Adverse findings carrying civil consequences cannot be recorded without prior notice and hearing.

The petitioner, an Assistant Registrar/Deputy Registrar in the Co-operative Department, retired on 30 June 2012. The dispute concerned alleged excess transportation payments made during 2008–09 to 2011–12, allegedly causing a loss of approximately Rs.15,96,889/- to the Government exchequer while the petitioner was functioning as In-charge Deputy Registrar, Mahasamund.

Proceedings were initiated against the concerned cooperative society under Section 53 of the Chhattisgarh Co-operative Societies Act, 1960, and the appellate proceedings culminated in an order dated 10 March 2016 passed by the Chhattisgarh State Co-operative Tribunal. Although the petitioner was not a party to those proceedings, the Tribunal recorded adverse observations against him and directed that the alleged loss be recovered from him and departmental proceedings be initiated.

Consequential recovery notices were issued on 23 May 2016 and 6 June 2016. The petitioner’s review petition before the Tribunal was dismissed on 20 April 2017.

In W.P.(S) No. 2532 of 2017, the petitioner challenged the Tribunal’s orders and the consequential recovery notices. In W.P.(S) No. 199 of 2023, he additionally sought release of his withheld retiral and pensionary benefits.

During the latter proceedings, the State produced an order dated 24 September 2018, passed purportedly under Rule 9 of the Chhattisgarh Civil Services (Pension) Rules, 1976, directing recovery of Rs.15,96,899/- from the petitioner’s pension at the rate of 20% per month. That order had not been specifically challenged in the writ petition.

Whether the Cooperative Tribunal could record adverse findings and direct recovery against the petitioner, who was neither impleaded nor afforded an opportunity of hearing, in violation of the principles of natural justice?

Whether the consequential recovery notices dated 23 May 2016 and 6 June 2016 were sustainable when they were founded upon the Tribunal’s order containing the impugned adverse observations?

Whether the Court could direct release of the petitioner’s entire retiral and pensionary benefits when the order dated 24 September 2018 directing recovery from pension had not been specifically challenged?

The Court applied the principles of natural justice, particularly audi alteram partem, holding that a person against whom adverse findings, strictures, or directions carrying civil and financial consequences are proposed must receive notice and a reasonable opportunity of hearing.

It relied on K, A Judicial Officer, AIR 2001 SC 972, which recognised that adverse observations affecting a person’s dignity, reputation, career, or legal interests should not be made without hearing that person; S.K. Viswambaran v. E. Koyakunju, AIR 1987 SC 1436, which held that adverse remarks cannot ordinarily be made without prior notice and opportunity of hearing; and Manish Dixit v. State of Rajasthan, (2001) 1 SCC 596, and Amarpal Singh v. State of Uttar Pradesh, (2012) 6 SCC 491, which reaffirmed the same principle.

The Court also considered Rule 9 of the Chhattisgarh Civil Services (Pension) Rules, 1976, under which the respondents purportedly ordered recovery from pension, but held that the validity and merits of that order could not be determined because it was not under challenge in the present proceedings.

The Tribunal’s observations were not merely incidental: they formed the basis for fastening a substantial financial liability upon the petitioner and issuing recovery notices against him.

Since the petitioner had retired before the Tribunal passed its order and had not been impleaded or heard, the adverse findings and recovery directions were made in breach of the audi alteram partem rule. The subsequent review petition did not cure the original denial of hearing, because the opportunity had to be afforded before the adverse observations were recorded.

Accordingly, the adverse observations and directions relating to the petitioner could not be sustained, while the unaffected portion of the Tribunal’s order concerning the society was left undisturbed.

However, regarding pensionary benefits, the Court declined to order release of the entire pension because the respondents had produced a later order dated 24 September 2018 directing recovery under Rule 9, and that order had not been specifically challenged. Granting the requested relief without first setting aside that order would have effectively rendered it inoperative without adjudicating its legality.

The Court did not interfere with the recovery notice dated 23 May 2016 at that stage, observing that it was consequential and that the petitioner could pursue appropriate remedies in light of subsequent developments.

W.P.(S) No. 199 of 2023 was disposed of without directing blanket release of the pensionary benefits. The petitioner was granted liberty to challenge the order dated 24 September 2018 before the appropriate forum and to submit a fresh representation to the State Government.

If submitted, the representation was to be decided by a reasoned and speaking order, preferably within 120 days. No order as to costs was made.