Recovery from retired employee for excess payment based on undertaking given only at retirement is impermissible.

The petitioner, a Deputy Superintendent of Police (DSP), retired on 31.12.2016

Upon retirement, the Treasury Department objected to the petitioner’s pay fixation and increments calculated between February 2004 and September 2014, alleging an excess payment of ₹2,81,276/-

Consequently, the respondents ordered a recovery of the said amount from the petitioner's gratuity (Annexure P/1)

The petitioner challenged this recovery on the grounds that it was initiated post-retirement without a show-cause notice and that he was not responsible for any wrong fixation

The State contended that the recovery was valid as the petitioner had signed an undertaking (Annexure R-2) at the time of preparing pension papers

1. Whether the recovery of excess salary paid due to wrong pay fixation can be effected from a retired employee after their superannuation

2. Whether an undertaking given by an employee at the time of retirement/payment of retiral dues is enforceable to recover excess payments made decades prior

The Court primarily applied the principles laid down by the Supreme Court in State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from retired employees or when excess payment was made for a period exceeding five years before the recovery order

It further relied on the Full Bench decision of the Madhya Pradesh High Court in State of M.P. v. Jagdish Prasad Dubey (2024), which held that "forced" undertakings given at the stage of retiral dues cannot be enforced for pay fixations done decades ago

Additionally, it considered Jogeswar Sahoo v. District Judge, Cuttack (2025), emphasizing that recovery is unsustainable if made without an opportunity of hearing and in the absence of fraud by the employee

The court found that the alleged wrong pay fixation occurred between 2004 and 2014, yet the recovery was only initiated after the petitioner’s retirement in 2016 without any show-cause notice, violating principles of natural justice

Applying the Jagdish Prasad Dubey precedent, the court determined that since the petitioner did not provide a voluntary undertaking at the time the actual financial benefit was extended (2004), the undertaking signed at the time of retirement (2014/2016) was "forced" and legally unenforceable

Following the Rafiq Masih guidelines, the court noted that recovery from a retired employee for payments made more than five years prior is impermissible in law, especially when the employee was not at fault for the erroneous calculation

It held that recovery from a retired employee for long-past excess payments is illegal when based on a post-retirement undertaking

The Court directed the respondents to refund the recovered amount of ₹2,81,276/- to the petitioner with 6% interest per annum from the date of retirement until actual payment, to be completed within 90 days