T.D. Jose vs Union Of India & Ors.

Per: Justice Sunil Thomas, Judicial Member –

The sole applicant who was an Assistant Postmaster, Accounts at Kattappana Head Office of Idukki Postal Division challenges Annexure A1 communication dated 13.11.2018 which directed the applicant to remit a sum of Rs. 3,00,000/- with interest and penal interest as part of loss caused to the respondents, due to the negligence of the applicant.

The applicant joined the service under the respondents as a Postal Assistant in Idukki Division on 29.5.1983. He was given the additional charge of Inspector of Posts, Kattappana, during the period 19.5.2009 to 26.1.2010. One Ramar was the Sub Postmaster of Ayyappancoil Sub Post Office under the Kattappana Head Office. He made several fraudulent entries in several accounts during the period of 2006-2009 and misappropriated huge amounts. He retired on 31.7.2009.

While so, Annexure A2 communication dated 7.5.2014 was issued by the 4^th respondent to the applicant. It was alleged that the above said Ramar had committed fraudulent transactions during the period 1.7.2006 to 31.7.2009. The amount so fraudulently collected by him was Rs. 22,40,476/-. He had credited only a sum of Rs. 2,36,986/-. The balance amount of Rs. 20,03,490/- was liable to be recovered from him. It was alleged that the applicant had officiated as SDI during the period from 19.5.2009 to 26.1.2010 and had inspected the sub office during 2009 immediately before the retirement of Shri Ramar. In the inspection report it was mentioned that the SPRD ledger posting was up to date. It was further alleged that if he had really checked the RD register, the innumerable corrections made in the entries of the ledger by Ramar could have been revealed. He did not conduct inquiry up to 27.1.2010, the day of terminating his official arrangement and handed over the keys to his successor. On the basis of these lapses, the applicant was identified as one of the subsidiary offenders and was liable to compensate the loss caused to the Department. Accordingly, he was called upon to credit Rs. 3,00,000/- into the Department immediately as a portion of loss involved due to the negligence on his part.

Thereafter, Annexure A1 notice was issued to the applicant raising the very same allegations. According to the applicant, proper action was not taken against Shri Ramar, no loss was caused to the Government by the applicant’s action or inaction. There was no negligence, much less any wilful negligence on his part, it was contended.

Challenging Annexure A1, the present OA has been filed. The main reliefs sought are as under:

Respondents filed a detailed reply statement denying the allegations. It was stated that Ramar while working as a Sub Postmaster in Ayyappancoil Division from 1.7.2006 to 31.7.2009 and retired from service on 31.7.2009, had committed fraud in 206 recurring deposit accounts resulting in a loss to the tune of Rs. 22,40,476/-. The fraud came to light only on 5.1.2010, after his retirement. Suspecting the transaction, Inspector of Posts, Kattappana Sub Division conducted an inquiry and verified all accounts and all transactions. A squad was also formed with IP, Kattappana and another officer to carry out the past work verification. On verification it was found that Ramar had committed fraud in 206 RD accounts by altering the denomination at the time of closure entering bogus entries in RD ledgers and improper accounting of interim withdrawals in 4 RD accounts. Divisional level investigation was conducted on 28.10.2013 by the Superintendent of Post Offices, Idukki and circle level investigation by the Director of Postal Service. Accordingly, 16 persons were found to have committed lapses and they were identified as subsidiary offenders. It included the applicant herein.

The applicant, after inspection had given an inspection report indicating that SB/RD ledger posting was up to date. The objection raised by the SBCO was forwarded to the applicant. However, he did not conduct any inquiry. If inquiry had been conducted, the fraud could have been detected in January, 2010 itself and Rule 9 proceedings could have been initiated against the Ramar. There was considerable lapse on the part of the applicant. Though several attempts were made to recover the amount from the assets of the said Ramar, he had moved the concerned court and obtained orders. Hence, the amount of loss caused to the institution was liable to be recovered from the subsidiary offenders.

A rejoinder was filed by the applicant denying the allegations in the reply statement.

Heard both sides and examined the records.

