Chief General Manager Gujarat Telecom Circle, Bharat Sanchar Nigam Ltd. & Ors. vs Manilal Ambalal Patel & Anr.

2. Commuted Value of Pension (CVP) is inter-linked with pension. Pension is not a bounty. It is a legal as well as a fundamental right of a Government servant to receive his pension. It is not an act of grace by the employer but it is the right of the Government servant who has put in the required number of years of service. This is subject to Rule 9 of the Central Civil Services (Pension) Rules, 1972 under which there is power to withhold and recover part or whole of the pension. In regard to pension, it is beyond dispute that for belated payment of pension, interest can be ordered to be paid. [Para 21] [1049-A-C]

3. Commutation of pension is nothing but payment of a portion of the pension calculated on a formula provided in the Rules, the result of which is that the employer will be absolved from payment of the pension to the extent it is commuted and the employee will receive the value of commuted pension in a lump sum at one go. No doubt after a certain number of years (15 years) the full pension gets restored. Therefore, CVP flows out of his right to receive pension. In fact, it is a part of his pension which is paid in lump sum to the employee. It is entirely optional for the officer to commute a part of his pension. [Paras 22 and 23] [1049-C-E]

4. The Commutation Rules declare the categories of pension which would qualify for commutation. Persons who fall in Rule 12 of the Commutation Rules, without undergoing any medical examination can apply for commutation, as provided in Rule 13 of Commutation Rules, which includes a person who receives superannuation pension. If such a person applies under Rule 13 of Commutation Rules , well within the time, he is indeed conferred a legal right under the Statutory Rules to receive commuted pension. It does not lie in the mouth of Government which is excepted to act as a model employer to sit over the papers and delay the sanctioning or the payment of the CVP. Therefore in a case where Rule 13(3) of Commutation Rules applies and the Government servant who is due to retire on superannuation applies for getting CVP along with pension papers, prior to the date of his retirement as provided and he actually retires on superannuation and his application is within time, the CVP must be paid immediately after the retirement. [Paras 29 and 30] [1053-F-H; 1054-A-B]

5. The applicant had moved application on 01.11.2012 where he sought commutation of pension without medical examination. He showed his date of retirement as 31.07.2008. He sought the maximum admissible fraction as the proposed commutation. On the basis of same, the appellant was admittedly sanctioned CVP in December, 2012. If the application dated 01.11.2012 is taken as the basis of sanctioning of the CVP then there can be no ground at all to give any interest as CVP has been given within a reasonable time. [Para 37] [1057-C-E]

6. There are three situations. The first category is where the pension is finalized immediately upon retirement and on the basis of the application, the commutation as permissible subject to the limit of forty percent, is ordered. The second category is where there is provisional pension granted under Rule 64 of Pension Rules. In such a case also commutation is permissible but of the provisional pension again subject to the limit under Rule 5 of Commutation Rules. In the third category where provisional pension is sanctioned on account of pendency of judicial or departmental proceeding Rule 4 of Commutation Rules applies and it forbids the commutation of “the provisional pension” granted under Rule 69 of Pension Rules. Since, in the present case the applicant was admittedly sanctioned provisional pension, while the provisional pension was in place, the applicant could not have sought commutation of the provisional pension granted under Rule 69 of Pension Rules in view of the embargo against such commutation contained in Rule 4 of Commutation Rules. [Para 35] [1056-C-F]

7. A perusal of Rule 9 of the Pension Rules would show that Government had a right to withhold the pension or gratuity or both either in full or in part or withdraw a pension in full or in part either permanently or for the specified period. Government is also authorized to order recovery from pension or gratuity of the whole or in part of any pecuniary loss caused, if in any departmental or judicial proceeding, the pensioner is found guilty of grave misconduct or negligence during the period of his service which includes service after re-employment. Thereafter, sub-rule 9(6) of Pension Rules deals with what constitutes when a departmental or a judicial proceeding will be deemed to commence. Judicial proceedings are divided into two categories. First category is a criminal proceeding. Second category is civil proceeding. As far as civil proceeding is concerned, it is deemed to be instituted when a plaint is presented. In other words, upon presentation of a plaint in a civil case judicial proceeding commences. In the case of a criminal proceeding by the deeming provision, it is deemed to have been instituted for the purpose of Rule 9 when the complaint or report of a police officer is made, but that is not sufficient. In a case where a complaint or a report of a police officer is made to a Court, it should culminate in cognizance being taken by the Magistrate, for the department to contend that the date of the complaint or report is to be the date of institution of the proceedings. [Para 43] [1059-C-F]

