Recovery of excess payments is barred for retirees or after five years, absent a contemporaneous undertaking.

The respondent was appointed as a Junior Engineer (Civil) with the Delhi Development Authority (“DDA”) in 1981. He received his first financial upgradation under the Assured Career Progression Scheme (“ACP”) in 2003, the second in 2005, and the third under the Modified Assured Career Progression Scheme (“MACP”) in 2011. He retired as an Assistant Engineer (Civil) on 31 March 2018.

By order dated 12 July 2018, the DDA postponed the dates of his second ACP and third MACP benefits from 2005 to 2009 and from 2011 to 2015, respectively.

Thereafter, by order dated 11 December 2018, the DDA reduced his basic pension from ₹49,900 to ₹38,950 per month without issuing a show-cause notice.

The respondent challenged the action before the Central Administrative Tribunal in O.A. No. 2499/2019. The Tribunal allowed the application on 9 November 2022, relying on State of Punjab v. Rafiq Masih, and set aside the recovery of excess payments.

The DDA challenged that decision before the High Court.

1. Whether recovery of alleged excess payments could be effected from the respondent after his retirement, particularly where the payments had been made more than five years before the recovery order.

2. Whether the undertaking relied upon by the DDA, given by the respondent in 2018, permitted recovery under High Court of Punjab and Haryana v. Jagdev Singh, when the alleged excess payments had been made in 2003 and 2005.

3. Whether, in the absence of any allegation of complicity or fraud by the respondent, the recovery was impermissible under the principles laid down in Rafiq Masih.

The Court applied the principles in State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, under which recovery of mistaken excess payments is ordinarily impermissible from retired employees, from employees who are due to retire within one year, and where the excess payment was made for a period exceeding five years before the recovery order; recovery is also impermissible where it would be harsh, arbitrary or inequitable.

The Court also considered High Court of Punjab and Haryana v. Jagdev Singh, (2016) 14 SCC 267, which permits recovery from a retired employee where, at the time the excess payment was made, the employee had furnished an undertaking or had been made aware that recovery could subsequently be effected.

The Court held that such undertaking must have been given at the time the excess payment was made, not retrospectively.

It further recognised that the protection in Rafiq Masih may not apply in cases involving complicity between the employee and the employer in securing the excess payments.

The respondent fell within two protected categories identified in Rafiq Masih: he had already retired when the recovery was ordered, and the alleged excess payments related to 2003 and 2005, substantially more than five years before the recovery action in 2018.

Although the DDA relied on Jagdev Singh, the undertaking in the present case was given only in 2018, whereas the payments alleged to be excessive had been made in 2003 and 2005. It therefore could not satisfy the requirement that the undertaking exist when the excess payments were made.

The Court also found no allegation of complicity between the respondent and the DDA in procuring the payments.

Accordingly, the exceptions in Jagdev Singh were unavailable, and the Tribunal correctly applied the prohibition against recovery under Rafiq Masih.

The Tribunal’s order allowing O.A. No. 2499/2019 was upheld, and the DDA’s writ petition was dismissed.