**Recovery Of Wrongful/Excess Payments To Government Servants: Guidelines And Legal Framework**.pdf

The Hon'ble Supreme Court has observed that orders passed by the employer seeking recovery of monetary benefits wrongly extended to employees can only be interfered with in cases where such recovery would result in a hardship of a nature far outweighing the equitable balance of the employer's right to recover.

The Court has also stated that interference would be called for only in such cases where it would be iniquitous to recover the payment made. The Court has established that the recovery being effected was iniquitous, and therefore, arbitrary.

The Court has also observed that equity and good conscience, in the matter of livelihood of the people of this country, has to be the basis of all governmental actions. An action of the State, ordering a recovery from an employee, would be in order, so long as it is not rendered iniquitous to the extent that the action of recovery would be more unfair, more wrongful, more improper, and more unwarranted than the corresponding right of the employer to recover the amount.

The Court has also stated that orders passed in given situations repeatedly, even in exercise of the power vested in this Court under Article 142 of the Constitution of India, will disclose the parameters of the realm of an action of recovery (of an excess amount paid to an employee) which would breach the obligations of the State, to citizens of this country, and render the action arbitrary, and therefore, violative of the mandate contained in Article 14 of the Constitution of India.

The Court has also summarized the following few situations, wherein recoveries by the employers would be impermissible in law:

Recovery from employees belonging to Class-III and Class-IV service (or Group 'C' and Group 'D' service)
Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery
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
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
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

The matter has been examined in consultation with the Department of Expenditure and the Department of Legal Affairs. The Ministries / Departments are advised to deal with the issue of wrongful / excess payments made to Government servants in accordance with the decision of the Hon'ble Supreme Court in CA No.11527 of 2014 (arising out of SLP (C) No.11684 of 2012) in State of Punjab and others etc vs Rafiq Masih (White Washer) etc.