Recovery of excess pension payments from retired Group C employees is impermissible and must be refunded.

The petitioner, a retired Head Clerk who voluntarily retired from government service on 30 November 2005, challenged the deduction of ₹8,000 per month from his pension by the respondent Bank towards alleged excess pension payments made between November 2009 and July 2023.

The alleged excess payment, amounting to ₹14,17,796, was attributed to incorrect fixation under the Sixth and Seventh Pay Revisions.

The Bank relied on an internal communication from its Chennai office and claimed that a letter dated 29 August 2023 had been issued to the petitioner before recovery was commenced.

It also asserted that the petitioner’s pension had been recalculated under the applicable rules and Finance Department Resolution No. 755 dated 20 October 2017.

The State and the Accountant General did not file counter-affidavits.

1. Whether the Bank could unilaterally recover alleged excess pension payments from the petitioner’s monthly pension without providing a proper prior notice and opportunity of hearing?

2. Whether recovery of alleged excess payments made over several years could be effected from the pensionary benefits of a retired Group “C” employee?

3. Whether the petitioner was entitled to cessation and refund of the amounts already recovered from his pension?

The Court applied the principles of natural justice, particularly the requirement that a person must receive a meaningful prior notice and opportunity of hearing before an adverse recovery order affecting pensionary benefits is implemented.

It relied on State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, which restricts recovery of excess payments in circumstances where recovery would be inequitable and particularly protects lower-ranking employees and pensioners.

It further relied on Thomas Daniel v. State of Kerala, 2022 LiveLaw (SC) 438, reiterating that recovery of excess payments from retired Group “C” and “D” employees is impermissible in appropriate circumstances.

The Court also recognised the hardship caused by recovery from an elderly pensioner in view of diminished purchasing power and increased living and medical costs.

The Court found that the Bank’s letter dated 29 August 2023 was not a genuine show-cause notice but merely communicated a final decision to recover the alleged excess amount.

The petitioner was not given an effective opportunity to contest either the alleged incorrect pay fixation or the proposed recovery before deductions commenced.

The respondents also failed to explain why the benefits of the Sixth and Seventh Pay Revisions were allegedly not applicable to the petitioner.

Since the petitioner had retired in 2005 and the alleged excess payments extended from 2009 to 2023, recovery at the age of 72 was held to be inequitable and legally unsupported, particularly in light of the protections recognised in Rafiq Masih and Thomas Daniel for retired Group “C” employees.

The Court therefore treated the Bank’s unilateral action as contrary to natural justice and the governing law on recovery of excess pension payments.

The Bank was directed to stop all further deductions from the petitioner’s pension with immediate effect and to refund, periodically, the entire amount already recovered.

The writ petition was accordingly allowed.