Plea challenging recovery from salary, pension junked in HC

The Punjab and Haryana High Court has clarified that excess payment made due to administrative reasons could be recovered where the employee was aware, or ought to have been aware that the amount exceeded his lawful entitlement.

Dismissing a petition challenging recovery of Rs 66,988 from the salary and pensionary benefits of an Army man, Justice Sandeep Moudgil held that the law on recovery of excess payments had evolved on a clear equitable principle: Courts protected employees who innocently receive excess payments, but not those who knowingly retained benefits beyond their entitlement.

The Bench asserted a Supreme Court decision restraining recovery in cases of bona fide employer error, where he was not guilty of misrepresentation or fraud. The principle later crystallised with the apex court identifying categories in which recovery would ordinarily be impermissible — such as from lower service category employees, retired employees or where recovery after long periods would cause undue hardship.

Justice Moudgil, however, asserted that the equitable protection was never intended to grant blanket immunity from recovery. Referring to another precedent, the court clarified that the protection disappeared where the employee knew about the overpayment.

Justice Moudgil observed that this case involved a former soldier, who had approached the court, seeking refund of Rs 66,988 deducted from his salary and pension. Directions were also sought for fixation of pension on the basis of his last drawn pay. He argued that the deductions were made without a formal order and without giving him an opportunity of hearing.

Justice Moudgil observed that the petitioner promoted as Havildar was later tried by a district court martial under the provisions of the Army Act for misappropriation of government funds. Following the conviction, he was demoted and awarded rigorous imprisonment.

Despite the punishment, higher pay continued to be credited for some time due to delay in updation. Rejecting the petitioner’s claim that he believed the payments to be legitimate, Justice Moudgil observed that the punishment and consequent reduction in rank were fully known to him.

“The continuation of higher salary occurred merely because the administrative process of recording the punishment in the service records and issuing the corresponding orders took some time,” the court observed. It added that a soldier disciplined by military command could not plausibly claim ignorance of the consequences of a court martial demoting him.

The court also rejected the argument that pension should be calculated on the basis of the “last drawn pay”.