CH. CUM MAN. DIRECTOR MAHANADI COALFIELD LTD. versus RABINDRANATH CHOUBEY

Citation: [2013] 11 S.C.R. 513 · Decided: 29-10-2013 · Supreme Court of India · Bench: K.S. RADHAKRISHNAN · Disposal: Disposed off
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Judgment (excerpt)

[2013] 11 S.C.R. 513 
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD LTD. 
A 
V. 
RABINDRANATH CHOUBEY 
(Civil Appeal No. 9693 OF 2013) 
OCTOBER 29 , 2013 
· [K.S. RADHAKRISHNAN AND A.K. SIKRI, JJ.) 
B 
Payment of Gratuity Act, 1972 - s.4(6)(a) and (b) -
Employer's right to withhold gratuity pending departmental 
enquiry - Held: A three Judge Bench judgment of Supreme 
C 
Court passed in *Ram Lal Bhaskar's case is contrary to the 
dicta laid down in ** Jaswant Singh's case passed by a Division 
Bench of Supreme Court which laid down that employer does 
not have right to withhold gratuity pending departmental 
enquiry - Hence matter refe"ed to larger Bench. 
D 
The question for consideration, in the present appeal 
was whether gratuity can be withheld in the wake of r. 34 
of Conduct, Disciple and Appeal Rules, 1978 of the 
appellant-employer, when examined in juxtaposition with 
the provisions of Payment of Gratuity Act, 1972. 
Referring the appeal to larger Bench, the Court 
E 
HELD: In ** Jaswant Singh Gill's case, a Two Judge 
Bench of Supreme Court directly answered the question 
F 
that gratuity has to .be necessarily released to the 
concerned employee on his retirement even if 
departmental proceeding are pending against him. The 
said judgment proceeds on the basis that after the 
retirement of an employee, penalty of dismissal cannot G 
be imposed upon the retired employee. However, in 
*Ram Lal Bhaskar's case, penalty of dismissal, even after 
the retirement, was upheld by Three Judge Bench of 
Supreme Court. This goes contrary to the dicta laid down 
513 
H 
514 
SUPREME COURT REPORTS 
[2013] 11 S.C.R. 
A in ** Jaswanf Singh Gill's case which took the view that no 
major penalty is permissible after retirement. If the view 
laid down in ** Jaswant Singh Gill's case is not correct 
and the imposition of penalty of dismissal is still 
permissible, employer will get the right to forfeit the 
B gratuity of such an employee in the eventualities provided 
u/ss. 4(1) & 4 (6) of the Payment of Gratuity Act. [Paras 
22 and 23] [526-B-C, D-F] 
2. For invoking s. 4(6) (a) and (b) of Payment of 
C Gratuity Act, necessary pre-condition is the termination 
of service on the basis of departmental enquiry or 
conviction in a criminal case. This provision would not 
get triggered if there is no termination of services. It is the 
case of the appellant that in the charge-sheet served 
upon the respondent, there are very serious allegations 
D of misconduct alleging dishonestly causing coal stock 
shortage amounting to Rs. 31.65 crores, and thereby 
causing substantial loss to the employer. If such a charge 
is proved and punishment of dismissal is given 
thereupon, the provisions of s. 4(6) of the Payment of 
E Gratuity would naturally get attracted and it would be 
within the discretion of the appellant to forfeit the gratuity 
payable to the respondent. As a corollary, one can say 
that the employer has right to withhold the gratuity 
pending departmental inquiry. However, this course of 
F action is available only if disciplinary authority has 
necessary powers to impose the penalty of dismissal 
upon the respondent even after his retirement. Therefore, 
the issue needs to be considered authoritatively by a 
larger Bench. Hence, the appeal needs to be decided by 
G a Bench of three Judges. [Paras 24 and 25] [528-8-F] 
H 
**Jaswanf Singh Gill vs. Bharat Coking Coal Ltd. and Ors. 
(2007) 1 SCC 663: 2006 (8) Suppl. SCR 1064; *State Bank 
of India vs. Ram la/ Bhaskar and Anr. 2011(10) SCC 249: 
CH. CUM MAN. DIRECTOR MAHANADI COALFIELD 515 
LTD. v. RABINDRANATH CHOUBEY 
2011 (12) SCR 1036; UCO Bank and Anr. vs. Rajinder Lal A 
Capoor 2007 (6) SCC 694: 2007 (7) SCR 543 - referred to. 
Case Law Reference: 
2006 (8) Suppl. SCR 1064 
referred to 
Para 13 
2011 (12) SCR 1036 
2007 (7) SCR 543 
referred to 
Para 14 
referred to 
Para 20 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
8 
9693 of 2013. 
c 
From the Judgment & Order dated 17.07.2013 of the High 
Court of Orissa, Cuttack in W.A. No. 115 of 2012. 
Mahabir Singh, Gp. Capt. Karan Singh Bhati, Monika 
Sharma, Ayushi Mittal for the Appellant. 
D 
Anukul Chand Pradhan, Kamal Said, Saurabh Mishra for 
the Respondent. 
The Judgment of the Court was delivered by 
E 
A.K. SIKRI, J. 1. Leave granted. 
2. The respondent was working as Chief General Manager 
(Production) since 17.2.2006 at Rajmahal area under Mahanadi 
Coalfields Ltd., the appellant herein. A memo containing articles
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