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

The petitioner was appointed as a Constable in 1981 and subsequently retired as a Sub-Inspector on 31 January 2023.

Upon scrutiny of his service book by the District Pension Office, the respondents concluded that his pay had been erroneously fixed and ordered recovery of ₹1,79,778 for alleged excess payments made between 1 January 2006 and 1 July 2021.

The petitioner contended that the recovery was ordered without a show-cause notice or opportunity of hearing, that he had not caused or contributed to the alleged erroneous fixation, and that recovery from a retired Class III employee was impermissible.

The State relied on an undertaking allegedly given by the petitioner agreeing to refund any excess payment and argued that recovery was therefore lawful.

The petitioner challenged the recovery order under Article 226 of the Constitution.

Whether recovery of alleged excess salary paid due to erroneous pay fixation could be made from the petitioner after his retirement, particularly when he was a Class III employee?

Whether recovery could be sustained when it was ordered without prior show-cause notice or opportunity of hearing?

Whether the undertaking relied upon by the State authorized recovery, despite the absence of proof that it had been voluntarily furnished at the time of the alleged pay fixation?

The Court applied Article 226 of the Constitution and the principles governing recovery of excess governmental payments.

Under State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, recovery is ordinarily impermissible from Class III/Class IV employees, retired employees, and where excess payment has continued for more than five years before the recovery order, or where recovery would be harsh, inequitable, or arbitrary.

Relying on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 MPLJ 198, the Court held that recovery may be made on the basis of an undertaking given before grant of the benefit, subject to hardship principles; however, an undertaking furnished at the stage of retiral benefits for a benefit granted decades earlier cannot be enforced, and an undertaking concerning pay refixation is unenforceable unless shown to have been given voluntarily.

The Court also relied on Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, (1986) 3 SCC 156, concerning unconscionable or forced undertakings.

Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831/2019, order dated 13 May 2024, placed the burden on the State to establish that the undertaking was voluntary.

Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) MPLJ (SC) 25, further supported the principle that recovery from retired, non-gazetted employees without a prior hearing is unsustainable where there is no fraud or misrepresentation.

The Court found that the alleged excess payment resulted from departmental pay fixation and not from fraud, misrepresentation, or any misconduct by the petitioner.

The recovery related to payments made over a period substantially exceeding five years and was initiated after the petitioner’s retirement on a Class III post; both circumstances fell within the categories identified in Rafiq Masih where recovery is impermissible.

The petitioner had not furnished any specific undertaking at the time of the 1 January 2006 pay fixation, and the State failed to establish that the later undertaking relied upon as Annexure R-2 had been voluntarily given.

Applying Jagdish Prasad Dubey, Brojo Nath Ganguly, and Ravindra Kumar Joshi, the Court treated the undertaking as forced and unenforceable.

The absence of a show-cause notice or opportunity of hearing further violated the principles of natural justice and rendered the recovery unsustainable.

The impugned recovery order was set aside, and the respondents were directed to refund ₹1,79,778 with interest at 6% per annum from the date of retirement until actual payment, subject to the clarification that no refund would be payable if the amount had not in fact been recovered from the petitioner’s retiral dues.

The exercise was directed to be completed within 90 days from submission of a certified copy of the order, and the writ petition was accordingly disposed of.