Introduction:

The case of Bangalore Electricity Supply Company Limited v. Malathi B & Anr., Writ Appeal No. 1577 of 2024, citation 2025 LiveLaw (Kar) 300, came before a Division Bench of the Karnataka High Court comprising Chief Justice Vibhu Bakhru and Justice C.M. Joshi. The matter revolved around whether retiral and pensionary benefits of a former employee could be withheld indefinitely on account of the possibility of initiating disciplinary proceedings in the future. The appellant, Bangalore Electricity Supply Company Limited (BESCOM), was represented by Advocates Swamini G. Mohanambal and Sandeep S. Patil, while the respondent, Malathi B, was represented by Advocate Abhishek N.V. The appeal challenged a Single Judge’s order directing BESCOM to release all retirement benefits—death-cum-retirement gratuity, leave encashment entitlement, and other pensionary benefits—along with interest from the date of retirement to the respondent. The central issue before the Court was whether the issuance of a show cause notice years earlier, without initiation of departmental proceedings, could justify withholding retiral benefits indefinitely.

Arguments:

The appellant, BESCOM, argued that the Single Judge had erred in directing the payment of pensionary and retiral benefits despite pending issues linked to a show cause notice. The company emphasized that a show cause notice had been issued to the respondent on 25.05.2019 in connection with certain alleged lapses resulting in financial loss. According to BESCOM, the allegations raised in the notice had not been conclusively dealt with and therefore the respondent’s entitlement to pensionary benefits was questionable. Counsel for BESCOM submitted that the cause of action was continuing in nature and, therefore, the pendency of issues arising from the show cause notice justified the non-settlement of retiral benefits. They stressed that the quantum of loss and irregularities mentioned in the notice needed to be examined, and until a decision was taken, it would be improper to release the funds. BESCOM contended that the pensionary scheme was subject to the employee maintaining integrity and accountability throughout service, and if allegations of misconduct remained unresolved, the company was entitled to withhold or recover amounts under the governing regulations. Reliance was placed on Regulation 171 of the Karnataka Electricity Board Employees’ Service Regulations, 1966, which provides for withholding or withdrawal of pensions in cases involving misconduct. It was urged that allowing the release of benefits without adjudication of the show cause notice would frustrate the purpose of the regulation and set an undesirable precedent where employees facing allegations could walk away with full benefits merely due to administrative delay.

On the other side, the respondent, Malathi B, through her counsel Abhishek N.V., argued that BESCOM’s stand was wholly arbitrary and violative of her fundamental rights as a retired employee. She submitted that she had rendered long and unblemished service, and despite the issuance of a show cause notice in 2019, no departmental proceedings had ever been instituted against her. The respondent pointed out that she had been repatriated to her parent organization after the notice, and in fact, she was subsequently promoted to the post of Deputy Controller of Accounts in 2022, which itself showed that no stigma was attached to her service record. Counsel stressed that she had attained superannuation on 31.07.2023, yet her retiral benefits were illegally withheld on the vague assertion that proceedings could be initiated at some future date. This, according to the respondent, was nothing but harassment. She relied upon Regulation 171(b)(ii) of the 1966 Regulations, which categorically prohibits the institution of departmental proceedings for an event that took place more than four years prior. In her case, more than seven years had passed since the issuance of the show cause notice, and no proceedings had commenced. Thus, any action now would be barred under the regulations. She further argued that withholding benefits indefinitely violated the principle of social security underlying pensionary entitlements, as recognized by the Supreme Court in several precedents. Pension, she submitted, was not a bounty but a vested right, and its denial without lawful justification amounted to deprivation of livelihood post-retirement. She therefore sought dismissal of the appeal and upholding of the Single Judge’s order directing immediate release of all dues with interest.

Judgement:

After considering the rival submissions, the Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Joshi upheld the Single Judge’s reasoning and dismissed the appeal. The Court observed that pensionary and retiral benefits cannot be withheld indefinitely merely on the anticipation that disciplinary proceedings may be instituted at some uncertain date in the future. The Bench noted that the show cause notice was issued to the respondent on 25.05.2019, yet no further proceedings had been initiated in more than seven years. On the contrary, the respondent had been repatriated and even promoted to the post of Deputy Controller of Accounts in 2022, suggesting that the allegations had not been treated as serious enough to warrant action. Referring to Regulation 171(b)(ii) of the Karnataka Electricity Board Employees’ Service Regulations, 1966, the Court emphasized that departmental proceedings cannot be instituted for an incident that occurred more than four years prior. Since more than four years had elapsed from the date of the alleged incident, no proceedings could lawfully be commenced against the respondent. Thus, the premise for withholding her benefits stood completely eroded.

The Bench also rejected BESCOM’s argument that the cause of action was continuing in nature. It clarified that the show cause notice itself had spelt out the alleged quantum of loss and articulated the charges, which were duly responded to by the respondent. There was no ambiguity requiring endless postponement. The Court found no reason to fault the Single Judge’s conclusion that the delay of over seven years in initiating disciplinary proceedings rendered any such action impermissible under Regulation 171(b). Consequently, the company’s decision to withhold benefits could not be sustained. The Court, therefore, directed BESCOM to release all retiral and pensionary benefits due to the respondent, including death-cum-retirement gratuity, leave encashment, and pension, together with interest from the date of her retirement.

In conclusion, the Karnataka High Court reiterated the principle that retiral benefits are a matter of right and cannot be subjected to indefinite uncertainty on speculative grounds of potential disciplinary action. The judgment is significant as it underscores that pension is not a concession but a statutory right, and employers must adhere strictly to regulatory timelines if they intend to initiate proceedings. By affirming that withholding benefits in anticipation of possible action amounts to an abuse of authority, the Court protected the rights of retired employees and ensured that social security entitlements remain secure and accessible. The ruling not only vindicated the rights of Malathi B but also set a strong precedent against arbitrary withholding of retiral benefits by public sector undertakings and government organizations.