Recovery of Excess Payment from Retired Group ‘C’ Employees Deemed Illegal and Arbitrary.

The applicant, Surjit Singh, joined Chandigarh Police on 12.12.1983 as a Constable and retired voluntarily as an ORP Inspector (Group – C) on 01.11.2019.

Prior to retirement, he received a ‘No Due Certificate’ and his retiral dues, including pension, were released.

Chandigarh Administration adopted the Punjab Civil Services (Revised Pay) Rules, 2021, effective from 01.01.2016.

The applicant submitted his option form for revised pay.

Respondent No. 5 (Accountant General) subsequently issued an order dated 16.11.2022 revising his pay fixation and a revised certificate (Annexure A-4) directing recovery of an overpayment of Rs. 1,02,468/- from his DCRG.

This amount was deducted without a show cause notice.

The applicant learned through an RTI that his pay had been stepped up on 19.10.2016 (Annexure A-10) with a junior, and an order dated 05.04.2023 (Annexure A-11) rectified this step-up, directing recovery of excess payment due to this rectification.

The applicants in the connected OAs are claiming similar relief on the same grounds.

The respondents contend that the recovery is justified as the applicant gave a written undertaking on 01.11.2019 regarding recovery of any excess payment related to ACP/DACP schemes or 6th Pay Commission.

1. Whether the recovery of overpayment from the applicants, who are retired Group-C employees, due to an administrative error in pay fixation, is impermissible in law.

2. Whether the impugned orders directing recovery are illegal and arbitrary due to the absence of a show cause notice and non-establishment of fraud or misrepresentation by the applicants.

3. Whether the 'No Dues Certificate' issued at the time of retirement creates an estoppel against subsequent recovery.

The court primarily applied the principles derived from State of Punjab & Ors. Vs. Rafiq Masih, SCT 2015 (1) 195, which outlined specific categories of employees from whom recoveries are impermissible, including Group-C employees and retired employees.

It further relied on Thomas Daniel Vs. State of Kerala, 2022 INSC 497, which held that belated recovery after a long lapse is inequitable and impermissible.

The court also noted the DoPT OM dated 02.03.2016 (Annexure A-7), adopted by UT Chandigarh, which prohibits recovery from retired employees, Group-C employees, and excess payments due to administrative error.

The principles of natural justice, specifically the requirement of a show cause notice for actions having civil consequences, were also considered.

The court found that the applicants' claims were covered under categories (i) and (ii) of the Rafiq Masih judgment, as they are Group-C employees and the recovery was ordered after their retirement.

It was undisputed that the pay step-up and subsequent alignment of increment dates were administrative decisions by the department, without any allegation of fraud, misrepresentation, or fault on the part of the applicants.

The wrong fixation of the annual increment was attributed to the negligence of concerned officials.

The court also emphasized the Thomas Daniel judgment, stating that belated recovery after a long lapse is inequitable and impermissible, especially when no misconduct is established.

The absence of a show cause notice or communication of the impugned order dated 05.04.2023 to the applicant rendered the recovery action against principles of natural justice and therefore bad in law.

While the respondents cited the applicant's undertaking on 01.11.2019, the court's analysis focused on the principles established in Rafiq Masih and Thomas Daniel regarding the impermissibility of recovery from specific categories of employees under administrative error.

The court in the present OA found the facts similar to OA No. 581/2024 (dated 12.11.2025), where recovery was also quashed.

The impugned orders dated 05.04.2023 (in OA No. 195/2024), 15.12.2023 (in OA No. 197/2024), 22.03.2023 (in OA No. 300/2024), 29.06.2023 (in OA No. 302/2024), and 26.05.2023 (in OA No. 469/2024), to the extent they ordered recovery, were quashed and set aside.

The respondents were directed to refund the recovered amounts to the applicants, along with interest at the GPF rate from the date of recovery until the date of actual payment, within eight weeks from the receipt of a certified copy of the order.