A reading of the above rules (Rule 40, 41 and 64 of the 1993 Rules) would clearly indicate that, a railway servant compulsorily retired from service as a penalty may be granted pension or gratuity or both at the rate not less that 2/3rd and not more than full compensation pension or gratuity, which clearly shows that the quantum is completely at the discretion of the competent authority to grant either 2/3rd or full pension and within the band of 2/3rd to full which is an absolute discretion of the employer and the applicant does not have any vested right to stake claim for the entire pension or gratuity in cases where he is imposed a penalty of compulsory retirement. Thus, past service can be forfeited or pension withheld to the extent the Regulations so permit. This exercise of discretion under the rules cannot be termed as a second punishment...

Deputy Solicitor General S Manu, however, submitted before the Court that the Tribunal has based its order on a 2006 Kerala High Court decision which was held to be per in curium by a subsequent decision. Deputy Solicitor General further submitted that the Kerala High Court order in this regard had clearly found that the petitioner ought to have been granted the punishment of dismissal and that leniency was shown by the petitioners herein while granting a lesser punishment of compulsory retirement. DSG also argued that nothing in Rule 64 contemplates the passing of orders under the said Rule simultaneously with the order of the disciplinary authority.

On the facts of the case, the Counsel averred that the disciplinary authority had chosen not to reduce the pension while passing order in 2004; and the impugned order reducing the pension was passed only after 11 years of imposition of compulsory retirement and much after the cessation of the jural relationship is impermissible and virtually inflicting a second enhanced punishment. He also contended that he is entitled to a full pension and that the order of the Tribunal need not be interfered with.