- 1 - NC: 2025:KHC:13815 WP No. 10299 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE R. NATARAJ WRIT PETITION NO. 10299 OF 2020 (S-R) BETWEEN: MR. VIJAYANARASIMHA S/O. SHARADHAMMA AND NARASIAH, AGED ABOUT 66 YEARS, RESIDING AT NO.164, 2ND CROSS, BALAJI LAYOUT, BENGALURU-560056 …PETITIONER (BY SRI. BHARGAVA D. BHAT, ADVOCATE) AND: 1. KARNATAKA POWER TRANSMISSION CORPORATION LIMITED, KAVERI BHAVAN, K.G. ROAD, GANDHINAGAR, BENGALURU-560009, REPRESENTED BY ITS MANAGING DIRECTOR 2. MANAGING DIRECTOR, KPTCL, KAVERI BHAVAN, K.G. ROAD, GANDHINAGAR, BENGALURU-560 009 3. FINANCIAL ADVISOR NDCPS, KPTCL, KAVERI BHAVAN, K.G.ROAD, GANDHINAGAR, BENGALURU-560 009. …RESPONDENTS (BY SMT. RAKSHITHA D.J., ADVOCATE FOR RESPONDENT NOS.1 TO 3) Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:13815 WP No. 10299 of 2020 THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS TO PAY INTEREST ON THE DELAYED PAYMENT OF THE RETIREMENT BENEFITS OF THE PETITIONER AT THE RATE OF 18% P.A. AS INDICATED AT ANNEXURE-E AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE R. NATARAJ ORAL ORDER The petitioner has sought for a writ in the nature of mandamus to the respondents to pay interest for the delayed payment of his retirement benefits at 18% per annum and to award compensation for delay in payment of interest duly owed to him. 2. The petitioner was serving as the Managing Director of Chamundeshwari Electricity Supply Company Limited from 03.03.2005 to 23.07.2008. He was deputed as Managing Director of several Electricity Companies in Karnataka and retired as a Managing Director of Kavika and Executive Director of the respondent No.1 on 30.06.2013. The respondent No.2 initiated disciplinary proceedings against the petitioner and three other employees on 26.06.2013 under the Karnataka - 3 - NC: 2025:KHC:13815 WP No. 10299 of 2020 Electricity Board Employees' Services (Conduct) Regulations, 1988. Since the petitioner had attained the age of superannuation by then, pending enquiry, interim pension was fixed at 75% of the actual pension payable to the petitioner and the gratuity amount of Rs.10,00,000/- payable to him was withheld. The petitioner challenged the disciplinary proceedings initiated against him by the respondent No.1 before this Court in W.P. No.3073/2014. The Disciplinary Authority later passed an order dated 21.05.2018 holding that the charges against the petitioner were proved and punishment was imposed to recover Rs.1,45,20,000/- being the loss caused on account of the misconduct alleged against the petitioner. The petitioner then challenged the order of the Disciplinary Authority before the Board of Directors of the respondent No.1. The respondent No.1 at its 114th meeting of the Board dated 06.03.2019 resolved to drop all charges framed against the petitioner. On 20.04.2019, the respondent No.2 dropped all the charges against the petitioner. On 25.05.2019, the Director (Admin. and HR) of the respondent No.1 passed an order to restore all pensionary benefits to the petitioner with effect from 01.07.2013. Accordingly, an amount of Rs.10,66,904/- which - 4 - NC: 2025:KHC:13815 WP No. 10299 of 2020 was the principal amount withheld from July 2013 to May 2019 was released to the petitioner on 10.06.2019. The petitioner contends that a sum of Rs.10,00,000/- towards gratuity which was withheld was also paid to him. The petitioner contends that since the pension and gratuity were wrongly withheld by the respondent No.1, he was entitled for interest at the rate of 18% per annum and therefore, submitted a representation dated 24/29.07.2019 to the respondent Nos.2 and 3 requesting that interest at the rate of 12% per annum on Death-cum- Retirement Gratuity (DCRG) amount of Rs.10,00,000/-, which was to be paid by the respondent No.1 on 30.06.2013, but was paid in June 2019 and on pension arrears of Rs.10,66,904/-, which was paid to him in June 2019, be awarded for the period during which it was withheld. The aforesaid W.P. No.3073/2014 filed by the petitioner before this Court was dismissed as withdrawn on 03.02.2020. The petitioner is, therefore, before this Court seeking for a direction to the respondents to pay interest on the belated payment of the retirement benefits to him. 3. Learned counsel for the petitioner reiterated the above contentions and submitted that once the charges against - 5 - NC: 2025:KHC:13815 WP No. 10299 of 2020 the petitioner were dropped by the respondent No.2 on 20.04.2019, the petitioner was entitled to interest on the withheld amount of pension and gratuity as provided under Section 8 of the Payment of Gratuity Act, 1972 (for short, 'the Act, 1972'). In support of his contentions, he relied upon the judgment of the Hon'ble Apex Court in the case of S.K Dua v. State of Haryana and Another [(2008) 3 SCC 44]. 