The withholding of leave encashment is justified under Rule 39(3) of the CCS Leave Rules when disciplinary or criminal proceedings are pending against the employee at retirement.

Headnote:(A) Administrative Tribunals Act, 1985 - Section 19 - CCS (Leave) Rules, 1972 - Rule 39(2)(a) and 39(3) - Leave encashment - Applicant sought release of leave encashment withheld due to pending disciplinary and criminal proceedings - Court held withholding of leave encashment was justified under Rule 39(3) as proceedings were ongoing - The applicant's entitlement to leave encashment was contingent upon the resolution of pending criminal charges. (Paras 6, 15, 18)

(B) Disciplinary Proceedings - The authority has the power to withhold leave encashment if disciplinary or criminal proceedings are pending against the employee at the time of retirement. (Paras 6, 15)

Facts of the case:
The applicant, a retired officer, claimed leave encashment which was withheld due to ongoing disciplinary and criminal proceedings against him. He argued that the withholding was unjustified and sought interest on the encashment amount. (Paras 2-4)

Findings of Court:
The court found that the withholding of leave encashment was lawful under Rule 39(3) due to the pending criminal case, and the applicant was not entitled to the relief sought. (Paras 15-19)

Issues: Whether the applicant is entitled to the release of leave encashment amount with interest during the pendency of criminal proceedings? (Para 6)

Ratio Decidendi: The court ruled that the withholding of leave encashment was justified as per Rule 39(3) of the CCS Leave Rules, emphasizing that the outcome of pending criminal proceedings could affect the applicant's entitlement. (Paras 15-18)

Result: OA stands dismissed. No order as to costs.

ORDER

The applicant has filed this original application under Section 19 of the Administrative Tribunals Act , 1985 seeking the following reliefs:

“a. Direct the respondents to release the leave encashment as provided under Rule 39(2)(a) of the leave Rules, 1972.

b. Direct the respondents to pay interest at GPF rates on the leave encashment from 01.06.2018 till the date of payment of the leave encashment.

c. Any other order or direction deemed fit and proper in the facts and circumstances of the case may also kindly be issued in favour of the applicant.

d. Costs of the Original Application be allowed in favour of the applicant.

2. Briefly stated the facts as narrated by the applicant are that he joined Employees Provident Fund Organisation (`EPFO’ for short) on 21.04.1983 as Lower Division Clerk and was promoted to the post of Enforcement Officer/Accounts Officer on 13.07.2012. The applicant retired on superannuation on 31.05.2018.

3. A charge memorandum dated 03.07.2017 was issued by the Central provident Fund Commissioner, EPFO through RPFC, Karnataka which culminated in penalty order of punishment dated 30.03.2022 imposing cut in pension at the rate of 30% for a period of 7 years. It is the grievance of the applicant that no payment of leave encashment has been made despite several representations submitted by him to which he is legally entitled to. Being aggrieved, the applicant has preferred this OA.

4. Learned Counsel Shri Narayana Kamma representing the applicant, placing reliance on Rule 39(2)(a) of CCS (Leave) Rules , 1972, submitted that despite the conclusion of the disciplinary proceedings in March, 2022, the leave encashment has been withheld by the respondents without authority and in derogation of Rule 39(2) of Leave Rules. Non release of leave encashment to the applicant is attributable to the negligence and lethargic attitude of the respondents towards the retired officer who gave about 34 years of his life to the organisation. Placing reliance on the orders passed by this Tribunal in OA No.11/2022 [(DD:02.08.2023) – P.Sudhakar Babu vs. Union of India and another], learned Counsel submitted that withholding of leave encashment of the applicant to which he is legally entitled, is illegal. The reasoning given by the respondents for denial of leave encashment that some disciplinary proceedings and criminal cases are pending against the applicant is unjustifiable. There being no likelihood of any recovery from leave encashment even on the conclusion of proceedings pending before the CBI Court against the applicant, withholding of leave encashment amount is arbitrary and calls for interference. Learned Counsel further submitted that the applicant is entitled for interest on the leave encashment amount from 01.06.2018 till the date of payment. Reliance is also placed on the judgment of the Hon’ble Apex Court in Dr.A.Selvaraj vs. C.B.M.College and others in Civil appeal No.1698/2022 (DD:04.03.2022) . Accordingly seeks for the reliefs claimed.

5. Learned Counsel Smt.Shwetha Anand appearing for Respondent No.2 - contesting party, submitted that the final order in the disciplinary proceedings initiated against the applicant has been passed on 30.03.2022 and communicated to the applicant on 12.04.2022. Crime No.CBI RC No.15/2016 registered against the applicant is still pending. In the event of a conviction, all retiral benefits including gratuity and leave encashment may be frozen. Conversely in the event of exoneration, the release benefits will be released to the applicant. Learned Counsel pointed out that the proceedings pending in CBI Court comes under the purview of the Prevention of Corruption Act, 1988. Placing reliance on the Rule 39(3) of the Leave Rules, learned Counsel submitted that competent authority has power to withhold either whole or a part of cash equivalent to earned leave of a Government servant who retires from service while under suspension or while disciplinary or criminal proceeding are pending again

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2025 Supreme(Online)(CAT) 3201

The withholding of leave encashment is justified under Rule 39(3) of the CCS Leave Rules when disciplinary or criminal proceedings are pending against the employee at retirement.

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