Four-year limit, HC says old losses cannot be recovered from a retired employee

The Punjab and Haryana High Court has made it clear that recovery proceedings cannot be initiated against a retired employee for losses caused during his service if the charge relates to incidents dating back more than four years.

The ruling came in response to a petition filed by a retired Ayurvedic doctor after he was found liable for compensation for “financial damage caused to the public exchequer”.

Referring to the relevant provisions of Rule 2.2 (b) of the Punjab Civil Services Rules, Justice Harsimran Singh Sethi of the High Court also quashed the order seeking recovery of over Rs 8.97 lakh.

Lawyer Manu K. Bhandari appeared before the court and argued that the officer had been held liable for alleged financial irregularities that occurred during his tenure in 1996 and 2004-2005.

After hearing detailed arguments and going through the relevant provisions of law, Justice Sethi maintained that recovery under the rules could be initiated only for incidents that occurred within four years of an employee’s retirement. Because the charges against the officer related to incidents were more than four years old, the state’s chargeback action was deemed unlawful.

In his detailed order, Judge Sethi noted that Rule 2.2(b) expressly prohibited clawback proceedings for events more than four years old. The court made it clear that the state could not wait for an employee to retire and then dig up old documents to initiate remediation for incidents well beyond the allowable period. The legal rule imposed a limitation period for initiating clawback proceedings and ignoring it would lead to serious injustice for pensioners.

The ruling is important because it reiterates that restrictions exist to protect retired employees from harassment. The judgment notes that holding employees responsible for old incidents without timely action while they are still employed not only violates their rights but also causes unnecessary financial hardship.

Before vacating the order, Justice Sethi noted Bhandari’s contention that the petitioner had no objection in the event that another Rs 49,000 would be recovered “to bury the issue for peaceful living, though even before that he has an appropriate explanation”.

Justice Sethi maintained that further findings on the issue were not required to be recorded as the petitioner had promised to deposit the amount. “In case the said amount has not been deposited/recovered so far, the respondents may take appropriate action in this regard,” the court concluded.