Recovery of excess salary from a retired employee absent misrepresentation is impermissible and must be refunded.

The petitioner was appointed as a Copyist in 1991 and subsequently served as a Special Grade Typist in the Principal District Court, Coimbatore.

She was sanctioned 5% basic pay as personal pay under Proceedings No. 24/2013 dated 03 June 2013, purportedly pursuant to G.O. Ms. No. 664, Finance (Pay Cell) Department, dated 24 August 1992.

Following an internal audit objection, the respondents determined that employees appointed on or after 27 June 1989 were ineligible for the benefit, and that the petitioner’s appointment in 1991 disentitled her to the personal pay.

Her pay was accordingly revised, and recovery of ₹1,95,593 towards alleged excess salary and allowances was ordered through Proceedings No. 61/2023 dated 01 November 2023.

Although she had retired on 30 April 2024, the petitioner deposited the amount through an e-challan on 03 November 2023 to avoid difficulty at the time of retirement, and thereafter challenged the recovery and sought refund.

Whether the respondents were entitled to recover the excess personal pay and allowances paid to the petitioner due to an alleged erroneous pay fixation, in the absence of any misrepresentation or fraud by her?

Whether the amount of ₹1,95,593 deposited by the petitioner pursuant to the recovery proceeding was liable to be refunded?

Whether the revision of the petitioner’s pay pursuant to the audit objection could be sustained independently of the recovery of the excess amount?

The Court exercised jurisdiction under Article 226 of the Constitution of India and distinguished between correction of an erroneous pay fixation and recovery of amounts already paid.

While authorities may rectify an erroneous fixation and continue the petitioner’s pay at the legally applicable rate, recovery of excess salary may be impermissible where the excess payment resulted from the employer’s mistake, without employee misrepresentation, particularly when recovery would cause hardship.

The Court relied on State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, which identifies, inter alia, the impermissibility of recovery from retired employees or employees due to retire within one year, recovery of payments made for more than five years, and recovery that would be inequitable, harsh or arbitrary.

The Court held that the respondents were competent to correct the petitioner’s pay fixation because the 5% personal pay had been granted contrary to the applicable Government clarification excluding employees appointed on or after 27 June 1989.

However, the record did not establish any misrepresentation by the petitioner; the excess payment resulted from an error committed by the establishment and continued for several years.

Since the petitioner had deposited the amount only to avoid complications near retirement, the deposit could not be treated as a voluntary waiver of her rights.

Applying the principles in Rafiq Masih, the Court found that recovery from a retiring employee, after a prolonged period and in circumstances causing hardship, was impermissible, even though correction of the pay fixation itself was valid.

The Court upheld the revision of the petitioner’s pay pursuant to the audit objection but set aside Proceedings No. 61/2023 dated 01 November 2023 insofar as it directed recovery of the excess salary.

The respondents were directed to refund ₹1,95,593 to the petitioner within 12 weeks from receipt of the order.

No costs were imposed, and any connected miscellaneous petition was closed.