JUDGMENT K.S.Radhakrishnan, J. 1. This writ appeal has been preferred by the State of Kerala, Director of Public Instruction, Trivandrum, Deputy Director of Education, Ernakulam and the Accountant General (A & E), Kerala, Trivandrum against the judgment of the learned single judge in O.P. No 4833 of 1990. Learned judge disposed of the writ petition with costs and directed D.C.R.G. and interest thereon be disbursed to additional petitioners 2 to 5 within thirty days from the date of the judgment. Learned judge also directed the State Government to conduct an enquiry to determine as to who was at fault in delaying the disbursement of D.C.R.G. to one V.Ananthanarayana Bhat, particularly after the government order dated 1.4.1995. Learned single judge also awarded costs to be recovered from the erring officers after holding departmental enquiry. Aggrieved by the said judgment this appeal has been preferred. 2. We narrate the facts as we get in the original petition. Original Petition was filed by one V. Ananthanarayana Bhat who was headmaster of Brahmanandodayam High School, Kalady. He retired from service on 31.3.1986. There were serious irregularities in the maintenance of school records and properties and therefore the Manager of the school requested the Deputy Director on 10.3.1986 to conduct an audit of accounts of the school and to verify the stock position of the books and other articles. Audit was conducted in two spells in order to cover the unaudited period from 1.4.1980 to 31.3.1983 and from 1.4.1983 to 31.3.1986 during May 1986 and June 1986 and it revealed various financial irregularities committed by the petitioner. Petitioner was served with copies of the audit reports and ample opportunity was given to him to rectify the defects pointed out in the audit report. Audit report was communicated to the school on 10.11.1986 with direction to submit rectification report within 15 days from the date of receipt of the report. Reply was received from the school on 6.1.1987 without the necessary documents required in the audit report. Non-liability certificate could not be issued to the petitioner since various financial irregularities were pending clearance in the audit report. Two spot verifications were then conducted on 21.12.1987 and 15.12.1988 in order to clear the outstanding audit objection. Spot inspection was conducted with notice to all the parties including the petitioner. With regard to stock verification held on 15.12.1988 petitioner filed his objection dated 5.1.1989. Two spot verifications were then conducted on 21.12.1987 and 15.12.1988 in order to clear the outstanding audit objection. Spot inspection was conducted with notice to all the parties including the petitioner. With regard to stock verification held on 15.12.1988 petitioner filed his objection dated 5.1.1989. He also filed another objection dated 5.2.1989 relevant portion of which reads as follows: "I submit as follows for the kind perusal of the audit. I retired from service on 31.3.1986 in the capacity of the Headmaster, B.H.S., Kalady with a meritorious service of 25 years and the gratuity amount is pending disbursal. The audit objections relating to the period under reference is pending for disposal. I submit the following detailed report for your consideration and disposal as per my promise in reference (2) .................................. .................................. With your kind permission may I point out that had the audit been conducted in time many objections would have been avoided. Also many mistakes as alleged would not have been committed. However, I would like to point out that omissions are so innocent and commissions are not wilful. I have absolutely no intention to override any provision of KER/ KSR. There are no audit prohibitions. I have tried to clear the audit objections. I assure that any irregularities as alleged will not be committed hereafter. For the time being you may kindly be satisfied with my reply furnished. You may accept the same and I request you to drop the objection raised. Also I feel that no grave irregularities are committed by me warranting initiation of disciplinary proceedings against me. I am sure that mistakes, if any have in quite unintentionally (sic) while I paid my attention at my level best in the administration of our school. Of course some slip might have been there as you have pointed out. However in the midst of a wholesome reputation and recognition of the school and my career this errors may kindly be excused and all the above objections dropped as a very special case." 3. The Deputy Director of Education, Ernakulam considered the petitioner's objection and passed an order, E2.9877/88 dated 10.3.1989. Relevant of the said order is as follows; "I am to invite your attention to the reference cited. The Deputy Director of Education, Ernakulam considered the petitioner's objection and passed an order, E2.9877/88 dated 10.3.1989. Relevant of the said order is as follows; "I am to invite your attention to the reference cited. In spite of repeated and specific direction you have not taken any appreciable action to clear the large numbers of audit objections pertaining to your period i.e. from 1.4.1980 to 31.3.1986. Therefore a spot verification was conducted in the matter on 15.12.1988. But on the spot verification the required records were not produced either by the present headmaster or by the retired headmaster. At the time of spot verification the retired headmaster had requested for an extension of three weeks time for the production of required details. But the retired headmaster had not furnished his reply on the due date and another letter has been received from the retired headmaster on 16.1.1989 for an extension of time for another three weeks. As per reference (1) cited the retired headmaster has furnished his replies on the audit report. The reply received from the retired headmaster are reviewed and the following observations are noted thereon. ....................... ........................ Moreover an amount of Rs 11,529.68 is fixed as liability against Sri V. Anandanarayan Bhat towards the amount due to school cooperative societies. As per reference (3) cited the present headmaster has stated that an amount of Rs 310/the cost of flag account remaining to be settled is fixed as liability against the retired headmaster and Rs 250/- i.e. the amount due to D.E.O. Alwaye towards the cost of Teachers' Sanatoria Society 1984. Thus the total amount fixed as liability is as follows: 1 Amount fixed as liability as per audit Objection 1.4.1980-31.3.1986. Rs 29,410.55 2 Amount fixed as liability towards dues to school cooperative society (9648+penal interest Rs. 1881.40) interest from 1/87 at the rate of 18% Rs 11,529.68 3 Amount fixed as liability towards dues to settlement of flags Rs 310.00 4 Amount due to the DEO Alwaye towards the cost of teachers Sanatoria Society 1984 coupons fixed as liability Rs 250.00 Total Rs. 41,500.23 Yours faithfully Sd/- Copy to the Headmaster, BHS, Kalady. She is requested to issue L.C. of the retired HM V.Anandanarayana Bhat after noting the entire amount fixed as liability against him. This should be treated as very urgent and the L.C. should be sent within three days. 41,500.23 Yours faithfully Sd/- Copy to the Headmaster, BHS, Kalady. She is requested to issue L.C. of the retired HM V.Anandanarayana Bhat after noting the entire amount fixed as liability against him. This should be treated as very urgent and the L.C. should be sent within three days. She is also requested to verify the stock register which was missing at the time of audit and spot verification(vide item No.28, 42 and 44) and the list of missing articles should be prepared and the price value should be calculated as per rule)" Petitioner then preferred Ext. P4 appeal dated 22.4.1989 to the State Government against Ext. P3 order by which an amount of Rs. 41,500.23 was fixed as his liability. While the representation was pending petitioner received Ext. P8 communication from the Accountant General stating that GPO No Pasyd/1610 for Rs 40,013/- was withdrawn to the office since that was not claimed. Petitioner preferred the present writ petition seeking writ of certiorari to quash Exts. P3 and P8 orders and for a writ of mandamus directing the respondents to issue nonliability certificate and to pay DCRG amount with 18% interest and also for other consequential reliefs. While the writ petition was pending before this court, Government disposed of Ext. P4 appeal preferred by the petitioner by G.O.(Rt)No.1465/95/G.Edn dated 1.4.1995 (Annexure I produced along with the appeal). Government confirmed the liability. However, with regard to an amount of Rs 11,529.60 being the amount due to the school cooperative society direction was given to the Deputy Director of Education, Ernakulam to verify the correct position and consider the question of excluding the amount from the liability of the petitioner. In all other respects the liability was confirmed. The Government then directed the Deputy Director of Education to release the DCRG deducting the actual liability. In view of the aforementioned government order, the Officer in-charge of the Deputy Director passed an order on 13.3.1996 (Annexure II produced along with the appeal) reducing the amount and fixing the liability at Rs. 35,183.90 and directed to deduct the said amount from the DCRG. While the writ petition was pending, Anandanarayana Bhat died on 22.5.1995 and his legal representatives were impleaded as additional respondents 2 to 5. 4. Counter affidavit has been filed on behalf of the first respondent. 35,183.90 and directed to deduct the said amount from the DCRG. While the writ petition was pending, Anandanarayana Bhat died on 22.5.1995 and his legal representatives were impleaded as additional respondents 2 to 5. 4. Counter affidavit has been filed on behalf of the first respondent. In the counter affidavit the State took up the stand that the liability of Rs 41,500.33 fixed within three years of retirement by Ext. P3 order dated 10.3.1989. Counter affidavit further stated as follows : "As per the provisions departmental audit was also conducted and the petitioner's total liability was finalised and fixed at Rs 41,500.33 as per order No. B2-9877/88 dated 10.3.1989 of the third respondent. On receipt of admissibility certificate petitioner's liability was reduced to Rs 39,629.25. Since petitioner has not remitted the liability amount, his N.L.C. has not been issued." Counter affidavit further states as follows: "As a matter of fact his successor in the post of headmaster has stated that audit objection had been issued to the petitioner on 22.8.1987 and its extracts were also furnished to him on 31.8.1987 and 11.9.1987. In the letter dated 15.9.1987 issued by the petitioner's successor has reported that petitioner has not taken any action to clear the audit objection. On medical ground petitioner has requested