Recovery of excess payments made for over five years from retired employees is impermissible.

The applicant joined the respondents’ service as a Group ‘C’ Tracer on 29 May 1979.

He was granted third financial upgradation under the Modified Assured Career Progression Scheme (MACPS) with Grade Pay of Rs. 4,800 with effect from 1 September 2008, but the benefit was subsequently withdrawn through Staff Posting Order No. 20 of 2014 dated 7 February 2014.

The respondents stated that the benefit had been wrongly granted due to an incorrect interpretation of the merger of the posts of Tracer and Draftsman, and that the applicant had earlier been promoted as Assistant Draftsman and Senior Draftsman.

The applicant superannuated on 31 August 2016 and contended that recovery of the alleged excess payment from his retirement dues was impermissible under State of Punjab v. Rafiq Masih.

The respondents relied on an undertaking allegedly furnished by the applicant and invoked High Court of Punjab & Haryana v. Jagdev Singh to justify the recovery.

The applicant ultimately confined his claim to refund of the amount recovered from his retirement dues.

The judgment refers to the recovered amount as Rs. 1,82,270 in the pleadings, while the relief clause mentions Rs. 2,22,270.

1. Whether recovery of alleged excess MACPS payments from the applicant’s retirement gratuity/dues, relating to a period commencing on 1 September 2008, was legally permissible.

2. Whether the undertaking allegedly furnished by the applicant enabled the respondents to recover the excess payment notwithstanding the principles laid down in Rafiq Masih.

3. Whether the decision in Jagdev Singh barred the applicant from seeking refund of the recovered amount.

The Tribunal primarily applied the principles laid down by the Supreme Court in State of Punjab v. Rafiq Masih (Whitewasher), (2015) 4 SCC 334, under which recovery of excess payments is ordinarily impermissible where it is made from Group ‘C’ or Group ‘D’ employees, retired employees or employees nearing retirement, or where the excess payment relates to a period exceeding five years before the recovery order; recovery is also barred where it would be inequitable, harsh or arbitrary.

The Tribunal also considered High Court of Punjab & Haryana v. Jagdev Singh, (2016) 14 SCC 267, which recognises that an employee who furnished a clear undertaking to refund excess payments may be bound by that undertaking.

However, the Tribunal treated Jagdev Singh as distinguishable in light of the applicant’s lower service status and the prolonged nature of the recovery.

The DoPT Office Memorandum dated 2 March 2016 was relied upon by the applicant as supporting the prohibition against such recoveries.

The Tribunal found that the recovery related to excess payments made from 1 September 2008 and was therefore for a period exceeding five years before recovery was effected.

It further noted that the amount was recovered from the applicant’s Death-cum-Retirement Gratuity upon his retirement, bringing the case within the categories identified in Rafiq Masih where recovery is impermissible.

The applicant belonged to the lower rungs of service, having initially entered service as a Group ‘C’ employee, and the Tribunal held that recovery of several years’ payments from such an employee would cause disproportionate hardship.

Although the respondents relied on an undertaking, the Tribunal held that such an undertaking could not automatically authorise recovery in circumstances where recovery was otherwise iniquitous and contrary to the protective principles of Rafiq Masih.

Jagdev Singh was distinguished because it concerned an Additional Civil Judge who had expressly undertaken to refund excess payments, whereas the present case involved a lower-level employee and prolonged recovery from retirement benefits.

It quashed and set aside Staff Posting Order No. 20 of 2014 dated 7 February 2014 to the extent that it authorised recovery from the applicant and directed the respondents to refund the amount recovered within three months from receipt of the certified copy of the order.

The Original Application was accordingly disposed of; associated miscellaneous applications were also disposed of, and the parties were directed to bear their own costs.