N. Madhava Reddy vs The Secretary (I&B) & Ors.

PER: DR. SANJIV KUMAR, MEMBER (A)

This OA has been filed under Section 19 of the Administrative Tribunals Act, 1985, seeking the following reliefs:-

These reliefs are founded on the following grounds and legal provisions:-

The brief facts of the case, as set out in the synopsis, are as follows:-

On notice being issued, the respondents entered appearance and filed their reply statement. No rejoinder has been filed by the applicant.

The case came up for final hearing on 09.09.2026. Shri P. Sreedhara, learned counsel for the applicant, and Shri Sayed S Kazi, learned counsel for the respondents, were present and heard.

We have carefully considered the pleadings, documents placed on record and the rival submissions advanced by the learned counsel for the parties.

From the rival pleadings and submissions, it is evident that the material facts relevant for adjudication of the OA are substantially undisputed. The principal question that arises for consideration is whether the respondents could, in the facts and circumstances of the present case, impose a recovery of Rs.1,49,909.09/- upon the applicant, without framing any charge of misconduct or negligence and without conducting a disciplinary enquiry in accordance with the applicable statutory rules.

The applicant, while working as Deputy Director General in Doordarshan Kendra, Bengaluru, was issued a show cause notice vide C-13015/07/2020-Vig/1396 dated 23.08.2022 alleging grave misconduct/negligence in issuing administrative approval/expenditure sanction by him during the period between 11.08.2018 to 26.12.2018 and 04.09.2020 to July 2021 towards clearance of professional charges payable to the Senior Central Government Panel Counsel (SCGPC) (Late Shri M.V. Rao), resulting in excess payment, thus causing substantial loss to the Government Exchequer.

The applicant submitted his reply dated 12.09.2022 to the said notice, denying the allegation of misconduct/negligence on his part in relation to the payment of professional bills received from the SCGPC. He specifically stated that all the bills of the SCGPC had been sanctioned by him only after due checking by the primary auditor and certification by the Administration/Accounts Section in-charges.

Thereafter, Respondent No.3, vide Memorandum bearing reference No. 27/11/2002-SIV/3203 dated 03.10.2024, while furnishing the names of officials alleged to have been associated with the above financial irregularity, as identified by the Vigilance Wing, called upon the applicant to furnish his version as to why equitable recovery amounting to Rs.1,49,909.09/- may not be effected against him.

The applicant submitted his reply dated 21.10.2024, denying the allegations and reiterating that, as HOO, he had followed all applicable rules and regulations while sanctioning the professional bills of Late Shri M.V. Rao, SCGPC, on the basis of the recommendations and thorough scrutiny undertaken by the Administrative/Accounts Section. Along with his reply, the applicant also enclosed a copy of the CVC’s OM dated 26.05.2023, obtained under the RTI Act, which, inter alia, states:-

The applicant has further asserted that the information obtained under the RTI Act demonstrates that there was no audit para in respect of any excess amount allegedly paid to Shri M.V. Rao, the then SCGPC. According to the applicant, the professional bills had been subjected to the prescribed audit scrutiny and no objection had been raised by the Audit Wing in respect of the alleged irregularity. Nevertheless, the respondents proceeded to pass the impugned order (Annexure–A1), directing recovery of Rs.1,49,909.09/- from the applicant, Shri N. Madhava Reddy, DDG. Aggrieved by the said order, the applicant has approached this Tribunal.

The respondents, on the other hand, contend that the recovery was imposed in accordance with the applicable rules and procedure after issuance of the show cause notice dated 23.08.2022 by the Vigilance Wing and after consideration of the applicant’s reply dated 12.09.2022. It is further contended that the applicant, in his capacity as HOO, was responsible for according Administrative Approval and Expenditure Sanction in accordance with the extant rules and instructions issued by the Government of India from time to time, which responsibility, according to the respondents, was grossly flouted by him, resulting in loss of Rs.4,48,500/- to the Government Exchequer during his period in office. On that basis, proportionate recovery was proposed against the applicant.

From the records, however, it is clear that no disciplinary enquiry was conducted against the applicant. This position has not been disputed by the respondents. The respondents have sought to rely upon the applicant’s reply dated 21.10.2024 (Annexure–A5), wherein, under the heading “Logical calculation in case of recovery from him”, the applicant had indicated that a recovery of Rs.1,22,548/- could be effected. The respondents appear to contend that, having regard to the said statement, the applicant had accepted the liability and that the recovery was consequently ordered.