for extension of time due to minor injury on the heel. Even after the expiry of the extended time no reply has been furnished by the petitioner. In spite of repeated directions from the third respondent, petitioner did not furnish and reply nor his successor has taken any effective steps to obtain petitioner's explanation and forwarded the same to the authorities. .......... The present headmaster was also reported that orders on review of audit objection had been received on 22.8.1987 and on the very same day the matter has been informed to the petitioner by registered post acknowledgement due. Hence petitioner cannot contend that he has not been served with copy of the audit objection. As per the request of the petitioner's successor a spot verification was conducted on 21.12.1987 and 15.12.1988 to clear the outstanding objections to the maximum extent possible by taking a lenient view. Though intimation was given to the petitioner at the time of spot verification, petitioner did not turn up. Therefore a special messenger was also deputed to fetch the presence of the petitioner and accordingly petitioner had attended the school on 16.12.1988. Though intimation was given to the petitioner at the time of spot verification, petitioner did not turn up. Therefore a special messenger was also deputed to fetch the presence of the petitioner and accordingly petitioner had attended the school on 16.12.1988. But he could not produce any proof or vouchers to waive the objections already noted. In that circumstances petitioner has requested a further period of three weeks time to furnish detailed reply." 5. We notice petitioner subsequently had sent a registered letter dated 5.2.1989 evidenced by Ext. P2 a portion of which we have already extracted in the earlier part of the judgment. After considering the objections the Deputy Director of Education fixed the liability as per order dated 10.3.1989. The aforementioned facts would reveal that the Department has fixed the liability within three years from the date of retirement though on appeal the liability has been reduced marginally. Liability was fixed against the petitioner within the statutory time. If the liability amount is adjusted no further amount is due to be paid by way of D.C.R.G. The liability amount was informed to the petitioner and to the school authorities mentioned herein before and since no amount was practically due after adjusting the liability as per Ext. P3 nobody turned up to the Sub Treasury Officer to receive the D.C.R.G. 6. We heard learned Govt. Pleader Sri C.K.Pavithran as well as the counsel for the respondent. We are of the view that the learned single judge was not properly appraised of the facts situation. We notice liability was fixed by Ext. P3 dated 10.3.1989 within three years from the date of retirement with notice to the petitioner. The details of the audit objection were also made available to the petitioner on 22.8.1987 and its extracts were also furnished to him on 31.8.1987 and 11.9.1987. Petitioner himself wanted time to file objection. Even after the expiry of the extended time no reply was furnished by him. Subsequently a spot verification was conducted on 21.12.1987 and 15.12.1988 to clear the outstanding objections. Intimation was given to the petitioner at the time of spot verification, but he did not turn up. A special messenger was also deputed to fetch the presence of the petitioner and accordingly petitioner attended the school on 16.12.1988. But he could not produce any proof of vouchers to waive the audit objection. Intimation was given to the petitioner at the time of spot verification, but he did not turn up. A special messenger was also deputed to fetch the presence of the petitioner and accordingly petitioner attended the school on 16.12.1988. But he could not produce any proof of vouchers to waive the audit objection. We notice that the petitioner had filed the objection to the notice received by him and filed his objection dated 5.1.1989 and 5.2.1989 and those objections were adverted to by the Deputy Director while fixing the liability by order dated 10.3.1989. We are of the view that sufficient opportunity was given to the petitioner at the time of spot verification as well as to file objection to the audit notes which was made available to the petitioner. It is after considering all the objections and giving opportunity at the time of spot verification that the liability was fixed by the Duputy Director by order dated 10.3.1989. 7. Petitioner filed appeal before the Government against the orders fixing the liability and the Government passed an order by which liability has been scaled down marginally and fixed at Rs. 35,183.90. 