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

The petitioner was appointed as a Sub-Engineer on 27 January 1986 and retired from service on 31 December 2024.

At the time of retirement, the District Pension Office objected to the alleged erroneous fixation of his pay, pursuant to which the respondents ordered recovery of ₹16,00,089 from his retiral benefits.

The petitioner contended that the recovery was ordered without a show-cause notice or opportunity of hearing, that he was a Class III employee, and that the alleged excess payment resulted from departmental pay-fixation errors rather than any fraud or misrepresentation on his part.

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

The record contained neither the relevant pay-fixation chart nor particulars of the period during which the alleged excess payment was made.

1. Whether recovery of alleged excess salary paid due to erroneous pay fixation could be made from the petitioner, a retired Class III employee, without issuing notice or affording an opportunity of hearing.

2. Whether the undertaking relied upon by the State authorised recovery, notwithstanding the petitioner’s retirement and the absence of proof that the undertaking was voluntarily given.

3. Whether the petitioner was entitled to refund of the recovered amount with interest.

The Court applied the principles in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, under which recovery is ordinarily impermissible from Class III/Class IV employees, retired employees, employees retiring within one year, or where the excess payment relates to a period exceeding five years, particularly where recovery would be harsh or inequitable.

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 given at the time of pay refixation may permit recovery only if it was voluntarily given and subject to the limitation against inequitable recovery; an undertaking obtained at the stage of retiral benefits for a decades-old refixation cannot ordinarily be enforced.

The Court further relied on Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, (1986) 3 SCC 156, and Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831 of 2019, holding that the State must establish that the undertaking was voluntary; otherwise, it is treated as forced and unenforceable.

Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, was applied for the proposition that recovery from retired non-gazetted employees, absent fraud or misrepresentation and without an opportunity of hearing, is unsustainable.

The Court found that the petitioner was a retired Class III employee and that the recovery had been initiated without notice or an opportunity of hearing, bringing the case squarely within the protective principles of Rafiq Masih.

The State failed to produce the pay-fixation chart or establish the period of alleged excess payment, and there was no finding of fraud or misrepresentation by the petitioner.

Although the State relied on an undertaking, it did not establish that the undertaking had been voluntarily given.

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

In these circumstances, recovery from the petitioner’s retiral benefits was held to be legally impermissible.

The respondents were directed to refund the amount to the petitioner, together with interest at 6% per annum calculated from 31 December 2024, the date of retirement, until actual payment.

The Court clarified that the refund and interest direction would operate only if the amount had in fact been recovered from the petitioner’s retiral dues.

The respondents were directed to complete the exercise within 90 days from submission of a certified copy of the order.