Headline: Recovery of excess payment from retired Group 'C' employees without notice and misrepresentation is impermissible.

The applicant, Shri Ram Sharma, was appointed on October 9, 1985, and subsequently promoted to Loco Pilot (Mail/Express) with a Grade Pay of Rs. 4200/-.

He voluntarily retired on October 29, 2021.

At the time of his retirement, the respondents recovered Rs. 4,28,681/- from his retiral dues, citing overpayment of pay.

The respondents claimed the overpayment resulted from an erroneous grant of financial upgradation to the Grade Pay of Rs. 4600/- under the Modified Assured Career Progression (MACP) Scheme, due to a misinterpretation of rules.

They contended that the applicant had already received three promotions and was not entitled to the MACP benefit.

The applicant represented against the recovery on June 20, 2022, but no action was taken.

He was not issued any prior notice before the recovery was made.

1. Whether the respondents were justified in recovering the alleged overpayment of Rs. 4,28,681/- from the applicant's retiral dues without prior notice and after his retirement?

2. Whether recovery from a retired Group 'C' employee, whose overpayment was not due to misrepresentation or fraud, is permissible in law?

The court primarily applied the principles of natural justice, specifically the requirement of affording an opportunity of hearing before passing any order having civil consequences.

It further relied on the judgment of the Hon’ble Apex Court in State of Punjab vs. Rafiq Masih (whitewasher) & Ors., reported in (2015) 4 SCC 334, which established specific situations where recoveries by employers would be impermissible.

Key impermissible situations include recovery from Class III and Class IV (or Group C and Group D) service employees, recovery from retired employees, and recovery where excess payment was not due to employee misrepresentation or fraud.

The court noted that while respondents are empowered to correct mistakes, the cardinal principles of natural justice were not followed as no notice was issued to the applicant before deducting the excess amount from his retiral benefits.

The court found that the applicant was a retired Group 'C' employee and there was no misrepresentation or fraud on his part in receiving the alleged excess pay; the benefit was granted by the respondents due to their own error.

Applying the principles laid down in State of Punjab vs. Rafiq Masih, the court emphasized that recovery is impermissible from retired employees and those belonging to Group 'C', particularly when the overpayment was not due to misrepresentation or fraud by the employee.

The court concluded that such recovery would be iniquitous and harsh.

The court held that the recovery of Rs. 4,28,681/- from the applicant's retiral benefits was impermissible as he was a retired Group 'C' employee and there was no misrepresentation or fraud on his part, and no prior notice was given.

The respondents were directed to refund the recovered amount of Rs. 4,28,681/- within a period of two months from the date of receipt of the certified copy of the order.