Legal Alert:::Leave encashment to retiring employee facing probe can't be withheld: HC

The Punjab and Haryana High Court, in a significant judgment, has held that the amount of leave encashment, payable to a retiring employee facing criminal or department proceedings, cannot be withheld.

With this, a Full Bench of the High Court, comprising three Judges, has cleared the air on the contentious issue of holding back the retirement benefits of alleged “delinquent” employees.

The Ruling

Taking up an appeal filed by Punjab State Civil Supplies Corporation Ltd and other appellants, the three-Judge Bench of Chief Justice Arjan Kumar Sikri, Justice Ranjit Singh and Justice Rakesh Kumar Jain ruled: “ Only gratuity or death-cum-retirement gratuity can be withheld… We are, therefore, in agreement with the view (earlier) taken by the Division Benchof this court in BS Gupta’s case, holding that amount of leave encashment is payable to the retiring employee notwithstanding the pendency of the departmental inquiry or criminal proceedings”.

The Case

An employee of the Civil Supplies Corporation, Pyare Lal was served with two charge sheets. He attainted the age of superannuation during the pendency of the inquiry in April 2006. He was allowed to retire, but retirement benefits were withheld till the decision of the pending charge sheets.

An appeal was filed by the corporation, after a Single Judge of the High Court directed the release of retirement benefits, except gratuity.

The Issue

Before reaching the conclusion, the Bench asserted that the corporation’s appeal against employee Pyare Lal gave rise to a vital question of law, which was required to be decided. “The question is as to whether retiral benefits of an employee, who at the time of his superannuation was facing departmental action, can be withheld and, if so, which of those retiral benefits the employer is entitled to withhold”.

The Bench observed at the outset that the parties were unanimous that the gratuity of such employees could be withheld during the pendency of the disciplinary proceedings. But, the issue was whether encashment of earned leave could also be withheld, “or was it the right of an employee to get his earned leave encashed on the date of his superannuation, as retiral benefit, notwithstanding the disciplinary action which he is facing”. The Bench added: " What is to be seen in the present case is as to whether there is any rule which empowers the appellants to withhold the benefit of encashment of leave. Referring to rule 2.2(c) of the Punjab Civil Services Rules, the Bench concluded that except for gratuity or death-cum-retirement gratuity, the withholding of other retirement benefit was not stipulated.

“Counsel for the appellants also could not point out any other rule authorising the appellants to withhold the benefit of encashment of leave”.

We are in agreement with the view (earlier) taken by the Division Bench of this court, holding that leave encashment is payable to the retiring employee notwithstanding the pendency of a departmental inquiry or criminal proceedings

— High Court Bench

Source:- Thursday, November 15, 2012, Chandigarh, India, P. 5

http://www.tribuneindia.com/2012/20121115/punjab.htm#15

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