Recovery of excess pay from a retiring Class III employee without misrepresentation is impermissible.

The petitioner, a Class III Rural Agricultural Extension Officer, was absorbed into the Horticulture Department in 1990 and served until retirement.

Although scheduled to retire on 31 December 2023, he was retired effective 29 December 2023.

The respondents deducted ₹2,20,825 from his retiral benefits without prior notice, hearing, or a reasoned order.

His representation against the deduction remained undecided.

The State did not dispute that the petitioner was a Class III employee or that no fraud or misrepresentation was attributed to him in connection with the alleged overpayment.

1. Whether recovery of alleged excess payment from the petitioner’s retiral benefits was impermissible because he was a Class III employee and the recovery was made at the time of retirement

2. Whether the recovery action, taken without notice or an opportunity to be heard, could be sustained

In State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, the Supreme Court identified categories in which recovery of mistaken excess payments is impermissible, including recovery from Class III/Group C employees and from employees who have retired or are due to retire within one year of the recovery order.

The Court also relied on the Madhya Pradesh High Court Division Bench decision in State of M.P. v. Jagdish Prasad Dubey, W.A. No. 815/2017, for the principle that excess payment resulting from departmental pay fixation, without employee misrepresentation, cannot be recovered post-retirement.

The petitioner fell within both relevant Rafiq Masih categories: he was a Class III employee, and the deduction was made at the point of retirement.

The State also accepted that there was no fraud or misrepresentation by him.

In those circumstances, the recovery was legally impermissible; the Court further noted that the deduction had been made without following natural justice.

It directed the respondents to refund the amount within three months of production of a certified copy of the order; if they failed to do so, the amount would carry interest at 6% from the date of deduction until payment.

No order as to costs was made.