Recovery of excess pay from Group 'C' employees is impermissible, especially when nearing retirement.

The applicant, Narayanappa Chitragar, was appointed as Turner Skilled in the 3rd respondent workshop on November 19, 1989.

He was promoted to Turner Highly Skilled (HS) with effect from May 20, 2003.

Subsequently, he was placed in Highly Skilled Grade I in Turner trade with effect from January 1, 2006.

Following directions from the Hon'ble High Court of Karnataka in Writ Petition Nos. 31240/2015 and 53718/2016, which allowed respondents to review promotions after the SRO 29/2006 came into force, the applicant's promotion was reviewed.

His date of placement as Turner HS I from January 1, 2006, was revised, and he was placed at Machinist HS II with effect from February 18, 2006, and Machinist HS I with effect from March 11, 2016.

The applicant retired voluntarily on February 14, 2025.

The respondents calculated an excess payment of Rs. 7,52,101/- from January 1, 2006, until July 2024, and proposed to deduct this amount from his retirement gratuity.

The applicant's counsel argued that the High Court judgment was not applicable as the applicant was appointed under SRO 1/1988, not SRO 29/2006, and that the recovery was illegal per Supreme Court rulings.

The respondents' counsel stated that the recovery was based on the High Court's directions for promotions on a unified list after the merger of trades effective February 18, 2006, and that the applicant had shown willingness for the recovery.

1. Whether the proposed recovery of Rs. 7,52,101/- from the applicant's retirement gratuity, a Group ‘C’ employee, constitutes an arbitrary, unjust, and illegal act?

2. Whether the undertaking/willingness for recovery obtained from the applicant at the verge of his retirement is valid and enforceable?

The court primarily applied the principles laid down by the Hon'ble Apex Court in **State of Punjab & Ors vs. Rafiq Masih (White Washer) and Ors.**, reported in (2015) 4 SCC 334, and **Thomas Daniel v. State of Kerala**, reported in 2022 SCC OnLine SC 536, regarding the impermissibility of recovering excess payments from employees in certain situations.

Specifically, it relied on the Department of Personnel and Training (DoPT) Office Memorandum dated March 2, 2016, which summarized situations where recoveries by employers would be impermissible, including from Group 'C' and Group 'D' service employees, from retired employees or those due to retire within one year, and where excess payment was made for a period exceeding five years before the recovery order was issued.

Additionally, the court cited **Subhash Nimba Chavan vs the State of Maharashtra** in Writ Petition No. 6440/2024 (DD: July 1, 2024), which held that undertakings extracted at the stroke of retirement are invalid due to the employer taking advantage of the employee's helplessness.

The court noted that the factual aspects were not in dispute and acknowledged that the re-fixation of pay was a consequence of the Hon'ble High Court of Karnataka's directions for review of promotions, which the Tribunal had upheld in a similar case (Shri Tazimulla Shariff S.D. and Ors. v. Union of India and Ors.).

However, the court found that the recovery proceedings were initiated against a Group 'C' employee, the applicant, who retired voluntarily, and there was no evidence of misrepresentation or fraud on his part in securing the excess payment.

Relying on the DoPT OM of March 02, 2016, which codifies the Rafiq Masih principles, the court emphasized that recovery from Group 'C' employees, especially at the time of retirement benefits, after a lapse of more than 18 years (excess payment from 2006 for retirement in 2025) and without fraud, is impermissible.

Furthermore, the court held that any "willingness" or undertaking for recovery extracted from an employee at the point of retirement, under coercive circumstances, does not hold sanctity and cannot exonerate the employer from their liability, as per the Bombay High Court's ruling in Subhash Nimba Chavan.

Therefore, while the re-fixation of pay was deemed valid, the recovery itself was found to be unjustifiable based on the established legal precedents against recovery from certain classes of employees, particularly when nearing retirement and in the absence of fraud.

However, it declared the initiated recovery proceedings for Rs. 7,52,101/- from the applicant's retirement gratuity as wholly unjustifiable.

The Communications dated December 5, 2024 (Annexure A7) and December 12, 2024 (Annexure A8), pertaining to the recovery aspect, were quashed and set aside.

The respondents were directed to refund Rs. 7,52,101/- to the applicant if already recovered, within eight weeks from the date of receipt of the certified copy of the order.

The OA was disposed of accordingly, with no order as to costs.