cases where it could not be granted, pension and death-cum-retirement gratuity should be disbursed in accordance with the procedure under Ruling Nos.1 to 3 of Rule 116. The mandate of Ruling No.5 is that in the unlikely event of the assessment and finalisation of liabilities not being completed at the time of retirement of an O.P.(KAT) No.398 of 2019 12 employee, it should be completed within a period of one year. If not, the amount withheld from the death-cum-retirement gratuity or the surety bond, or cash deposit accepted under Ruling Nos.1 or 3, will have to be released. The rigour of the requirement of releasing retirement benefits immediately on superannuation of an employee is reflected from the dictate in Ruling No.5, that disciplinary action shall be taken against the employees responsible for the failure to assess and adjust the liabilities within the prescribed period. The time limit of one year for assessment of liabilities is subject to the stipulation mandating release of DCRG on acceptance of surety bond or cash deposit, or after withholding the estimated amount of outstanding dues from the DCRG or 10% of the DCRG, as the case may be. Hence, Ruling No.5 of Rule 116 cannot be relied on to contend that an outer time limit of one year has been O.P.(KAT) No.398 of 2019 13 provided for finalising the assessment and for disbursal of pension in all cases, nor can it be taken as an enabling provision permitting the amount of DCRG to be retained with the Government for one year. The prescribed period mentioned in Ruling No.5 can only be the day of retirement or the following day in the case of DCRG and the first day of the month after retirement, in the case of pension. Further, Ruling No.5 applies only if the whole or substantial portion of the pension and gratuity of the Government employee has been disbursed on the basis of surety bond or cash deposit or by retaining a portion of the pension or DCRG in the manner prescribed in Ruling Nos.1 to 3. 9. Even accepting that under Rule 116 (5), the Government could ascertain and determine the liability within one year from retirement of an employee, it only enables the O.P.(KAT) No.398 of 2019 14 recovery, of any such liability assessed, from the DCRG. It is not a provision to be resorted to mechanically in every case of retirement, which would only be a validation of the red tape prevalent in government offices and the gross official apathy towards a government servant facing impending severance from service. Here there is no allegation against the applicant that he failed to forward an application for pension within time. Once that is done it is for the higher authorities to act with expediency so as to enable payment of pension and DCRG immediately on superannuation. The claim for interest will depend on the facts of each case, especially with reference _inter alia_ to the liability eventually fixed. 10. Here the petitioner retired on 30.06.18 and the Office of the Accountant General issued Pension Payment Order along with which the verification report fixing the DCRG O.P.(KAT) No.398 of 2019 15 at Rs.14,00,000/-. A liability of Rs. 1,620/- then fixed was remitted by the petitioner and later an indemnity bond was also submitted. Then the petitioner approached the Tribunal and while the O.A was pending a liability of Rs. 4,508/- was fixed, upon which the Tribunal directed the disbursal of DCRG. For a mere Rs. 4,500/-, DCRG of Rs.14,00,000/- was withheld from the pensioner. There is also no contention of an apprehended huge liability pending against the applicant here. In such circumstances, the applicant is liable to be compensated for the delay. 11. The statutory scheme under Part III KSR is amply supported by the decisions of the Honourable Supreme Court. In _**State of Kerala and others v. M.Padmanabhan Nair [1985 (1) SCC 429]**_ , the Apex Court deprecated the failure to complete the process of collecting the requisite information O.P.(KAT) No.398 of 2019 16 and issuing last pay certificate and NLC by the concerned Departments and observed that the process should be completed at least a week before the date of retirement, so that gratuity could be paid to the Government servant on the date he retires or on the following day and pension at the expiry of the following month. Terming the delay of two years and three months in disbursing pension and gratuity as culpable delay, the Court proceeded to hold as follows:- _“Pension and gratuity are no longer any bounty to be distributed by the Government to its employees on their retirement, but have become, under the decisions of this Court, valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with the penalty of payment of interest at the current market rate till actual payment.”_ 12. The legal position expatiated in _**M.Padmanabhan**_ _**Nair**_ was reiterated by the Honourable Supreme Court many a time in subsequent decisions including the decision in _**v. Tewari D.D. (D) Thr. Lrs Uttar Haryana Bijil Vitran Nigam**_ O.P.(KAT) No.398 of 2019 17 _**Ltd and others [2014 (8) SCC 894].**_ In _**Tewari** 's case,_ the Apex Court frowned upon the delay in payment of pension and gratuity and awarded interest at the rate of 9% from the date of entitlement till the date of the actual payment, with a further condition that if the amount is not paid within six weeks from the date of receipt of a copy of the order, the same shall carry interest at the rate of 18% per annum. The right of a Government employee for interest on the delay in payment of retirement benefits being explicit, the Tribunal ought to have hold that the applicant is entitled for interest on the DCRG amount from the next day of his retirement. Hence, the impugned order of the Tribunal is modified by declaring that the respondents are liable to pay interest to the applicant at the rate of 7% per annum from 1.7.2018 onwards till payment of the DCRG. The payment in O.P.(KAT) No.398 of 2019 18 terms of the modification shall be made within a period of three months from the date of receipt of a copy of this judgment, failing which the interest shall be enhanced to 9% per annum from 1.7.2018, in which event, the amount paid as interest component to the applicant shall be recovered from the officials who were responsible for the delay. Original petition is allowed on the above terms. No order as to costs. **Sd/K.VINOD CHANDRAN JUDGE** **Sd/V.G.ARUN JUDGE** Scl/17.10 O.P.(KAT) No.398 of 2019 19 ## **APPENDIX** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE O.A. EKM 743/2019 FIELD BY THE PETITIONER BEFORE KAT, ERNAKULAM BENCH.** **EXHIBIT P1 A1** - **TRUE COPY OF THE INTIMATION SLIP DTD. 17.4.2018 OF THE PRINCIPAL ACCOUNTANT GENERAL A AND E, KERALA NUMBERED P- 11/2101810301/2/P/18/10/20393230.** - **EXHIBIT P1 A1 A TRUE COPY OF THE VERIFICATION REPORT DATED 17.4.2018 ISSUED BY THE OFFICE OF THE ACCOUNTANT GENERAL.** - **EXHIBIT P1 A2 TRUE COPY OF THE REPRESENTATION SENT BY THE APPLICANT TO THE 2ND RESPONDENT DATED 6.9.2018.** - **EXHIBIT P1 A3 TRUE COPY OF THE REPRESENTATION SENT BY THE APPLICANT TO THE 2ND RESPONDENT DTD. 28.11.2018.** - **EXHIBIT P1 A4 TRUE COPY OF THE REMITTANCE CHALAN DTD. 6.7.2018.** - **EXHIBIT P1 A5 TRUE COPY OF THE INDEMNITY BOND DTD. 26.7.2018** - **EXHIBIT P1 A6 TRUE COPY OF THE LETTER SENT BY THE APPLICANT TO THE 2ND RESPONDENT DTD. 6.7.2018** - **EXHIBIT P2** - **TRUE COPY OF THE ORDER DTD. 17.6.2019 IN O.A. EKM 743/2019 OF THE KERALA** O.P.(KAT) No.398 of 2019 20 **ADMINISTRATIVE TRIBUNAL AT THIRUVANANTHAPURAM ADDL. BENCH, ERNAKULAM FIELD BY THE RESPONDENTS.**