Recovery of excess pay fixed more than five years before superannuation is impermissible.

The State authorities recovered ₹3,70,542 from the respondent’s leave encashment, alleging excess payment arising from incorrect pay fixation for the periods 1 January 2009–31 July 2017 and 1 July 2019–31 August 2021.

The recovery order was made after his superannuation on 31 August 2021, without prior notice or hearing.

The Single Judge set aside the recovery order and directed refund.

The State appealed; the delay in filing the appeal was condoned.

1. Whether the authorities could recover alleged excess payments from the respondent’s leave encashment after his superannuation, where the alleged incorrect pay fixation related to periods more than five years before retirement.

2. Whether, despite being required to refund the amount recovered, the authorities could re-fix the respondent’s pay and adjust his pension prospectively.

The Court relied on State of Punjab & Ors. v. Rafiq Masih (White Washer), (2015) 4 SCC 334, concerning limits on recovery of excess payments from employees in specified circumstances.

The Court relied on Thomas Daniel v. State of Kerala & Ors., AIR 2022 SC 2153, which the Court cited in relation to recovery of excess payments resulting from incorrect pay fixation, particularly where the relevant fixation preceded retirement by more than five years.

The Court also held that the bar on recovering amounts already paid did not prevent the authorities from correctly re-fixing pay and determining future pension under the applicable rules.

The respondent had retired before the recovery was ordered, and the alleged excess payments included amounts attributable to a period more than five years before his superannuation.

The recovery was also made without notice or an opportunity to be heard.

Applying the cited Supreme Court decisions, the Division Bench found the Single Judge justified in directing repayment of the amount recovered.

It distinguished repayment of amounts already paid from prospective pension determination: the authorities could re-fix pay and calculate future pension under the applicable rules, but could not recover amounts already paid.

The authorities were permitted to re-fix the respondent’s pay from the date of the alleged incorrect fixation and to determine future pension accordingly, but were barred from recovering amounts already paid.