Judgment :- 1. This writ petition comes before us on a reference by a learned judge, who felt that the question raised in the petition had to be decided by a larger Bench. 2. The petitioner retired from Government, service on 28/2/1979. At the time of retirement, he was holding the post of Lay Secretary and Treasurer, Women and Children Hospital, Alleppey, which post he took charge on 30-4-1976 afternoon. After retirement the Superintendent of the Women and Children Hospital, Alleppey, sent a communication Ext. P1 to District Medical Officer of Health, forwarding a non-liability certificate of the petitioner dated 28/9/1979. Death-cum-retirement gratuity for short D.C.R G. was not paid to the petitioner despite this communication. A few months later, the petitioner received a note, Ext. P2 dated 3/12/1979 from the Director of Health Services saying that an amount of Rs. 2.174.39 should be withheld from the gratuity of the petitioner. On the basis of this note, the 2nd respondent Director of Health Services sent a communication to the District Treasury Officer, Ernakulam, forwarding a non-liability certificate of the petitioner. Ext. P3 dated 13/12/1979. Ext.P3 directs the District Treasury Officer to withhold an amount of Rs.2189.24 from the death-cum-retirement gratuity of the petitioner. Ext.P3(a) is the non-liability certificate. Subsequently, the 3rd respondent, Accountant-General of Kerala, Trivandrum, sent a communication, Ext. P4, dated 4-3-1980 to the 2nd respondent directing him to withhold an amount of Rs. 2204.09 from the death-cum-retirement gratuity of the petitioner. Aggrieved by this order, this petition is filed to quash Exts. P2, P3, P3(a) and P4, and for a direction to the respondents to disburse the amount of Rs. 2204.09 withheld from the death-cum-retirement gratuity of the petitioner. 3. The Ist respondent in its counter-affidavit states as follows: At the time the petitioner was in charge as Lay Secretary, proposals for settling the tenders for supply of dietary and allied articles to W & C Hospital, Alleppey were forwarded to D. M. O. Health, Alleppey, Certain items were accepted by the Director of Health Services. The Aryad South Village Primary Consumers' Co-operative Society had come forward with a voluntary offer with reduced rates for certain items. This offer was not accepted by the petitioner. This resulted in a loss to the Government. It is this loss that was withheld from the amount due to the petitioner. The Aryad South Village Primary Consumers' Co-operative Society had come forward with a voluntary offer with reduced rates for certain items. This offer was not accepted by the petitioner. This resulted in a loss to the Government. It is this loss that was withheld from the amount due to the petitioner. The petitioner's case in reply to this averment is that the voluntary offer was not accepted because there were instructions from above to negotiate with other tenderers on which the original offerer, the Aryad South Village Primary Consumers' Co-operative Society withdrew. 4. The only question that falls to be considered in this case is, whether the orders under challenge directing withholding of the amounts mentioned therein from the D. C. R. G. payable to the petitioner after his retirement are valid or not. The petitioner's counsel invites us to R.3 Part III of the Kerala Service Rules and Note (2) and Ruling (3) thereunder and contends that it is only where disciplinary proceedings are initiated and are pending at the time of retirement and in cases where the pensioner is found guilty of grave misconduct during the period of his service that proceedings for recovering the amounts due from pension can be continued even after retirement. In this case, the loss is sought to be recovered from the petitioner from D.C.R.G. due to him. This can only be after due compliance with Note 2. 5. We will examine this contention presently. R.3 with the relevant proviso reads as follows: "3. The Government reserve to themselves the right of withholding or withdrawing a pension or any part of it, whether permanently or for a specified period, and the right of ordering the recovery from a pension of the whole or part of any pecuniary loss caused to Government, if in a departmental or judicial proceeding, the pensioner is found guilty of grave misconduct or negligence during the period of his service, including service rendered upon re-employment after retirement. Provided that (a) such departmental proceeding, if instituted while the employee was in service, whether before his retirement or during bis re-employment, shall after the final retirement of the employee, be deemed to be a proceeding under this rule and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service; (b) such departmental proceeding, if not instituted while the employee was in service, whether before his retirement or during his re-employment, (i) shall not be instituted save with the sanction of the Government; (ii) shall not be in respect of any event which took place more than four years before such institution; and (iii) shall be conducted by such authority and in such place as the Government may direct and in accordance with the procedure applicable to departmental proceedings in which an order of dismissal from service could be made in relation to the employee during bis service; (c) no such judicial proceeding, if not instituted while the employee was in service whether before his retirement or during his re-employment shall be instituted in respect of a cause of action which arose or an event which took place more than four years before such institution; and (d) the Public Service Commission shall be consulted before final orders are passed. From a reading of the rule it is clear that the right reserved with the Government relates to withholding the pension or, a part of it. In this case, what is involved is not pension. 