Excess-pay recovery from retired employees is impermissible when payments predate recovery by over five years.

The petitioner was appointed as an Assistant Surgeon in 1981 and retired as a Medical Officer on 31 August 2019.

During scrutiny of his service records at the time of retirement, the respondents alleged that his pay had been wrongly fixed for the periods 19 April 1982–3 February 1984 and 1 January 2006–1 January 2016.

On that basis, the respondents ordered recovery of ₹16,35,225, together with interest, without issuing a show-cause notice or affording the petitioner an opportunity of hearing.

The petitioner challenged the recovery under Article 226 of the Constitution.

Whether recovery of alleged excess salary payments could be made from the petitioner after his retirement, particularly where the payments related to periods more than five years before the recovery order.

Whether recovery was lawful in the absence of a show-cause notice and opportunity of hearing.

Whether the alleged undertaking could authorise recovery when the respondents had not established that it was voluntarily furnished.

The Court applied the principles in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, under which recovery is generally impermissible from retired employees or employees due to retire within one year, and where excess payments were made for a period exceeding five years before the recovery order; these circumstances are independent and may apply even to employees above Class III and Class IV.

It relied on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 M.P.L.J. 198, holding that recovery based on an undertaking may be made only where the undertaking was voluntarily given, that hardship must be considered, and that an undertaking obtained at the stage of retirement concerning benefits granted decades earlier cannot be enforced.

The Full Bench also held that recoveries under Rules 65 and 66 of the relevant 1976 Rules require compliance with the prescribed procedure.

The Court further relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, recognising that recovery without hearing, after retirement, and in the absence of fraud or misrepresentation is unsustainable.

The Court further relied on Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831 of 2019, holding that an undertaking not proved to have been voluntarily furnished cannot support recovery.

The Court found that the alleged excess payments arose from pay fixation undertaken decades earlier and that recovery was initiated after the petitioner had retired.

Since the recovery related to payments made substantially more than five years before the recovery order, the petitioner fell within the independent protection recognised in Rafiq Masih, irrespective of his status as a Class-I employee.

The respondents had neither issued a show-cause notice nor afforded an opportunity of hearing before ordering recovery, contrary to natural justice.

Further, no undertaking given at the time of the disputed pay fixation was produced, and the State failed to establish that any undertaking was voluntarily furnished.

Accordingly, the alleged undertaking could not override the protection against harsh or inequitable recovery.

The High Court allowed the challenge to the recovery and set aside the recovery of ₹16,35,225 on the grounds that it was made after retirement, related to payments made more than five years earlier, was ordered without notice or hearing, and was unsupported by a proven voluntary undertaking.

If the amount had already been recovered from the petitioner, the respondents were directed to refund it with interest at 6% per annum from the date of retirement until actual payment.

The refund was to be completed within 90 days of submission of the certified order; failing that, the amount would carry interest at 12% per annum from the date of retirement until payment.

If no amount had been recovered from the petitioner’s retiral dues, he was held not entitled to the refund directed in the order.