Unilateral fixation of liability without notice is illegal and contrary to the Kerala Service Rules. Pension and gratuity are not a bounty but a well-deserved amount due to retired employees, and any delay in settlement must be visited with a penalty of payment of interest at the current market rate.

Pareed Pillay, J.

Appeal is by the State. The original petition was filed by the respondent for a writ of mandamus compelling the appellants to issue Non-liability Certificate so as to enable him to draw the gratuity and also for a direction for payment of interest at 15% with effect from 1-4-1988. The learned Single Judge holding that unilateral fixation of the' liability at Rs. 18,663/- by the appellants is illegal, unjust and contrary to Rr. 3 and 116 Part III of Kerala Service Rules allowed the Original Petition and directed the appellants to disburse the entire death-cum-retirement gratuity amount to the respondent with 12% interest from 1-6-1989 to the actual date of payment.

2. Appellants' contention is that the respondent has caused loss of Rs. 18,663/- as found by the Department and accordingly Liability Certificate was issued to him by the Director of Health Services on 11-10-1989. Appellants maintain that failure to issue notice before fixing the liability to the respondent amounts only to a technical defect to be ignored and respondent cannot advantageously make any claim on that score.

3. Since the relief claimed is with respect to death-cum-retirement gratuity alone it is relevant to note ruling No. 5 given under Rule 116(5) of Part III K.S.R which is as below:

"In all cases where the liabilities could-not be assessed and fixed before retirement of

the government employees, efforts should be made to assess and adjust the recoverable dues within a period of one year from the date of retirement of the government employee concerned. If in any case, the liability could not be assessed and adjusted within one year, the amount withheld from the death-cum-retirement-gratuity or the surety bond or cash deposit accepted under paragraph (1) or (3) above will be released. Disciplinary action shall be taken against the employees responsible for the failure to assess and adjust the liabilities within the prescribed period".

Thus it can be seen that all efforts should be taken to assess and fix the liability within a period of one year from the date of retirement of the government servant.

4. As the respondent has retired from service on 31-3-1988, his liability ought to have been fixed by the Department on or before 31-3-1989. The liability has been fixed only on 11-10-1989 as evidenced by Ext. P2 letter. This is beyond the period indicated in ruling No. 5 given under Rule 116(5) of Part III K.S.R. Since the liability was not fixed within one year of the retirement the entire amount of D.C.R.G. ought to have been released to the respondent on the expiry of one year from the date of retirement.

5. Ext. P2 certificate was issued on 11-10-1989 fixing the liability of an amount

of Rs. 18,663/- without issuing any notice to the respondent. Note 2 to Rule 3 Part III K.S.R. contemplates reasonable opportunity to the government servant to explain. Certainly this is to enable him to submit his explanation before actual recovery is effected. Government cannot circumvent issuance of notice as contemplated under Note 2 to Rule 3. As notice is intended for the explanation of the

employee/ pensioner, it cannot be considered as a mere empty formality. Of course it does not mean that the consent of the employee/ pensioner has to be obtained before recovering the liabilities from the death-cum-retirement gratuity payable to him. ruling No. 3 makes the position very clear. When the communication is issued showing the liability it is really intended to enable employee/ pensioner to submit his explanation before the recovery is effected. The communication should specifically state that if no reply is received within 30 days of its issue it will be presumed that the employee/ pensioner has no explanation to offer and that further action will be taken that basis. It is thus apparent that notice cannot be dispensed with under any circumstances. Neither before nor after his retirement notice was issued to the respondent fixing the liability. As t