'Recovery Of Excess Amount From Retired Employee For Period More Than Five Years Before Order Of Recovery Is Impermissible', Patna High Court

A Division Bench of the Patna High Court comprising Justice Arvind Singh Chandel allowed a Petition challenging an Order of Recovery from a Retired Clerk who was paid an excess amount due to alleged wrong pay fixation. The Court reiterated that the recovery of excess amount paid by mistake is not permissible in cases where the recovery is made in case of employees belonging to Class-III and Class-IV service and also in cases where the Recovery is sought for the excess amount received by Employees for a period more than five years before the order of recovery is issued. Background On 28.12.1990, the Petitioner was appointed as a clerk on compassionate grounds in the office of the District Superintendent of Education, Nalanda. He retired on 30.06.2023 and in the years 2002, 2014 and 2021, the Petitioner was granted the benefit of first, second and third MACP. After his retirement, the office of the Accountant General (A & E), Bihar, Patna verified his pension and the Petitioner was paid some extra amount due to an alleged wrong pay fixation. Accordingly, the Treasury Officer, Nalanda was directed to recover Rs 2,17,738 from the retiral dues of the petitioner. Aggrieved by this direction, the Petitioner approached the High Court. Contentions of the Parties: The Counsel for the Petitioner submitted that the excess amount was paid to the Petitioner by the alleged wrong pay fixation which was done by the Respondents and the Petitioner had no role to play in the same. Moreover, the Counsel argued that the Respondents had not attributed the reason for payment of extra amount by the Respondents to any fraud or misrepresentation by the Petitioner. Citing the judgment of the Supreme Court in the case of State of Punjab & Others Versus Rafiq Masih (White Washer) 2015 AIR SCW 501, the Counsel added that recovering the excess amount paid to the Petitioner would be unjust and unfair to the Petitioner. The Petitioner was not even afforded the opportunity of being heard before passing the order of recovery, the Counsel argued. On the other hand, the Counsel for the Respondent submitted that the Petitioner was paid the amount that he was not entitled to receive and therefore, as soon as the authorities noticed it, they issued an order to recover the same which was not questionable. Findings of the Court: The Court perused the record and noted that the petitioner had retired on 30.06.2023 from the post of Clerk which was a Class III post and had received some excess amount since 01.07.2007. As per the record, the payment of this excess amount was made for more than 16 years before passing the order of recovery for the said amount. The Court appreciated the contention of the Counsel for the Petitioner that the Respondents had not attributed the payment of the excess amount to any fraud or misrepresentation by the Petitioner. Referring to the decision in the case of Rafiq Masih, the Court reiterated that recovery of the excess amount in this situation would be impermissible. It was held in the case of Rafiq Masih, “Recovery of excess payments, made from employees who have retired from service, or are close to their retirement, would entail extremely harsh consequences outweighing the monetary gains by the employer. It cannot be forgotten that a retired employee or an employee about to retire is a class apart from those who have sufficient service to their credit, before their retirement. Needless to mention, that at retirement, an employee is past his youth, his needs are far in excess of what they were when he was younger. Despite that, his earnings have substantially dwindled (or would substantially be reduced on his retirement). Keeping the aforesaid circumstances in mind, we are satisfied that recovery would be iniquitous and arbitrary, if it is sought to be made after the date of retirement, or soon before retirement. A period within one year from the date of superannuation, in our considered view, should be accepted as the period during which the recovery should be treated as iniquitous. Therefore, it would be justified to treat an order of recovery, on account of wrongful payment made to an employee, as arbitrary, if the recovery is sought to be made after the employee's retirement, or within one year of the date of his retirement on superannuation.” The Court further held that in certain cases as mentioned in the judgement mentioned above, the recovery of excess amount paid would be impermissible. As per the categorization of the same, the excess amount could not be recovered in cases where the amount was to be recovered from employees belonging to Class-III and Class-IV service. Moreover, if the excess payment was made for a period in excess of five years, before the order of recovery was issued, such recovery would not be permissible. Additionally, in cases where it was found by the Court that the recovery...

'Recovery Of Excess Amount From Retired Employee For Period More Than Five Years Before Order Of Recovery Is Impermissible', Patna High Court

Syed Nazarat Fatima

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