Can a Central Government Job Deduct Loan Payments from My Salary Without Consent? Seeking Advice

My father took a loan from a cooperative society. After his death, I was appointed to the organization on compassionate grounds where my father used to work to ensure the survival of my family. Two months after joining, the organization started deducting the remaining loan amount EMI without my permission. When I asked the authorities about the deduction, they said to contact the cooperative bank. Upon learning this, I contacted the bank and discovered that there is a rule stating that the bank will not sanction any loan without insurance cover for the loan applicant. When I inquired why my father had no insurance cover, the bank simply said that I have to pay the remaining loan amount, whether it's right or wrong.

Following this, I reached out to the organization's authorities again and requested them to cease the deduction, for which I did not give permission. However, they are not responding now. Is it possible for my organization to make any deductions from my salary without my consent? I am employed in a central government organization. Please suggest any solutions.

Illegal Deduction Concerns

This appears to be an illegal deduction. If you can access the loan documents your father signed, please review them to understand the implications. At any rate, it does not seem that an employee could authorize, upon his unfortunate demise, the deduction of the outstanding loan amount from the salary payable to the family member appointed on compassionate grounds. Try to ascertain more details about the insurance coverage.

You can provide a written statement that the deduction is unauthorized and must be stopped immediately, with the deducted amount returned. If nothing succeeds, raise an RTI query seeking details of the basis for the deduction made.

Loan Deductions from Gratuity and PF

There is a certain statement in the loan form which mentions that the cooperative bank can deduct the remaining loan amount from the gratuity and PF of the deceased employee. If the loan amount still remains, they can recover that amount from the salary of the person appointed on compassionate grounds in the organization without any further intimation to that person.

I have informed my organization about the whole case, but they refuse to stop the illegal deduction. They said that they do not need any permission from me to make any such deduction. Insurance is mandatory to avail a loan from the bank as per their rules and regulations mentioned in the loan form, but the bank is refusing to give any clarification on this.

Permission for Deductions in Central Government Organizations

Is it possible for a central government organization to deduct such an amount without taking permission from the employee?

Legal Implications of Loan Recoveries

Such recoveries are improper and illegal in terms of the Central Government Account (Receipts and Payments) Rules, 1983.

Liability of Legal Heirs

Even otherwise, it is settled law that the liability of the legal heir for the debts incurred by the deceased is limited to the estate they have inherited. Appointment on compassionate grounds does not count as 'estate inherited'.

Role of Sureties in Loan Settlement

However, it could be that some colleagues, friends, or relatives would have been the surety for the loan availed. If so, non-settlement of the outstanding amount is bound to complicate the issues.

Loan Securities by Cooperative Bank

The loan sanctioned by the cooperative bank has three securities:

1. The insurance cover is mandatory for the member to get the loan sanctioned.

2. Six guarantors are compulsory to avail a loan from the bank.

3. Lastly, if the above two do not settle the loan, then gratuity, PF, and the salary of a family member appointed on compassionate grounds also serve as security for the bank.

You raised a case regarding the payment of wages, stating that unauthorized deductions are being made from your salary every month.