No Link with Official Duty, No Right to Withhold Gratuity – Punjab & Haryana High Court Orders Release of Pensionary Benefits to Widow of Deceased Employee

“Pendency of Criminal Appeal Loses Significance Once Employee Dies After Acquittal”, Punjab and Haryana High delivered a significant ruling on the rights of retired government employees and their families to receive gratuity and pensionary benefits. Justice Jagmohan Bansal held that where alleged criminal offences are unconnected with an employee’s official duties, the State cannot withhold gratuity, particularly when the employee has been acquitted and has since passed away. The Court directed the release of gratuity, regularisation of pension/family pension, and payment of interest to the widow of the deceased petitioner.

“Criminal Proceedings Must Relate to Official Duty to Justify Withholding”

Suresh Kumar Sharma retired on 31 March 2004. At the time of retirement, an FIR under the Transplantation of Human Organs and Tissues Act, 1994 was pending against him, alleging that he was a beneficiary of a kidney transplant. He was convicted in 2013 but acquitted by the High Court in 2018. Despite the acquittal, the State refused to release his gratuity on the ground that it intended to file – and later did file – a criminal appeal before the Supreme Court.

The State relied on Rule 2.2(b), Rule 2.2(c), and Rule 9.14 of the Punjab Civil Service Rules (as applicable to Haryana) to justify withholding the benefits. Justice Bansal, however, found that these provisions only apply when the alleged misconduct is connected to official duties:

“An offence which is totally unrelated to official duty is not contemplated by Rule 2.2(b)… criminal proceedings must be relating to official duty.”

“Dead Persons Cannot Be Dismissed from Service”

The Court distinguished the case from the Supreme Court’s decision in K. Chandran, where the conviction was for corruption in official duties and the appeal was a continuation of the trial. In Sharma’s case, the alleged act had no bearing on his official role, and with his death, no departmental action or dismissal was possible:

“She [the widow] cannot be deprived from right of gratuity on the ground that criminal appeal is pending before Hon’ble Supreme Court especially when employee was acquitted by this Court and he is no more.”

Relief Granted with Interest

Allowing the petition, the Court directed the State to release gratuity and regularise pension/family pension within three months. It further ordered interest at 7.5% per annum from the date of filing the petition until payment, with an additional 2.5% penalty interest if payment was delayed beyond the stipulated period:

“Interest is compensatory in nature. The State has utilized dues of the petitioner… it would be just, equitable and reasonable if respondent is burdened with interest.”

This ruling reinforces that the mere pendency of a criminal appeal is not a carte blanche to indefinitely deny pensionary benefits, especially when the alleged offence is unconnected with service duties and the employee is deceased. It affirms that the protective shield around post-retirement benefits is intended to guard against undue hardship to legal heirs.

Date of Decision: 25 July 2025