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

The petitioner was initially appointed as a Teacher/Upper Division Teacher in 1987 and subsequently served as a Lecturer at Government Higher Secondary School, Gorkhi, Gwalior. He retired in January 2023. At the time of retirement, the District Pension Officer reviewed his pay fixation and concluded that excess payment had been made due to an erroneous grant of senior pay scale for the period from 1 April 2001 to 30 June 2012. The respondents consequently ordered recovery of ₹98,693, including interest, from the petitioner’s retiral benefits.

The petitioner challenged the recovery on the grounds that it was ordered without a show-cause notice or opportunity of hearing, that he belonged to Class III service, that the excess payment resulted from departmental miscalculation, and that the recovery was initiated after retirement and more than five years after the alleged excess payment. The State relied upon an undertaking allegedly furnished by the petitioner agreeing to refund any excess payment. The High Court found that the undertaking dated 1 June 1998 did not relate to the pay fixation made in 2001 and that no specific undertaking had been furnished at the time of the relevant fixation.

1. Whether recovery of alleged excess salary payment from the petitioner’s retiral benefits was legally permissible when the petitioner was a retired Class III employee and the excess payment related to the period from 2001 to 2012?

2. Whether the recovery could be sustained without issuance of a show-cause notice or providing an opportunity of hearing?

3. Whether the undertaking relied upon by the State constituted a valid and enforceable basis for recovery?

The Court applied the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 M.P.L.J. 198, which holds that recovery may be made pursuant to an undertaking given before pay refixation, subject to consideration of hardship and the principles in Rafiq Masih, but an undertaking obtained at the stage of retiral benefits for pay fixation carried out decades earlier cannot ordinarily be enforced; recovery based on an undertaking is permissible only where it was voluntarily given.

The Court relied on Rafiq Masih (White Washer), which identifies recovery from Class III/Class IV employees, retired employees, and recovery relating to excess payments made more than five years earlier as ordinarily impermissible. It also relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, holding that recovery is unsustainable where the employee has retired, has not committed fraud or misrepresentation, and was not afforded an opportunity of hearing. The decision in Ravindra Kumar Joshi v. State of Madhya Pradesh, W.P. No. 17831 of 2019, was applied for the principle that an undertaking is unenforceable unless the State establishes that it was voluntarily furnished. Principles of natural justice also required prior notice and an opportunity of hearing before ordering recovery.

The Court held that the recovery was impermissible because the petitioner had retired, belonged to Class III service, and the alleged excess payments were made between 2001 and 2012, substantially more than five years before the recovery order. There was no allegation of fraud or misrepresentation by the petitioner, and the recovery was ordered without issuing a show-cause notice or granting an opportunity of hearing.

The State’s reliance on the undertaking was rejected because the undertaking dated 1 June 1998 did not relate to the pay fixation undertaken in 2001; further, the State did not establish that any relevant undertaking had been voluntarily given at the time of the disputed pay fixation. Applying Jagdish Prasad Dubey, Rafiq Masih, and Jogeswar Sahoo, the Court concluded that the recovery would operate harshly and contrary to the settled restrictions on recovery from retired and lower-grade employees.

The respondents were directed to refund ₹98,693 to the petitioner with interest at 6% per annum from the date of retirement until actual payment, within three months; in case of default, the amount would carry interest at 12% per annum from the date of realization until payment. The directions were to be complied with within 90 days from the date on which the respondents received a certified copy of the order. The writ petition and any pending interlocutory application were accordingly disposed of.