The state cannot withhold the gratuity of a retired government official without conducting any pre-retirement department inquiry. A division bench of the Chhattisgarh High Court has recently ruled that the recovery of gratuity from Class III employees after retirement is illegal unless inquiries were initiated before such person’s retirement.

The absence of inquiry pre-retirement in this matter worked in favour of the retiree, as the court held that the employer cannot simply withhold the gratuity without commencing needed inquiries prior to superannuation.

A Brief Background:

As per the report from Live Law, the appellant, B.P. Tiwari, retired as a Revenue Sub-Inspector on March 03, 2019. On his superannuation, the department issued him gratuity but partially, around 47 per cent of the full gratuity. The reason they gave was that Tiwari misappropriated the funds during his work. The allegation was based on the audit reports for 2008-09, indicating a misappropriation of a total amount of around Rs 10 lakh.

In the case, the court observed that there was no departmental inquiry or show-cause notice issued to Tiwari before his retirement. On denial of issuing full gratuity, Tiwari approached the court and filed a writ petition seeking release of the full amount. The court directed the department to release him full gratuity along with interest.

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Then, the state went against the decision. The state council argued that because of the audit objections and the pending departmental inquiries, withholding gratuity should be permitted, and rather it is essential to recover the losses that occurred to the exchequer due to funds misappropriation by Tiwari.    

Tiwari’s council citing a previous case, argued that recovery from a retired Class III employee is not permitted unless certain conditions are met or otherwise the recovery is illegal.

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The Court Order

The court’s division bench observed that there were no inquiries conducted and no show-cause notice was issued, and referring to the case of State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 33, the court held that recovery from Class III employee is unlawful unless it was initiated before the person’s retirement.

On the argument of ‘pending departmental inquiry’, the court found no evidence to back this. With no evidence found about inquiries conducted before Tiwari’s superannuation, the court held the Single judge order to release full gratuity along with interest to the appellant.