Public Sector Enterprise Can't Initiate Disciplinary Action Against Retired Employee If Rules Don't Expressly Enable It : Supreme Court

The Supreme Court on Tuesday (January 6) ruled that a public-sector corporation cannot initiate or continue disciplinary proceedings against an employee after retirement in the absence of an express enabling provision in its service regulations.

A bench of Justices JK Maheshwari and Vijay Bishnoi quashed the post-retirement disciplinary action taken against a former employee of the Maharashtra State Warehousing Corporation nearly eleven months after his retirement.

Noting that the Maharashtra Civil Services (Pension) Rules, 1982 ('1982 Pension Rules') and Maharashtra State Warehousing Corporation (Staff) Service Regulations, 1992 don't include an enabling provision to launch disciplinary proceedings against the retired employee, the Court allowed the ex-employee's appeal, holding that “the Corporation had no jurisdiction to institute the departmental proceedings against the appellant for the alleged misconduct and to direct recovery against him applying 1982 Pension Rules.”

Appellant-Kadirkhan Pathan retired as a Storage Superintendent of MSWC on August 31, 2008. Nearly eleven months later, the Corporation initiated disciplinary proceedings alleging financial losses during his tenure, issued a charge sheet in 2010, and in 2017 held him liable for ₹18.09 lakh, withholding ₹4.43 lakh of his retiral dues and ordering further recovery.

Pathan challenged the action, arguing that the MSWC Staff Service Regulations, 1992 did not permit post-retirement proceedings. While the High Court partly upheld the action by restricting withholding to gratuity, Pathan appealed to the Supreme Court.

Setting aside the impugned order, the judgment authored by Justice Maheshwari, citing decisions of Bhagirathi Jena Vs. Board of Directors, O.S.F.C. and Others, (1999) 3 SCC 666 and Girijan Cooperative Corporation Limited Andhra Pradesh Vs. K. Satyanarayana Rao, 2010 15 SCC 322 held that in the absence of a specific enabling rule, disciplinary proceedings lapse upon retirement and retiral benefits cannot be withheld.

In essence, the Court said that if the Public-Sector Enterprises wish to initiate disciplinary proceedings against their ex-employee after their retirement, then an enabling provision needs to be included in the governing rules.

"The impugned departmental proceedings against the appellant are also hereby quashed, and the Corporation is directed to release all the retiral benefits to the appellant within a period of eight weeks. The recovery, if any, made from the appellant in the interregnum, shall also be refunded within the period as specified.", the court ordered.

The appeal was allowed.

Headnote

Service Law – Departmental Enquiry – Post-Superannuation – Lack of Jurisdiction – Adoption of Rules – The Supreme Court quashed a departmental enquiry initiated against a retired employee of the Maharashtra State Warehousing Corporation (MSWC) approximately 11 months after his superannuation - Held that in the absence of specific provisions in the Maharashtra State Warehousing Corporation (Staff) Service Regulations, 1992, the Corporation could not ipso facto apply the Maharashtra Civil Services (Pension) Rules, 1982, to initiate proceedings against a retired employee without a conscious decision or resolution by the Board of Directors to adopt such rules - that a public-sector corporation cannot initiate or continue disciplinary proceedings against an employee after retirement in the absence of an express enabling provision in its service regulations.

Service Law – Rule 27 of Maharashtra Civil Services (Pension) Rules, 1982 – Mandatory Requirement of Sanction – Held that even if assumed that the 1982 Pension Rules were applicable through the residuary Clause 110 of the 1992 Regulations, observed that Rule 27(2)(b)(i) mandates prior sanction of the Government for instituting proceedings after retirement - rejected the Corporation's argument that a "general sanction" was accorded at the time the 1992 Regulations were originally approved, clarifying that the word 'shall' in the rule implies a mandatory safeguard for each specific case to prevent unwarranted proceedings against superannuated employees – Regulation 110 of the 1992 Regulations is a miscellaneous/residuary provision intended to cover silent areas - it does not confer automatic jurisdiction to initiate departmental enquiries against retired employees unless the Corporation has formally adopted the relevant Government rules at an appropriate level – Appeal allowed. [Relied on Bhagirathi Jena v. Board of Directors, O.S.F.C. and Others, (1999) 3 SCC 666; Girijan Cooperative Corporation Limited Andhra Pradesh v. K. Satyanarayana Rao, (2010) 15 SCC 322; Anant R. Kulkarni v. Y.P. Education Society and Others, (2013) 6 SCC 515; Paras 18-30]

Cause Title: KADIRKHAN AHMEDKHAN PATHAN VERSUS THE MAHARASHTRA STATE WAREHOUSING CORPORATION & ORS.

Citation : 2025 LiveLaw (SC) 10

Click here to download judgment

Appearance:

For Petitioner(s) :Mr. Anjani Kumar Jha, AOR Mr. Varun V. Solshe, Adv. Mr. Vivek C. Solshe, Adv.

For Respondent(s) :Mr. Yash Prashant Sonavane, Adv. Mr. Ravindra Keshavrao Adsure, AOR