4. The petition is opposed by the respondents, who contend that under Regulation 172 (1) of the Karnataka Electricity Board Employees' Service Regulations, the respondents are entitled to withhold the gratuity until the conclusion of the disciplinary proceedings and until final orders are passed thereon. It is also contended that under Regulation 256 of the said Regulations, the respondents are entitled to sanction commutation of the pension not exceeding 1/3rd of pension and the balance becomes payable only after conclusion of the enquiry or the Disciplinary proceeding. Therefore, it is contended that as per the prevalent Regulations, there is no provision for payment of interest on pensionary benefits and that the petitioner is governed by the Karnataka Electricity Board Employees' Service Regulations. Therefore, it is - 6 - NC: 2025:KHC:13815 WP No. 10299 of 2020 contended that the petition is misconceived and no interest is payable on the withheld amount. 5. Learned counsel for the respondents in support of her contentions, has relied upon the following judgments: 1) Chairman-Cum-Managing Director, Mahanadi Coalfields Limited v. Rabindranath Choubey [AIR 2020 SC 2978]; 2) Sri. N.G.Sujaya Kumar v. The Managing Director, KPTCL and others [W.P.No.39177/2015 (S-R)]; 3) The Director, Administration and Human Resources, KPTCL v. Sri. G. Nagendrappa [W.A. No.745/2010]; and 4) Sri. R. Ramabhadraiah v. Karnataka Electricity Board and another [W.A.No.2607/1999]. 6. I have considered the submissions of the learned counsel for the petitioner and the learned counsel for the respondents. 7. The fact that the petitioner was proceeded against in a departmental enquiry is not in dispute. The petitioner retired from service on 30.06.2013 and the charges against the petitioner were held to be proved and the Disciplinary Authority passed an order dated 21.05.2018 directing recovery of a sum - 7 - NC: 2025:KHC:13815 WP No. 10299 of 2020 of Rs.1,45,20,000/- from the petitioner. The charges against the other delinquent employees were dropped. The petitioner thereafter filed a review petition before the Reviewing Authority/respondent No.2, who dropped the charges against the petitioner on 20.04.2019. Soon thereafter, the benefits payable to the petitioner was finalized and paid in terms of the letter of the respondent No.3 dated 10.06.2019. As per the case of the petitioner, what was withheld was 25% of the pension and gratuity of a sum of Rs.10,00,000/-. Under Section 4 of the Payment of Gratuity Act, 1972, the employer is entitled to forfeit the amount of gratuity payable to the extent of the damage or loss caused to the employer in case of an employee whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer. In the case on hand, the Disciplinary Authority had held that the charges against the petitioner were proved and it is only the Reviewing Authority / respondent No.2 who proceeded to drop the charges framed against the petitioner. Therefore, the respondents were entitled to withhold the gratuity till the disciplinary proceedings were finally concluded in favour of the petitioner / employee. - 8 - NC: 2025:KHC:13815 WP No. 10299 of 2020 Since the right to withhold gratuity is conferred on an employer under the Act, 1972, the petitioner is not entitled to any interest on the gratuity amount till the date the charges were dropped against him. This is also the law declared by the Hon’ble Apex Court in the case of Chairman-cum-Managing Director, Mahanadi Coalfields Limited (referred supra). 8. In so far as the balance of the pension benefits that was withheld, the respondent No.1 was entitled to recover the loss caused to it from the petitioner. It was for this reason that the employer had withheld 25% of the pension payable to the petitioner. Since the charges were dropped against the petitioner by the Reviewing Authority/respondent No.2 in terms of the order dated 20.04.2019, the employer was justified in withholding 25% of the pension payable to the petitioner from the date of his retirement till the charges framed against him were dropped. The liability to pay interest arose if the respondents failed to pay the amount even after the charges were dropped. In the case on hand, the charges framed against the petitioner were dropped on 20.04.2019 and the gratuity and the balance of pension were paid on 10.06.2019. Therefore, liability, if any, of the respondents is to pay interest - 9 - NC: 2025:KHC:13815 WP No. 10299 of 2020 from the date the charges were dropped against the petitioner till the date the amount was paid to the petitioner. Having regard to the fact that under Section 8 of the Act, 1972 the petitioner is entitled to interest at not less than 10% per annum, it is only appropriate to direct the respondents to pay interest on 25% of pension withheld by the respondent No.1 and gratuity of Rs.10,00,000/- from the date the charges were dropped till the date the amount was paid, at the rate of 10% per annum. In that view of the matter, this writ petition is allowed in part. The respondents are directed to pay interest at the rate of 10% per annum on the unpaid / withheld amount of pension and gratuity from the date the charges framed against the petitioner were dropped till the date on which payment of the same was made to him. Sd/- (R. NATARAJ) JUDGE SMA List No.: 1 Sl No.: 47