Withholding Gratuity Of Retired Class III Employee Without Any Pre-Retirement Inquiry Deemed Illegal: Chhattisgarh HC

Chhattisgarh High Court: A division bench of Justices Ramesh Sinha and Ravindra Kumar Agrawal held that the State cannot withhold gratuity from a retired Revenue Sub-Inspector without any prior departmental inquiry. Following State of Punjab v. Rafiq Masih, the court ruled that recovery from Class III employees post-retirement is illegal unless proceedings were initiated before superannuation. It explained that despite the allegations of financial misappropriation, the State's failure to commence an inquiry or issue a show-cause notice before retirement, invalidated the recovery. Background B.P. Tiwari worked as a Revenue Sub-Inspector before retiring on 31-03-2019. When he claimed his retiral dues, the authorities sanctioned a partial gratuity of Rs. 2,21,341 while withholding the remaining amount of Rs. 4,68,194. They alleged that Tiwari misappropriated funds amounting to Rs. 4,68,194 during his tenure as Incharge Chief Municipal Officer, Nagar Panchayat Chhuriya. The allegations arose from audits conducted in 2008-09, which reported a misappropriation totaling Rs. 10,14,170; out of which, it was alleged that Tiwari was liable for Rs. 4,68,194. However, despite his retirement on 31-03-2019, no departmental inquiry or show-cause notice was initiated regarding the matter before his superannuation. Aggrieved, he filed a writ petition seeking the release of the withheld amount. A Single Judge allowed the writ petition and directed the release of the full gratuity amount with 8% simple interest. However, the State field an appeal against this judgement. Arguments The State, represented by Mr. Yashwant Singh Thakur, argued that withholding gratuity was justified due to the objections raised in the audit and the pending departmental inquiry. It was argued that Tiwari's misappropriation caused financial losses to the public exchequer, and its recovery was essential to safeguard public funds. The State claimed that the Single Judge failed to consider the letter dated 16-07-2020, which clearly pinned Tiwari's liability at Rs. 3,38,057. Ms. Hamida Siddiqui, representing Tiwari, submitted that no inquiry or show-cause notice was initiated before his retirement. Citing State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 33, she argued that recovery from Class III employees after their retirement is impermissible, unless specific conditions are met. Thus, she argued that the recovery was illegal. Court's Findings Firstly, the Division Bench noted that Tiwari was a Class III employee. Referring to Rafiq Masih, it held that recovery from retired Class III employees is prohibited unless it is initiated prior to their retirement. Thus, the court ruled that the State's failure to commence an inquiry or issue a show-cause notice before Tiwari's superannuation, rendered the recovery order unlawful. Secondly, the court addressed the contention regarding pending departmental inquiry. It observed that the State failed to file any evidence proving that it initiated the proceedings prior to Tiwari's retirement. Even if proceedings had been initiated post-retirement, the court noted that it could not justify withholding gratuity, if no pre-retirement actions were taken. Thirdly, the court noted that no inquiry or show-cause notice had been initiated before Tiwari's superannuation. It explained that under Rule 9(6)(b)(i) of the Pension Rules, 1976, judicial or departmental proceedings must be instituted prior to retirement to justify withholding gratuity. Since this condition was not met, the court held that Tiwari was entitled to his full gratuity. Thus, the court dismissed the appeal. It upheld the Single Judge's directions to release the full gratuity amount to Tiwari with interest. Decided on: 14-01-2025 Neutral Citation: 2025:CGHC:2151-DB | State of Chhattisgarh v. B.P. Tiwari Counsel for the Appellants: Mr. Yashwant Singh Thakur, Additional Advocate General Counsel for Respondent No. 1: Ms. Hamida Siddiqui Counsel for Respondents No. 2 and 3: Mr. H.S. AhluwaliaCitation: 2025 LiveLaw (Chh) 7 Click Here To Read/Download The order

Withholding Gratuity Of Retired Class III Employee Without Any Pre-Retirement Inquiry Deemed Illegal: Chhattisgarh HC

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Withholding Gratuity Of Retired Class III Employee Without Any Pre-Retirement Inquiry Deemed Illegal: Chhattisgarh HC

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