High Court of Punjab & Haryana & Ors. v. Jagdev Singh
Background
The respondent, a judicial officer in Haryana, was given a revised senior pay scale in 2001 after furnishing an undertaking that he would refund any amount later found to have been paid in excess. He was compulsorily retired in 2003. In 2003 the pay rules were revised again following the Shetty Commission's recommendations, and on recalculation the State found it had overpaid him and sought to recover about Rs. 1,22,003 in 2004. He challenged the recovery in the Punjab & Haryana High Court, which ruled in his favour on the ground that excess salary paid without any fraud or misrepresentation on his part could not be recovered after retirement.
Decision Breakdown
The Supreme Court held that the general principle shielding retired or soon-to-retire employees from recovery of mistaken excess payments (as laid down in State of Punjab v. Rafiq Masih) does not apply where the employee had specifically and knowingly undertaken, as a condition of getting the revised pay scale, to refund any amount later found to be in excess. Because the respondent had furnished such an undertaking and admitted this in his own counter-affidavit, he was bound by it regardless of his subsequent retirement. The Court therefore set aside the High Court's judgment and allowed the recovery to proceed, but tempered the result by directing that the amount be recovered in equated monthly instalments spread over two years rather than as a lump sum, with no order as to costs.
Lesson Learnt
The usual rule protecting retired government employees from having mistaken salary overpayments clawed back does not help if the employee had earlier signed a written undertaking agreeing to repay any future excess: such a specific promise overrides the general equitable protection, though courts may still soften the impact by spreading recovery over instalments.