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

The petitioner, an Agriculture Extension Officer and Class III employee, retired from service on 31 March 2025. During scrutiny of his service book and pension papers, the respondents concluded that his pay had been erroneously fixed and that excess salary had been paid from 1 January 1986 until retirement. A recovery of ₹2,95,107 was consequently ordered through the impugned order, without issuing a show-cause notice or providing an opportunity of hearing

The State contended that the recovery was lawful because the excess payment resulted from erroneous pay fixation and because the petitioner had furnished an undertaking at the stage of preparation of his pension papers agreeing to refund any excess payment. The petitioner argued that he had not furnished any undertaking when the pay benefit was originally granted in 1986, that the recovery was initiated after retirement, and that he was a Class III employee

Whether recovery of alleged excess salary paid pursuant to erroneous pay fixation, covering the period from 1 January 1986 to 31 March 2025, could be made from a retired Class III employee without prior notice or opportunity of hearing

Whether an undertaking furnished by the petitioner at the time of retirement or preparation of pension papers could authorize recovery of excess payments made pursuant to pay fixation decades earlier

Whether the petitioner was entitled to refund of ₹2,95,107 with interest

The Court exercised jurisdiction under Article 226 of the Constitution of India. It applied the Supreme Court’s principles in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, under which recovery is ordinarily impermissible from retired employees, Group C/Class III and Group D/Class IV employees, and where the excess payment relates to a period exceeding five years before the recovery order, particularly where recovery would be harsh or inequitable.

The Court relied on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 MPLJ 198, which held that an undertaking given at the time of payment or refixation of pay may permit recovery subject to the principles governing hardship and limitation, but an undertaking obtained at the stage of retirement for payments made decades earlier cannot ordinarily be enforced; it also held that undertakings must be voluntary, not forced. The Court further relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) MPLJ (SC) 25, applying the rule that recovery from retired, non-gazetted employees, absent fraud or misrepresentation and without a hearing, is unsustainable. The decision in Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831/2019, order dated 13 May 2024, was cited for the principle that the State must establish that an undertaking was voluntarily furnished before relying upon it for recovery.

The Court found that the alleged excess payment arose from pay fixation made on 1 January 1986 and that no undertaking had been furnished by the petitioner when the benefit was originally granted. The undertaking relied upon by the State was furnished only after retirement, during preparation of pension papers, and therefore did not constitute the kind of contemporaneous, voluntary undertaking contemplated in Jagdish Prasad Dubey.

The recovery was also independently barred under Rafiq Masih because the petitioner had retired, belonged to Class III service, and the alleged excess payments extended over nearly thirty-nine years, substantially beyond the five-year period identified by the Supreme Court. Further, the recovery order was issued without notice or hearing, contrary to the principles of natural justice; the absence of fraud or misrepresentation by the petitioner reinforced the conclusion that recovery would be inequitable and legally unsustainable.

The respondents were directed to refund the amount to the petitioner 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.