Excess Gratuity Payment Can Be Recovered From Retired Employee: Chhattisgarh HC

Public money disbursed without legal authority cannot be retained by a retired employee under the guise of an administrative error, as equity cannot justify unjust enrichment at the expense of the public exchequer. Refusing to quash a post-retirement recovery order, the High Court clarified that recovery of excess public funds remains the general rule while exemptions are narrow exceptions.

A single-judge bench of Justice Bibhu Datta Guru dismissed a writ petition challenging a departmental order that directed the recovery of excess gratuity paid to a retired government employee.

Court's Rationale on Public Funds and Unjust Enrichment

The High Court emphasized that public funds do not belong to the disbursing officer or the recipient, and any payment made without authority of law must be returned.

The Court, in its reasoning, observed: "Mere administrative error does not automatically extinguish the right of the employer to recover public money, particularly where the employee was aware of the correct entitlement. If an amount beyond the sanctioned entitlement has been paid, the employer is under a corresponding obligation to safeguard the public exchequer. Equity operates in favour of an innocent employee but cannot be extended to permit unjust enrichment at the cost of public revenue."

Addressing the principle of recovery, the Court further noted: "The recovery of excess payment is the general rule, whereas exemption from recovery constitutes a narrow exception, to be invoked only in exceptional factual situations where equitable considerations outweigh the State's right to recover public money."

Background

The petitioner retired from service on January 31, 2025. Subsequently, through an order dated June 5, 2026, the respondents directed the recovery of an overpaid amount of gratuity disbursed beyond his entitlement at the time of retirement. The petitioner challenged this recovery order under Article 226 of the Constitution of India.

The petitioner relied upon State of Punjab and Others Vs. Rafiq Masih (White Washer) and Others ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477), contending that recovering excess payments from a retired employee after one year of retirement is impermissible when the employee is not at fault. Conversely, the State argued that the precedent in State of Punjab and Others Vs. Rafiq Masih (White Washer) and Others ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477) was inapplicable, as the impugned order merely sought to recoup excess gratuity inadvertently disbursed.

Evaluating the precedents, the High Court referred to Chandi Prasad Uniyal & Others v. State of Uttarakhand & Others ( "(2012) 8 SCC 417": 2012 CaseBase(SC) 537), which established that unauthorized payments can always be recovered to prevent unjust enrichment. Distinguishing State of Punjab and Others Vs. Rafiq Masih (White Washer) and Others ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477) from the present facts, the Court observed that the petitioner had a duty to report the inadvertent excess gratuity payment to the department but failed to do so. Finding no jurisdictional error or statutory violation, the High Court dismissed the writ petition.

Case Details:
Case No.: WPS No. 5988 of 2026
Neutral Citation: 2026:CGHC:34715
Case Title: Shankar Das Dhirhi v. State Of Chhattisgarh & Ors.
Appearances:
For the Petitioner(s): Mr. Pramod Ramteke, Advocate
For the Respondent(s): Mr. K.G. Yadav, Dy. G.A.

Source: 2026 CaseBase(CTH) 7415