Excess salary recovery is impermissible after prolonged periods absent employee misrepresentation or undertaking.

V. Nagarajan, a retired Sub-Inspector of Police, challenged the recovery of alleged excess salary paid to him.

In W.P. No. 6417 of 2025, the Writ Court held that recovery of the excess amount was impermissible under State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, but permitted the authorities to refix his pay in accordance with the applicable Pay Rules and Government Orders.

The Writ Court further observed that an erroneous pay fixation could be corrected, but recovery after a prolonged period would cause hardship where there was no misrepresentation or clear undertaking by the employee.

The State authorities filed the present writ appeal challenging that order.

1. Whether recovery of excess salary paid to the retired employee was permissible in the absence of misrepresentation or a clear undertaking by him, particularly when the recovery was made after a prolonged period.

2. Whether the authorities could refix the employee’s pay in accordance with the applicable Pay Rules and Government Orders notwithstanding the prohibition against recovery of the excess amount.

3. Whether the excess amount already recovered was required to be refunded and whether interest at 6% per annum should be paid on the refunded amount.

The Court applied the principle laid down by the Supreme Court in State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, that recovery of excess payments from employees is impermissible in circumstances where recovery would cause undue hardship, particularly after a prolonged period and in the absence of fraud, misrepresentation, or a clear undertaking by the employee.

The Court distinguished between correction of an erroneous pay fixation and recovery of amounts already paid: authorities may refix pay prospectively or otherwise in accordance with the applicable Pay Rules and Government Orders, but such correction does not automatically authorise recovery of past excess payments.

The Division Bench found no infirmity in the Writ Court’s application of Rafiq Masih.

The employee’s pay could be corrected to conform with the governing Pay Rules and Government Orders, since an erroneous fixation may be rectified by the authorities.

However, the recovery of past excess salary, particularly after a prolonged period and without any finding of misrepresentation or undertaking by the employee, would impose the hardship addressed in Rafiq Masih and was therefore impermissible.

Since the appellants had already recovered amounts from the respondent, the Court directed restitution of those sums.

It found no basis to retain the interest component awarded by the Writ Court and consequently set aside the direction for payment of 6% interest.

The appellants were directed to refund the excess amount already recovered from the respondent within twelve weeks from receipt of the order.

The Writ Court’s direction granting interest at 6% per annum until repayment was set aside.

No order as to costs was made, and the connected miscellaneous petition was closed.