Recovery of Excess Pay From Employees Without Misrepresentation is Impermissible After Five Years or Upon Hardship

The petitioner, initially appointed as a Steno Typist Grade-III in 2006 and eventually promoted to Stenographer Grade-I in 2015, was served with a notice dated 13.11.2025 and subsequent proceedings dated 20.11.2025.

These orders sought to recover an excess payment of ₹2,59,654/- in 24 monthly installments.

The recovery was initiated following an internal audit report which determined that an increment granted on 31.05.2012 for passing an Account Test was inadmissible.

The petitioner challenged the recovery proceedings through a Writ of Certiorari under Article 226 of the Constitution of India.

1. Whether the respondents are entitled to recover excess pay and allowances from the employee after a significant lapse of time when no misrepresentation was attributed to the employee.

2. Whether the revised pay fixation based on the audit objection is legally sustainable.

The Court applied the principle that while authorities are empowered to rectify errors in pay fixation to prevent unjust gain of public money, recovery from employees is impermissible under specific hardship situations.

State of Punjab v. Rafiq Masih (2015 4 SCC 334): Recovery from employees belongs to Class III and Class IV service (or Group 'C' and Group 'D' service); Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued; or cases where recovery would be iniquitous or cause extreme hardship.

The Court noted that although the respondents have the right to correct pay fixation errors in accordance with Pay Rules, they failed to establish any misrepresentation or fraud on the part of the petitioner.

The error was committed solely by the Establishment. Given that the petitioner belongs to the category of employees for whom recovery is considered harsh after a long duration (the increment in question dated back to 2012), the Court determined that the recovery would result in "extreme hardship".

Applying the guidelines from Rafiq Masih, the Court found that while the downward revision of pay (rectification of the error) was permissible to ensure the correct pay is drawn moving forward, the retrospective recovery of the "excess" already paid was legally impermissible.

The Writ Petition was partly allowed; the impugned notice dated 13.11.2025 and proceedings dated 20.11.2025 were quashed only regarding the recovery of excess salary. The respondents were directed to refund any amount already recovered from the petitioner within twelve weeks.