Recovery of excess salary is impermissible from retired Class III employees for employer’s pay-fixation errors.

The petitioner, a Class III Data Entry Operator employed by Savitribai Phule Pune University, joined service in 1993 and was subsequently confirmed.

He received the benefits of the Fifth and Sixth Pay Commissions and a time-bound promotion. He retired on 31 December 2022.

Thereafter, the University issued a letter dated 17 April 2023 alleging that his pay had been incorrectly fixed under the Sixth Pay Commission and seeking recovery of ₹39,94,343 from his retiral dues.

The University contended that the petitioner was entitled to the pay scale of ₹5,200–20,200 with Grade Pay of ₹2,400, rather than ₹9,300–34,800 with Grade Pay of ₹4,300, and relied on an undertaking allegedly given by him to refund any excess payment.

The petitioner challenged the recovery and sought release of gratuity, leave encashment, Provident Fund interest, Assured Career Progression Scheme benefits, and Seventh Pay Commission arrears.

During the proceedings, the Court directed the University to deposit the petitioner’s retiral dues, including gratuity, in Court.

1. Whether the University could recover alleged excess salary payments from the petitioner, a Class III employee, after his retirement, particularly where the excess payment was attributed to an employer-side mistake.

2. Whether the undertaking furnished by the petitioner at the time of implementation of the Sixth Pay Commission permitted recovery notwithstanding the principles governing impermissible recoveries from Class III and retired employees.

3. Whether the petitioner was entitled to release of his post-retiral benefits and to the benefits of the Assured Career Progression Scheme, Seventh Pay Commission, leave encashment, and accrued Provident Fund interest.

The Court exercised jurisdiction under Article 226 of the Constitution of India.

It principally applied State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, which holds that recovery of payments made by mistake is impermissible, inter alia, from Class III/Class IV employees, retired employees or employees retiring within one year, and where the excess payment continued for more than five years, or where recovery would be inequitable, harsh or arbitrary.

The Court also relied on Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475, and the Bombay High Court’s decision in Anil Pralhad Dhande v. State of Maharashtra, W.P. No. 13029 of 2022, applying the same protection to retiral benefits of a Class III employee.

High Court of Punjab and Haryana v. Jagdev Singh, (2016) 14 SCC 267, concerning recovery pursuant to an undertaking, was distinguished because it involved a Class I judicial officer, whereas the petitioner was a Class III employee.

Mandeep Singh Kohli v. Union of India, 2021 (1) Mh.L.J. 370, was also distinguished because it concerned employees who had obtained a disputed higher scale through litigation and undertakings, unlike the petitioner whose higher pay was allegedly granted through an administrative mistake.

The Court found that the petitioner squarely fell within two categories identified in Rafiq Masih: he was a Class III employee and the recovery notice was issued after his retirement.

The alleged excess payment had been made over a prolonged period due to the University’s own pay-fixation decision, and there was no finding that the petitioner had misrepresented facts or caused the alleged overpayment.

The Court held that the undertaking relied upon by the University could not override the prohibition against an inequitable recovery in the case of a Class III employee, particularly when the undertaking related only to correction of pay-fixation discrepancies.

The Court further held that the decisions relied upon by the University were factually distinguishable and that withholding retiral benefits to secure recovery of the alleged excess payment was illegal and arbitrary.

Having rejected the recovery, the Court directed the University to compute and release the petitioner’s remaining retiral and pay-related benefits, including ACPS benefits and Seventh Pay Commission benefits, in accordance with the petitioner’s existing pay scale.

Any amount already recovered was ordered to be refunded within three months.

The University was directed to pay all post-retiral benefits, including ACPS benefits from June 2017 with arrears and appropriate interest, accumulated leave encashment, and interest accrued on the Provident Fund.

It was further directed to implement the Seventh Pay Commission for the petitioner with effect from 1 June 2016 on the pay scale of ₹9,300–34,800 with Grade Pay of ₹4,300, after granting the ACPS benefit for 24 years of continuous service.

All directions were to be complied with within three months; the Rule was made absolute and the petition was disposed of without costs.