Recovery of excess pay from Class III employees is impermissible, though pay fixation may be reconsidered lawfully.

The petitioner, a Class-III employee working as a Constable in the 1st Battalion, CAF, Bhilai, was informed by the respondent authorities that verification of his service book had disclosed excess payment allegedly arising from erroneous pay fixation.

His pay fixation was consequently amended by order dated 29 April 2026. Thereafter, by order dated 22 June 2026, the authorities directed recovery of ₹2,71,587 from him towards the alleged excess payment.

The petitioner challenged the recovery order, relying principally on State of Punjab v. Rafiq Masih (White Washer), while the State defended the recovery as lawful.

Whether recovery of alleged excess salary paid due to erroneous pay fixation could be effected from the petitioner, who undisputedly belonged to Class-III service.

Whether, notwithstanding the impermissibility of recovery, the respondents could reconsider the petitioner’s pay fixation in accordance with law.

The Court applied the principles laid down in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, that recovery of mistaken excess payments is ordinarily impermissible, inter alia, from employees belonging to Class-III and Class-IV service, from employees nearing retirement, where excess payment has continued for more than five years, and where recovery would be inequitable, harsh or arbitrary.

The Court also noted the qualification recognised in High Court of Punjab and Haryana v. Jagdev Singh, (2016) 14 SCC 267, that recovery may be permissible where the employee had furnished an undertaking to refund excess payment.

The Court further relied upon the Division Bench decisions of the High Court of Chhattisgarh in State of Chhattisgarh v. Labha Ram Dhruv, W.A. No. 264 of 2020, and State of Chhattisgarh v. Roshan Lal Baghel, W.A. No. 265 of 2020.

Since the petitioner’s status as a Class-III employee was undisputed, the case fell within the category identified in Rafiq Masih in which recovery of mistakenly paid excess salary is impermissible.

The Court therefore found the recovery order legally unsustainable, irrespective of whether the underlying pay fixation was correct.

However, the prohibition against recovery did not prevent the respondents from examining the legality of the petitioner’s pay fixation on its merits.

Any such reconsideration had to be undertaken only after giving the petitioner a proper opportunity of hearing and issuing a reasoned order.

The respondents were directed to refund any amount already recovered from the petitioner within six months from the date of receipt of the order.

The Court left the correctness of the petitioner’s pay fixation open for reconsideration in accordance with law, subject to prior notice, hearing, and a reasoned decision.