CWP No. 7278 of 2019 (O&M) -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH CWP No. 7278 of 2019 (O&M) Reserved on: 18.08.2026 Date of Decision: 27.08.2026 Raj Pal Singh ......Petitioner Versus Managing Director, Haryana Tourism Corporation Limited and Others .....Respondents 1 The date when the judgment is reserved 18.08.2026 2 The date when the judgment is pronounced 27.08.2026 3 The date when the judgment is uploaded on the website 27.08.2026 4 Whether only operative part of the judgment is pronounced or whether the full judgment is pronounced Full 5 The delay, if any, of the pronouncement of full judgment, and reasons thereof. N.A. CORAM: HON'BLE MS. JUSTICE KIRTI SINGH Argued by: Mr. Parveen Gupta, Advocate for the petitioner. Mr. Padamkant Dwivedi, Advocate for respondent No.1. **** KIRTI SINGH , J. 1. The petitioner has invoked the writ jurisdiction of this Court under Articles 226 and 227 of the Constitution of India, praying for issuance of a writ in the nature of certiorari for setting aside the order dated 06.12.2018 passed by the Appellate Authority under the Payment of Gratuity Act, U.T. Chandigarh, whereby the appeal preferred by the petitioner against the order of the Controlling Authority was dismissed, and the order dated 27.09.2018 passed by the Controlling Authority, U.T. Chandigarh, whereby the petitioner's claim for release of gratuity was itself declined. RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -2- 2. Briefly stated as per the pleaded case, the petitioner was appointed as Counter Incharge with the respondent-Corporation and, after rendering thirty four years of service, retired on attaining the age of superannuation on 31.01.2011. During the course of his service, on account of certain shortages of petrol and diesel noticed at the Petrol Pump, Tilyar Lake, Rohtak, where the petitioner was then posted, he was placed under suspension on 13.10.2007 and was thereafter served with a charge-sheet dated 25.03.2008 under Rule 21 of the Certified Standing Orders of the respondent-Corporation. The petitioner submitted his reply on 18.05.2008, asserting that the shortage was on account of natural evaporation of the fuel, a phenomenon even recognized by the Indian Oil Corporation, and not on account of any misappropriation on his part. He was reinstated on 25.07.2008, without prejudice to the disciplinary proceedings, and a regular departmental enquiry was thereafter conducted. The petitioner retired on superannuation on 31.01.2011, before the enquiry proceedings had culminated in any final order. It was only thereafter, on 23.02.2012, that the Punishing Authority, upon consideration of the enquiry report, held the petitioner responsible for embezzlement to the extent of Rs. 7,05,272/- and directed recovery of the said amount from his dues. In consequence, the entire gratuity amount payable to the petitioner, computed at Rs. 4,71,183/-, was adjusted and withheld by the Drawing and Disbursing Officer against the amount so found recoverable, instead of being disbursed to the petitioner. Aggrieved, the petitioner approached the Controlling Authority under the Payment of Gratuity Act, 1972, which came to be dismissed on 27.09.2018, and the appeal preferred thereagainst was also dismissed by the Appellate Authority on 06.12.2018, giving rise to the present writ petition. RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -3- 3. Learned counsel for the petitioner inter alia contends that the withholding and forfeiture of the petitioner's gratuity is wholly impermissible in law. While drawing the attention of this court to Section 4(6) of the Payment of Gratuity Act, 1972, learned counsel submits that a bare perusal of the same reveals that it permits forfeiture of gratuity only where the services of an employee have been terminated for an act, willful omission or negligence causing damage or loss to the property of the employer, and that the petitioner's services came to an end not by way of any such termination but by way of ordinary superannuation on 31.01.2011, a full year before the impugned order of recovery dated 23.02.2012 was even passed. It is further submitted that Rule 21 of the Certified Standing Orders of the respondent-Corporation, under which the petitioner was proceeded against, nowhere contains any provision authorizing the withholding or forfeiture of gratuity, nor any provision deeming the services of a workman to continue, for purposes of disciplinary proceedings, beyond the date of his superannuation. In the absence of any such enabling provision, it is contended, the respondent-Corporation possessed no authority of law to withhold the petitioner's gratuity, and reliance is placed on the observations of the Hon'ble Supreme Court in State of Jharkhand and others v. Jitendra Kumar Srivastava and another, (2013) 12 SCC 210 to contend that pension and gratuity constitute property within the meaning of Article 300-A of the Constitution and cannot be taken away save by authority of law, an administrative instruction or a general service rule being insufficient for the purpose. Reliance is also placed upon Union Bank of India and others v. C.G. Ajay Babu and another, 2018 INSC 708 to submit that forfeiture of gratuity is not an automatic consequence of a finding of misconduct, and RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -4- must independently satisfy the requirements of Section 4(6) of the Act. Learned counsel accordingly prays that the orders passed by the authorities below be set aside and a direction be issued to the respondent department to release his gratuity dues. 4. Per contra, learned counsel for respondent No.1 supports the concurrent findings recorded by the Controlling Authority and the Appellate Authority. It is submitted that the petitioner was proceeded against, and the embezzlement of Rs. 7,05,272/- stood proved against him, on the basis of a regular departmental enquiry initiated well before his retirement, and that the order dated 23.02.2012 directing recovery was never assailed by the petitioner before any competent forum and has, therefore, attained finality. It is submitted that the retirement order itself dated 14.01.2011 annexed as (Annexure R-2) expressly recorded that the petitioner's retirement would not absolve him of responsibility for any loss sustained by the Corporation on account of negligence or fraud on his part which may come to notice at a later stage, and that this constituted sufficient authority for the Corporation to adjust the proven loss against his retiral dues, including gratuity. 