Recovery of excess pay from retired employee based on forced undertaking is legally impermissible.

The petitioner, initially appointed as a Constable, retired from the post of Sub-Inspector (SI) on January 31, 2024

Following retirement, during a service book audit by the Joint Director, Treasury, Accounts and Pension Department, it was alleged that the petitioner received excess payments totaling Rs. 75,748/- due to incorrect pay fixation between January 1, 1996, and December 31, 2015

Consequently, the respondents ordered the recovery of this amount from the petitioner’s gratuity without providing a show-cause notice or a hearing

The State contested the petition, arguing that the petitioner had signed an undertaking (Annexure R-3) at the time of retirement, consenting to the recovery of any excess payments

1. Whether the recovery of excess pay from a retired employee is permissible when the payment resulted from an erroneous fixation by the employer without any fraud by the employee

2. Whether an undertaking for recovery furnished by an employee at the time of retirement is legally enforceable to justify recoveries for pay fixations done decades prior

The court primarily applied the principles from State of Punjab v. Rafiq Masih (White Washer), which prohibits recovery from retired employees or those retiring within one year, and for payments made in excess of five years before the recovery order

It further relied on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, which held that "forced" undertakings—those not given voluntarily at the time of receiving the benefit—are unenforceable

the court cited Central Inland Water Transport Corp. Ltd. v. Brojo Nath Ganguly regarding unequal bargaining power

Jogeswar Sahoo v. District Judge, Cuttack, emphasizing the necessity of observing natural justice before ordering recoveries

The court reasoned that the alleged excess payment (1996–2015) was made over five years before the recovery order and the petitioner had already retired, placing the case squarely within the prohibitions set by Rafiq Masih

Regarding the State's reliance on an undertaking, the court observed that the document was signed at the time of retirement, not at the time of initial pay fixation; therefore, it was a "forced" undertaking arising from unequal bargaining power and lacked voluntariness

The court noted that the State failed to establish that the undertaking was voluntary or that the petitioner was responsible for the erroneous fixation through fraud or misrepresentation

Furthermore, the lack of a show-cause notice violated the principles of natural justice

The Court set aside the recovery order and directed the respondents to refund the amount of Rs. 75,748/- to the petitioner with interest at 6% per annum from the date of retirement until actual payment

The exercise is to be completed within 90 days. The petition was disposed of accordingly