Recovery of excess pay is impermissible absent employee misrepresentation when caused by delayed administrative error.

The first petitioner’s husband was appointed as a Typist in the Judicial Department on 5 February 1997 and died on 17 April 2021. He had been granted Selection Grade and revised pay benefits. Although his revised pay was initially fixed at ₹50,200, the third respondent, acting on an audit objection raised by the fourth respondent, re-fixed his pay at ₹48,800 plus Special Pay of ₹240 and ordered recovery of ₹6,74,090 as alleged excess payment from his Death-cum-Retirement Gratuity (“DCRG”).

The pay was subsequently revised again, and family pension and death gratuity were sanctioned, but the recovered amount was not refunded despite representations. The petitioners therefore challenged the recovery and sought refund of ₹6,74,090 under Article 226 of the Constitution.

1. Whether the respondents were entitled to recover ₹6,74,090 from the deceased employee’s DCRG on account of an alleged excess payment resulting from erroneous pay fixation, particularly in the absence of any misrepresentation by the employee.

2. Whether the respondents’ correction of the employee’s pay fixation could be sustained independently of the recovery of the alleged excess amount.

The Court applied Article 226 of the Constitution in reviewing the legality of the impugned recovery order.

It recognised the authority of the competent department to correct erroneous pay fixation and continue the revised fixation in accordance with the applicable Pay Rules and Government Orders, since unjust enrichment from public funds is impermissible.

However, it applied the principles laid down by the Supreme Court in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, under which recovery of excess payment is generally impermissible where it is made from Class III or Class IV employees, retired employees, or where the excess payment continued for more than five years, and in cases where recovery would be harsh, inequitable, or arbitrary.

The absence of employee misrepresentation and the resulting hardship are material considerations against recovery.

The Court distinguished between correcting the erroneous pay fixation and recovering the amount already paid. It upheld the respondents’ power to revise the deceased employee’s pay pursuant to the audit objection and applicable pay rules, as retention of an incorrect fixation would result in unjust gain from public funds.

Nevertheless, the record did not establish any misrepresentation by the employee, and the alleged excess payment arose from an establishment-level error that remained uncorrected for a substantial period. Applying Rafiq Masih, the Court held that recovery at that stage—particularly after the employee’s death and from his DCRG benefits—would impose undue hardship and would be inequitable. Accordingly, the pay revision was sustained, but the recovery component was found legally impermissible.

The respondents were directed to repay the recovered amount to the petitioners within twelve weeks from the date of receipt of a copy of the order. No costs were imposed, and the connected miscellaneous petitions were disposed of accordingly.