Punjab & Haryana High Court Quashes Post-Retirement Recovery From Gratuity; Holds Audit Objection Cannot Justify Unilateral Deduction
Case Name: Rajinder Singh v. Uttar Haryana Bijli Vitran Nigam and Others
Date of Judgment: 11 December 2025
Citation: CWP-36946-2025
Bench: Hon’ble Mr. Justice Harpreet Singh Brar
Held: The Punjab and Haryana High Court set aside the action of Uttar Haryana Bijli Vitran Nigam in deducting a substantial amount from the gratuity of a retired employee without issuing a charge-sheet, conducting a departmental inquiry, or affording an opportunity of hearing. The Court held that a mere audit objection or show-cause notice cannot substitute the mandatory requirement of due process, particularly when no financial loss was established. The Court further directed release of withheld ACP benefits and refixation of pension with consequential relief.
Summary: The petitioner, a retired employee of the respondent-Nigam, challenged the unilateral deduction of a large sum from his gratuity on the basis of alleged irregularities noticed in an audit relating to non-posting of sundry items in consumer accounts. The petitioner contended that the entire disputed amount had already been recovered from the consumers, that no loss had been caused to the Nigam, and that the recovery was effected without initiation of disciplinary proceedings or grant of an opportunity of hearing.
The respondents defended the recovery by relying upon internal audit objections and issuance of a show-cause notice. However, they were unable to dispute that no charge-sheet was issued and no inquiry was conducted before effecting the recovery.
The High Court held that deduction of gratuity without following due process was illegal and arbitrary. It reiterated that issuance of a charge-sheet and conduct of a departmental inquiry are sine qua non before fastening financial liability on an employee. The Court further held that audit objections, by themselves, cannot justify withholding or recovery of retiral benefits, particularly when the alleged loss has not been determined during service and the disputed amount has already been recovered from third parties.
Relying on consistent precedent of the Court, the High Court concluded that the petitioner was entitled not only to refund of the deducted gratuity amount with interest but also to release of the withheld ACP benefits and refixation of pension with consequential monetary benefits.
Decision: The writ petition was allowed. The recovery made from the petitioner’s gratuity was quashed, and the respondents were directed to refund the deducted amount with interest. The respondents were further directed to release the third ACP benefits, refix the petitioner’s pension, and pay all consequential arrears with interest.