Recovery of Embezzlement Amount and Withholding Retiral Dues Without Proper Inquiry Illegal: Chhattisgarh High Court - 2025-04-02

Chhattisgarh High Court Quashes Recovery Order and Directs Release of Retiral Dues for Police Employee

Bilaspur, Chhattisgarh - In a significant judgment delivered on February 14, 2025, the High Court of Chhattisgarh at Bilaspur has quashed a recovery order issued against a retired police employee, Suresh Singh , and directed the state authorities to release his withheld retiral dues, including pension, gratuity, and other benefits. The single-judge bench of Justice Naresh KumarChandravanshi ruled that recovery of a substantial amount based on alleged embezzlement and the subsequent withholding of retiral benefits without conducting a proper departmental inquiry or judicial proceeding is illegal and violates established service rules and pension regulations.

Case Background and Legal Question

The case arose from two writ petitions filed by Suresh Singh , a retired Sub-Inspector (Mechanic) in the Chhattisgarh Police Department. WPS No. 8586 of 2019 challenged recovery orders issued in 2015, demanding adjustment of over ₹80 lakh allegedly embezzled during his tenure at a police petrol pump. WPS No. 3137 of 2024 sought the release of his retiral dues, withheld due to these embezzlement allegations.

Singh , initially appointed as a Constable (Mechanic) in 1982, was assigned duties at the ‘Shourya Petrol Pump’ in Raipur from 2011 to 2014 under oral instructions. He claimed he lacked experience in handling petrol pump transactions and was merely following orders from Respondent No. 4/5, the then Reserve Inspector, who he claimed was the in-charge. The department alleged a significant deficiency in the petrol pump's accounts during Singh ’s tenure and issued recovery notices without initiating a formal departmental inquiry or criminal proceedings.

The central legal question before the High Court was whether the state could recover alleged embezzlement amounts and withhold retiral dues from an employee based on mere allegations, without due process of law and in the absence of any departmental or judicial proceedings to substantiate the claims.

Arguments Presented

Petitioner's Counsel: Mr. Rajesh Kumar Kesharwani, representing Suresh Singh , argued that the recovery orders and withholding of retiral dues were unlawful and violated principles of natural justice and service rules. He emphasized that Singh was a mechanic, not trained in accountancy, and was assigned petrol pump duty under oral instructions. Singh consistently denied embezzlement and contended that the recovery was being enforced without any proper inquiry, violating the CG Civil Services (Classification, Control and Appeal) Rules, 1966, and CG Civil Services (Pension) Rules, 1976.

State's Counsel: Mr. Rajeev Bharat , representing the State, contended that an audit and a preliminary inquiry had revealed a deficit, and Singh had even consented to deductions from his salary, implying admission of guilt. They argued the recovery was a minor penalty under Rule 10 of the CCA Rules and thus permissible.

Court's Analysis and Legal Precedents

Justice Chandravanshi meticulously examined the case, noting the lack of formal orders assigning Singh in-charge duties at the petrol pump. The court highlighted that the preliminary inquiry report itself mentioned Singh 's denial of embezzlement. Crucially, the court emphasized that despite allegations of a massive financial deficit, no departmental inquiry under Rule 16 of the CCA Rules or criminal proceedings were initiated against Singh .

The judgment cited several key legal precedents:

Ku. Shailja R. Jeswani v. State of M.P. and others [2000 (3) MPHT 85 (NOC)] : Established that a mere notice cannot be construed as a proposal for disciplinary action under CCA Rules.

Lal Audhraj Singh Lal Rampratap Singh v. State of Madhya Pradesh (1967 MPLJ 528) : Affirmed that a show-cause notice regarding misconduct and proposed penalty isn't sufficient; the employee must be informed of specific allegations and supporting material.

Union of India and another v. C.P. Singh (2004 (II) MPJR 252) : Summarized the procedural requirements for imposing minor penalties and stressed the need for a reasoned decision on whether a formal inquiry is necessary.

Deokinandan Prasad Vs. State of Bihar [(1971) 2 SCC 330] : Established pension as a right to property under Article 300A (formerly Article 31(1)) of the Constitution, which cannot be withheld by a mere executive order.

State of W.B. v. Haresh C. Banerjee [(2006) 7 SCC 651] : Reaffirmed pension as a constitutional right under Article 300A.

The court quoted Rule 16 of the CCA Rules, emphasizing that even for minor penalties like recovery, a written proposal of action, imputations of misconduct, and a reasonable opportunity for representation are mandatory. The judgment explicitly stated, "Rule 16(1)(a) of the CCA Rules prohibits imposition of any penalty without serving a charge sheet on the delinquent and giving him reasonable opportunity to defend."

Regarding pension and gratuity, the court referred to Rule 9 and Rule 64 of the CG Civil Services (Pension) Rules, 1976, noting that withholding these benefits is contingent upon pending departmental or judicial proceedings, which were absent in Singh ’s case.

Court's Decision and Implications

Justice Chandravanshi allowed both writ petitions, quashing the recovery orders dated 11-9-2015 and 16-11-2015. The court directed the respondents to release Singh 's full pension and all retiral dues within 45 days, along with interest at 8% per annum from the date of retirement until actual payment. Additionally , the recovered amounts were ordered to be refunded with 8% interest.

Pivotal Excerpt from the Judgment:

> "In view of above discussion, it is evidently clear that, without any inquiry or criminal proceeding and even prior to obtaining any preliminary inquiry report, impugned show cause notice (Annexure P-1) dated 11-9-2015 and recovery order (Annexure P-2) dated 16-11-2025 have been issued by the respondent No. 3/ Superintendent of Police, Raipur... which is contrary to the principle of law laid down by the Hon’ble MP High Court in the case of Lal Audhraj Singh Lal Rampratap Singh (supra) and C.P. Singh ’s case (supra)...and there is complete non -compliance of Rule 16(1)(a) of the said Rules..."

The court clarified that the order would not prevent authorities from initiating lawful proceedings against Singh in the future, should they choose to do so. This judgment underscores the importance of due process in disciplinary proceedings and the protection of employees' retiral rights, reinforcing that recovery and withholding of benefits cannot be arbitrary or without proper legal and procedural basis.