6. Note (2) reads as follows: "Note. (2) The word 'pension' used in this rule does not include death-cum-retirement gratuity Liabilities fixed against an employee can be recovered from the death-cum-retirement gratuity payable to him without the departmental judicial proceedings referred to in this rule, but after giving the employee concerned a reasonable opportunity to explain." From this it is clear that R.3 does not take in D.C.R.G. Action for recovery from D.C.R.G. is possible irrespective of the fact whether disciplinary proceedings have been taken or not. Two conditions, however, are to be satisfied. (1) Liability must have been fixed and (2) the employee concerned should have been given an opportunity to explain. 7. Ruling No. 3 explains the scope of the reasonable opportunity mentioned in Note (2). Two conditions, however, are to be satisfied. (1) Liability must have been fixed and (2) the employee concerned should have been given an opportunity to explain. 7. Ruling No. 3 explains the scope of the reasonable opportunity mentioned in Note (2). It is better to read it and we do so; "The Note 2 above does not mean that the employee's consent should be obtained for recovering the liabilities from the death-cum-retirement gratuity payable to him. What is contemplated is only a communication of such liabilities to him so as to enable him to submit his explanation before the recovery is effected. It should be specifically stated in the communication that if no reply is received within 30 days of its issue, it will be presumed that the employee has no explanation to offer and that further action will be taken on that basis." The communication about the liability should therefore give 30 days to explain. 8. The petitioner retired on 28/2/1979. The liability was, fixed by the internal audit party. There is no knowing when this was fixed. This was communicated to the petitioner on 30/11/1979. The petitioner did not respond. The order under challenge was passed on 3-12-1979. The petitioner's counsel submits that neither of the two conditions in Note (2) is satisfied. Liability was not fixed before retirement. 30 days notice was not given. It is submitted these orders are therefore bad. We feel that the submission has to be accepted. 9. In support of the petitioner's case that quantification of liability should have been made with notice to the employee before bis retirement, reliance was placed upon the decision of this Court rendered by one of us (Khalid, J.) reported in Sreedharan Pillai v. State of Kerala (1977 KLT. 758) and the decisions rendered by T. Chandrasekhara Menon, J. in OP. Nos. 969 of 1976 and 3657 of 1977, which was confirmed by a Division Bench in State of Kerala v. P. M. Beeran (ILR.1980 (1) Kerala 327). We are examining the above decisions once again, because of the reference order, even though these decisions were not brought to the notice of the learned judge. 10. In Sreedharan Pillai v. State of Kerala (1977 KLT. 758) the employee retired from service on 4-3-1971 and recovery of the amount from bis D.C.R.G. was attempted by an order dated 20-12-1975. We are examining the above decisions once again, because of the reference order, even though these decisions were not brought to the notice of the learned judge. 10. In Sreedharan Pillai v. State of Kerala (1977 KLT. 758) the employee retired from service on 4-3-1971 and recovery of the amount from bis D.C.R.G. was attempted by an order dated 20-12-1975. This court held that recovery from the D.C.R.G. gratuity could be made only if the liability was fixed before retirement and the employee concerned was given a reasonable opportunity to explain. Ruling No 3 was noticed by this court and it was observed that the Government should wait for 30 days after giving notice for effecting actual recovery. The contention that the Government can fix liability at any time and call upon the Government servant to pay such amount was repelled. 11. In O. P. No: 969 of 1976 the facts are as follows. The petitioner was a Junior Engineer in the PWD. He retired from service on 31st January, 1975. While in service he was served with a charge memo dated 25-9-1973. He submitted an explanation to it. Nothing happened till be retired. Thereafter by order dated 3-4-1975 be was asked to show cause within 15 days why an amount of Rs. 57,497/-should not be recovered from his D. C R G. or from any other amount due to him from the Government. He filed objections to this memo. This was followed by certain other orders proposing to witi-hold one third of pension and a portion of the D. C. R. G. allowance. These were challenged in that writ petition. T. Chandrasekhara Menon, J. held that Ext. PI memo issued before retirement had become ineffective. The subsequent memo issued on 3-4-1975 was after retirement and that it was an independent proceeding. Disciplinary proceedings initiated before retirement can be continued after retirement but fresh proceedings cannot be started after retirement. The contention that the second memo can be considered as a continuation of the earler memo, relying upon