Recovery of overpaid allowances from retirement gratuity is permissible where the employee undertook to refund excess payments.

The applicant, who served in the Intelligence Bureau and retired as Assistant Central Intelligence Officer-I, challenged the recovery of ₹1,59,900 from his retirement gratuity of ₹13,33,167 pursuant to PPO No. 234082300862 dated 27 October 2023.

The amount represented Tough Location Allowance/related allowances paid to him pursuant to the respondents’ circular dated 24 July 2019 concerning allowances for officials posted at hard and tough locations in Arunachal Pradesh.

The respondents contended that the allowances had been paid in excess or were inadmissible and that the applicant had executed an undertaking agreeing to refund any overpayment whenever demanded.

The applicant argued that the recovery was made without proper notice or opportunity of hearing and relied on State of Punjab v. Rafiq Masih and relevant DoPT Office Memoranda.

1. Whether the respondents were entitled to recover ₹1,59,900 from the applicant’s retirement gratuity towards alleged overpayment of Tough Location/Hardship Allowance.

2. Whether the applicant’s undertaking to refund any overpayment defeated his reliance on the protection against recovery recognised in State of Punjab v. Rafiq Masih.

3. Whether the recovery was legally impermissible because it was made without adequate notice or opportunity of hearing.

The Tribunal considered Rule 71 of the CCS (Pension) Rules, under which recoverable government dues may be adjusted against retirement gratuity.

It also considered the principles in State of Punjab v. Rafiq Masih, (2014) 8 SCC 883, concerning the impermissibility of certain recoveries of excess payments from employees, particularly in circumstances involving hardship or absence of fault.

The Tribunal further applied the principle recognised in High Court of Punjab & Haryana v. Jagdev Singh, Civil Appeal No. 3500 of 2006, that the general protection against recovery does not apply where the employee had expressly undertaken to refund any excess payment.

The applicant was held bound by the written undertaking accompanying the allowance claim, applying the doctrine of estoppel.

The Tribunal found that the applicant had knowingly signed an undertaking stating that any overpayment towards the relevant allowances would be refunded whenever demanded.

Since the alleged excess payment arose from the allowances covered by that undertaking, the applicant could not invoke the general protection against recovery under Rafiq Masih to avoid repayment.

The Tribunal treated the undertaking as binding and held that the applicant was estopped from challenging recovery after accepting the allowances subject to that condition.

It therefore found no sufficient ground to interfere with the adjustment of ₹1,59,900 from the gratuity, without entering into any separate determination that the recovery was invalid solely for want of notice.

The challenge to recovery of ₹1,59,900 and the prayer for refund with interest were rejected.

The Original Application was dismissed without costs.