Whether employer has right to recover excess payments from pensionary benefits of employee?

In the present case, the declaration of the petitioner that Learned Counsel for the State has relied on is as follows:-

“I do hereby agree that the payments of the monthly bills and arrear pay bills drawn in the revised scale of pay are ‘Provisional’ and are subject to subsequent adjustment and that the over-drawals, if any, in this regard be recovered forthwith from my salary bill” (emphasis is mine).

14. The form of declaration clearly means that even at the highest, recovery of excess payment could be made by the State from the salary bill of the petitioner during the tenure of his service. In my opinion, such a declaration would not entitle the State to recover any over-drawals from the pensionary benefits of the petitioner. Pensionary benefits are paid to a superannuated person by way of social welfare measure to enable him to live a life of dignity which is now recognized as a fundamental right of a citizen of India. Retiral benefits are not to be lightly interfered with. Any right of the employer to recover from the pensionary benefits of an employee any excess payment received by the employee due to no fault, fraud or misrepresentation on his part is to be strictly construed. Of course, it will be a different thing altogether if the employee has fraudulently induced the employer to make the excess payment. In such a case the employer's right to recover the excess payment from the pensionary benefits of the employee cannot be doubted since fraud unravels everything. But it is not the case of the State that the petitioner in the present case has received excess payment by practising fraud or making misrepresentation nor that the petitioner was conscious that he was receiving more than he was entitled to. Moreover, it is common knowledge that such declarations are signed by an employee under compelling circumstances with no real choice in the matter. As a Learned Judge observed in one case, the choice is like choosing between the devil and the deep sea. 

In the High Court of Calcutta

(Before Arijit Banerjee, J.)

WP 29979 (W) of 2016

Shiba Rani Maity

v.

The State of West Bengal

Decided on January 18, 2017

Citation: 2017 SCC OnLine Cal 109

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When employer may not recover excess payment made by him to employee due to his own mistake?

 It is not possible to postulate all situations of hardship, which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to herein above, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:

(i) Recovery from employees belonging to Class-III and Class-IV service (or Group 'C' and Group 'D' service).

(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.

(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.

(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.

(v) In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover.

Supreme Court of India

State Of Punjab & Ors vs Rafiq Masih (White Washer) on 18 December, 2014

Bench: Jagdish Singh Khehar, Arun Mishra

Citation;AIR 2015 SC 1267

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