Recovery of excess pay from retiral dues is impermissible if based on forced undertakings obtained at retirement.

The petitioner, who retired as an Assistant Sub-Inspector (ASI), challenged an order dated 25-04-2023 issued by respondent no. 3.

The order directed the recovery of ₹1,24,415/- from the petitioner’s retiral dues on the grounds of excess payment resulting from a previous erroneous salary re-fixation.

The State contended that the recovery was valid because the petitioner had signed an undertaking at the time of preparing pension papers, consenting to the recovery of excess payments.

1. Whether the recovery of excess salary payments from a retired employee is permissible when the payment resulted from an employer’s error rather than the employee’s misrepresentation.

2. Whether an undertaking signed by an employee at the time of retirement/pension processing can be used to justify the recovery of benefits granted decades earlier.

The court primarily applied the principle of "hardship" established by the Hon'ble Supreme Court in State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from retired employees or those in Class III/IV service when payments were made mistakenly by the employer.

The Full Bench judgment in State of Madhya Pradesh v. Jagdish Prasad Dubey (2024), which held that an undertaking given at the stage of retirement regarding decades-old re-fixation is a "forced undertaking" and unenforceable under the principles of Central Inland Water Transport Corp Ltd.

The court reasoned that the petitioner, having retired from the post of ASI (Class III), fell directly under the protective categories defined in Rafiq Masih.

Regarding the State's reliance on the petitioner's consent, the court noted that the respondents failed to prove the undertaking was given voluntarily.

Applying the Jagdish Prasad Dubey precedent, the court found that since the undertaking was furnished only at the time of retirement—and not at the time the actual financial benefit was extended—it was effectively coerced and legally ineffective for recovering payments made years prior.

Consequently, the court held that the recovery was iniquitous and arbitrary, as the error lay solely with the department and not the petitioner.

It quashed the recovery order and the attached chart. The respondents were directed to refund any recovered amount with 6% interest per annum within three months; failure to do so results in an enhanced interest rate of 12% per annum. However, the court upheld the revised pay fixation of the petitioner.