5. I have heard learned counsel for the parties and perused the record. 6. The controversy in the present case turns entirely upon the interplay between Section 4(6) of the Payment of Gratuity Act, 1972 and Rule 21 of the Certified Standing Orders of the respondent-Corporation, framed and certified on 12th December, 1980 under Section 5 of the Industrial Employment (Standing Orders) Act, 1946. 7. Section 4(6)(a) of the Payment of Gratuity Act, 1972 provides that the gratuity of an employee, "whose services have been terminated for RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -5- any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused." The forfeiture contemplated by this provision is thus not an incident of misconduct simpliciter; it is expressly and exclusively tied to a termination of service for the specified misconduct. 8. The question that falls for determination, therefore, is whether the cessation of the petitioner's service, which admittedly occurred by way of superannuation on 31.01.2011, can be treated in law as a termination of service within the contemplation of Section 4(6)(a), so as to clothe the respondent-Corporation with the power to forfeit his gratuity. 9. Before turning to the terms of Rule 21 itself, it would be apposite to notice the law as it now stands on the extent to which an employer's service rules may permit withholding or forfeiture of gratuity upon a finding of misconduct recorded after an employee's superannuation, since it is against this settled position that Rule 21 must ultimately be tested. The order of the Controlling Authority as well as of the Appellate Authority proceeded substantially on the strength of the observations of the Hon'ble Supreme Court in Chairman-cum-Managing Director, Mahanadi Coalfields Limited v. Rabindranath Choubey, (2013) 16 SCC 411 while candidly recording that the said decision itself stood referred, at that time, to a larger Bench, on account of certain contradictory observations in Jaswant Singh Gill v. Bharat Coking Coal Ltd., (2007) 1 SCC 663, and State Bank of India v. Ram Lal Bhaskar, (2011) 10 SCC 249. That reference has since been authoritatively answered by a three-Judge Bench of the Hon'ble Supreme Court, reported as Chairman-cum-Managing Director, Mahanadi Coalfields Limited v. Rabindranath Choubey (2020) 18 SCC 71. RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -6- 10. The question that fell for consideration before the larger Bench was twofold: whether it is permissible for an employer to withhold payment of gratuity even after an employee's superannuation, on account of the pendency of disciplinary proceedings against him, and whether, where a departmental enquiry had been instituted while the employee was in service and continued after his superannuation, the punishment of dismissal could still be imposed upon him. The larger Bench answered both questions in the affirmative, but, and this is the aspect of central importance to the present case, it did so specifically by reference to Rule 34.2 of the Conduct, Discipline and Appeal Rules applicable to the employer in that case, which expressly provided for the continuation of disciplinary proceedings, and the consequent deemed continuation of service, notwithstanding the employee's superannuation. It was on the strength of that specific rule that the Hon'ble Supreme Court held that the employee's services would be deemed to continue for the purpose of the pending enquiry, that a penalty of dismissal could validly be imposed even after superannuation, and that, Section 4(1) of the Payment of Gratuity Act being subject to Section 4(6), the employer could accordingly withhold and, upon the charges being proved, forfeit the gratuity that would otherwise have fallen due. The decision, in other words, does not hold that an employer may, as a matter of general law, treat superannuation as if it were dismissal; it holds that an employer may do so only where its own service rules specifically say so. 11. This position has since been reiterated, and indeed reinforced, in Western Coal Fields Ltd. v. Manohar Govinda Fulzele, 2025 INSC 233, where the Hon'ble Supreme Court, dealing with forfeiture of gratuity on the ground of misconduct involving moral turpitude under Section 4(6)(b)(ii) of RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -7- the Act, held that a finding of such misconduct recorded in a properly conducted departmental enquiry is, by itself, sufficient to justify forfeiture, and that a criminal conviction for the same misconduct is not a precondition therefor, the contrary observations in Union Bank of India and others v. C.G. Ajay Babu and another, (2018) 9 SCC 529, to the effect that the offence must be "duly established in a Court of Law," being treated as obiter, delivered in the context of a bipartite settlement to which Section 4(5) of the Act applied rather than Section 4(6). The Hon'ble Supreme Court in Western Coal Fields (supra) expressly reaffirmed Mahanadi Coalfields and proceeded on the footing that the disciplinary proceedings in the cases before it had culminated in an actual termination of service, whether at the time of superannuation by force of an enabling rule, or, in the case of the other connected appeals, prior to superannuation altogether. 