Recovery of excess payment from retired employee's gratuity is impermissible unless fraud or misrepresentation.

The applicant, Smt. K.Y. Jayanthi, retired from service on May 31, 2023, as Deputy Director (Senior Time Scale) in the Press Information Bureau (PIB), Bengaluru.

On May 3, 2023, the 2nd respondent informed the 6th respondent that a review of the applicant's pay fixation revealed an incorrect fixation for her promotion to Assistant Director, as she had already received a notional increment at the time of her first MACP.

Consequently, the 2nd respondent requested a revised pay fixation order effective from May 18, 2015, and sought a due and drawn statement.

An amount of Rs. 3,20,788/- was subsequently recovered from the applicant's retirement benefits, specifically her DCRG, due to this excess payment.

The applicant's representation seeking a refund remained unanswered, leading to the present application.

It was not alleged by the respondents that the excess payment was due to fraud or misrepresentation by the applicant.

Whether the recovery of an alleged excess payment of Rs. 3,20,788/ from the applicant's retirement benefits, when such excess payment was not due to her fraud or misrepresentation and she was due to retire within a year, is permissible in law.

The court primarily applied the legal principles summarized in paragraph 18 of the Supreme Court judgment in State of Punjab & Ors vs. Rafiq Masih (White Washer) and Ors., reported in (2015) 4 SCC 334.

This precedent establishes situations where recoveries by employers would be impermissible in law, specifically citing: "(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery".

This precedent establishes situations where recoveries by employers would be impermissible in law, specifically citing: "(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued".

The court also noted that this legal principle was reiterated in Thomas Daniel v. State of Kerala, reported in 2022 SCC OnLine SC 536.

The court relied on the established principle that payments mistakenly made by the employer in excess of an employee's entitlement, without misrepresentation or fraud by the employee, fall within the ambit of these guidelines.

The court found that the excess amount recovered from the applicant was not due to any misrepresentation or fraud on her part.

The pay fixation was revised effective from May 18, 2015, and the recovery order was issued on May 3, 2023, just before the applicant's retirement on May 31, 2023.

By recovering the amount from her gratuity at the time of her retirement, the respondents violated the principles established in Rafiq Masih, specifically clauses 18(ii) and 18(iii).

Clause 18(ii) prohibits recovery from retired employees or those due to retire within one year of the recovery order, which was the applicant's situation.

Clause 18(iii) disallows recovery when the excess payment was made for a period exceeding five years before the recovery order.

Since the pay fixation was revised from 2015 and the recovery order was in 2023, this period exceeded five years.

The court concluded that the recovery action was illegal and unjustifiable given the absence of fraud or misrepresentation by the applicant and the timing of the recovery in relation to her retirement.

The OA was disposed of, and the respondents were directed to refund the amount of Rs. 3,20,788/- (Rupees Three Lakhs Twenty Thousand Seven Hundred and Eighty Eight Only) recovered from the retiral benefits of the applicant.

Compliance was directed within eight weeks from the date of receipt of the certified copy of the order.