Recovery of excess pay from a retired Class III employee is impermissible absent fraud or misrepresentation.

The petitioner, a retired Class-III Assistant Teacher, challenged the recovery order dated 17 June 2025 issued by the Block Education Officer, Bilha, directing recovery of ₹3,72,824/- towards alleged excess salary paid due to erroneous pay fixation and making release of her final pension and retiral dues conditional upon such deposit.

She contended that the excess payment resulted from departmental pay fixation and not from any fraud, misrepresentation, or suppression on her part; that the recovery was initiated after more than 15 years without notice or hearing; and that a No Dues Certificate had been issued at retirement.

The respondents maintained that the excess payment resulted from a clerical error in fixation of her pay.

1. Whether the respondents were justified in revising the petitioner’s pay fixation and directing recovery of ₹3,72,824/- in respect of alleged excess payments made over several years, where the petitioner held a Class-III post and there was no allegation of fraud or misrepresentation.

2. Whether the recovery order was sustainable when it was passed without affording the petitioner an opportunity of hearing and in view of the principles laid down in State of Punjab v. Rafiq Masih.

The Court applied the principles laid down by the Supreme Court in State of Punjab & Others v. Rafiq Masih (White Washer), (2015) 4 SCC 334.

Under that decision, recovery of mistaken excess payments is generally impermissible where it is made from Class-III or Class-IV employees; from retired employees or those due to retire within one year; where the excess payment relates to a period exceeding five years before the recovery order; where the employee was paid for duties of a higher post; or where recovery would be inequitable, harsh, or arbitrary.

The Court also noted that recovery may remain permissible where the employee had furnished an undertaking agreeing to refund any excess payment.

The Court found that the petitioner was a Class-III employee and that the alleged excess payment arose from an error attributable to the department, with no material indicating fraud, misrepresentation, or suppression by her.

Since the alleged excess payment related to a period substantially exceeding five years and the petitioner had retired, the case fell within the protective categories identified in Rafiq Masih.

Accordingly, recovery of the amount from the petitioner could not be sustained. However, the Court preserved the respondents’ liberty to undertake a fresh pay-fixation exercise in accordance with law, subject to providing the petitioner an adequate opportunity of hearing.

The respondents were permitted to undertake a fresh determination of the petitioner’s pay fixation after giving her an opportunity of hearing, but any recovery of excess payment was required to comply with Rafiq Masih.

The respondents were directed to release and refund any amount recovered or withheld pursuant to the impugned order and to release the petitioner’s withheld retiral dues, completing the exercise within six months from receipt of the certified copy of the order.

The writ petition was allowed to that extent.