Recovery of excess payments from retired Class-III employees based on stale pay refixations is impermissible.

The petitioner, a former Head Constable in the Madhya Pradesh Police, retired voluntarily on 01.11.2018.

Following his retirement, the Treasury Department raised an objection regarding the Kramonnati (career progression benefit) granted to him on 18.09.2004.

Consequently, the respondents withdrew the benefit retrospectively and recovered ₹2,09,672/- (principal plus interest) from his retiral dues via an order dated 16.11.2018.

The State justified the recovery based on an indemnity bond/undertaking signed by the petitioner at the time of retirement.

The petitioner challenged this recovery under Article 226 of the Constitution.

1. Whether recovery of excess payments made due to alleged incorrect pay fixation decades prior can be effected from a retired employee’s retiral dues based on an undertaking given at the time of retirement.

2. Whether the recovery in question is permissible under the guidelines established by the Supreme Court regarding hardship to retired employees.

The Court relied on the Supreme Court’s decision in State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from retired employees, employees belonging to Class-III/IV service, or when the excess payment was made more than five years prior to the recovery order.

Full Bench ruling of the Madhya Pradesh High Court in State of M.P. v. Jagdish Prasad Dubey (2024), which held that an undertaking given at the stage of paying retiral dues for pay refixations done decades earlier is a "forced undertaking" and is legally unenforceable.

The Court observed that the Kramonnati benefit was granted in 2004, while the recovery was initiated in 2018, representing a gap of 14 years.

Applying the Jagdish Prasad Dubey precedent, the Court reasoned that the indemnity bond relied upon by the State was obtained only at the time of settling pension dues and could not validate the recovery of benefits granted decades prior.

The Court found the petitioner’s situation squarely covered by the Rafiq Masih guidelines, specifically the prohibitions against recovery from retired Class-III employees and recoveries concerning payments made more than five years before the order.

The Court concluded that the recovery was iniquitous, harsh, and legally unsustainable.

The Court quashed the order dated 16.11.2018 and directed the respondents to refund the recovered amount of ₹2,09,672/- to the petitioner within 90 days, along with interest at 6% per annum from the date of recovery until actual payment.

The writ petition was disposed of accordingly.