Headline: Recovery of overpayment from Group C retired employees, without fault, is illegal and impermissible.

The applicant, Surjit Singh, joined the Chandigarh Police on December 12, 1983, and voluntarily retired as an ORP Inspector (Group – C) on November 1, 2019.

Prior to his retirement, a 'No Due Certificate' (Annexure A-1) was issued, and his retiral dues, including pension, were released.

In 2021, the Chandigarh Administration adopted the Punjab Civil Services (Revised Pay) Rules, 2021, effective from January 1, 2016.

The applicant submitted an option form for revised pay.

Subsequently, on November 16, 2022, Respondent No. 5 (Accountant General) revised his pay fixation and, via a revised certificate (Annexure A-4), directed the recovery of an overpayment of Rs. 1,02,468/- from his Death-cum-Retirement Gratuity (DCRG) without a show cause notice.

This recovery was based on a rectification of an earlier step-up of pay granted to the applicant on October 19, 2016 (Annexure A-10), which had aligned his pay with his junior, Sh. Dalbir Singh.

The applicant contends there was no misrepresentation or fraud on his part, and the pay fixation and step-up were departmental errors.

The respondents argue that the recovery is justified as per Punjab Civil Services Rules due to an incorrect annual increment date after the step-up, and the applicant had given an undertaking regarding future recoveries.

These OAs were heard together due to similar facts and reliefs.

Whether the recovery of overpaid amounts from a retired Group-C employee, without establishing misrepresentation or fraud, is permissible.

Whether such a recovery, particularly from DCRG, is prohibited under established legal principles and administrative instructions.

Whether the impugned recovery orders, issued without a show cause notice, violate principles of natural justice.

The court primarily applied the principles laid down by the Hon’ble Apex Court in State of Punjab & Ors. Vs. Rafiq Masih, SCT 2015 (1) 195, which summarized situations where recoveries by employers are impermissible in law, specifically from Class-III and Class-IV (or Group 'C' and Group 'D') service employees, and from retired employees or those due to retire within one year of the recovery order.

It also considered Thomas Daniel Vs. State of Kerala, 2022 INSC 497, which held that belated recovery after a long lapse is inequitable and impermissible.

The court further referenced DoPT OM dated 02.03.2016 (Annexure A-7), which prohibits recovery from retired employees, Group-C employees, and for excess payments due to administrative error.

The court found that the applicants' claims were covered under categories (i) and (ii) of the Rafiq Masih judgment, as they are Group-C employees and the recovery orders were issued after their retirement.

There was no allegation or establishment of fraud, misrepresentation, or fault on the part of the employees for the erroneous pay fixation; the stepping-up and increment alignment were administrative decisions and errors.

The court noted that recovery from DCRG is prohibited unless misconduct is established, which was not the case here.

Relying on Thomas Daniel (supra), the court emphasized that belated recovery after a long lapse is inequitable and impermissible.

Furthermore, the court observed that the impugned recovery orders were issued without a copy being issued/marked to the applicants, violating natural justice principles.

The argument that the applicants provided an undertaking was not deemed sufficient to override the principles established in Rafiq Masih especially considering the administrative nature of the error and the applicants' retired status.

The Original Applications are allowed.

The impugned recovery orders dated 05.04.2023 (in OA No. 195/2024), 15.12.2023 (in OA No. 197/2024), 22.03.2023 (in OA No. 300/2024), 29.06.2023 (in OA No. 302/2024), and 26.05.2023 (in OA No. 469/2024) are quashed and set aside to the extent they ordered recovery.

The respondents are directed to refund the recovered amounts to the applicants, along with interest at the GPF rate from the date of recovery until the date of actual payment, within eight weeks from the receipt of the order.