No recoveries from the terminal dues can be made in the absence of disciplinary proceedings: Delhi High Court

The petitioner opted for voluntary retirement from the services of the respondent company. The respondent company communicated that ex gratia amount as per the voluntary retirement scheme shall be disbursed after deduction of other amounts due from the petitioner, if not recovered from other terminal benefits in the meantime. The respondent company then ordered release of terminal dues stating no audit recoveries were pending against petitioner and no disciplinary proceedings were underway. Later, the respondent company in a subsequent communication claimed that an amount of INR 4,84,026 was recoverable from the petitioner which was missed due to an oversight. The petitioner requested list of components for alleged recovery. The respondent company enumerated various heads of recovery among which audit recovery of INR 3,83,815 is under challenged in this Writ Petition (C) 349/2008.

The principal question which requires consideration in this case is whether the impugned audit recovery is sought to be made in compliance with the principles of natural justice, whether in terms of the Company’s Service Rules, the Scheme, or otherwise. The respondent company contended that the audit recovery stemmed from the petitioner’s negligence in booking short-premiums and applying incorrect rates, contrary to the Company’s policy. 

The court noted that neither such contention was established in the disciplinary proceedings nor an opportunity of being herd was extended to the petitioner. It is emphasized that recovery from an employee’s terminal dues is an act with civil consequences, and the power to inflict such a recovery has to be supported by the relevant Rules, and accord with the rules of natural justice. Considering this the Delhi High Court vide its order dated April 1, 2025 directed to the respondent company to remit the said amount of INR 3,83,815 to the petitioner.