Recovery for disputed stock shortages requires prior determination of employee responsibility through prescribed disciplinary proceedings.

The applicant, a Senior Section Engineer (Works) in the North Eastern Railway, was transferred from Bareilly City to Izzatnagar by order dated 23 August 2012. He claimed that he handed over charge of the stores and materials to his successor between 25 August and 9 September 2012. A vigilance stock verification conducted on 10 September 2012, in the applicant’s absence, allegedly disclosed shortages in eight out of fourteen items. The applicant was suspended on 13 September 2012, though the suspension was later revoked, and he was relieved on 30 November 2012.

The respondents issued a show-cause notice dated 21 June 2013 proposing recovery of ₹6,55,930 for the alleged shortage. The applicant denied responsibility, asserting that he had already handed over charge and had not participated in the verification. Nevertheless, by order dated 3 July 2013, Respondent No. 3 directed recovery of ₹6,55,930 from his salary in instalments. The applicant challenged the recovery under Section 19 of the Administrative Tribunals Act, 1985, seeking quashing of the order and refund of any amount recovered with interest.

1. Whether recovery of ₹6,55,930 from the applicant’s salary could be ordered without initiating disciplinary proceedings or conducting a departmental enquiry to determine his responsibility and negligence for the alleged stock shortage.

2. Whether the stock-verification report, an opportunity to inspect records, and the applicant’s written explanation were sufficient to establish pecuniary liability where the applicant disputed the factual basis of the alleged shortage.

3. Whether Rule 15 of the Railway Services (Pension) Rules, 1993 authorised the impugned recovery without compliance with the procedure under the Railway Servants (Discipline and Appeal) Rules, 1968.

The Tribunal applied Section 19 of the Administrative Tribunals Act, 1985, concerning the applicant’s jurisdictional remedy.

It relied upon the General Manager, North Eastern Railway circular dated 6 February 1997, which requires determination of an employee’s responsibility for stock shortages before disciplinary action or recovery is initiated.

Rule 15 of the Railway Services (Pension) Rules, 1993 permits recovery or adjustment of Government or Railway dues, including losses or shortages caused by an employee’s negligence or fraud, but does not dispense with the requirement of determining such negligence or responsibility.

The Tribunal further referred to Rule 6(iii) read with Rule 11 of the Railway Servants (Discipline and Appeal) Rules, 1968, under which pecuniary recovery imposed as a disciplinary consequence must follow the prescribed procedure.

Relying on Sanjeev Shrivastava v. State of Madhya Pradesh, the Tribunal held that disputed factual allegations involving pecuniary liability ordinarily require a regular departmental enquiry and that any decision to dispense with such enquiry must be reasonable, objective, and supported by recorded reasons.

It also relied on Lakshmi Narayan Mukhopadhyay v. Union of India, requiring proper quantification of recoverable amounts after affording due opportunity, and Vijay Narayan Singh v. General Manager, N.E. Railway, which held that recovery for alleged railway-material shortages cannot be sustained absent compliance with the applicable disciplinary procedure.

The Tribunal found that the applicant had consistently disputed both the alleged shortage and his responsibility for it, specifically asserting that he had handed over the stores before the vigilance verification and was absent when it was conducted.

These circumstances raised disputed questions concerning the applicant’s duty, any negligence or misconduct, causation of the loss, and the correct quantification of liability.

The respondents relied only on the stock-verification report, assessment of the shortage, and the applicant’s opportunity to inspect records and submit an explanation. However, that limited opportunity did not establish responsibility in accordance with the 1997 Railway circular or the disciplinary rules.

No charge-sheet was issued, no departmental enquiry was conducted, and no reasoned decision dispensing with an enquiry was recorded.

Rule 15 of the Pension Rules could not cure this procedural defect because the recovery was made from the applicant’s salary while he remained in service; the alleged negligence and liability therefore had to be determined under the applicable disciplinary framework.

The Original Application was allowed, and the impugned order directing recovery of ₹6,55,930 from the applicant’s salary was quashed and set aside.

The respondents were directed to refund any amount already recovered within three months from receipt of a certified copy of the order. The applicant’s claim for interest was left to be governed by law, and there was no order as to costs.