Conviction U/S 138 NI Act Cannot Be Ground To Stop Pension: Madras High Court [Read Order]

Chennai: The Madras High Court has held that a conviction under Section 138 of the Negotiable Instruments Act does not constitute an offence involving moral turpitude and therefore cannot be used as a ground to stop the pension of a retired government employee. The court emphasized that Section 138 cases arise from contractual disputes and do not impact a person’s good conduct.

Justice K. Kumaresh Babu delivered the ruling while allowing W.P.(MD) No.24101 of 2025 filed by Srinivasan, challenging the order dated July 7, 2025 passed by the Assistant Treasury Officer, Srivilliputhur, which had stopped his pension.

The case concerned a retired police department employee whose pension was withheld by invoking Rule 8 of the Tamil Nadu Pension Rules, 1978, following his conviction under Section 138 of the NI Act. Notably, the court observed that the order was passed “without offering an opportunity to the petitioner.”

The petitioner relied upon an earlier judgment in W.P.(MD) No.5002 of 2024 dated September 5, 2024, contending that a conviction under Section 138 NI Act cannot be treated as an offence involving moral turpitude. The counsel argued that “no action can be initiated on the basis of such conviction to withhold pension, more so without due process of law.”

The Special Government Pleader argued that the petitioner had been “repeatedly convicted for offences under Section 138 NI Act,” which amounted to grave misconduct, and good conduct was essential for pension entitlement under Rule 8.

The State further contended that no inquiry was required since the conviction itself proved misconduct.

After considering submissions, the Court noted that the conviction under Section 138 was undisputed but clarified the legal character of the offence. The Court observed:

“Section 138 of the Negotiable Instruments Act arises out of contractual disputes between parties. Involvement in such offence cannot be said to affect a person’s conduct or good character.”

Relying on the Division Bench ruling in W.P.(MD) No.5002 of 2024, the Court reaffirmed that conviction under Section 138 NI Act does not amount to an offence involving moral turpitude.

Examining the pension rules, the Court noted that pension can be denied only for lack of future good conduct. However, offences under Section 138 NI Act, being contractual in nature, do not affect a person’s conduct so as to disentitle pension rights.

Agreeing with the earlier Division Bench decision, the Court held that the petitioner’s conduct could not be treated as improper for the purpose of denying pension.

Accordingly, the Court quashed the impugned order and directed the authorities:

“The respondents are directed to release the pension to the petitioner and also pay the arrears of pension, if any, within twelve weeks from the date of receipt of a copy of this order.”

The writ petition was allowed with no order as to costs.

M/s R. Karunanidhi, Advocate, appeared for the petitioner, while Mr. F. Deepak, Special Government Pleader, appeared for the respondents.

Case Title: Srinivasan vs. The Director, Treasury and Accounts Department & Ors.

[Read Order]