The basic facts are not in dispute. By Annexure A1 and Annexure A2, a sum of Rs. 3,00,000/- with interest and penal interest was sought to be recovered from the applicant on the ground that he had committed lapses in not inspecting the records and not being vigilant in detecting the fraud committed by Ramar. It is pertinent to note that the applicant was in charge as IP for a brief period overlapping with that of the period during which Ramar allegedly committed fraud. The applicant was the IP in charge during the period 19.5.2009 to 26.1.2010. The fraud was committed from 1.7.2006 to 31.7.2009. Admittedly the overlapping period is only during 19.5.2009 to 31.7.2009.

The crux of the allegation against the applicant is that he had mentioned that SB/RD register posting was up to date. If he had really checked the RD register, the corrections made in the entries in the ledger by Ramar would have been revealed and the inquiry could have been initiated before Ramar retired on 31.7.2009. Accordingly, the applicant is being proceeded against along with 15 others, as revealed from paragraph 6 of the reply statement as subsidiary offenders.

It is pertinent to note that the reply statement itself indicates that two inquiries were conducted one at divisional level, on 20.10.2013 by the Superintendent of Post Offices, Idukki and circle level investigation by the Director of Postal Services, Kochi. It was based on those reports the lack of devotion of duty/lapses which caused to the fraud and subsidiary offenders were identified and recovery sought to be imposed. Admittedly there is nothing on record to show that the applicant was given an opportunity to explain himself in the investigation. There is also nothing on record to show that the inquiry reports were given to him.

After both the inquiries, Annexure A2 notice was issued to him. It was followed by Annexure A1. The basis on which such recovery was ordered, whether any individual liability of each of the person involved was found out and on what basis the proportionate liability of each officer was fixed is also not clear. A blanket liability has been fixed on several of the officers/staff. In other words, before imposing penalty on the applicant, he was not informed about the basis of the conclusions arrived at in the inquiry.

A perusal of the allegations raised in the reply statement shows that all those officers/staff who were the Postmasters of Kattappana or were employed in the concerned Post Office or as IP during the relevant period have been fixed as liable and liability imposed on them depending on the posts held by them. The basis of such a fixation of liability is not discernible and such a recovery cannot be justified.

In this regard the learned counsel for the applicant invited our attention to the order of this Tribunal in OA No. 709 of 2022 in which an exactly identical situation arose. This Tribunal considered the question whether the recovery was to be made for the loss of amount due to fraud or misappropriation committed by another person and whether such amount can be recovered from the subsidiary offenders, that too, without fixing the individual responsibility. This Tribunal relied on the decision of the Central Administrative Tribunal, Ahmedabad Bench in Dinesh Bachubhai Waghela v. Union of India & Ors. (OA No. 232 of 2022 and connected maters). After a detailed reference to several decisions in this regard, that Tribunal came to conclusion that ultimately the records did not indicate as to how the authority had arrived at the quantum of the amount to be recovered from the applicant therein. That was also a case wherein huge amount was sought to be recovered from the applicant therein without fixing the individual responsibility.

A connected matter arising from the same issue involving Ramar was the subject matter of OA No. 384 of 2014 before this Tribunal which ultimately resulted in OP (CAT) No. 107 of 2016. The order of this Tribunal setting aside a communication issued to the applicant therein directing him to pay a sum of Rs. 3,00,000/- who was the HSG-I Postmaster of Kattappana Head Office was the subject matter. The Hon’ble High Court held that authority had not fixed responsibility on the officer concerned, in accordance with law and hence, the recovery notice cannot be sustained.

An identical situation was the subject matter of the Hon’ble High Court in OP (CAT) No. 139 of 2025. In that also the recovery was under challenge. Setting aside the recovery proceedings, it was held that the recovery of the amount from the gratuity constitutes a major penalty. Hence, the petitioners therein (the Postal Department) should have initiated proceedings under Rule 14 of the CCS (CCA) Rules by issuing a show cause notice followed by a proper departmental inquiry. The said procedure was not adopted nor followed by the petitioners before imposing the major penalty. Hence, the recovery cannot be accepted, it was held.

The above decisions apply to the facts of the case at hand also. Accordingly, Annexure A1 is set aside and it is held that the alleged loss caused by Shri Ramar cannot be recovered from the applicant based on Annexure A1. OA is allowed to the above extent. If any amount has been withheld or recovered, it shall be paid within 3 months from today, failing which, it will carry 8% interest till payment. No costs.