SC: Gratuity Stays Withheld While Criminal Proceedings Pending, Rule 69(1)(c) Valid

A bench of Justices Prashant Kumar Mishra and Vipul M. Pancholi heard the appeal arising from the Himachal Pradesh High Court’s dismissal of a writ petition by a retired employee of the Himachal Pradesh Road Transport Corporation challenging the withholding of his gratuity and other retirement benefits. The narrow question before the Court concerned the proper construction of Rule 69(1)(c) of the Central Civil Services (Pension) Rules, 1972  whether the expression “departmental or judicial proceedings” required conclusion of both proceedings before gratuity became payable or whether conclusion of either would suffice.

The Supreme Court dismissed the appeal and held that Rule 69(1)(c) operated as an embargo: gratuity could not be paid while either departmental or judicial proceedings were pending. The Court rejected the appellant’s submission that the disjunctive “or” must be read as permitting release of gratuity once one set of proceedings concluded, observing that such an interpretation would “altogether defeat the purpose of the provision, which is to safeguard the financial interests of the State.” 

The Court, in its reasoning, observed: “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 further noted that Rule 9(1) of the Pension Rules — which permits recovery where a pensioner was later found guilty — was a downstream remedy and could not be invoked to justify release of gratuity while proceedings remained pending, observing that the provision “is downstream in its operation and cannot be invoked to justify the release of gratuity during the interregnum when proceedings are admittedly pending.”

Background

The appellant, who had been in service with the Corporation since 1979 and was promoted to Senior Assistant in 2000, retired on 28 February 2009. Between May and July 2006 he was implicated in the leak of the Combined Pre-Medical Test (CPMT) question paper and FIR No. 140/2006 was registered at West Shimla Police Station, alleging offences including criminal breach of trust and cheating. He was arrested in November 2006 and released on bail the following day. The Corporation initiated departmental proceedings under Rule 14 of the CCS (Classification, Control and Appeal) Rules, 1965; the Inquiry Officer, after examining documentary correspondence and two witnesses, recorded on 26 February 2009 that there was “no material on record establishing the appellant’s involvement in the CPMT paper leak” and noted that “the case is under consideration of Honourable Court and until the Court's decision, it would not be appropriate to say anything. Based on the documents, it does not seem that the Accused was involved in the scam.”

Despite the inquiry report and the appellant’s superannuation, gratuity and certain terminal benefits were withheld on account of the pendency of criminal proceedings. Charges were ultimately held “not proved” on 28 May 2015 and the appellant sought release of gratuity and pensionary benefits before the Himachal Pradesh State Administrative Tribunal (transferred later to the High Court). The Single Judge dismissed the writ petition on 19 July 2021; a Division Bench affirmed on 23 April 2022, while urging the trial court to expedite the criminal trial. The present appeal upheld the High Court’s interpretation of Rule 69(1)(c) and declined to interfere with the factual findings; the Supreme Court reiterated the direction to the trial court to expedite the trial arising from FIR No. 140/2006. The appeal was dismissed.

Case Details:
Case No.: Civil Appeal No. 14669 of 2025
NeutralCitation: 2026 INSC 326
Case Title: Bikram Chand Rana v. Himachal Pradesh Road Transport Corporation

Source: 2026 CaseBase(SC) 285