12. This Court, therefore, proceeds on the settled premise that the law today stands considerably more developed, and more favourable to employers, than it did when the impugned orders in the present case came to be passed; the difficulty for the respondent-Corporation, however, is not one of law having moved against it, but of the foundational fact on which that law operates being absent from its own Rules. 13. It is against this settled position that Rule 21 of the Certified Standing Orders, under which the petitioner was proceeded against, falls to be examined. Rule 21, captioned "Disciplinary Action for Misconduct", opens with the stipulation that "the services of a workman shall not be terminated on the grounds of misconduct, unless he has been adjudged guilty of misconduct, after a departmental enquiry held in the manner prescribed below." Clause (a) thereof empowers the management, where a disciplinary RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -8- proceeding is contemplated or pending, to place the workman under suspension and to serve upon him a charge-sheet setting out the details of the alleged misconduct. Clauses (b) and (b)(i)-(ii) prescribe the rate of subsistence allowance payable during such suspension. Clause (c) provides that if, on conclusion of the enquiry, the workman is found guilty and it is considered, after affording him an opportunity to make representation on the penalty proposed, that an order of "stoppage of annual increment or composition of fine or reduction in rank or dismissal/removal from service would meet the ends of justice, the employer shall pass an order accordingly." Clauses (d) to (h) deal with ancillary matters such as treatment of the suspension period where the punishment is confined to that period, restoration of wages upon acquittal, the conditions attaching to subsistence allowance, the factors to be weighed in awarding punishment, and the supply of a copy of the enquiry proceedings to the workman. 14. 14. A plain reading of Rule 21, in its entirety, discloses two things of considerable significance to the present controversy. First, the Rule is silent, completely and unambiguously, as to what is to happen where a workman against whom disciplinary proceedings are pending attains the age of superannuation before the enquiry is concluded. There is no provision, of the kind noticed above in Mahanadi Coalfields (supra), deeming the services of such a workman to continue, notwithstanding his superannuation, for the limited purpose of enabling the disciplinary proceedings to reach their logical conclusion and a penalty, including dismissal or removal, to be imposed upon him as though he continued to be in service. Rule 21(c) speaks only of "dismissal/removal from service", a penalty inherently premised upon the workman continuing to hold, at the time the penalty is RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -9- imposed, a service capable of being dismissed from or removed from; where a workman has already ceased to hold any service by reason of superannuation, and no rule deems that service to subsist, the power to dismiss or remove him from service is, in the plain terms of Rule 21, simply not available to be exercised. 15. Second, and equally significant, Rule 21 nowhere confers upon the management any power to withhold, adjust, or forfeit the gratuity of a workman, either as a substantive punishment in itself or as a mode of recovering a loss found to have been occasioned by him. The five punishments contemplated by Clause (c) are stoppage of increment, fine, reduction in rank, dismissal, and removal from service; withholding or forfeiture of gratuity finds no place among them. 16. The only other provision of the Certified Standing Orders bearing even remotely upon recovery of loss is Clause 17, captioned "Deduction for Damage to or Loss of Goods or Money", which provides that "deduction may be made for damage to or loss of goods, expressly entrusted to the employed person for custody or for loss of money for which he is required to account for where such damage or loss is directly attributable to his neglect or default," and which is, by its own terms, expressly made subject to the provisions of any law for the time being in force," being a reference to the deduction machinery under the Payment of Wages Act, 1936. This is manifestly a provision for deduction from current wages during subsisting employment, governed by an entirely distinct statutory procedure, and neither its language nor its object can be stretched to authorise forfeiture of a statutory retiral benefit payable under a different, self-contained welfare enactment such as the Payment of Gratuity Act, 1972, RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -10- more so when no procedure under the Payment of Wages Act appears to have been followed at all in the present case. Clause 24 of the Standing Orders, which entitles every workman to a service certificate "at the time of his dismissal, discharge or retirement from service," is also of some relevance, in that it treats dismissal, discharge and retirement as three distinct and mutually exclusive modes of cessation of service under the very scheme of these Standing Orders, reinforcing that superannuation was never conceived, by the framers of these Rules, as a species of punitive termination. 17. Applying the ratio of Mahanadi Coalfields (supra) and Western Coal Fields (supra) to the facts at hand, it is apparent that the very premise on which those decisions permit an employer to treat a superannuated employee's gratuity as forfeitable, namely, the existence of an express rule deeming service to continue and enabling a penalty of dismissal or removal to be imposed notwithstanding retirement, is missing from the Certified Standing Orders of the respondent-Corporation. Rule 21, as already noticed, contains no Rule 34.2 equivalent. 