Recovery of excess pay from Class III employees is impermissible absent fraud or voluntary undertaking.

The petitioner, a Class-III employee, challenged the order dated 25.04.2018 [Annexure P-1] issued by respondent No. 3, which withdrew the benefit of a time-bound pay scale.

The withdrawal and subsequent recovery were initiated on the grounds that the petitioner had foregone a promotion to Assistant Grade-II.

The petitioner contended that the recovery was ordered without following the principles of natural justice and that, as a Class-III employee who did not misrepresent facts, the recovery was impermissible under established law.

1. Whether the recovery of excess payments made toward time-bound pay scales is permissible from a Class-III employee where there is no allegation of fraud or misrepresentation.

2. Whether an undertaking given by an employee at the time of pay re-fixation can be used to justify recovery if such undertaking was not given voluntarily.

State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from Class-III and Class-IV employees or when excess payment was made for more than five years.

Full Bench decision of the Madhya Pradesh High Court in State of Madhya Pradesh v. Jagdish Prasad Dubey (2024), which held that "forced" undertakings given during pay re-fixation are unenforceable.

Jogeswar Sahoo v. District Judge, Cuttack (2025) regarding the necessity of providing an opportunity of hearing before initiating recovery.

The Court observed that the petitioner is a Class-III employee and found no evidence of fraud or misrepresentation on his part regarding the pay scale benefits.

To address the state's reliance on an undertaking, the Court applied the Jagdish Prasad Dubey and Ravindra Kumar Joshi precedents, noting that the State failed to prove the undertaking was given voluntarily; thus, it was deemed a "forced" undertaking and legally unenforceable.

The Court further noted that the recovery was initiated without a show-cause notice or an opportunity for a hearing, violating natural justice.

The court determined that the hardship caused to a low-tier employee outweighed the employer's right to recover mistakenly paid funds.

The order dated 25.04.2018 [Annexure P-1] was set aside regarding the recovery, though the underlying pay fixation (withdrawal of the higher scale due to refusal of promotion) was upheld.

The respondents were directed to refund any recovered amounts with 6% interest per annum and grant all consequential benefits within 90 days.