- 1 - NC: 2025:KHC:7350 WP No. 25708 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 25708 OF 2018 (L-PG) BETWEEN: THE REGIONAL DIRECTOR (FOOD), DEPARTMENT OF FOOD AND PUBLIC DISTRIBUTION, FOOD CORPORATION OF INDIA ZONAL OFFICE, NO.3, HADDOWS ROAD, CHENNAI-06. …PETITIONER (BY SRI B PRAMOD, ADVOCATE) AND: SHRI. P. LAKSHMANAN, ASST MANAGER (DEPOT), AGED ABOUT 70 YEARS, RETIRED FOOD TRANSFEREE, RAJNI NIVAS, KUNJIMANGALAM, KANNUR DISTRICT, KERALA-670 309. …RESPONDENT (BY SRI M NARAYANA BHAT, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 2.2.2015 PASSED BY THE CONTROLLING AUTHORITY UNDER PAYMENT OF GRATUITY ACT, 1972 & ASSISTANT LABOUR COMMISSIONER (CENTRAL) MANGALORE IN APPLICATION NO.48/20/2013-A/M (ANNEXURE-A);QUASH TEH ORDER DATED 31.1.2017 PASSED BY THE APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT, 1972 & DY. CHIEF LABOUR COMMISSIONER (CENTRAL), BENGALURU IN APPEAL NO.36(18) 2016-B1 (ANNEXURE-A1). THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: Digitally signed by PRAMILA G V Location: High Court of Karnataka - 2 - NC: 2025:KHC:7350 WP No. 25708 of 2018 CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE ORAL ORDER This petition is filed challenging the order dated 02.02.2015 passed by the Controlling Authority under the Payment of Gratuity Act, 1972 (for short 'Act of 1972') as well as the order dated 31.01.2017 passed by the Appellate Authority under the same Act. 2. The petitioner/employer’s decision to withhold the gratuity payable to the respondent/employee is called in question before the Controlling Authority. The employer had taken the decision to withhold the gratuity payable to the respondent on the premise that respondent/employee is convicted in a criminal offence and appeal against conviction is pending consideration. 3. The Appellate Authority, dismissed the employer’s appeal. Hence, the present petition. - 3 - NC: 2025:KHC:7350 WP No. 25708 of 2018 4. It is the submission of learned counsel appearing for the petitioner that under Rule 69(1)(c) of Central Civil Service (Pension) Rules, 1972, (for short 'CCS Rules, 1972'), the pendency of a disciplinary proceeding or any criminal case, is a valid ground to withhold the pension till the conclusion of the said proceedings. He further submits that the Competent Authority as well as the Appellate Authority have erred in holding that the respondent is entitled to pension despite pendency of the appeal before the Appellate Court. 5. Learned counsel submits that the Competent Authority despite appraisal of the relevant Rule i.e., Rule 69 referred to above, has erroneously held that the relevant provision of law is not brought to the notice of the Appellate Authority and has wrongly held that Section 14 of the Act of 1972 overrides Rule 69 to dismiss the appeal. 6. Learned counsel would urge that respondent who was initially a Central Government employee on establishment of Food Corporation of India migrated to Food Corporation of India and opted to be governed by the - 4 - NC: 2025:KHC:7350 WP No. 25708 of 2018 provisions of the Rules applicable to the Central Government employees, in so far as terminal benefits. Thus, he would be a Central Government employee, not an employee covered under the Act of 1972, as such, the Act of 1972 has no application. 7. Learned counsel for the petitioner would further contend that the respondent/employee has opted for benefits under the CCS Rules, 1972, by exercising option under Section 12A of The Food Corporations, Act of 1964 (for short 'Act of 1964'). Having opted for the said option, he cannot claim the benefit under Section 14 of the Act of 1972. 8. It is his further contention that throughout the proceedings, the respondent has claimed that he is a Central Government employee. When he makes a claim that he is a Central Government employee, he is bound by the Central Government Service Rules and Rule 69(1)(c) of CCS Rules, 1972 enables the employer to withhold the gratuity because of pending criminal case. - 5 - NC: 2025:KHC:7350 WP No. 25708 of 2018 9. It is his further contention that valid contentions raised under the law have not been considered by the Controlling Authority as well as by the Appellate Authority. The authorities were under obligation to consider the same. Despite raising a specific defence under Rule 69(1)(c) of CCS Rules, 1972, the Appellate Authority has proceeded to hold that no provision of law is cited in support of the case of the petitioner. 10. Learned counsel for the respondent on the other hand would contend that the Act of 1964 has to be read along with the provisions of Act of 1972, particularly considering the sweep of Section 14 of the Act of 1972. 