RECOVERY FROM PENSION / PAYMENT OF GOVERNMENT SERVANT

Interestingly, I received a call from one of my acquaintance who served  in a government department for 20 years and retired in 2021.  He told me that he has received a notice saying that an LTC advance that he took in the year 2016 has been objected by the audit agencies and that the amount is to be recovered from his pension.

The issue is such that any government employee can easily be plagued by it, so I thought to put some light on it.  Before we start I must remark that it is required to be understood here that there is difference between recovery & penal action and therefore this article will not apply to recoveries in compliance of penalties or punishment.

First thing first – recovery from payment or pension in respect of any excesses made by the employer including Central & State Governments is not barred. For example when we submit our pension papers we also end up giving certain undertakings where we undertake to refund the amount if required and thereby agree for recovery from pension in respect of any excess payment made to us. So, yes recovery can be made and it can definitely be made when the employer is able to prove that the excess payment was made due to a misrepresentation or fraud by the employee and this will undoubtedly also be coupled with departmental / disciplinary action.

But the issue involved here is – what if there was no misrepresentation or fraud by the employee and the mistake for excess payment was completely on the part of employer. Well in this case too – recovery is not barred and the employer can very well recover the excess payment.

However, certain guidelines / safeguards for employees have been laid down by Hon’ble Supreme Court in State Of Punjab & Ors vs Rafiq Masih Date of Judgment- 18 Dec 2014. The Hon’ble Supreme Court provided certain categories under Para 12 of this judgment where the recovery will be impressible in law. The categories mentioned by the Hon’ble Supreme Court were the following: (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.” (emphasis supplied).

 Consequently, DOPT also issued an Officer Memorandum dated 02 Mar 2016 in line with the judgment of Hon’ble Supreme Court.

The important aspect of Hon’ble Supreme Court’s judgment is that this judgment vide its Para 7 acknowledges that the employee who has been given the excess payment does not have any absolute right for denying the recovery but it is an issue of equitability and of avoiding hardship which the employee would suffer on such recoveries. So, suppose if you have gone out of service or in the last year of your service – can a recovery be made – u may say that as u fall under Clause (ii) of the judgment i.e. “Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery” – you are immune from such recoveries. Alas! The answer is No and the reason lies in details like what sort of excess payment it was (like pay fixation, LTC, TD claim, Posting claim etc), how much time has passed and most importantly did you give a specific undertaking (for recovery) regarding such payment which is currently in dispute. For example the issue involved in the case of High Court Of Punjab & Haryana vs Jagdev Singh (Date of Judgment 29 Jul 2016) was regarding recovery of excess amount given due to wrong fixation of pay after the retirement of a civil judge. In this case Hon’ble Supreme Court did not apply the principles of above said judgment of State Of Punjab & Ors vs Rafiq Masih and said that because the person had given an undertaking (for returning the excess if wrongly fixed) at the time of fixation itself therefore now he will have comply with the undertaking. Finally, I very humbly put forth that if it is only a matter of undertaking then there will not be any problem for the authorities to bring rules mandating requirement of undertaking for every financial up-gradation and therefore the whole beneficial ratio propounded in State of Punjab Vs Ors & Rafiq Masih will become completely ineffective.

Blog written by Advocate Pradeep Shukla