Recovery From Class-III Employee For Excess Payments Made Without Misrepresentation Exceeding Five Years Is Impermissible

The Petitioner, a Class III employee (Assistant Grade III) at a Government Higher Secondary School, was granted two advance increments in 2009.

This benefit continued for eleven years until November 2020.

On 11.12.2020, Respondent No. 4 issued an order for the recovery of ₹98,406/- in 48 installments, citing that the increments were wrongly extended.

The Petitioner challenged this recovery, asserting there was no misrepresentation on his part and that as a Class III employee, such recovery would be iniquitous.

The State contended that the recovery was justified as it corrected a detected administrative mistake that the Petitioner failed to report.

1. Whether the recovery of excess payments made due to administrative error is permissible from a Class III employee after a lapse of eleven years in the absence of fraud or misrepresentation.

2. Whether the Petitioner’s case falls under the protected categories against recovery as established by judicial precedent.

The Court primarily applied the legal principles summarized by the Hon’ble Supreme Court in State of Punjab v. Rafiq Masih (White Washer) and others (2015) 4 SCC 334.

This precedent establishes that recovery by employers is impermissible in law when: (i) it involves Class III or Class IV employees; (ii) the excess payment has been made for a period exceeding five years before the recovery order; or (iii) the recovery would be so iniquitous or harsh that it outweighs the employer’s right to recover.

The Court observed that the Petitioner is a Class III employee and that the State failed to produce any evidence demonstrating fraud or misrepresentation on his part in securing the increments.

The Court noted that the benefit had continued uninterrupted for a significant duration of 11 years (2009–2020).

Applying the Rafiq Masih criteria, the Court reasoned that recovery from a Class III official after such a long duration would be "harsh" and "iniquitous".

Since the mistaken payment was a result of departmental error rather than the Petitioner's conduct, and the recovery was initiated well beyond the five-year threshold stipulated in the governing precedent, the recovery order was deemed legally unsustainable.

The High Court quashed the recovery order dated 11.12.2020 (Annexure P/1) and directed the Respondents to refund any amount already recovered to the Petitioner forthwith, along with interest at the rate of 6% per annum.

The writ petition was allowed.