Note (2) of R.3, Part III K. S. R. was repelled and the learned judge held as follows: "This Note 2 is not a repository of power enabling government to fix liabilities against an employee, which liability could be recovered from the D. C. R. gratuity payable to him. The fixation of liability is not under this Rule. The fixation of liability is not under this Rule. The liability is already fixed at the time of retirement or which is obviously be due from him at that time can be recovered from him, no doubt after enabling the employee concerned to submit his explanation before recovery is effected." The learned judge noted the decision in Sreedharan Pillai v. State of Kerala (1977 KLT. 758). He found that the conclusion in that case was based on a different reasoning. It was held that disciplinary proceedings against the petitioner there was impermissible under R.3 Part IK K.S.R. as there was none pending at retirement and the attempted recovery of the amount from D.C. R.G. was also bad because no notice as contemplated under Note 2 was given and the liability was not fixed in terms of that Note. 12. A similar question again fell to be decided by the same learned judge in O. P. No. 3657 of 1977. In that case proceedings were taken against the petitioner before his retirement regarding certain loss caused by him. The liability was fixed after bis retirement. In that case the Chief Conservator of Forests, had directed recovery of certain amount of money from the D C.R.G. due to the petitioner. This was cancelled by the Government by order dated 7-6-1977 but by the same order the Chief Conservator of Forests was directed to take fresh action to recover the amount from the D.C.R. gratuity after issuing notice to the delinquent officer after considering the representation, if any, filed by him. The learned judge held that this direction by the Government would not stand scrutiny of law and observed as follows: "The liability that is fixed by the Chief Conservator's order has been rescinded, and therefore, there is no liability fixed against the petitioner The Chief Conservator of Forests on the basis of my decision in O. P. 969/76 cannot proceed after the petitioner's retirement to fix the liability on the basis of Note (2) to R.3 Part III K.S R. Therefore, Ext. P8 is not valid. I set aside Ext. P8. P8 is not valid. I set aside Ext. P8. In the circumstances of the case, I hereby direct the respondents to disburse the gratuity, last pay and arrears of pension due to the petitioner forthwith." These two cases were taken in appeal by the State and the decisions of the learned judge were confirmed in the decision reported in State of Kerala v. Bee ran (ILR.1980(1) Kerala 327). The Division Bench held after extracting Note 2 to R.3 as follows: "It is clear from the above note that before proceedings are taken to adjust liabilities against the death-cum-retirement-gratuity payable to the employee, the employee should be afforded a reasonable opportunity to explain. In this case this has not been done The quantification of liability effected in pursuance to Ext P1 charge was sought to be adjusted against the death-cum-retirement gratuity of the respondent. The learned judge, we think, rightly discountenanced this attempt and allowed the writ petition. We agree with him and dismiss the appeal with no order as to costs." While disposing of the other writ appeal by the same judgment, the Division Bench further observed as follows: "In this case the charge memo was dated 21st May 1972 and the explanation to the charge was dated 30th May 1972-By Ext. P2 order dated 4th May 1975 (after retirement of the respondent) an amount of Rs. 4673.68 was ordered to be recovered from his death-cum-retirement gratuity due to him. Applying the provisions of R.3. Part III of the K.S.R. the disciplinary proceedings started by Ext. P1 would get transmuted to and could be continued for the limited purpose of withholding or withdrawing pension as contemplated by the rule. Adjustment against death-cum-retirement gratuity can only be after affording the respondent an opportunity for explanation. The qualification of liability in this case at Rs. 4.673 was not after affording the respondent any such opportunity for explanation. It seems to have been only the result of the conclusion drawn from the disciplinary proceedings started and continued in pursuance of Ext. P1. This was hardly the proper compliance with Chapter I, Part III, R.3 of the K.S.R. especially is that so, when Ext. P2 proceedings were quashed by the Government by Ext. P3 order." We respectfully agree with the above decisions and the principle of law laid down in them. P1. This was hardly the proper compliance with Chapter I, Part III, R.3 of the K.S.R. especially is that so, when Ext. P2 proceedings were quashed by the Government by Ext. P3 order." We respectfully agree with the above decisions and the principle of law laid down in them. We hold that the liability of an officer should be fixed before his retirement and the quantification of the liability should be after giving an opportunity to the officer to explain. Ruling No. 3 obliges the Government to wait for 30 days before recovering the alleged liability from the D. C. R. G. In the case before us, the petitioner was informed of the liability on 30-11-1979 and the order under challenge was passed on 3-12-1979. Neither of the conditions mentioned in Note 2 is satisfied. 