Recovery Of Excess Arrears Of 6th Pay Commission From Retired Employee’s Gratuity Amount Is Illegal: Allahabad High Court

The Allahabad High Court held that recovering excess arrears of the 6th pay commission from the retired employee’s gratuity amount is illegal.

The Court dismissed a Special Appeal challenging a single bench order directing the Commissioner of District Rural Development Agency (DRDA) to refund the recovered arrear amount. The Court observed that no statutory provision specifies such recovery and is based on equitable consideration.

“Thus, the deduction of the amount of arrears of 6th Pay Commission of Rs. 2,86,851/- from gratuity money payable to him is illegal and was rightly directed to be refunded to the respondent-petitioner vide impugned order dated 26.4.2023 passed by the learned Single Judge in WritA No. 33297 of 2013”, the Bench comprising Justice Salil Kumar Rai and Justice Surendra Singh-I held.

Advocate Lal Babu Lal appeared for the Respondent.

An employee (Respondent) of the DRDA was paid arrears of the 6th Pay Commission. However, the Commissioner issued an order that DRDA employees were not entitled to these arrears. However, such excess amount was recovered from his gratuity amount during his retirement. The Respondent filed a Writ Petition challenging the recovery, which was allowed. The Court had passed an order directing the DRDA to return the recovered amount. Aggrieved, the DRDA filed a Special Appeal challenging the said order.

The Court observed that there is no statutory law concerning the recovery of excess payment made by an employer to an employee. The Court noted that such recovery is based on equitable consideration while referring to the Supreme Court Judgment in the case of Sayed Abdul Qadir v State of Bihar [(2009) 3 SCC 475]. The Court also observed that the excess payment made was not due to misrepresentation or fraud committed by the Respondent but due to a government order. 

The Court held, “There is no statutory law regarding recovery of excess payment made by the employer to the employee. The recovery of excess payment is based on equitable consideration, which has been settled by the Judgment of Hon’ble Apex Court In Sayed Abdul Qadir Vs. State of Bihar reported in (2009) 3 SCC 475. In this case, the Hon’ble Apex Court quashed the order directing the recovery of excess payment made to the teachers for their no fault after ten years”.

Furthermore, the Court noted that the recovery of the excess payment was made on the date of his retirement. The Court placed reliance on the Supreme Court Judgment in the case of Punjab and others v Rafiq Masih (Whitewasher) and others [2015 (4) SCC 334] and held that recovery of such amount was illegal. The Court held that the recovery of the payment of arrears of the 6th Pay Commission would be iniquitous and arbitrary and cannot be permitted.

Accordingly, the Court dismissed the Appeal and afirmed the impugned order. 

Cause Title: State Of U.P. And 3 Others v Suresh Chandra Asthana (2023:AHC:210748-DB)

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