Employee arrested for moral turpitude, wins pension case

On August 20, 2025, the Jharkhand High Court decided that an employee’s pension and gratuity can’t be withheld just because there are criminal cases pending against them, especially since they haven’t been convicted yet.

This is the case of a teacher who was employed as a Hindi language lecturer in a reputed college in Gumla, Jharkhand on November 1, 1984 under a one-year contract. Her appointment letter mentioned that her services could be terminated any time without any reasons during this period.

On February 8, 2002, she was transferred to another college in Ranchi on deputation, where in addition to teaching, she was required to work at the tabulation centre without being granted duty leave. Then, on November 7, 2003, she was appointed as a member of the Jharkhand Public Service Commission and took charge on the same date.

She was granted extraordinary leave without pay for 5 years as per a memo dated February 28, 2004. Another memo dated March 3, 2005, provisionally absorbed her into the service of Ranchi University under Section 4 (14) of the Jharkhand State Universities Act, 2000.

On April 6, 2009,while she was on deputation at the Ranchi college, she was granted leave with lien (without pay) from November 8, 2008 to November 7, 2009, following a meeting held by the Ranchi University on December 23, 2008. After that, she again joined the Ranchi College on November 7, 2009 after being relieved by the Jharkhand Public Service Commission.

On June 2, 2011, she was arrested by the Vigilance Department for moral turpitude and sent to jail. The next day, on June 3, 2011, she was suspended from her service. After being granted bail, she rejoined the Ranchi College, on January 30, 2014 and continued to perform her duties from January 30, 2014 to March 3, 2015. During this period, the suspension order was revoked by an order dated March 14, 2014 with effect from January 30, 2014.

However, on March 4, 2015, the University suspended her again, citing pending criminal proceedings against her related to moral turpitude and ordered her to report to Ranchi University headquarters. Given the serious nature of the allegations, the University decided on December 18, 2018 to grant her compulsory retirement under the provisions of Section 67 of the Jharkhand State University Act, 2000.

On January 17, 2019, the University revoked her suspension order that had been issued on March 4, 2015.

Shortly after, on January 25, 2019, the University ordered her retirement as per Section 67 of the Jharkhand State University Act, 2000 and paid her three months’ salary in lieu of notice period. Since her retiral benefits were not being disbursed, she made various representations. It wasn’t until December 19, 2019 that the Principal of Ranchi College forwarded her service record and requested the University to settle the retiral benefits due to her.

On January 27, 2020 she submitted a request for the release of her Provident Fund (PF) amount. On October 16, 2020, the Vice-chancellor of the University sanctioned the payment of PF amount along with the accrued interest to her, which was duly received by her. Thereafter, on January 16, 2021 she again made a representation to the Registrar for the release of her pension and other retiral dues along with the arrears.

The University sent the requisite file related to her case to the Department of Higher Education on February 21, 2021 and again on March 15, 2023 . However, the Department of Higher and Technical Education in a letter dated February 27, 2021, informed the University regarding some discrepancies in the proposal for her pay fixation in the 5th Pay Commission scale compared to the salary set in the 6th Pay Commision scale and instructed the University to file a proper report.

Due to lack of action, she had no choice but to approach the writ Court to obtain her retiral benefits. The writ court approved the writ petition and directed the University to fix her pension taking into consideration the 6th and 7th commission pay revisions and further directed the University to pay the benefits for which she was legally entitled to, within 12 weeks. The University filed an appeal against this order in the Jharkhand High Court but on August 20, 2025, the University lost the case, resulting in her victory.

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Varsha Kripalani, Partner, SNG & Partners, Advocates & Solicitors, said to ET Wealth Online: "This judicial pronouncement has far-reaching and positive implications; it firmly establishes that pension is a vested property right effectively a form of deferred salary and not a discretionary government favour. This clarity limits arbitrary administrative action and empowers employees to seek judicial redress if their pension is unlawfully withheld or delayed."

Kripalani says that employees now have a clear legal pathway to approach the High Courts under Article 226 for immediate relief, including disbursal of arrears and interest on delayed payments. Since pension is recognised as a vested right, any stoppage or reduction without statutory authority becomes constitutionally unsustainable.

According to Kripalani, the judgment also encourages uniformity in administrative practice across departments, ensuring that retired employees are not left at the mercy of bureaucratic lapses or financial excuses. The recognition of pension as enforceable property right not only upholds economic justice but reinforces faith in rule-based governance.

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Read on to find out the reasons and details behind her win.

Jharkhand High Court said this
The Jharkhand High Court in its judgement (L.P.A. No. 482 of 2024) dated August 20, 2025 said that it is not in dispute that she served the University as a lecturer and thereafter, while she was posted a member of the Jharkhand Public Service Commission, as many as six criminal cases came to be lodged against her by the Vigilance Department.

Out of these six cases, she came to be acquitted in three cases, while the other three cases are still pending adjudication, but the fact remains that she was never convicted. Even her suspension orders passed from time to time came to be revoked.

