Recovery of excess pay from retired Class-IV employees is impermissible under Rafiq Masih.

The petitioner, a retired Work Charged Mason Grade-II holding a Class-IV post, retired on 31 May 2025.

Following an objection by the Treasury office during processing of his pension and retiral benefits, the respondents re-examined his 2020 pay fixation and, by order dated 25 March 2026, directed recovery of ₹82,754 as excess salary.

The petitioner challenged the recovery, asserting that the excess payment resulted from the employer’s act, without any fraud or misrepresentation on his part, and that he had received no prior hearing.

He sought, among other relief, quashing of the recovery and release or refund of amounts withheld or recovered

1. Whether the respondents could recover alleged excess salary from the petitioner after his retirement, where he held a Class-IV post and the alleged excess arose from employer-made pay fixation without fraud or misrepresentation by him

2. Whether the impugned pay refixation and recovery orders were sustainable when no show-cause notice or effective opportunity of hearing had been provided

3. Whether the respondents could reconsider the petitioner’s pay fixation notwithstanding that recovery of the alleged excess payment was impermissible

The Court applied State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, which identifies circumstances in which recovery of excess payments by an employer is impermissible, including recovery from Class-III or Class-IV employees; retired employees or employees due to retire within one year; and recovery of payments made for a period exceeding five years before the recovery order.

Recovery may also be barred where it would be inequitable, harsh, or arbitrary

The Court also applied the principles of natural justice, requiring an adequate opportunity of hearing before an adverse pay-refixation and recovery decision

The Court found that the petitioner had retired before the recovery order, had held a Class-IV post, and had not procured the alleged excess payment through fraud, misrepresentation, or suppression; the excess, if any, appeared attributable to the employer

It held that the case fell within the protections identified in Rafiq Masih, noting the petitioner’s retired status, Class-IV classification, and the period associated with the disputed pay fixation

Independently, the absence of a show-cause notice or effective hearing vitiated the impugned action

The Court nevertheless distinguished the question of recovery from the correctness of the pay fixation itself: the respondents could examine pay fixation afresh, but only after hearing the petitioner and issuing a reasoned order

It permitted the respondents to reconsider pay fixation in accordance with law after giving the petitioner an adequate hearing, while clarifying that any recovery would remain subject to Rafiq Masih

The respondents were directed to release and refund any amount recovered or withheld pursuant to the impugned order and to release any remaining admissible retiral dues within 50 days of receiving a certified copy of the order.

The petition was disposed of with no order as to costs