We are unable to accept such a contention. In the first place, the impugned order does not record that the recovery was being imposed with the consent or acceptance of the applicant. Secondly, the applicant had specifically addressed a communication dated 16.12.2024, marked as Annexure–A6, described as Confidential/Corrigendum to his reply dated 21.10.2024, requesting that the paragraph relating to the logical calculation in case of recovery from him be treated as deleted. Thus, the respondents could not, without examining the legal and factual effect of the applicant’s subsequent communication, treat the earlier calculation as an unequivocal admission of liability.

More importantly, even assuming that such a calculation had been made by the applicant, a tentative statement regarding the quantum that could be recovered cannot, by itself, constitute an admission of misconduct, negligence or legal liability. The foundational question as to whether the applicant was responsible for the alleged loss had first to be determined in accordance with law. A consent to, or calculation of, a possible amount of recovery cannot substitute the statutory process where the recovery is founded upon an allegation of misconduct or negligence.

It is also significant that the respondents have not been able to demonstrate by reference to any applicable statutory rule that a recovery of the nature imposed in the present case could be ordered merely on the basis of a show cause notice and reply, without framing a charge and conducting the disciplinary proceedings prescribed under the applicable rules. Nor is there anything on record to demonstrate that the contents of the applicant’s subsequent communication dated 16.12.2024 were considered before any final decision was taken. The respondents’ contention is further weakened by the fact that the impugned order is dated 09.12.2024, whereas Annexure–A6 is dated 16.12.2024. Thus, while Annexure–A6 could obviously not have been considered before the order dated 09.12.2024, there is no material before us to establish whether the applicant’s subsequent representation was considered or whether any order was passed thereon before his retirement on 31.01.2025.

We have also examined the Office Memorandum dated 26.05.2023, filed by the respondents themselves as Annexure–R3, vide No. 023/I&B/003/549331, which contains the first stage advice of the Central Vigilance Commission in relation to the departmental proceeding. The said Office Memorandum records as follows:-

The above document assumes considerable significance. The Commission, while examining the matter specifically in the context of the departmental proceeding, recorded its assessment that the role of the DDG was supervisory; that the approval had been accorded on the basis of scrutinized bills; and, most importantly, that the lapse could not be attributed to the DDG. The Commission further characterised the issue as administrative in nature and advised Prasar Bharati to take necessary action as deemed fit.

The respondents were therefore required to consider the said advice in its proper perspective before arriving at a conclusion that the applicant was personally liable for the alleged financial loss. The fact that the CVC’s advice may not, by itself, be conclusive of the disciplinary liability of the applicant does not dispense with the obligation of the competent authority to consider it. In the present case, the impugned order does not disclose any consideration of the said material or any reason for departing from the specific conclusion recorded by the CVC insofar as the applicant’s role was concerned.

We find that the impugned order dated 09.12.2024 does not advert to or consider the contents of the aforesaid Office Memorandum, despite the fact that it contains the first stage advice of the Central Vigilance Commission in a departmental proceeding relating to the very same alleged financial irregularity.

It is an admitted position that no charge-sheet was framed against the applicant and no disciplinary enquiry was conducted. Nevertheless, the respondents proceeded, by the impugned order dated 09.12.2024, to direct recovery of Rs.1,49,909.09/- from the applicant on the premise that he was responsible for a proportionate part of the alleged loss.

The legal position governing such action cannot be overlooked. Where recovery from a Government servant is founded upon a finding that, by reason of misconduct or negligence, he caused financial loss to the Government, such recovery is not merely an administrative adjustment of accounts. Where the recovery is imposed as a consequence of misconduct/negligence and is in the nature of a penalty, it attracts the safeguards prescribed by the statutory disciplinary rules. Rule 11 of the Central Civil Services (Classification, Control & Appeal) Rules, 1965 expressly recognises recovery from the pay of the whole or part of any pecuniary loss caused to the Government by negligence or breach of orders as one of the penalties.

Consequently, where the liability for recovery is disputed and is sought to be fastened upon an employee on the allegation that his negligence or misconduct caused pecuniary loss to the Government, the competent authority cannot bypass the statutory disciplinary mechanism and arrive at such a finding merely through a show cause notice. The employee must have a meaningful opportunity to know the specific allegation against him, to controvert the factual and legal basis of the proposed liability, and, where the statutory rules so require, to have the charge adjudicated through the prescribed disciplinary process.