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Therefore, the only issue which was required to be decided by the learned writ Court was as to whether the pendency of a criminal case can by itself be a bar for non-payment of retiral benefits including gratuity, pension, group insurance and leave encashments.

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Jharkhand High Court said: “The issue is no longer res integra, as has been held by the learned writ Court and has otherwise been long decided by the Hon’ble Supreme Court in Deoki Nandan Prasad-Vs.-Union of India, (1971) 2 SCC 330 by holding the pension is not a bounty payable on the sweet will and the pleasure of the Government and the same is a valuable right vested in a Government servant. In the later judgments of the Hon’ble Supreme Court, pension has been held to be a right in (property), which cannot be withheld and is to be treated as deferred salary. It is duly related and has a nexus with the salary payable to the employees as on the date of retirement.”

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Jharkhand High Court cites Bihar Pension Rules
The Jharkhand High Court said that the legal provisions regarding withholding of retiral benefits was a subject matter of a Full Bench of Jharkhand High Court in Dr. Dudh Nath Pandey versus State of Jharkhand and Others reported in 2007 (4) JCR 1 wherein while dealing with the provisions of the Bihar Pension Rules, the legal position was summed up as under:

“(i) Under Rule 43(a) and 43(b) of the Bihar Pension Rules, there is no power for the Government to withhold gratuity and pension during the pendency of the departmental proceeding or criminal proceeding. It does not give any power to withhold leave encashment at any stage either prior to the proceeding or after conclusion of the proceeding. (ii) The circular, issued by the Finance Department, referring to the withholding of the leave encashment would not apply to the present facts of the case as it has no sanctity of law.”

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However, the ratio laid down in the aforesaid Full Bench was doubted by another Bench and the reference was then made on 16.01.2020 to a Bench of 5 Judges. The Division Bench in the reference order referred the following questions for consideration of the larger Bench:-

“A. Whether encashment of unutilized leave forms part of salary? B. Whether it would be admissible even after dismissal of the employee? C. Whether the Full Bench has considered the provisions of encashment of unutilized earned leave in its proper perspective?

The Jharkhand High Court said that vide a judgment dated March 18, 2025, question No. A was answered by the larger Bench by concluding that in view of F.D.Memo No.P.C.2- 9-8/81/2150/b. dated July 19, 1984 and Memorandum No. PC-Miss50/97/4158/V dated may 5, 1998 issued by the State Government stating that cash in lieu of unavailed Earned Leave is a form of salary. It was held that the leave encashment is also a form of salary.

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Question B was answered by holding that an employee, who has been dismissed from service, is not entitled to leave encashment. As regards Point ‘C’, it was held that an employee cannot be denied leave encashment even after the conclusion of the departmental proceedings or criminal proceedings.

Jharkhand High Court judgement
The Jharkhand High Court said:

• In view of the settled legal position, the learned writ Court committed no error in directing the appellant (University) to fix the pension of respondent No. 1 (she) by taking into consideration 6th and 7th pay revision and thereafter fixing the benefits and pay the amount of gratuity, leave encashment and other benefits for which respondent No. 1 (she) was entitled in accordance with law in view of the fact that respondent No. 1 (she) had neither been convicted nor was any punishment imposed upon respondent No.1 (she) pursuant to any departmental enquiry.
• Accordingly, we find no merit in this appeal. This appeal is dismissed leaving the parties to bear the cost. Pending application(s), if any, shall also stand disposed of.

Mansi Singh, Partner at BTG Advaya, said to ET Wealth Online: "This judgment reaffirms the position taken by courts that employers remain obligated to pay statutory retirement benefits such as gratuity, pension, leave encashment, etc. to an employee whose employment has been terminated during the pendency of criminal proceedings and where no conviction has been made at the time of termination of employment. Mere initiation of criminal proceedings against an employee does not take away their entitlement to receive retirement benefits. In other words, such benefits are not a discretionary handout, but a vested right earned through years of service. They can only be withheld where the employee has been duly convicted of an offense.

Singh adds: "Accordingly, once an employee satisfies the conditions under the pension rules, pension becomes a right and is treated as a part of the overall salary (deferred salary). The fact that pension is considered deferred salary indicates that it is not an optional payment and must be mandatorily paid to an eligible employee. Further, if there is any delay or wrongful withholding of such statutory payments then an employee is entitled to payment of interest as well."





Kripalani from SNG & Partners, Advocates & Solicitors, says that the judiciary has consistently upheld that pension is not charity, it’s a deferred salary and a matter of right. The Supreme Court has long treated pension as part of socio-economic justice, a safeguard for the dignity of employees after retirement. The Jharkhand High Court’s reiteration of this position only strengthens that constitutional promise.
Kripalani explains: "Financial constraints or bureaucratic lapses can never justify withholding pension or other terminal benefits. In Indian labour law, pension, gratuity, and leave encashment stand on the same legal footing protected by principles of equity and Article 300A of the Constitution. Once these benefits vest, no authority can curtail them without due process. Any such action would be legally unsustainable and constitutionally impermissible."