Recovery from a retired Class III employee for excess payments made due to erroneous pay fixation is impermissible.

The petitioner was appointed as a daily wager in the Forest Department in 1976 and regularized as a Forest Guard (Class III) in 1993.

Upon his retirement on April 30, 2017, the respondents conducted a service book audit and alleged that an excess payment of ₹7,193/- was made between October 23, 1989, and April 22, 1993, due to incorrect pay fixation.

Consequently, the respondents issued an order (Annexure P-1) dated September 12, 2017, directing recovery of the said amount without providing a show-cause notice or a hearing.

The petitioner challenged this recovery, asserting he was not responsible for the miscalculation and that recovery from a retired Class III employee is legally impermissible.

1. Whether the recovery of excess payments made due to wrong pay fixation decades earlier can be effected from a retired Class III employee

2. Whether an undertaking for repayment of excess salary is enforceable if it was not given voluntarily at the time the benefit was first extended

The Court primarily relied on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey (2024), which held that recovery from retired employees or regarding pay revisions extended decades ago is generally impermissible, and that undertakings given under duress or at the stage of retirement are unenforceable.

It further applied the criteria from State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from Class III/IV employees, retired employees, or when the excess payment was made more than five years prior to the recovery order.

Additionally, the Court cited Jogeswar Sahoo v. District Judge, Cuttack (2025) regarding the necessity of observing natural justice before initiating recovery.

The Court observed that the petitioner retired from a Class III post, and the alleged excess payment dated back to 1989-1993, satisfying the "hardship" conditions laid out in Rafiq Masih.

The Court noted that the respondents failed to produce any evidence of a voluntary undertaking given by the petitioner at the commencement of the pay fixation in 1989.

Following the Jagdish Prasad Dubey precedent, any undertaking obtained at the time of retirement is considered "forced" and legally void.

Furthermore, the Court found the recovery order procedurally flawed as it was issued without a show-cause notice, violating the principles of natural justice.

Since the petitioner was not responsible for the administrative error in pay fixation, the court determined that the recovery would be iniquitous and arbitrary.

It held that recovery from a retired Class III employee for errors occurring over 25 years prior is impermissible in the absence of fraud or a voluntary contemporaneous undertaking.

The respondents were directed to refund the recovered amount of ₹7,193/- with 6% interest per annum from the date of retirement until actual payment.

Additionally, the respondents were ordered to settle any remaining retiral dues within three months.