Recovery of excess pay is impermissible from retired Class III employees without notice and hearing.

The petitioner was appointed as a Rural Agriculture Extension Officer in 1983 and retired as an Agriculture Development Officer on 31.08.2024.

At the time of retirement, scrutiny of his service book allegedly revealed an erroneous pay fixation, pursuant to which the respondents ordered recovery of ₹78,486 from his retiral dues.

The petitioner contended that the recovery was ordered without a show-cause notice or opportunity of hearing, that the excess payment resulted from an administrative error for which he was not responsible, and that recovery from a retired Class III employee was impermissible.

The respondents did not file a reply despite repeated opportunities, including a final opportunity with a direction that the petition would be decided on the existing record.

Whether recovery of ₹78,486 from the petitioner’s retiral dues, on account of alleged erroneous pay fixation, was permissible when the petitioner had retired from a Class III post and had not been issued a show-cause notice or afforded an opportunity of hearing?

Whether any undertaking allegedly furnished by the petitioner could validate the recovery in the absence of proof that it was voluntarily given?

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 generally impermissible from Class III/Class IV employees, retired employees, and employees nearing retirement, particularly where recovery would be inequitable, harsh, or arbitrary.

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 an undertaking or indemnity bond only in appropriate circumstances; an undertaking given at the stage of retiral benefits concerning pay fixation or increments granted decades earlier cannot ordinarily be enforced, and recovery under the applicable service rules requires compliance with the prescribed procedure.

The Full Bench further held that an undertaking given at the time of grant of financial benefits is unenforceable unless shown to have been voluntarily given.

The Court also relied on Jogeswar Sahoo v. District Judge, Cuttack, 2025 (3) M.P.L.J. (S.C.) 25, where recovery from retired, non-gazetted employees was held unsustainable in the absence of fraud, misrepresentation, and an opportunity of hearing.

The Court proceeded on the basis of the available record because the State failed to file its reply despite repeated opportunities, and consequently extended the benefit of doubt to the petitioner.

The alleged excess payment arose from erroneous pay fixation, with no material establishing fraud, misrepresentation, or responsibility on the petitioner’s part.

The recovery was initiated after his retirement and without prior notice or hearing.

Since the petitioner was treated as a Class III employee, the case fell squarely within the categories identified in Rafiq Masih in which recovery is ordinarily impermissible.

Further, any undertaking could not assist the respondents because the State neither established its voluntary character nor demonstrated compliance with the applicable procedural requirements.

Applying the Full Bench ruling in Jagdish Prasad Dubey, the Court held that the recovery was legally unsustainable.

The respondents were directed to refund ₹78,486 to the petitioner and to pay interest at 6% per annum from the date of retirement, 31.08.2024, until actual payment.

If the amount was not paid within the directed period, interest would be payable at 12% per annum from the date of entitlement until actual payment.

The exercise was to be completed within 90 days from submission of a certified copy of the order, and the writ petition was accordingly disposed of.