Recovery of mistaken excess pay is impermissible from Group C employees after retirement.

The applicant, a Group ‘C’ employee, retired on superannuation on 31 May 2022.

The respondents later identified an excess payment of ₹1,32,639 arising from an erroneous pay fixation and recovered that amount from his leave encashment on 28 September 2022, after his retirement.

The applicant challenged the recovery, contending that it was impermissible under the Supreme Court’s decision in State of Punjab v. Rafiq Masih and the applicable DoPT instructions.

The respondents maintained that the recovery followed audit directions and stated that a request to waive recovery had been returned; they also referred to a later process for seeking waiver.

1. Whether recovery of the excess payment from the applicant’s leave encashment after retirement was impermissible under the principles in Rafiq Masih.

2. Whether the respondents’ failure to waive or refund the recovered amount warranted setting aside the impugned order and directing repayment.

Under State of Punjab v. Rafiq Masih (White Washer), AIR 2015 SC 696, recovery of mistaken excess payments is impermissible in specified circumstances, including recovery from Group ‘C’ or Group ‘D’ employees; from retired employees or those due to retire within one year of the recovery order; and where the excess payment was made for more than five years before recovery was ordered.

Recovery may also be barred where it would be inequitable, harsh, or arbitrary.

The DoPT instructions dated 2 March 2016 advised departments to apply the principles in Rafiq Masih to recoveries of wrongful or excess payments.

The Tribunal also referred to paragraph 4 of the DoPT Office Memorandum dated 1 April 2024, which it understood to empower the department to waive excess recovery up to ₹2 lakh.

The Tribunal found that the applicant belonged to Group ‘C’, that the excess payment resulted solely from the respondents’ error and involved no fraud or misrepresentation by him, and that the recovery was made after his retirement.

It further noted that the excess payment had been made for more than five years before recovery.

The case therefore fell within the categories identified in Rafiq Masih as impermissible for recovery.

The respondents’ reference to a pending or returned waiver process did not justify retaining the recovered amount; the Tribunal also observed that the department had power to waive recovery up to ₹2 lakh under the cited 2024 instruction.

It quashed the impugned order and directed the respondents to refund the recovered amount within six months of receiving a copy of the order.

If repayment was not made within that period, interest at 6% would accrue until the amount was refunded.

The OA was allowed, with no order as to costs.