Pensionary rights require prior hearing: reduction or forfeiture cannot stand without notice and an opportunity to show cause.

Pensionary benefits were treated as property carrying vested rights, so any reduction or forfeiture could not be made on an administrative assessment of service record alone. Because such action had civil consequences, the rule of audi alteram partem required prior notice of the proposed grounds and a fair opportunity to meet the material before any prejudicial order was passed. In the absence of notice and hearing, the reduction of pension and forfeiture of gratuity was impermissible and was vitiated for breach of natural justice.

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Issues: Whether pension and gratuity payable to retired government servants could be reduced or forfeited under the pension rules without giving them a reasonable opportunity of being heard.

Analysis: Pensionary benefits were held to be property and not a mere bounty. Even though the power to reduce pension under the relevant rule was couched in administrative terms and could be exercised on consideration of the service record, the exercise of that power directly affected vested rights and had civil consequences. In such a situation, the basic rule of fair play required that the officers be informed of the grounds on which a reduction was proposed and be afforded an opportunity to meet the material before any prejudicial order was passed. The absence of prior notice and hearing therefore vitiated the reduction of pension and forfeiture of gratuity.

Conclusion: Reduction or forfeiture of pensionary benefits without giving a reasonable opportunity to show cause was impermissible and the challenge to the impugned orders failed.

Ratio Decidendi: An administrative order that prejudicially affects vested property rights must comply with the rule of audi alteram partem, and pension cannot be reduced or forfeited without a fair hearing.

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