Discharged in Criminal Case, J&K HC Orders JKPCC to Release Withheld Retiral Benefits and Salary of Retired Officer

The High Court of J&K and Ladakh held that once a criminal charge sheet is dismissed and no assessed loss exists, a public sector corporation cannot withhold a retired employee's terminal benefits.

The High Court of Jammu, Kashmir and Ladakh at Srinagar has directed the J&K Projects Construction Corporation Ltd (JKPCC) to release the terminal benefits and unpaid salary of a retired officer, Vikar Mustafa Shonthu, after finding that the sole basis for withholding those dues had collapsed. Justice Sanjay Dhar, sitting singly, pronounced the judgment on 5 June 2026 in WP(C) No. 493/2023. The court held that the petitioner's discharge from the criminal case that had underpinned the Corporation's decision to withhold his retiral benefits, combined with the absence of any assessed monetary loss to the Corporation, left the respondents with no legal justification to continue the withholding. The order carries a six per cent per annum interest clause if the dues are not released within two months.

The Dispute Before the Court

Vikar Mustafa Shonthu joined JKPCC and was promoted to Deputy General Manager in 2000 and to General Manager (Civil) in 2015. By order No. 1 of 2018 dated 2 March 2018, he was asked to perform the duties of Managing Director on an incharge basis. The Board of Directors confirmed this arrangement at its 93rd meeting, and a circular was issued by the Company Secretary on 11 June 2018.

In 2018, the Government constituted a fact-finding committee to examine the affairs of JKPCC. The committee's report recommended that the arrangement placing Shonthu as Incharge Managing Director be referred to the Crime Branch. Acting on that recommendation, respondent No. 2 wrote to the SSP Crime Branch Kashmir on 3 April 2019, leading to the registration of FIR No. 10/2019. A challan was subsequently filed before the Special Judge, Anti-Corruption, Kashmir.

By order No. 27 of 2021 dated 21 May 2021, Shonthu was placed under suspension. He superannuated from service on 30 June 2021 while the criminal prosecution was still pending. Separately, a regular departmental enquiry was initiated against him by order No. 39 of 2021 dated 16 June 2021. The Enquiry Officer issued a notice on 24 June 2021.

Shonthu responded to the Enquiry Officer on 24 June 2021, stating that in the absence of specific allegations he was unable to defend himself and sought time to arrange documents. The Enquiry Officer, according to the petitioner, proceeded without adequately considering that response. The enquiry report dated 11 November 2021 found him guilty of: ensuring the preparation and presentation of a wrong agenda before the Board of Directors; pressurising the then Company Secretary to issue a wrong circular that benefited him; and causing a backdated circular bearing No. PS/MD/644-75 dated 11 June 2018 to be put up for his benefit.

The Managing Director of JKPCC, by communication dated 9 March 2022, recommended that Shonthu's retiral benefits be withheld until the outcome of the criminal trial or until framing of charges by the court. The Board of Directors approved these recommendations on 22 April 2022. The Corporation released only the GP Fund. Leave salary of approximately Rs 10 lakhs and gratuity of approximately Rs 20 lakhs remained unpaid. Salary from November 2020 until the date of superannuation was also withheld.

Shonthu challenged the enquiry report, the Managing Director's communication, and the Board's approval in WP(C) No. 493/2023, also seeking release of the withheld salary and retiral benefits.

The Legal Issue

Two questions arose. First, whether the departmental enquiry and the consequent decision to withhold retiral benefits could survive once the criminal case that formed their foundation was dismissed. Second, whether the pendency of a separate FIR still under investigation—FIR No. 44/2021 relating to alleged irregularities in Shonthu's promotion as General Manager and post-facto sanction of leave—could independently justify withholding terminal benefits.

The governing provision was Article 168-A of the J&K Civil Service Regulations (J&K CSR), which the court noted is also applicable to employees of JKPCC. That article permits recovery from pension and retiral benefits only where the employer has instituted departmental proceedings for recovery of amounts on account of losses caused to the employer by the negligence or fraud of the delinquent officer, and only after such losses have been established in judicial or departmental proceedings.

How the Bench Reasoned

A significant development occurred during the pendency of the writ petition. By order dated 29 August 2025, the Special Judge, Anti-Corruption, Srinagar discharged Shonthu in the case arising out of FIR No. 10/2019 and dismissed the charge sheet against him. As of the date of judgment, no charge sheet relating to any criminal offence was pending against the petitioner before any court.

Justice Dhar observed that the Board of Directors had sanctioned the withholding of retiral benefits until framing of charges by the trial court. Since the charge sheet in FIR No. 10/2019 had been dismissed and Shonthu stood discharged, even applying the Board's own decision on its terms, the respondents could no longer withhold his retiral benefits. In those circumstances, the court declined to examine the legality and validity of the enquiry report and the impugned recommendations, treating such an exercise as purely academic.

On the second question—whether FIR No. 44/2021, still under investigation, could sustain the withholding—the court applied Article 168-A directly. The provision requires that losses caused to the employer be established either in judicial or departmental proceedings. Mere pendency of an investigation, without a charge sheet having been filed before a court, does not constitute a judicial proceeding. No departmental proceeding had assessed any loss to JKPCC attributable to Shonthu's acts or omissions. The respondents had not even claimed that his alleged actions caused any loss to the Corporation.

The court pointed to an admitted fact: Shonthu had drawn neither the charge allowance nor the salary attached to the post of Managing Director. His alleged actions had therefore produced no monetary benefit to him and no monetary loss to JKPCC. Justice Dhar held that in these circumstances it was not open to the respondents to withhold either the terminal benefits or the salary dues.

Outcome

Justice Sanjay Dhar allowed WP(C) No. 493/2023 and directed the respondents to release the terminal benefits of the petitioner along with unpaid salary “most expeditiously, preferably within a period of two months” from the date a copy of the order is made available to the respondents by the petitioner. If the amount is not released within that period, it will carry interest at the rate of 6% per annum from the date of filing of the petition until realisation. The judgment was reserved on 19 May 2026 and pronounced on 5 June 2026. The order is marked as speaking and reportable.