An employer is entitled to withhold retiral benefits, including gratuity and Performance Related Pay, pending the conclusion of disciplinary or judicial proceedings, provided such withholding is supported by the applicable service rules to safeguard the institution's financial interests.

ORDER (ORAL)

By Hon’ble Mr. B. Anand, Member (A)

The brief factual matrix of the case is that the applicant had retired from the respondents’ organization NBCC on 30.06.2025 on attaining the age of superannuation. Thereafter, the applicant vide representations dated 04.07.2025 and 09.09.2025 sought release of his retiral benefits specifically Performance Related Pay (PRP), gratuity and leave encashment. The applicant was given a reply by the respondents dated 02.09.2025 received by the applicant on 11.09.2025, informing that according to clause 8(20) (ii) and (b) the NBCC (Discipline and Appeal) Rules, 1993, the said retiral benefits would not be released to the applicant on account of pending disciplinary/judicial proceedings against him.

2. The applicant, aggrieved by the impugned order dated 02.09.2025, has approached this Tribunal under Section 19 of the Administrative Tribunals Act, 1985 seeking the following relief (s):

“(i) To direct the respondents to release the gratuity, leave encashment and performance related pay for the financial year 2024-25 along with interest @24%.

(ii) To direct the respondents to release the gratuity, leave encashment and performance related pay for the financial year 2024-25 and quashing the impugned letter dated 02.09.2025.

(iii) To allow the OA with cost.

(iv) To pass any further order as this Hon’ble Tribunal may deemed fit and proper in the facts and circumstances of the case.”

3. The short issue to be adjudicated in this matter is whether the applicant has a vested right to get his retiral benefits i.e. PRP, leave encashment and gratuity, especially when he states that there are no disciplinary proceedings or judicial proceedings pending against him. In support of his claim qua unjustly withholding of retiral benefits, the applicant drew the attention of the Bench to the rules of the respondents’ organisation regarding release of gratuity, leave encashment and PRP, mentioned in page nos. 56 and 57 in the OA, relevant portion whereof reads as under:-

“(ii) Release of Gratuity

(a) Vigilance Division should spell out that if there is any order against the employee to recover any amount of any pecuniary loss/ partial forfeiture or fully forfeiture of gratuity within the period of 30 days after retirement.

(b) During the pendency of the disciplinary proceedings, the Disciplinary Authority may withhold payment of gratuity, for ordering the recovery from gratuity of the whole or part of any pecuniary loss caused to the company if the employee is found, in a disciplinary proceeding or judicial proceeding, to have been guilty of offence/misconduct as mentioned in Sub- section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the Company by misconduct or negligence, during his/her service including service rendered on deputation or on re employment after retirement. However, the provisions of Section 7(3) and 7(3a) of the payment of Gratuity Act,1972 will be kept in view in the event of delayed payment, in case the employee is fully exonerated.

(REFER- Circular No. NBCC/HRM/2022/1247 dtd 07.10.2022)

(c) For Administrative nature of cases, Gratuity will be released.

EXPLANATION:

The term disciplinary proceedings appearing in Para (i) and (ii) above covers proceedings of both types i.e., majors as well as minor.

(iii) Release of Leave Encashment

The provision of Rule-39 of CCS (Leave) Rules, 1972 may be followed while releasing the Leave Encashment in the event of continuation of disciplinary/criminal proceedings post retired, as under The authority competent to grant leave may withhold whole or part of cash equivalent of earned leave