The State and banks cannot recover excess pension payments made due to official error without any misrepresentation by the pensioner.

The petitioner is the widow of Late Shri Pramod Kumar Patel, a Police Constable who died in a Naxalite operation on 29.12.2008.

The petitioner received a monthly family pension of ₹22,900 through the State Bank of India (SBI).

In February 2017, the bank unilaterally reduced her pension to ₹4,870 and initiated a recovery of ₹2,500 per month from her account to recoup alleged excess payments of Dearness Allowance (DA).

The bank contended that the DA was wrongly extended based on treasury directions and that the petitioner had signed an undertaking to refund any excess payments.

The petitioner challenged the recovery and reduction, citing a lack of hearing and no personal misrepresentation.

1. Whether the bank can recover excess pension payments made due to its own administrative error in the absence of fraud or misrepresentation by the pensioner.

2. Whether an undertaking given by a pensioner justifies recovery if it doesn't align with specific service rules or established equitable principles.

The court primarily applied the equitable principles established by the Supreme Court in State of Punjab v. Rafiq Masih (White Washer) (2015) 4 SCC 334, which prohibits recovery from Class-III/IV employees or retired employees when excess payments were made for over five years or where recovery would be iniquitous.

It further relied on Col. (Retd.) B.J. Akkara v. Govt. of India (2006) 11 SCC 709, extending these protections to pensioners who are in a more disadvantageous position than active employees.

The court also distinguished High Court of Punjab and Haryana v. Jagdev Singh (2016) 14 SCC 267, noting that recoveries based on undertakings are only sustainable if the undertaking is mandated by specific service rules.

The Court observed that the petitioner, a pensioner, did not commit any fraud or misrepresentation; rather, the SBI committed an administrative error by incorrectly calculating DA.

Applying the Rafiq Masih criteria, the Court found that recovering funds from a person in a disadvantageous financial position—especially when the error was detected years later—is "harsh" and "arbitrary".

Regarding the bank's reliance on an undertaking, the Court noted that the respondent failed to produce any specific service rules justifying such a recovery mechanism under the Jagdev Singh exception.

Consequently, the Court held that the bank had no authority to unilaterally deduct amounts from the pension, as the balance of equity favored the pensioner over the mistake of the banking institution.

It quashed the recovery order and the decision to deduct pension amounts and directed Respondents No. 2 and 3 (SBI) to refund the total amount already recovered (₹2,60,000+) to the petitioner forthwith, along with interest at the rate of 6% per annum.