Recovery of Excess Salary from Group-C Retirees Impermissible Without Misrepresentation or Due Process

The petitioner, a Group-C employee (Junior Mechanic), retired on 31.12.2024 with a last basic pay of ₹51,700.

Post-retirement, the Accountant General (Respondent Nos. 5 6) detected anomalies in his pay fixation, noting he had already availed three scale advancements and was ineligible for further MACP benefits.

Consequently, the parent department re-fixed his basic pay downward to ₹48,800 on 10.07.2025.

Based on this retrospective Revision, the respondents issued orders for the recovery of ₹3,91,588, representing alleged excess payments and a 1/4th withholding of gratuity.

The petitioner challenged these recovery orders and the downward re-fixation in the High Court.

1. Whether the respondents are legally permitted to recover excess salary payments from a retired Group-C employee where no misrepresentation or fault is attributed to the employee.

2. Whether the downward re-fixation of pay conducted without providing the petitioner an opportunity to be heard is sustainable in law.

3. Whether the petitioner is entitled to interest on the delayed payment of retirement benefits.

The court primarily applied the principles governing recovery of excess payments as articulated by the Supreme Court in State of Punjab Ors. vs. Rafiq Masih (White Washer) Ors. (2015) 4 SCC 334, which prohibits recovery from Group-C/Group-D employees or retired employees when the excess payment spans more than five years.

It further relied on the principles of Natural Justice, specifically the right to a fair hearing before an administrative action results in civil consequences such as pay reduction.

The court found that the petitioner was a Group-C employee and that there was no evidence of fraud or misrepresentation on his part regarding the original pay fixation.

Applying the Rafiq Masih criteria, the court noted that the recovery was impermissible as it involved a retired Group-C employee and the re-fixation was applied retrospectively from 01.04.2017—a period exceeding five years prior to retirement.

The court further observed that the unilateral reduction of pay from ₹51,700 to ₹48,800 was procedurally flawed as the petitioner was not granted a hearing.

While the court rejected the petitioner's argument that gratuity can never be withheld (noting the state's right to protect the public exchequer), it held that such actions must nonetheless comply with due process and established legal bars against recovery from low-earning/retired staff.

The court directed the respondents to refrain from any recovery and granted liberty to the respondents to re-examine the pay fixation after hearing the petitioner within three months; it further ordered the respondents to pay 7% interest per annum on any arrears of gratuity, leave salary, and pension from their due dates, as well as 7% interest on the delayed partial payments already made on 10.07.2025.