Judgment on Withholding Pension and Gratuity

In a significant legal case, a court examined the State’s decision to withhold a portion of a government servant’s pension and gratuity. The court’s detailed legal analysis focused on the interpretation of pension rules, executive circulars, and government resolutions. The judgment underscores the fundamental right of government servants to receive their full pension and benefits in accordance with established legal provisions. Stay informed about the key findings and implications of this important case.


  • The Appellant was made an accused in the Fodder Scam and charged on 21.11.2003.
  • He was placed under suspension on 31.05.2002.
  • Upon superannuation, 90% of provisional pension was paid with 10% withheld due to pending criminal proceedings.
  • Government relied on a judgment stating pension cannot be withheld during pending proceedings.
  • Review Petition dismissed on 23.08.2017.
  • State paid G.P.F and leave encashment to the Appellant.
  • Appellant filed a Writ Petition seeking full pension and benefits.
  • Appellant argued against the application of Rule 43(b) of Bihar Pension Rules.
  • Circulars from 1974 allowed for payment of 75% pension during proceedings.
  • Appeal filed against High Court judgment.
  • The division bench followed the judgment in Vijay Kumar Mishra v. State of Bihar on the interpretation of Rules 43(b) and (c) of the Bihar Pension Rules.
  • The LPA filed by the Appellant was dismissed by the division bench of the High Court, stating that the Appellant must await the outcome of the pending criminal case to be entitled to payment of 10% pension and full gratuity.
  • The State justified its decision on the basis of Circulars and Government Resolutions dating back to 1974 and 1980, which determined that government servants retiring under suspension are not entitled to full pension and gratuity until the conclusion of proceedings.
  • The Writ Petition filed by the Appellant was dismissed by the Single Judge of the High Court, upholding the decision to withhold 10% of pension and full gratuity until the conclusion of the criminal proceedings.

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  • Issue: Whether the State of Bihar was justified in withholding 10% pension and full gratuity of the Appellant under Circulars dated 22.08.1974 and 31.10.194, and Government Resolution dated 31.07.1980, on the ground of pending criminal proceedings?
  • The Appellant was appointed to the post of Touring Veterinary Officer (TVO) at Pawana, Bihar by the Respondent-State.

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  • The Circulars dated 22.08.1974 and 31.10.1974, and Government Resolution No. 3104 dated 31.07.1980, were deemed as administrative instructions/executive orders with no statutory sanction.
  • Executive instructions are not considered as ‘law’ within the meaning of Article 300A of the Constitution.
  • There is no provision in the statutory rules for withholding pension or gratuity in cases where departmental or judicial proceedings are pending.
  • The amendment to the Bihar Pension Rules on 19.07.2012 included Clause (c) in Rule 43, ensuring that provisional pension must be paid in cases where proceedings were initiated but not concluded by retirement.
  • The power to withhold leave encashment is not provided under the statutory rules regardless of the outcome of the proceedings.
  • The Appellant’s attempt to withhold any part of pension, gratuity, or leave encashment without statutory provision is not permissible.
  • The executive order denying pension is deemed to affect the fundamental rights of the petitioner under Articles 19(1)(f) and 31(1) of the Constitution.
  • In the absence of statutory rules permitting the withholding of pension or gratuity, the State cannot do so through executive instructions.
  • All Heads of departments were instructed to ensure the correct implementation of rules to prevent the denial of provisional pension to retired Government servants.
  • Rule 43(b) does not cover situations where judicial or departmental proceedings are pending.
  • A Circular dated 22.08.1974 issued by the Finance Department of the Government of Bihar addresses the payment of pension to government servants under suspension or facing ongoing departmental or judicial proceedings.
  • The circular specifies that provisional pension of 75% may be paid to such officers until the conclusion of the proceedings, without gratuity or death-cum-retirement gratuity being paid until final orders are issued.
  • The Circular of 31.10.1974 emphasizes that pension cannot be withheld unless a finding of grave misconduct is recorded in the departmental or judicial inquiry.
  • It is reiterated that administrative authorities cannot impede the payment of pension as it is earned through long and faithful service.
  • The State Government’s Resolution No. 3014 on 31.07.1980 reaffirms the power to withhold or withdraw pension in cases of grave misconduct, but clarifies that pension cannot be withheld if no proceedings were initiated against the government servant until retirement.
  • Rule 43(b) empowers the State Government to withhold or withdraw pension only when the pensioner is found guilty of grave misconduct in either a departmental or judicial proceeding.
  • The Division Bench of the Patna High Court relied on the Vijay Kumar Mishra case to deny the reliefs sought by the Appellant.
  • Pension granted to a public servant on retirement is considered ‘property’ under Article 31(1) of the Constitution and cannot be deprived without proper legal authority.
  • Government cannot withhold the full pension or gratuity of a Government servant during judicial or departmental proceedings.
  • The Punjab High Court held that interfering with the pension of a public servant is a breach of Article 31(1) of the Constitution.
  • Pensions are not discretionary and are valuable rights vested in government servants.
  • Withholding 10% of the Appellant’s pension after superannuation was unjustified.
  • Pension is a measure of socio-economic justice providing economic security in old age and should not be subject to government discretion.
  • Pension is a right earned through long and efficient service, and the payment is governed by rules, not discretion.
  • A further opportunity must be given to an officer before a reduction in pension based on misconduct is imposed.
  • The right to receive pension is considered ‘property’ under Article 31(1) of the Constitution.

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  • Rule 43(c) was inserted in Bihar Pension Rules on 19.07.2012, allowing the State to withhold 10% of the pension amount until the conclusion of criminal proceedings in R.C. Case No 48A/1996.
  • The State is directed to release 90% of the gratuity payable to the Appellant within 12 weeks from the date of the judgment.
  • Gratuity could not have been withheld under previous administrative circulars and Government Resolutions after the insertion of Rule 43(c).
  • 10% of the pension amount withheld from 31.03.2008 to 19.07.2012 must be paid to the Appellant within 12 weeks.
  • The State will deduct 10% from the pension amount starting from 07.2012 based on the outcome of the criminal proceedings.
  • Rule 27 of the Bihar Pension Rules clarifies that ‘pension’ includes ‘gratuity’.
  • Civil Appeals are allowed based on the terms mentioned in the judgment.

Case Title: HIRA LAL Vs. THE STATE OF BIHAR (2020 INSC 204)

Case Number: C.A. No.-001677-001678 / 2020

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