In Brief
An employee of Mahanadi Coalfields Limited, a Coal India subsidiary, was charged with serious misconduct involving coal stock shortages of ₹31.65 crores in 2007, but the disciplinary proceedings remained pending when he superannuated in 2010. The employer withheld his gratuity. The Supreme Court held, in a split judgment: (1) the employer may withhold gratuity during pendency of disciplinary proceedings initiated before retirement, under Rule 34.3 of the CDA Rules; (2) while disciplinary inquiry may continue after superannuation, substantive penalties like dismissal cannot be imposed retrospectively on retired employees. Only forfeiture of gratuity (proportionate to proven misconduct) is permissible under the Payment of Gratuity Act, 1972.
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