11. It is his contention that though the respondent- employee was initially the Central Government employee, in view of the establishment of the Corporation under the Act of 1964, he was transferred to the Corporation and then became the employee of the Corporation for all practical purposes. Though he opted to claim the retirement benefits under the CCS Rules, 1972, because of the operation of - 6 - NC: 2025:KHC:7350 WP No. 25708 of 2018 Section 14 of the Act of 1972, the Act would override the option which the respondent has exercised which is in the nature of the contract between the employer and employee. 12. It is also urged that the Act of 1972 is not applicable to the Central Government employees and State Government employees. The respondent being the employee of the Corporation is governed by the provision of the Act of 1972 and the Act of 1972 in terms of Section 14 overrides the provisions of all other enactments to the extent of inconsistency in other enactments vis-à-vis the provisions of the Act of 1972. 13. The Act of 1972 provides for forfeiture of gratuity only in the event of loss or damages being caused to the employer by the employee. In the Departmental enquiry initiated against the employee, the employee has been exonerated and no loss or damages is quantified against the employee. Thus, it urged that there is no power to withhold the gratuity payable even under the provisions of the Act of 1972. - 7 - NC: 2025:KHC:7350 WP No. 25708 of 2018 14. Learned counsel would also place reliance on the following judgments: (1) Municipal Corporation of Delhi vs. Dharam Prakash Sharma and Anr.1 (2) Allahabad Bank and Anr. vs. All India Allahabad Bank Retired Employees Assn.2 (3) Nagar Ayukt Nagar Nigam, Kanpur vs. Mujib Ullah Khan and Anr.3 (4) Y K Singla vs. PNB and Ors.4 (5) University of Delhi vs. Sharwan Kumar Gupta and Ors.5 15. This Court has considered the contentions raised at the bar and perused the records. 16. The following point would arise for consideration: 1 AIR 1999 SC 293 2 2010 (2) SCC 44 3 2019 (6) SCC 103 4 2013 (3) SCC 472 5 2014 SCC Online Del 4114 - 8 - NC: 2025:KHC:7350 WP No. 25708 of 2018 Whether the respondent - employee can claim benefit of gratuity under the Act of 1972, after having exercised the option to claim the terminal benefit available to the Central Government employee under the Central Government Service Rules? 17. On a reading of the impugned order and the grounds urged in the appeal memo before the Appellate Authority, is noticed that the authorities have not considered the contentions raised with reference to Rule 69(1)(c) of the CCS Rules, 1972. That can be a ground to set aside the order and to remand the case back to the Appellate Authority or Competent Authority. The question raised under Rule (1) (c) is a pure question of law. instead of remanding the matter to the Controlling Authority or the Appellate Authority, same can be adjudicated by this Court. Hence, same is considered by this Court. 18. There is no dispute that the respondent was once employed by Central Government. Later after the establishment of the Corporation, under the Act of 1964, the respondent has migrated to the Corporation and since then - 9 - NC: 2025:KHC:7350 WP No. 25708 of 2018 he became the employee of the Corporation. The employee was given an option to opt for pay scale and retirement benefits under the Central Government or under the Corporation. The respondent opted for pay scale under the Corporation and retirement benefits under the CCS Rules, 1972. 19. On attaining the age of superannuation, the terminal benefits payable to the employee were paid. However, the gratuity was not paid. It was withheld. Hence, the employee raised a dispute, apparently taking shelter under Rule 69(1)(c) of the CCS Rules, 1972. 20. Relevant portion of Rule 69(1)(c) of the CCS Rules, 1972 reads as under: "69. Provisional pension where departmental or judicial proceedings may be pending.- (1)(c) No gratuity shall be paid to the Government servant until the conclusion of the departmental or judicial proceedings and issue of final orders thereon : xxxx - 10 - NC: 2025:KHC:7350 WP No. 25708 of 2018 21. The aforementioned provision undoubtedly provides for withholding the gratuity until conclusion of departmental or judicial proceeding and issue of final order thereon. It is the contention of the learned counsel for the petitioner that though the respondent is exonerated in the departmental enquiry conducted by the employer, in the criminal case initiated against the respondent and the respondent has suffered conviction and appeal against the said conviction is pending consideration for the Appellate Court. Thus, there is justification to withhold the gratuity as provided under Rule 69(1)(c) of the CCS Rules, 1972. 