Supreme Court Shields Retired Low-Wage Employees from Unjust Recovery of Overpaid Benefits.


04 April 2025 Civil Appeals >> Civil & Consumer Law   |   Employee Related >> Corporate Law  

In a significant ruling of Jogeswar Sahoo & Others v/s The District Judge, Cuttack & Others., safeguarding the financial security of retired low-wage employees, the Supreme Court of India has overturned a High Court order that mandated the recovery of overpaid benefits from former stenographers of the District Judiciary, Cuttack, Orissa. The apex court's decision underscores the principle that recovery of such amounts, especially post-retirement and without any fault on the employee's part, is unjust and inequitable.

The case stemmed from orders issued by the Special Judge, Special Court, Cuttack, and the Registrar, Civil Courts, Cuttack, directing the appellants, who were retired stenographers, to return sums ranging from Rs. 21,485 to Rs. 40,713. These amounts were initially credited to the appellants' accounts in 2017 following a retrospective promotion/appointment order issued by the District Judge, Cuttack, in line with the recommendations of the Shetty Commission.


 

 

However, six years later, and three years after the appellants' retirement in 2020, the authorities sought to recover these amounts, claiming the initial grant of financial benefits was based on an erroneous interpretation of the Shetty Commission's recommendations. Aggrieved by this decision, the appellants filed a writ petition before the High Court of Orissa, which was subsequently dismissed.

The Supreme Court, in its recent judgment, addressed the core issue of whether recovery of amounts extended to employees during their service is justified post-retirement, particularly without affording them an opportunity for a hearing. The court reiterated the established legal position that recovery is generally impermissible when the excess payment is not attributable to any fraud or misrepresentation on the employee's part, and when it results from an employer's error in interpreting rules or orders.

Drawing upon a series of precedents, including Sahib Ram vs. State of Haryana, Thomas Daniel vs. State of Kerala & Ors., and State of Punjab v. Rafiq Masih (White Washer), the Supreme Court emphasized the equitable considerations that guide such matters. The court noted that low-wage employees, particularly those retired, often rely on their received emoluments for their sustenance. Any subsequent recovery would cause undue hardship.

The court stated, "This Court has consistently taken the view that if the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous, such excess payments of emoluments or allowances are not recoverable."

In this case, the appellants, working as stenographers, were not found to have engaged in any fraudulent activity or misrepresentation. The overpayment resulted from a subsequent disapproval of the District Judge's order by the High Court. Furthermore, the recovery order was issued without affording the appellants a hearing.

The Supreme Court, therefore, allowed the appeal, setting aside the High Court's order and the recovery directives. This ruling reinforces the principle that retired low-wage employees should not be subjected to the financial strain of recovering amounts paid due to administrative errors, especially when they are not at fault.

This judgment serves as a significant relief for retired employees, particularly those in lower-grade positions, and reaffirms the judiciary's commitment to protecting their financial well-being.