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

The original petitioner’s husband was appointed as a Lab Keeper in 1979 and retired as a Lab Technician, a Class III post, on 28 February 2021.

Upon scrutiny of his service book, the respondents alleged erroneous pay fixation and ordered recovery of ₹5,99,723 for excess payments made between 1 April 2006 and June 2017.

The recovery orders dated 5 October 2021 and 8 November 2021 were issued without a show-cause notice or opportunity of hearing.

The petitioner challenged the recovery and sought release of pensionary benefits, gratuity, and interest.

During the proceedings, the original petitioner was deleted and the matter continued through his legal representative, Smt. Shanti Devi.

1. Whether recovery of alleged excess salary payments could be made from a retired Class III employee in the absence of fraud, misrepresentation, or a specific undertaking given at the time of pay fixation.

2. Whether the recovery orders were sustainable when issued without notice or an opportunity of hearing.

3. Whether the petitioner was entitled to refund of the recovered amount with interest.

The Court applied the 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 excess payments relate to a period exceeding five years, particularly when recovery would be harsh or inequitable.

It relied on the Full Bench decision in State of Madhya Pradesh v. Jagdish Prasad Dubey, (2024) 2 M.P.L.J. 198, holding that recovery may be made on the basis of a valid undertaking or indemnity bond, subject to hardship considerations, but an undertaking obtained at the stage of retirement for a pay fixation made decades earlier cannot ordinarily be enforced; recovery under Rules 65 and 66 of the 1976 Rules also requires compliance with the prescribed procedure.

An undertaking given at the time of grant of pay benefits is enforceable only if voluntarily given; a forced undertaking is not enforceable in light of Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly.

The Court also relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, recognising that recovery from retired non-gazetted employees, absent fraud or misrepresentation and without a hearing, is unsustainable.

The alleged excess payment arose from departmental pay fixation between 2006 and 2017, and there was no allegation or evidence of fraud or misrepresentation by the petitioner.

The petitioner had retired on 28 February 2021 and had held a Class III post; moreover, the recovery related to payments made over a period exceeding five years before the recovery order.

No undertaking given contemporaneously with the 1 April 2006 pay fixation was produced, and the respondents failed to establish that any undertaking was voluntarily given.

These circumstances fell squarely within the categories identified in Rafiq Masih where recovery is impermissible.

Independently, the recovery was vitiated by breach of natural justice because no show-cause notice or hearing was afforded before the recovery orders were passed.

Accordingly, the respondents’ general contention that erroneous fixation permits recovery could not override the specific equitable and procedural limitations governing recovery from retired Class III employees.

The respondents were directed to refund ₹5,99,723, together with interest at 6% per annum from the date of retirement until actual payment, provided that the amount had in fact been recovered from the petitioner’s retiral dues; if no recovery had been made, the petitioner would not be entitled to that refund.

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.