PC Act | Proceedings By Third Parties Not Judicial Proceedings, Employer Cannot Withhold Pension On Such Grounds: Karnataka High Court

The Karnataka High Court has recently held that proceedings instituted by third parties against a government employee under the Prevention of Corruption Act ("PC Act"), cannot be construed to fall within the category of judicial proceedings, permitting the employer to withhold the pension of the retired employee.

In dismissing an appeal by the Karnataka Power Transmission Corporation Limited ("KPTCL") against an order of a single bench which allowed a plea by a KPTCL employee, seeking disbursal of all of his retirement benefits, a Division bench of Justice S Sunil Dutt Yadav and Justice Vijaykumar A Patil observed,

“The judicial proceedings instituted by third parties under the PC Act cannot be considered to be proceedings instituted under Regulation 171. Proceedings instituted by third parties cannot be construed to fall within the category of judicial proceedings permitting the employer to withhold the pension of the employee.”

The petitioner retired from service on 31.05.2022 upon attaining the age of superannuation. It was submitted that while he was in service, on 9.4.2018, FIR came to be registered by the ACB police under Section 13(1)(e) read with Section 13(2) of the PC Act on the basis of a complaint at the instance of a third party complainant not by the employer. Cognizance of the FIR was however taken in August 2022, once the employee had retired from office. 

Petitioner argued that he was suspended but subsequently reinstated. After attaining the age of superannuation, the petitioner sought payment of his pension, whereby the respondent/Corporation as his employer, sanctioned only 50% of his pension in terms of Regulation 172(1) of Karnataka Electricity Board Employees’ Service Regulations, 1996, in light of judicial proceedings initiated against him under the PC Act. 

The corporation argued that the Single Judge had grossly erred in recording a finding that pecuniary loss was required to be established for the purpose of withholding the pension. It was submitted that such restrictions cannot be read into Regulation 172 of the PC Act. 

The petitioner/employee contended that the right to receive a pension would constitute property and that it could not be restricted except as sanctioned by the Regulation, since it related to past service rendered.

It was further argued that judicial proceedings under Regulation 172 must refer to judicial proceedings instituted by the employer and cannot refer to any proceedings instituted by a third party.

The bench held that while Regulation 172 provided for withholding of pension insofar as retired employees were concerned, it referred to the proceedings instituted under Regulation 171. A close reading of Regulation 171 would make it clear that the proceedings under Regulation 171 relate to pecuniary loss caused to the Board either in whole or part, it held. 

In reiterating the finding of the single judge that the petitioner in this case had not caused any pecuniary loss to his employer, it added. “While interpreting Regulation 171, the words “any pecuniary loss caused to the Board”, are required to be construed as a condition precedent even as regards enquiry sought to be initiated after attaining superannuation in terms of Regulation 172(b). Such interpretation would be necessary taking note of the nature of the pension being a reward for the past services rendered and if sought to be withheld, the same must be sanctioned by the applicable regulation.”

It further noted that in terms of the explanation to Regulation 172, on the date of superannuation from service, there were no judicial proceedings pending against the petitioner, since cognizance of the aforesaid complaint had only been taken after he had demitted office. 

It rejected the appeal on holding that the present case only related to withholding of pension in terms of Regulation 172, and that all rights of the employer under the Regulations of the PC Act were available upon conclusion of the ongoing proceedings.

Accordingly, the Writ Appeal was rejected.

Appearance: Advocate Shirish Krishna for Advocate Shivraj S Balloli for Appellants.

Advocate Santosh B Malligawad for Respondent.

Citation No. 2023 LiveLaw (Kar) 450

Case Title: Karnataka Power Transmission Corporation Limited & Other And Mallikarjun Savanur

Case No: Writ Appeal No. 100422 of 2023.

Click Here To Read/Download Order