The skulls and bones of at least 17 children were dug up last week in the backyard of a house in Noida, an industrial town on the outskirts of the capital New Delhi.
"Our probe panel had prima facie found these officials guilty of dereliction of duty and gross negligence in responding to complaints made by parents of missing children," Bajpai said.
Police have arrested the businessman who owns the house and his domestic servant in connection with the case.
The gruesome case has horrified the country and police in Uttar Pradesh state, where Noida is located, have been slammed for not adequately investigating complaints from parents about their missing children over the last two years.
Earlier this week, anger spilled into the streets of Noida as grieving parents and relatives stoned the house and clashed with police, accusing them of failing to find their children.
Many children could have been saved if the complaints had been probed earlier, activists say.