No Disciplinary Proceedings After Retirement Unless Initiated Before Cessation of Service: Andhra Pradesh High Court Quashes Bank’s Post-Retirement Penalty on Retired Manager

"Disciplinary proceedings can be continued after retirement only if initiated prior to retirement. Any proceedings initiated after cessation of employment are void and without jurisdiction," In a significant judgment delivered on January 8, 2026, the High Court of Andhra Pradesh emphatically ruled that disciplinary proceedings initiated against a retired bank employee after acceptance of voluntary retirement are illegal, void, and ultra vires the governing service and pension regulations.

In Writ Petition No. 25019 of 2004, titled S.B.G. Sarma v. Bank of Baroda & Others, the Court quashed a charge memo dated 26.08.2003/02.09.2003 and the punishment order dated 21.04.2006 that had imposed a penalty of permanent withdrawal of one-third pension. The ruling strikes a blow to the routine practice by public sector banks of initiating disciplinary action after an employee has exited service — a matter that has caused uncertainty and litigation across the country.

“The Petitioner ceased to be an employee on 20.01.2003. Any proceedings initiated after that date are ex facie without jurisdiction”

The Court held that regulations governing disciplinary proceedings apply only to ‘officer employees’, and since the petitioner had voluntarily retired with effect from 20.01.2003, the employer-employee relationship had ceased on that date. Consequently, the disciplinary action initiated via charge memo dated 26.08.2003, more than seven months after the effective date of retirement, was declared to be without jurisdiction.

Justice Challa Gunaranjan observed: "There is no specific provision in the Conduct or Disciplinary Regulations making them applicable to retired employees. The very initiation of disciplinary proceedings against the petitioner, who admittedly ceased to be employee of the bank w.e.f. 21.01.2003, is clearly without jurisdiction."

The Court decisively rejected the contention of the respondent-bank that internal notings prior to retirement amounted to initiation of proceedings. It held that disciplinary proceedings are deemed to be initiated only upon issuance of a formal charge memo or charge sheet, not by internal memos or preliminary contemplation.

Citing the Supreme Court’s decision in State Bank of India v. Navin Kumar Sinha, 2024 SCC OnLine SC 3369, the Court reiterated:

"No disciplinary proceeding can be initiated after the delinquent officer retires from service. A subsisting proceeding may continue, but it must have commenced before the date of superannuation."

Regulations 45 and 48 of Pension Rules Cannot Independently Authorize Post-Retirement Inquiry Without Board Approval or Grave Misconduct Finding

The Bank had purported to act under Regulations 45 and 48 of the Bank of Baroda Officer Employees’ Pension Regulations, 1995, alleging grave misconduct during the petitioner’s service. However, the Court clarified that these Pension Regulations do not create an independent disciplinary jurisdiction.

Crucially, the Court noted that Regulation 48 permits recovery from pension only in case of a valid departmental or judicial proceeding that finds the employee guilty of grave misconduct, criminal breach of trust, or fraud, and only after prior consultation with the Bank’s Board. No such finding of grave misconduct was made in this case, and no Board consultation was proven.

"Even assuming the bank intended to act under Pension Regulations, such action must be preceded by a proper finding of grave misconduct, an enquiry under Regulation 45, and prior consultation with the Board under Regulation 48. These mandatory conditions were not met."

The Court emphasized that 'grave misconduct' stands on a higher pedestal than mere ‘misconduct’, as contemplated under the Conduct Regulations. Since the disciplinary authority had merely found irregularities constituting misconduct, the action did not meet the threshold required under Regulation 48 for pension recovery.

Punishment of Withholding One-Third Pension Held Ultra Vires: "No Authority Has Power to Devise a New Penalty Not Envisaged by Rules"

The Court also examined whether the punishment of withdrawing one-third of the petitioner’s pension permanently was legally sustainable. It found that such a punishment is not among the enumerated penalties under Regulation 4 of the Bank’s Discipline and Appeal Regulations.

Justice Gunaranjan held: "It is a well-settled proposition that an authority has no inherent power to devise punishments not contemplated by rules. The penalty imposed is not traceable to any of the minor or major penalties under the DA Regulations, and therefore, violates Article 14."

Rejecting the respondent-bank's plea to remit the matter for fresh consideration of punishment, the Court reiterated:

"Since this Court has held that the very initiation of proceedings is without jurisdiction, no further disciplinary action can be sustained."

Availability of Appeal Not a Bar When Action Is Without Jurisdiction

The Court dismissed the Bank’s objection that the petitioner should have availed the alternative remedy of appeal under Regulations 17 and 18 of the DA Regulations. It held:

"When the action of the authority is ex facie without jurisdiction, the existence of an alternative remedy is no bar to exercise of writ jurisdiction under Article 226."

Relief Granted: Entire Pension and Retiral Benefits to be Released Within Two Months

Setting aside both the charge memo and the punishment order, the High Court directed the Bank to release all retiral benefits, including pension, gratuity, and commuted value of pension, within two months, subject to adjustment of any amounts already paid.

The Court also addressed the Bank’s attempt to invoke the Payment of Gratuity Act, 1972, to limit the interest liability, observing that such statutory caps have no application when payment itself was unjustifiably delayed due to illegal disciplinary action.

“Grave Misconduct” Requires Specific Finding and Board Consultation; Misconduct Under Conduct Rules Not Enough

Drawing a critical distinction between 'misconduct' and 'grave misconduct', the Court clarified that routine allegations of irregularities, even if proved, do not meet the threshold of ‘grave misconduct’ for the purposes of Regulation 48 of the Pension Regulations.

"Unless an employee is specifically found guilty of grave misconduct, as distinguished from ordinary misconduct, and such finding is preceded by proper procedure and Board consultation, no deduction from pension can be effected."

Judicial Endorsement of Service Law Principle: Employer’s Powers End With Retirement Unless Protected by Rule

This decision reinforces the well-settled legal position that disciplinary proceedings must be initiated before retirement, and the only exception is when existing rules specifically permit continuation or initiation after retirement, such as Rule 20(3)(iii) of Officers’ Service Regulations, which did not apply in the present case.

"If a particular thing has to be done in a prescribed manner, it must be done in that manner or not at all," the Court reiterated while emphasizing the mandatory procedural safeguards under service jurisprudence.

With this ruling, the Andhra Pradesh High Court has firmly struck down the practice of initiating disciplinary proceedings post-retirement without statutory backing, reinforcing the sanctity of service law principles and protection of pensionary rights. The judgment is a clarion call to public sector institutions to exercise their powers strictly within the legal framework, especially in matters affecting post-retirement entitlements of employees.

Date of Decision: 08.01.2026