13. We may in passing refer to two decisions, one tendered by a Full Bench and another by a Division Bench, about which reference is seen made by the Division Bench in ILR.1980(1) Kerala 327, so that the nature and limits of the proceedings under Part III R.3 K. S R. could be better understood. In Xavier v. K S. E. Board (1979 K. L. T. 80 (F. B.)) Nambiar, C. J speaking for the Bench after quoting R.3 Part III K. S. R. observed as follows: "The Rule does not authorise the continuance of disciplinary proceedings as such, against a Government servant after his retirement. Both on principle and on authority, such a position cannot be easily countenanced. It allows only a limited type of enquiry to be proceeded with, namely an enquiry in regard to withholding or withdrawing pension, or of ordering recovery from pension by reason of any misconduct or negligence during the period in service of the employee. Under clause (a) of the proviso to the Rule, the departmental proceeding, if instituted during the service of the employee is to be deemed to be a proceeding under the Rule and may be continued and completed even after his retirement. To this limited extent alone is provision made under the rule for continuance of a disciplinary enquiry beyond retirement. That too is by transmuting it by fiction to be an enquiry under the Rule. Beyond this, we cannot understand the rule as in any way permitting the authorities either to launch or to continue disciplinary proceedings after the retirement of the employee. That too is by transmuting it by fiction to be an enquiry under the Rule. Beyond this, we cannot understand the rule as in any way permitting the authorities either to launch or to continue disciplinary proceedings after the retirement of the employee. That would be destructive of the concept of relationship of employer and employee which has come to an end by reason of the retirement of the employee, beyond which, disciplinary control cannot extend." In reinforcement of this observation the Full Bench noticed AIR 1964 SC. 72. AIR. 1970 SC. 214 and 1978 KLT. 696. A Division Bench had again occasion to consider the scope of this rule in a decision reported in Vasudevan v. Secretary, Govt. Vigilance (B) Det. (1979 KLT.489). Repelling the contention that disciplinary proceedings can be taken against a retired employee, the Division Bench held: "All that is stressed by the passage is that after retirement the disciplinary proceedings as such cannot be continued against the Government servant. But disciplinary proceedings already initiated before retirement can well be continued for the limited purpose contemplated by R.3 Part III of the K.S.R." These decisions clearly lay down the limits within which proceedings against an employee who has retired can be taken. They show that the Government has no powers to proceed against an ex-employee as it can against an employee. We thought it necessary to advert to the above passages to make the position clear lest the following observation by T. Chandrasekhara Menon, J. should create a contrary impression. In Para.10 of the judgment in OP. No. 969 of 19,76, the learned judge has observed as follows: "10. Learned Government Pleader disputes the correctness of the decision 1977 KLT. 758 and in the circumstances he wanted me to refer the case to Division Bench. However, though I see considerable force in his argument that the word "employee" used in the Rule will include ex-employee also in the nature of the expression used in various parts of the said Rule and the other rules in the KSR., I see no reason to refer this question to Division Bench, because I base my conclusion on an entirely different basil. Nor did the learned counsel for the petitioner place any reliance on the said decision in support of his contentions. Therefore, there is no question of examining the correctness or otherwise of that decision. Nor did the learned counsel for the petitioner place any reliance on the said decision in support of his contentions. Therefore, there is no question of examining the correctness or otherwise of that decision. If that is not so, I would certainly have referred the matter to a Division Bench." The observation that the word 'employee' used in the rule will include an ex-employee also, in the nature of the expression used in various parts of the said Rule and the other rules in the KSR. has to be read subject to what the Full Bench and the Division Bench have observed, according to which disciplinary proceedings against an ex-employee is permissible only for the limited purpose, mentioned in R.3 and Note 2. 14. We hold that the petitioner is entitled to succeed in this case. The orders under challenge are quashed and we direct the respondents to disburse the amount of Rs. 2204.09 withheld from the petitioner's D.C.R G. as expeditiously as possible. 15. We feel that it would be advisable to make the scope of Note 2 clear to avoid confusion and to facilitate recovery of liabilities from retired employees against D.C.R.G. if that is what is intended. For this purpose Note 2 can be suitably amended stating whether the liability should be quantified and fixed with notice to the employee before retirement or whether it could be fixed after retirement and also stating clearly as to what is meant by reasonable notice. In this case we find the amount fluctuated from 2174.39 to 2189.24 to 2204 09. If quantification was done with the requisite notice, cither before or after retirement (under a clear note or a rule) a challenge of the kind made here could be easily repelled.