The requirement is not merely procedural. It goes to the foundation of the power to impose the penalty. The principles of natural justice require that a finding of culpability carrying penal consequences should not be arrived at without affording the delinquent officer an effective opportunity to defend himself against the specific charge. A unilateral determination of liability for pecuniary loss, where such liability is founded on alleged misconduct or negligence, would effectively convert a disciplinary penalty into an administrative recovery, thereby defeating the safeguards incorporated in the statutory rules.

There had been a catena of Hon’ble Apex Court judgments that imposing a recovery for a loss to the State which is classified as a penalty under the Central Civil Services (Classification, Control & Appeal) Rules, 1965; hence, for imposing any such recovery without the compliance with the rules for natural justice and the procedure laid down in the said Rules would be improper as evident from the ruling in the Hon’ble Apex Court in Food Corporation of India, Hyderabad vs. A. Prahalada Rao and Another, reported in 2001 (1) SCC 165 (DD: 01.11.2000).

The principle emerging from the aforesaid legal position is directly attracted to the facts of the present case. The impugned order dated 09.12.2024 imposes a financial liability of Rs.1,49,909.09/- upon the applicant by attributing to him a proportionate share of the alleged loss to the Government. Such liability is founded upon the allegation that, in his capacity as DDG/HOO, the applicant failed to comply with the applicable rules while according administrative approval/expenditure sanction. The allegation, therefore, is intrinsically connected with the alleged negligence or misconduct of the applicant.

However, no charge was framed, no disciplinary enquiry was conducted and no finding of misconduct or negligence was recorded after following the procedure prescribed under the CCS (CCA) Rules, 1965. The respondents have also failed to demonstrate the existence of any statutory provision which permits the imposition of such penal recovery, in the circumstances of the present case, dehors the disciplinary procedure.

The position becomes still more significant in view of the CVC’s specific advice in the very matter. The Commission had examined the applicant’s role and recorded that he was functioning in a supervisory capacity, that he had accorded approval on the basis of scrutinized bills and that the lapse could not be attributed to him. The Commission further observed that the issue was administrative in nature. The respondents were certainly entitled to take such action as was permissible in law notwithstanding the advisory nature of the CVC’s opinion; however, if they proposed to fasten personal pecuniary liability upon the applicant contrary to the specific observation of the Commission, they were required to apply their mind to that material and disclose cogent reasons for their conclusion.

The impugned order contains no such consideration. It does not explain why the applicant’s supervisory role did not absolve him from personal liability, despite the bills having undergone scrutiny by the concerned Administration/Accounts machinery. It also does not deal with the CVC’s observation that the lapse could not be attributed to the applicant. Nor does it record any independent finding, based upon a disciplinary enquiry or other legally permissible adjudicatory process, establishing that the applicant’s negligence or misconduct caused the alleged pecuniary loss.

The absence of any audit objection in respect of the alleged excess payment is also a relevant circumstance, particularly when the applicant’s case is that the bills had undergone the prescribed scrutiny before approval. We are conscious that absence of an audit objection, by itself, cannot conclusively exonerate an officer from disciplinary liability. Nevertheless, where the respondents seek to impose a substantial recovery upon an officer on the ground of financial loss, the existence or otherwise of audit scrutiny, the role of the Accounts/Administration machinery and the basis on which personal liability is attributed to the sanctioning authority are material considerations which require examination. The impugned order does not demonstrate such an examination.

In these circumstances, the conclusion that the applicant was liable to bear Rs.1,49,909.09/- cannot be sustained. The impugned order has, in substance, fastened a penal pecuniary liability upon the applicant without establishing the necessary foundation of misconduct or negligence through the procedure mandated by law. It also fails to disclose due consideration of the first stage advice of the CVC, which was directly relevant to the applicant’s individual role and liability.

We are, therefore, of the considered opinion that the impugned order dated 09.12.2024 is vitiated both on account of non-compliance with the procedure prescribed under the applicable disciplinary rules and on account of failure to consider material and relevant facts, particularly the first stage advice of the Central Vigilance Commission. The impugned order consequently suffers from non-application of mind and cannot be sustained in law.

For the aforesaid reasons, the OA deserves to be allowed. Accordingly, we pass the following:-

OA is allowed, quashing the impugned order File No.27/11/2002-SIV/4004 dated 09.12.2024 (Annexure – A1) passed by Respondent No.3 as the same being unjust, arbitrary, capricious and unsustainable in law.

All associated MAs, if any pending, shall be treated as disposed of.

No order as to costs.