8. We notice that the learned single judge directed release of the D.C.R.G. due to the petitioner after deducting the actual liability. If liability is deducted there is no amount to be disbursed to the petitioner or to his legal representatives towards DCRG. In the original petition the main case of the petitioner was that the Department cannot fix the liability after retirement. Reference was made to the Government Circular dated 5.8.1955 as well as the D.O. letter dated 4.6.1981 and Circular dated 10.4.1985 The rule as it stood prior to 31.3.1986 prevented the State Government from recovering the liability from a retired government employee after his retirement. This court in Sreedharan Pillai v. State of Kerala ( 1977 KLT 758 ) took the view that Government have no power to fix the liability as against an employee after the retirement. Relevant portion of the said judgment is as follows: "As I see Note 2, liability can be fixed in terms of Note 2 only after the issuance of a notice to the Government servant and waiting for 30 days for his explanation. This was not done before he retired. Relevant portion of the said judgment is as follows: "As I see Note 2, liability can be fixed in terms of Note 2 only after the issuance of a notice to the Government servant and waiting for 30 days for his explanation. This was not done before he retired. It follows, therefore, that the death cum retirement gratuity cannot be directed to be adjusted for any liability which got fixed only after his retirement. This, according to me, is the proper interpretation to be given to Note 2 read with Ruling No.3 of the Kerala Service Rules. Normally an employee means a person who is in the service. When a government servant retires, the contractual relationship between him and the government ceases and it would not be correct to say that any employee includes a pensioner also." 9. In order to get over the rigour of the above decision, the rule making authority, the Government, in exercise of the powers conferred by sub-section (i) of S.2 of the Kerala Public Services Act, 1968, read with S.3 thereof, amended the Kerala Service Rules which reads as follows: "2. Amendment of the Rules - In Part III of the Kerala Service Rules, in R.3 (1) in Note 2, after the word 'employee' occurring two places, the words 'or pensioner' shall be inserted. (2) After Note 2, the following Note shall be added, namely :- . Note 3- The liabilities of an employee should be quantified either before or after retirement and intimated to him before retirement if possible or after retirement within a period of three years on becoming pensioner. The liabilities of a pensioner should be quantified and intimated to him." The above amendment was introduced by G.O.(P) 274/86/Fin dated 31.3.1986 and was published in the Kerala Gazette dated 15.4.1986. In the explanatory note to the aforementioned amendment it is stated as follows: The amendment is to overcome the difficulty experienced by the Government to recover the liability against a government servant after his retirement out of the death cum retirement gratuity because of the High Court decision reported in 1977 KLT 758 . In view of the aforementioned amendment, all the contentions raised by the petitioner in the original petition that the liability has to be fixed before retirement cannot hold good. In the instant case the petitioner, Bhat retired from service on 31.3. In view of the aforementioned amendment, all the contentions raised by the petitioner in the original petition that the liability has to be fixed before retirement cannot hold good. In the instant case the petitioner, Bhat retired from service on 31.3. 1996, the date on which the Kerala Service (Amendment) Rules, 1986 came into force and therefore the amended rule is applicable to the petitioner in this original petition. We now in this connection extract the rule for easy reference. 8. Note 2 to R.3 of Part III of K.S.R. reads as follows: 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." "3. The liabilities of an employee should be quantified either before or after retirement and intimated to him before retirement if possible or after retirement within a period of three years on becoming pensioner. The liabilities of a pensioner should be quantified and intimated to him." We find justification in the stand of the appellant State Government that death cum retirement amount due to the petitioner has already eaten away by the liability which has been fixed within three years. R.3 says that the liabilities of an employee should be quantified either before or after retirement and intimated to him before retirement, if possible or after retirement within a period of three years on becoming pensioner. The aforementioned rule make it ample clear that liability can be fixed against an employee without the departmental/judicial proceeding but by giving the employee an opportunity to explain and this can be done within a period of three years from the date of retirement. This position has been upheld by this court in Vincent v. State of Kerala ( 1998 (1) KLT 305 ). 10. We are of the view as per the amendment effected to the Kerala Service Rules as per Kerala Service (Amendment) Rules published as per G.O. dated 31.3.1986 the Government have got the legal right to fix the liability as against a retired government servant within a period of three years from the date of retirement provided he is given sufficient opportunity to explain. In this case the petitioner Bhat dies on 22.5.1995 and the liability was fixed with notice to him after perusing his objection by order dated 10.3.1989, that is, within three years from the date of his retirement. Therefore, we are of the view in this case liability has already been fixed within three years from the date of retirement and the State and its officers are justified in not releasing the D.C.R.G. amount. 11. We therefore set aside the judgment and vacate the directions to conduct enquiry against the departmental officers and the order awarding costs. We make it clear that if any amount is due on the account of Bhat after deducting the liability, the same will be sent to his legal representatives within a period of one month from today. The appeal is allowed as above.