Excess payments made during service cannot be recovered from a retired employee’s retiral benefits.

The petitioner received grade pay while in service and retired on 30 November 2017.

After retirement, the authorities raised an objection to the grade-pay fixation, refixed it by order dated 10 May 2019, and determined that ₹2,55,494 had been paid in excess. That amount was recovered from his retirement gratuity.

The petitioner did not challenge the refixation of grade pay; he sought refund of the amount recovered.

Whether the authorities could recover alleged excess grade-pay payments from the retirement benefits of an employee after his retirement

Whether the petitioner was entitled to a refund of the ₹2,55,494 recovered from his gratuity

The Court relied on State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, which identifies recovery from retired employees as a category in which recovery of mistaken excess payments is impermissible;

it also relied on Thomas Daniel v. State of Kerala, 2022 SCC OnLine SC 536, and Jogeswar Sahoo v. District Judge, Cuttack, SLP(C) No. 5918 of 2024, applying the equitable principle that recovery of excess payments may be barred where it would cause undue hardship, particularly when the employee has retired and the payment was not obtained through fraud or misrepresentation

The petitioner had retired before the authorities ordered recovery, and the amount was deducted from his retirement gratuity following the post-retirement refixation of grade pay.

Applying the principles in Rafiq Masih and the cited decisions, the Court held that recovery from a retired employee’s benefits was impermissible in the circumstances. The petitioner’s acceptance of the grade-pay refixation did not prevent him from challenging the separate recovery.

The writ petition was disposed of.