22. The petitioner contends that since respondent has exercised the option in the year 1977 seeking retirement benefits under the CCS Rules, 1972, he cannot claim a benefit under the Act of 1972. 23. The Food Corporation Act came into force in 1964. The respondent has given the option in the year 1977 opting for CCS Rules, 1972, insofar as retirement benefits are concerned. Thus it is a contract between himself and the - 11 - NC: 2025:KHC:7350 WP No. 25708 of 2018 employer. However, the Act of 1972 had come into operation by then. 24. The Act of 1972 is not applicable to Central Government employees. There is no difficulty in accepting the contention that the respondent ceased to become the Central Government employee after the establishment of Corporation. Thereafter, he became the employee of the Corporation and his salary was paid on par with the employee Corporation. 25. Though the respondent was initially a Central Government employee after the migration to the Food Corporation of India which is a statutorily created Corporation, the respondent became the employee of the Corporation and thus fit into the definition of 'employee' under the Act of 1972. Once he fits into the definition of employee under the Act of 1972 and once he fulfills the requirement under Section 4 of the Act of 1972 i.e., minimum 5 years of service and once he attains the age of - 12 - NC: 2025:KHC:7350 WP No. 25708 of 2018 superannuation, he is entitled to the benefit under the Act of 1972. 26. The respondent no doubt has opted to the benefit of CCS Rules, 1972, in so far as retirement benefit is concerned. However, on account of operation of Section 14 of Act of 1972 the said option which is in the nature of the contract between the employer and the employee pales into insignificance in so far as payment of gratuity. 27. Section 14 of the Act of 1972 reads as under: "Act to override other enactments, etc.- The provisions of the Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act." 28. On reading of Section 14 of the Act of 1972, it is crystal clear that it overrides all other Enactments, Rules and Regulations, instruments and contracts contrary to the provisions of the Act of 1972. - 13 - NC: 2025:KHC:7350 WP No. 25708 of 2018 29. Thus, the respondent who is coming under definition of 'employee' under the Act of 1972 is also entitled to benefit of the Act of 1972 as he fulfills all the requirements under Section 4 of the Act of 1972. 30. Learned counsel for the respondent has also relied upon judgment of the Hon'ble Apex Court in the case of Municipal Corporation Delhi vs. Dharam Prakash Sharma6. 31. In the aforementioned judgment, the Hon'ble Apex Court was considering in an almost similar situation where the employee who was governed by CCS Rules, 1972. However, by interpreting the provisions of the Act of 1972, the Apex Court has held that as far as payment of gratuity is concerned because of Section 14 of the Act of 1972, the restrictions contained in the CCS Rules, 1972 are not applicable. 6 AIR 1999 SC 293 - 14 - NC: 2025:KHC:7350 WP No. 25708 of 2018 32. This Court is of the view that the ratio laid down in the aforementioned judgment squarely applies to the present case on hand. 33. It is also relevant a note that as pointed out by the respondent in the very order dated 30.08.2008, the petitioner has stated as under: "The outstanding amounts if any, due to the Corporation shall be recovered/adjusted out of the amounts payable to Sri.P.Lakshmanan, Manager (Depot) other than terminal benefits." (Emphasis supplied) 34. This order is issued pursuant to the respondent attaining age of superannuation. Thus, the petitioner himself has made it clear that any dues payable to the petitioner, by the respondent shall be adjusted or recovered from the respondent other than the terminal benefits. 35. There is no dispute over the fact that the gratuity amount payable falls under the category of terminal benefits. - 15 - NC: 2025:KHC:7350 WP No. 25708 of 2018 Hence, the said order passed by the employer also comes in the way in accepting the contention of the petitioner. 36. For the aforementioned reasons, this Court is of the view that impugned orders have to be sustained and accordingly sustained. The Writ Petition is dismissed. 37. The amount in deposit if any, shall be released in favour of the respondent. SD/- (ANANT RAMANATH HEGDE) JUDGE CHS/GVP List No.: 1 Sl No.: 19