Employer can’t withhold pension based on third-party criminal proceedings: Karnataka HC

The Dharwad bench of the high court has said that proceedings, instituted by third parties, cannot be construed to fall within the category of judicial proceedings permitting the employer to withhold the pension of the employee.

A division bench, comprising Justice S Sunil Dutt Yadav and Justice Vijayakumar A Patil, said this while rejecting a writ appeal filed by Karnataka Power Transmission Corporation Limited (KPTCL).

The KPTCL had challenged the order passed by the single bench directing it to settle/disburse all retirement benefits of one Mallikarjun, who was working as an assistant executive engineer. The ACB registered a case under the Prevention of Corruption Act against Mallikarjun in 2018. On May 31, 2022, Mallikarjun retired from service. The KPTCL issued an endorsement stating that since a judicial proceeding is pending against him, 50 per cent of his gratuity and pension would be withheld.

Challenging this endorsement, Mallikarjun moved the high court and contended that he had not caused any loss to KPTCL and that there were no judicial or departmental enquiry proceedings against him.

He claimed that neither Regulation 171 nor Regulation 172 of the Karnataka Electricity Board Employees Service Regulations attracted in his case. On May 31, 2023, the single bench had allowed his petition.

On the appeal preferred by the KPTCL, the division bench perused the regulations and noted that the proceedings under Regulation 171 relate to pecuniary loss caused to the Board either in whole or part.

"The reference to proceedings instituted under Regulation 171 would imply that the proceedings must be instituted by the employer, that is the only manner of construing the power of withholding the pension since the pension is a service condition between the employer and employee. If that were to be so, the judicial proceedings instituted by third parties under the PC Act cannot be considered to be proceedings instituted under Regulation 171," the bench said.

The bench also said that in the case on hand, though proceedings were instituted before the ACB even prior to the petitioner having retired, cognizance was taken subsequently.

"It is relevant to note that the endorsement withholding the pension came to be passed on June 28, 2022. As cognizance was taken only on 6.8.2022, in terms of the explanation to Regulation 172, as on the date of endorsement, there was no judicial proceeding that was pending," the bench said.