'No Recovery From Pension Without Prior Notice Or Consent': Punjab & Haryana High Court Directs RBI To Issue Instructions To Banks
In a significant ruling safeguarding the rights of retired government employees, the Punjab & Haryana High Court has directed the Reserve Bank of India to issue instructions to all agency banks stipulating that no recovery of excess pension may be made without the pensioner's knowledge, consent or prior notice, and that any such recovery must strictly conform to the governing...
In a significant ruling safeguarding the rights of retired government employees, the Punjab & Haryana High Court has directed the Reserve Bank of India to issue instructions to all agency banks stipulating that no recovery of excess pension may be made without the pensioner's knowledge, consent or prior notice, and that any such recovery must strictly conform to the governing service rules.
The direction came while allowing a writ petition filed by a retired Executive Officer of the Municipal Council, Kaithal, from whose pension account a sum of ₹6,63,688 was unilaterally debited by Punjab National Bank on the ground of “excess pension”, without any notice or opportunity of hearing
Justice Harpreet Brar said, "Abrupt recovery of pension without the knowledge of the pensioner, even if administratively justified, produces consequences far beyond the legal sphere. Such an action undermines the very object of providing pension to the retired employees, i.e. to secure the economic dignity and emotional stability in the post-retirement stage of life. From a financial standpoint, it causes immediate hardship as the predetermined plans on the basis of legitimate expectation of a certain amount of pension, suddenly become unfeasible."
Sudden Deduction Disturbs Financial Equilibrium
Moreover, pensioners often depend entirely on their monthly pension to meet essential household and medical expenses. Therefore, sudden deductions disturb their financial equilibrium and may lead to inability to meet healthcare needs or other basic expenses, the Court added.
The Court observed that, "absence of prior communication generates shock, anxiety, and a feeling of betrayal after long years of service. At an administrative level, such actions erode confidence in the fairness and credibility of the employer or government department. Such conduct reflects procedural insensitivity and weakens the morale among both serving and retired employees which often results in a lack of motivation to perform well."
Hence, the bench opined that, "arbitrary or un-communicated recoveries contradict the spirit of a welfare administration and demonstrate a lack of humane consideration. Overall, the effect of such abrupt recovery extends beyond administrative error; it reflects on the sensitivity, fairness, and accountability of governance itself."
Therefore, even where legal remedies exist, administrative prudence demands that any recovery from pension be preceded by due notice, consultation, and empathetic handling consistent with the dignity of the retired employee, it added.
Consequently, the Court directed the Reserve Bank of India to issue appropriate instructions to all agency Banks, clarifying that no recovery of excess amount from the pension of a Government employee shall be effected without the pensioner's knowledge and consent, or without the issuance of a prior notice.
It made it clear that any such recovery must strictly conform to the applicable service rules and the principles discussed in the judgement.
The petitioner retired on 29 February 2016 and was issued a Pension Payment Order sanctioning pension with effect from 1 March 2016. In 2019, the authorities suo motu revised his pension under the Haryana Civil Services (Revised Pension) Rules, 2017 and subsequent government memoranda—without sharing calculations or any material with him. On 31 March 2021, PNB deducted ₹6,63,688 from his personal account, allegedly towards “recovery of excess pension”.
Aggrieved, the petitioner issued a representation and later approached the High Court. Though the Court earlier directed the authority to pass a speaking order, the representation was rejected on 16 November 2022, citing “clerical error” and alleging that the petitioner, being educated, should have known that excess payment was being received.
After examining the submissions, relying on Rule 2.2(a) of the Punjab Civil Services Rules (as applicable in Haryana) and Rule 11 of the Haryana Civil Services (Pension) Rules, 2016, the Court held that no recovery can be effected from pension without the express written consent of the pensioner, except where an employee had furnished an undertaking to refund excess payment.
The Court reiterated the settled position of law laid down by the Supreme Court in State of Punjab v. Boota Singh, State of Punjab v. J.L. Gupta, State of Punjab v. Rafiq Masih, and Jagdev Singh, observing that service conditions are governed by rules in force at the time of retirement, and that unilateral recovery from post-retirement benefits is impermissible in the absence of fraud or misrepresentation by the employee.
No Notice, No Hearing—Violation of Natural Justice
The Court strongly deprecated the respondents' action, holding that the unilateral deduction violated basic principles of natural justice. Citing Daffodills Pharmaceuticals v. State of U.P., it reiterated that no adverse order can be passed without affording minimum opportunity of hearing.
Bank Had No Authority To Debit Pensioner's Account
The Court also examined the RBI's Master Circular dated 01.04.2025 regarding pension disbursement, and noted that while banks must refund excess payment to the government where the overpayment is due to bank error, there is no provision authorising banks to unilaterally deduct alleged excess amounts directly from a pensioner's account when the overpayment originated from the Government's mistake.
The Court termed the bank's actions as “wholly arbitrary and without authority of law.”
Pension Once Authorised Cannot Be Reopened At Will
After examining Rule 9.15 of the Punjab Civil Services Rules and Rule 78 of the Haryana Civil Services (Pension) Rules, 2016, the Court held that, Pension once authorised cannot be revised to the disadvantage of a pensioner except in narrowly defined situations such as detection of clerical error.
The Court clarified that even then, a notice and opportunity of hearing is mandatory and where recovery is contemplated, express consent of the pensioner is required unless a prior undertaking exists.
While allowing the plea, the Court set aside the impugned order and directed to refund the amount recovered from the petitioner, along with interest at the rate of 6% per annum from the date of institution of the present writ petition until the date of actual payment.
Mr. Raman B. Garg, Advocate with Mr. Mayank Garg and Mr. Navjeet Singh, Advocate for the petitioner.
Mr. Arun Singla, AAG, Haryana.
Ms. Navya Jindal, Advocate for Mr. Prince Singh, Advocate for respondent No.3.
Title: Sajjan Kumar Goyal v. State of Haryana and others