Karnataka HC: Pension Benefits Cannot Be Withheld Indefinitely Over Possible Future Proceedings

The Karnataka High Court has ruled that the pensionary and retiral benefits of a former employee cannot be withheld indefinitely on the grounds of possible disciplinary proceedings in the future.

An appeal was filed by the Bangalore Electricity Supply Company Limited (BESCOM). The company had challenged a Single Judge’s order directing it to release all retirement benefits, including death-cum-retirement gratuity, leave encashment, pensionary benefits, and applicable interest, to Malathi B., a retired employee.

The Bench observed:
“We are not persuaded to accept that the pensionary and retiral benefits of employee could be withheld indefinitely on account of a possible disciplinary proceeding at a future date.”

BESCOM had withheld Malathi’s retirement benefits after issuing her a show-cause notice in May 2019. However, despite this, she was later repatriated to her parent organization, promoted to Deputy Controller of Accounts in 2022, and eventually retired on 31 July 2023. The Court noted that more than seven years had passed since the notice was issued, yet no disciplinary proceedings had been initiated.

Show Cause Notice:

You, Smt. B. Malathi (PIN 2726), working as Deputy General Manager in the Electronic Payment Unit (O.P.C) of the Corporate Office of BESCOM, Bangalore, had the duty of proper management and supervision. This included verifying with the sub-division office and bank accounts about the credit of bill payments made online by BESCOM customers, confirming and tallying receipts with the concerned consumers, and ensuring proper maintenance of records in the software.

However, it has been confirmed that since March 2018, the staff working in the said section have not been performing these duties properly. They have been issuing false receipts, causing a financial loss of about Rs. 1.23 crores to the Company. By failing to discharge your duties and responsibilities properly and not supervising the work of your subordinates adequately, you are indirectly responsible for causing this financial loss to the Company.

What she replied

She submitted that during the period she was deputed as Deputy Controller to Bengaluru Electric Supply Company Limited (BESCOM), she had noticed that there were certain financial irregularities in online payment cell. She claimed that this was brought to the notice of her superiors and it also led to registration of an FIR (Crime No.0041/2019). She contested the allegation that there was dereliction of duty on her part. Concededly, thereafter, no action was initiated against her.

Action taken by Department

The persons accused in the FIR (Crime No.0041/2019) registered with Vidhana Soudha Police Station were suspended, but had been reinstated. It is also not controverted that no action has been instituted against those persons as well.

After the issuance of the said show cause notice, respondent No.1 was repatriated to her parent organization. She was also promoted to the post of Deputy Controller of Accounts in the year 2022. She attained the age of superannuation on 31.07.2023. It is noticed that more than seven years has been lapsed from the issuance of the show cause notice and no disciplinary proceedings have commenced.

What Court said

Referring to Regulation 171 of the Karnataka Electricity Board Employees’ Service Regulations, 1966, which governs withholding or withdrawal of pensions, the Court highlighted that under Regulation 171(b)(ii), departmental proceedings cannot be initiated for events that occurred more than four years prior to such proceedings.

The Bench further clarified that the 2019 show-cause notice had specified the alleged quantum of loss and the related allegations, to which Malathi had already responded. Since more than four years had elapsed from the date of the incident, no fresh departmental inquiry could now be initiated.

Rejecting BESCOM’s argument that the cause of action was “continuing,” the Court upheld the Single Judge’s decision. It concluded that Malathi was entitled to receive all her retiral and pensionary benefits with interest, as any indefinite withholding of such dues was legally untenable.

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