Recovery from retiral benefits is impermissible absent formal disciplinary proceedings or judicial findings of guilt.

The applicant, a retired Senior Section Engineer (SSE) in the North Eastern Railway, retired on 31.01.2015.

Following his transfer in 2012, a stock verification was conducted, alleging shortages in materials.

Although the applicant submitted that charges were handed over and ledgers were tallied, the respondents recorded a recovery note of Rs. 74,41,027/- on his Pension Payment Order (PPO) dated 16.10.2015 and a revised PPO dated 11.07.2018.

Consequently, the bank began recovering Rs. 13,309/- per month from his provisional pension starting June 2019.

The applicant challenged these recoveries, asserting they were made without initiating any disciplinary proceedings, issuing a show-cause notice, or obtaining the approval of the President of India.

1. Whether the respondents could legally effect a recovery of Rs. 74,41,027/- from the applicant’s pension and withhold retiral benefits without initiating formal disciplinary proceedings under the relevant service rules.

2. Whether the recovery and withholding of dues violated Rule 9 of the Railway Servants (Pension) Rules, 1993.

Rule 9 of the Railway Servants (Pension) Rules, 1993, which mandates that the President’s right to withhold or withdraw pension/gratuity is contingent upon a pensioner being found guilty of grave misconduct or negligence in departmental or judicial proceedings.

Rule 6(iii) of the Railway Servant (Discipline & Appeal) Rules, 1968, which requires following due procedure (such as a charge sheet) before imposing a penalty for pecuniary loss.

The principle established in State of Jharkhand v. Jitendra Kumar Srivastava (2013) and Dr. Hira Lal v. State of Bihar (2020), affirming that retiral benefits cannot be withheld without statutory authority or pending proceedings.

The Tribunal observed that despite the lapse of ten years, the respondents failed to produce any evidence of a charge sheet or formal disciplinary inquiry against the applicant.

Applying Rule 9 of the Pension Rules, the Tribunal reasoned that in the absence of pending judicial or departmental proceedings, the administration lacks the jurisdiction to withhold gratuity or recover alleged losses from pension.

The court noted that the respondents had not placed any rule on record that authorized such a substantial recovery (Rs. 74,41,027/-) through a mere "note" on a PPO without a show-cause notice.

Relying on its own previous decision in a related matter (O.A. No. 952/2015), the Tribunal found the respondents' actions to be arbitrary and a violation of the principles of natural justice and statutory service rules.

It held that the recovery was illegal as no disciplinary proceedings had been initiated or concluded against the applicant.

The respondents were directed to release the applicant's pension, gratuity, and all settlement dues within three months, along with interest at the applicable G.P.F. rate from the date of receipt of the order.