18. In its absence, the order dated 23.02.2012, by which the Punishing Authority held the petitioner guilty of embezzlement and directed recovery of Rs. 7,05,272/-, was passed over a year after the petitioner had already ceased to be in the employment of the respondent-Corporation by ordinary superannuation on 31.01.2011, at a point in time when the respondent-Corporation possessed no rule-based authority to treat him as continuing in service for the purpose of visiting him with what was, in substance, though not in name, a punitive consequence attaching to his retiral dues. Section 4(6)(a) of the Act being confined, in its terms, to RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -11- gratuity of an employee "whose services have been terminated" for the specified misconduct, and the petitioner's services never having been terminated, in the sense contemplated by that provision or by Rule 21 itself, but having come to an end by superannuation simpliciter, the condition precedent for invoking forfeiture under Section 4(6)(a) was never satisfied. 19. The reliance placed by learned counsel for the respondents upon the retirement order dated 14.01.2011, and its recital that the petitioner's retirement would not absolve him of responsibility for any loss that may come to notice at a later stage, does not improve the position. Such a recital, at its highest, reflects a unilateral administrative expectation on the part of the employer; it is not, and cannot be equated with, a certified standing order or statutory rule conferring the power of forfeiture that the Payment of Gratuity Act, 1972 requires. The Hon'ble Supreme Court, in State of Jharkhand and others v. Jitendra Kumar Srivastava and another, (2013) 12 SCC 210, has held in clear terms that pension and gratuity constitute "property" within the meaning of Article 300-A of the Constitution of India, and that "a person cannot be deprived of his pension or gratuity or even leave encashment without any statutory provision and under the umbrage of administrative instructions," holding further that where the applicable statutory rules contain no provision for withholding these benefits, the position would have been different had such a provision existed, but in its absence the attempt of an employer to withhold a part of these retiral dues could not be countenanced. The observations of the Appellate Authority in the order dated 06.12.2018, which itself proceeded on the footing that the Mahanadi Coalfields principle remained provisionally applicable notwithstanding the pending reference, cannot survive the subsequent RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -12- clarification of that principle, which, as demonstrated above, confines its application to cases where an enabling rule exists. 20. Nor can the decision in Canara Bank v. Lalit Popli, (2003) 2 SCC 199, relied upon by the Appellate Authority be of assistance to the respondents. The recovery upheld in that case was traceable to specific service regulations of the bank concerned, which conferred an independent right upon the bank to adjust proven loss against the gratuity and provident fund of the delinquent employee; it was, in other words, a case where the enabling rule that is absent here was present there. 21. It is, at the same time, necessary to be equally clear as to what this order does not decide. The finding of embezzlement recorded against the petitioner in the departmental enquiry, culminating in the order dated 23.02.2012, was never put to challenge by him before any competent forum, whether by way of appeal, revision, or independent writ petition, and has, on that count, attained a finality of its own. Nothing in this order should be read as reopening, still less as setting aside, that finding, which continues to bind the petitioner. What this order holds is only that the mechanism by which the respondent-Corporation sought to give effect to that finding, namely, the unilateral withholding and adjustment of the petitioner's statutory gratuity, was not available to it under its own Certified Standing Orders, and that, consequently, the Controlling Authority and the Appellate Authority fell in error in declining the petitioner's claim for release of gratuity under the Payment of Gratuity Act, 1972. It shall remain open to the respondent- Corporation, if so advised, to recover the amount found due from the petitioner in the departmental enquiry through such other lawful means as may be available to it in accordance with law. RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh CWP No. 7278 of 2019 (O&M) -13- 22. For the foregoing reasons, the writ petition is allowed. The order dated 27.09.2018 passed by the Controlling Authority under the Payment of Gratuity Act, U.T. Chandigarh, and the order dated 06.12.2018 passed by the Appellate Authority under the Payment of Gratuity Act, U.T. Chandigarh, are hereby set aside. The respondents concerned are directed to release to the petitioner the gratuity amount payable to him within a period of eight weeks from the date of receipt of a certified copy of this order. It is clarified that this order shall not preclude the respondent-Corporation from pursuing recovery of the amount found due from the petitioner in the departmental enquiry through any lawful proceedings available to it. 23. Pending miscellaneous application(s), if any, also stands disposed of. (KIRTI SINGH) JUDGE August 27, 2026 Ritika Whether speaking/reasoned : Yes/No Whether reportable : Yes/No RITIKA 2026.08.27 16:30 I attest to the accuracy and integrity of this document Chandigarh