Recovery of Excess Payments From Class-III Employee Without Misrepresentation or Fraud Is Legally Impermissible

The petitioner was appointed as a Training Officer (Class-III post) in 1989

He was granted the 1st Time Bound Pay Scale effective from 01.04.2006 vide an order in 2011, which was reaffirmed in 2022

However, by impugned letters dated 23.12.2022 and 18.01.2023, the respondents revised the effective date to 01.04.2008, citing adverse entries in the Annual Confidential Reports (ACR)

Consequently, the respondents ordered and subsequently recovered an alleged excess payment of Rs. 89,575/- for the period between 2006 and 2008

The petitioner, who has since retired, challenged these recovery orders on the grounds that the payment resulted from departmental error rather than any misrepresentation on his part

1. Whether the recovery of excess pay from a retired Class-III employee is legally permissible when the payment was made due to administrative error without any misrepresentation by the employee.

The Court primarily applied the legal principles established by the Hon’ble Supreme Court in State of Punjab v. Rafiq Masih (White Washer) (2015) and Thomas Daniel v. State of Kerala (2022)

These precedents establish that recovery from Class-III and Class-IV employees is impermissible in law if the excess payment was made by the employer in mistake, without any fraud or misrepresentation by the employee, and especially if the recovery is sought after a long lapse of time or after retirement, as it causes undue hardship

The Court observed that the petitioner was a Class-III employee and the financial benefits in question were granted by the department itself upon his completion of the requisite service period

The record indicated no evidence of misrepresentation or fraud by the petitioner; rather, the higher pay scale was a result of a unilateral administrative decision by the respondents

The Court noted that the recovery was initiated in 2022-2023 for payments starting as far back as 2006, representing a significant lapse of time

Applying the Rafiq Masih criteria, the Court reasoned that penalizing a retired subordinate employee for an departmental error in pay fixation is arbitrary and creates an unsustainable financial burden

The Court quashed the orders and directed the respondents to refund the recovered amount of Rs. 89,575/- to the petitioner with interest at 6% per annum from the date of recovery until actual payment, to be completed within 60 days