74-year-old Gill, who is credited with retrieving Punjab from insurgency, dismissed the demand as "nonsense."
Rupan Deol Bajaj wanted the Centre to move against Gill in the same manner as it was proceeding against ex-Haryana top cop SPS Rathore to strip him of his police medal in the aftermath of the Ruchika molestation cae.
"Gill's case is also one of moral terpitude. All his medals and the Padma Shri should be taken away," said Bajaj, who is currently a Information Commissioner in Punjab.
"It is very necessary that some kind of message should go out to society that such persons do not deserve to have these high decorations(Padma Shri)," Bajaj said.
"I think Ruchika would not have been molested had KPS Gill not be given Padma Shri. Because(Rathore) knew that if such things happen even to IAS officer,they can get away, a top cop can get away with it," she said.
Gill, who got the country's fourth highest civilian honour in 1989 for his work in the civil service, said retrospective punishment for award and medal recipients for services rendered by them was "against the law."
Gill, a recipient of several police medals, also appeared to suggest that he was not unduly bothered if the medals given to him were taken away by the Government.
"Who is bothered about that medal yaar. I never asked for it. They gave it to me. They can take away all the 20 medals."
Gill was in 1996 found guilty of outraging modesty of Bajaj by a trial court after she complained in 1988 that the police officer "pinched" her "posterior" at a party where he was alleged to be drunk.
Speaking to TV channels, Gill said he had not asked for the Padma Shri and so he did not care whether the government took it away from him.
Gill was the DGP of Punjab and Bajaj a senior IAS officer at the time of the molestation incident. He was sentenced by a trial court to pay a fine of Rs 2 lakh, be imprisoned rigorously for 3 months and simply for 2 months.
After final appeals before the Supreme Court in July 2005, the conviction was upheld and the jail sentences were reduced to probation. The victim had declined to accept the monetary compensation and the court ordered that it be donated to women's organziations.
With a precedent being set for the withdrawal of medals awarded to Rathore questions are being asked whether this would mean Gill could lose his awards.
Senior advocate KTS Tulsi came out in the officer's defence.
"Remember, in 1996, Gill was convicted for outraging the modesty of a lady IAS officer. Now stripping him off his medals is unjustified. KPS Gill is an outstanding officer.
They will need to balance acts of courage with this minor blemish. Anyone can have false accusations against them. Anyone can have an accusation that is blown out of proportion," Tulsi said.
Officials also feel the Monday's decision by the Centre did not mean all tainted officers will automatically lose their medals.
During a long and illustrious career, Gill has served as the Punjab Director General of Police twice. He commanded 'Operation Black Thunder' to flush out militants hiding in the Golden Temple in 1988.
His services in counter-terrorism were also sought by Sri Lankan and Gujarat governments and he is currently the president of the Indian Hockey Federation(IHF).