Disciplinary Proceedings Initiated During Service Can Be Continued After Retirement If Rules Permit : Supreme Court

The Supreme Court on Thursday (March 19) observed that if the service Rules/regulations permit, the disciplinary proceedings initiated against an officer/employee before retirement can be continued even after attaining the age of superannuation, and penalties such as reduction in pay can be enforced by recalculating pensionary benefits. “…what is settled is that if the extant service Rules/Regulations permit continuance of the disciplinary proceedings, initiated against an officer/ employee before he had attained the age of superannuation, those can be continued and brought to its logical conclusion even after he had attained the age of superannuation.”, observed a bench of Justices PS Narasimha and Manoj Misra. The case arose from disciplinary proceedings initiated against a bank officer on the very date of his retirement, September 30, 2011. The proceedings continued thereafter, culminating in a penalty of permanent reduction by three stages in the time scale of pay. The appellant challenged the action, contending that once he had retired, the employer-employee relationship ceased, and therefore, no penalty under the Service Regulations could be imposed. He argued that only action under Pension Regulations, such as withholding pension or recovery from gratuity, was permissible post-retirement. While a Single Judge of the High Court accepted this contention, the Division Bench reversed the ruling, upholding the penalty, leading to filing of an appeal before the Supreme Court by the bank employee. Affirming the Division bench ruling, the judgment authored by Justice Misra observed that since the 1979 Service Regulations of the Respondent-bank permit continuation of the disciplinary proceedings after the age of superannuation, the post-retirement imposition of a penalty of reduction in the time scale of pay was justified, which can be implemented upon adjustment in the pensionary benefits. Since pension is calculated based on the last drawn pay, a reduction in pay scale can be factored into the computation of pensionary benefits. Thus, the punishment is not rendered meaningless merely because the employee has retired, the court added, while rejecting the Appellant's argument that there cannot be a post-retirement reduction in the pay scale. Further, the Court said that even the pensionary benefits and other retirement benefits can be forfeited if the disciplinary proceedings resulted into a dismissal of the employee after his retirement. “…And where, pursuant to such proceedings, the ultimate penalty imposed is of dismissal, there may be no technical difficulty in its implementation as it may result in forfeiture of pension and other retiral dues. Therefore, in such an event, the question of entitlement to pensionary benefits may not arise.”, the court observed. “However, where the punishment imposed is such which may, instead of forfeiture of pension in its entirety, result in mere reduction or adjustment of pension, or recovery from post retiral dues, the Court may have to consider whether such punishment is implementable or not, postretirement”, the court added. Resultantly, the appeal was dismissed, while affirming the validity of the penalty imposed on the appellant.HeadnoteService Law – Disciplinary Proceedings – Continuance after Superannuation – Permissibility of Punishment – Punjab and Sind Bank Officers' Service Regulations, 1982; Regulation 20(3)(iii) – Punjab and Sind Bank Employees' Pension Regulations, 1995; Regulation 48 - The Supreme Court upheld the dismissal of a writ petition filed by a retired bank officer challenging a punishment of "reduction by three stages in the time scale of pay" imposed after his superannuation - Key Findings by Supreme Court – i. Continuance of Proceedings: If service rules permit, disciplinary proceedings initiated before superannuation can be continued and brought to a logical conclusion even after the employee attains the age of superannuation; ii. Legal Fiction of Service - Regulation 20(3)(iii) of the Service Regulations creates a legal fiction where the officer is deemed to be in service until the proceedings are concluded; iii. Implementability of Punishment - The Court rejected the argument that only penalties under Pension Regulations could be imposed post-retirement - held that a punishment of reduction in pay scale relates back to the date of superannuation and is implementable because pension is computed based on the salary last drawn/payable; iv. Misconduct by Bank Officers: A bank officer holds a position of trust - Failure to ensure the end-use of a loan constitutes a financial irregularity that exposes the bank to risk and amounts to misconduct, regardless of whether an actual loss was suffered. [Relied on Chairman cum-Managing Director, Mahanadi Coalfields Ltd. vs. Rabindranath Choubey (2020) 18 SCC 71; Ramesh Chandra Sharma vs. Punjab National Bank and Another (2007) 9 SCC 15; State Bank of India vs. Ram Lal Bhaskar (2011) 10 SCC 249; ...

Disciplinary Proceedings Initiated During Service Can Be Continued After Retirement If Rules Permit : Supreme Court

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Yash Mittal

Disciplinary Proceedings Initiated During Service Can Be Continued After Retirement If Rules Permit : Supreme Court

Yash Mittal

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Yash Mittal

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