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A judgment by a three-Judge Bench of the Apex Court held that an employer has a right to retain gratuity during the pendency of disciplinary proceedings against an employee even after superannuation.
Another question before the court was whether the disciplinary authority can impose a penalty of dismissal from service for misconduct on an employee who has superannuated. The bench was divided on this issue, but majority were of the affirmative opinion.
Facts of the case:-
An employee of Mahanadi Coalfields was charged with serious allegations of misconduct, which allegedly caused losses of over Rs 30 crore to the company, following which a departmental inquiry was initiated under the CDA Rules of 1978 put in place by Coal India Ltd. In the middle of these proceedings, the present respondent superannuated. Immediately after superannuation, the employer withheld the gratuity amount due to the ex-employee while the disciplinary proceedings were pending. The employee applied for the payment of gratuity. The controlling authority held the claim as ‘pre-mature’ due to pending disciplinary proceedings. The respondent approached to the Orissa High Court for challenging this, which held that the petition was maintainable and that the employee's dismissal from service would not arise on account of his superannuation. It further held that payment of gratuity cannot be withheld on the basis of the CDA Rules, as these rules do not have the force of a statute. It said that right to gratuity under the Payment of Gratuity Act which is a statute, accrued to the respondent cannot be impaired. It was challenged before the Supreme Court.
Questions before the court:-
Can an employer withhold gratuity of an employee after superannuation over pending disciplinary proceedings?
Whether dismissal as a penalty can be effected even after superannuation of employee?
Held:-
The bench unanimously held that the CDA Rules of 1978, read with the provisions of the Payment of Gratuity Act, give an employer the right to withhold gratuity during the pendency of disciplinary proceedings.
On the second question, it held that the disciplinary authority has powers to impose the penalty of dismissal upon the respondent even after his attaining the age of superannuation, as the disciplinary proceedings were initiated while the employee was in service.
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