8. It is not correct to say that there was a departmental proceeding pending by virtue of the fact that an order of suspension was passed within the meaning of Rule 9(6). While the applicant was placed under suspension, in the year 1997, it is equally indisputable that the said suspension was revoked in the year 1999 well before the date of superannuation of the applicant. It is not the law that to constitute a departmental proceeding that a Government servant has been placed under suspension at some point of time of his career. What is contemplated is that there must be a suspension when the applicant would have otherwise retired on superannuation. In the present case the suspension stood revoked several years prior to his date of superannuation. Therefore, the suspension which was subsequently revoked cannot constitute suspension within the meaning of Rule 9(6)(b) of the Pension Rules. [Para 39] [1057F-H; 058-A-B]

9. It is true that well before the retirement of the applicant, the agency which had no doubt conducted a trap against the applicant, had itself found that there was no material in view of subsequent developments. It could be said that this is a case where the applicant was exonerated by the agency well before the date of his retirement. No doubt this is not a case where the applicant has been acquitted honourably after trial. In fact, there was never a trial and the case was not sent up for trial in view of the submission of A-summary. [Para 42] [1059-A-B]

10. A claim for interest in regard to CVP may lie when an application has been made in time under Rule 13(3) of Commutation Rules and the payment is delayed. But in a case where application is made under Rule 13(1) of Commutation Rules which can be made within a period of one year from the date of retirement, the same would have to be processed and undoubtedly at the earliest it must be brought to its logical culmination as per the rules. But certainly, in a case falling under Rule 13(1) there can be no question of paying interest from the date of retirement as the application itself is predicated after the date of retirement. No doubt the question as to payment of interest even in such cases would arise based on the date of application and the reasonableness of the time taken in processing it and the arbitrariness in a particular case in delaying the matter. [Para 45] [1060-E-G]

11. In the present case the applicant has no case even that he made an application within the meaning of Rule 13(3) of the Commutation Rules as contemplated before three months of his retirement. Nothing stood in the way of the applicant applying under Rule 13(3) of Commutation Rules apparently. If on the other hand, there was any legal impediment which stood in the way, then also he cannot claim the CVP on retirement. Without having made such an application under the Commutation Rules, it is clear that there can be no question of even becoming entitled to commute pension w.e.f. first day following his retirement. The Tribunal and the High Court have completely overlooked the conspectus of the Rules. The direction to pay interest on the CVP, as ordered by the Tribunal, from the date of retirement from 01.08.2008 is clearly erroneous. Rule 13(1) of Commutation Rules enables a person who is in receipt of a pension under Rule 12 of Commutation Rules, to apply after retirement but within one year thereof for CVP. It is true that the applicant was not in receipt of any pension under Rule 12 and therefore, he could not have applied under Rule 13(1) of Commutation Rules. This is for the reason that as per order dated 04.08.2008, he was to be given provisional pension which was under Rule 69 of the Pension Rules. The applicant, however, proceeded to accept the provisional pension. It is true that the effect of the order dated 04.08.2008 of the sanctioning of the provisional pension under Rule 69 of Pension Rules, was that he was precluded from applying for commuting the provisional pension, in view of Rule 4 of Commutation Rules and on the other hand, as he was not in receipt of superannuation pension, he could not have filed an application under Rule 13(1) of Commutation Rules. Having issued order dated 04.08.2008, the effect of which should interest be ordered on the basis that the applicant was prevented from applying for CVP under Rule 13(1) of Commutation Rules. The applicant was not precluded from making any application under Rule 13(3) of Commutation Rules. Had he done so, his claim for interest from the date of retirement could have been considered under Articles 14 and 21 of the Constitution. The applicant did not challenge the order dated 04.08.2008 and he continued to accept the provisional pension sanctioned thereunder. There could be no question of granting interest from the date of retirement in view of the absence of any application under Rule 13(3) of Commutation Rules. [Para 46] [1061-A-H; 1062-A-B]

S.K. Dua v. State of Haryana and Another

(2008) 3 SCC 44 : [2008] 1 SCR 395 – relied on.