Recovery of excess pay from retired Class III employees is impermissible absent a voluntary undertaking.

The petitioner was appointed as a Compounder in 1980 and retired from service on 31 January 2016 from a Class III post.

During scrutiny of his service book and pension papers, the respondents alleged that his pay had been incorrectly fixed, resulting in excess payment from 1 April 2003 to June 2013.

By order dated 27 October 2023, the respondents directed recovery of ₹66,133 from the petitioner.

The petitioner contended that the recovery was ordered without a show-cause notice or opportunity of hearing, that he was not responsible for the erroneous pay fixation, and that recovery from a retired Class III employee was impermissible.

The State argued that the recovery was justified because the petitioner had furnished an undertaking consenting to recovery of any excess payment.

1. Whether recovery of ₹66,133 could be effected from the petitioner, a retired Class III employee, towards alleged excess payment arising from pay fixation undertaken between 2003 and 2013?

2. Whether the undertaking allegedly furnished by the petitioner at the stage of preparation of pension papers authorised the recovery, particularly when the respondents did not establish that it was given voluntarily?

3. Whether the recovery order was invalid for having been passed without notice or an opportunity of hearing?

The Court applied Article 226 of the Constitution and the principle that recovery of mistaken excess payments is impermissible in the situations identified in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, including recovery from retired employees, Group ‘C’ or Group ‘D’ employees, and recovery relating to payments made more than five years before the recovery order.

Relying on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 M.P.L.J. 198, the Court held that an undertaking may support recovery only where it was given before the benefit of pay refixation and voluntarily; an undertaking obtained at the stage of retirement or payment of retiral dues for a refixation made decades earlier cannot ordinarily be enforced.

The Court also relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, which treated recovery from retired ministerial employees, absent fraud or misrepresentation and without an opportunity of hearing, as unsustainable.

Under Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831/2019, decided on 13 May 2024, the State bears the burden of establishing that an undertaking was voluntarily given; otherwise, it cannot be enforced.

The alleged excess payment resulted from pay fixation carried out between 1 April 2003 and June 2013, and there was no specific undertaking furnished by the petitioner at the time of that fixation.

The undertaking relied upon by the State was given only during preparation of pension papers, and the respondents failed to prove that it was voluntary; consequently, it could not authorise recovery under the Full Bench ruling in Jagdish Prasad Dubey.

The petitioner had retired in 2016, held a Class III post, and the recovery related to payments made substantially more than five years before the recovery order. These circumstances fell squarely within the protective categories recognised in Rafiq Masih.

The absence of a show-cause notice or hearing further rendered the recovery unsustainable, consistent with the principle applied in Jogeswar Sahoo.

The Court therefore held that the recovery was illegal.

The respondents were directed to refund ₹66,133 to the petitioner, together with interest at 6% per annum from the date of his retirement until actual payment.

The exercise was directed to be completed within 90 days from submission of a certified copy of the order.

The Court clarified that the petitioner would not be entitled to the refund if no recovery had in fact been made from his retiral dues.