Supreme Court Quashes Recovery Orders Seeking Excess Arrears From Retired Stenographers; High Court Set Aside

A Bench of Justices Pamidighantam Sri Narasimha and Prashant Kumar Mishra heard an appeal arising out of Special Leave Petition (C) No. 5918/2024 challenging a judgment of the Orissa High Court, Cuttack which had dismissed a writ petition by former stenographers and personal assistants seeking to quash administrative orders directing recovery of arrears credited on account of retrospective promotions implemented in 2017.

The Court allowed the appeal, set aside the High Court judgment dated 09.11.2023 and quashed the recovery orders dated 12.09.2023 and 08.09.2023 which had directed the deposit of amounts ranging from Rs. 21,485 to Rs. 40,713. The Bench held that recovery after retirement and without affording any opportunity of hearing was unsustainable where the excess payments were not shown to result from fraud or misrepresentation by the employees and where the payments were made pursuant to an administrative interpretation later found erroneous. The Court, in its reasoning, observed: “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. It is held that such relief against the recovery is not because of any right of the employee but in equity, exercising judicial discretion to provide relief to the employee from the hardship that will be caused if the recovery is ordered.”

Background: The appellants had served as Stenographer Grade-I and Personal Assistant in the District Judiciary, Cuttack. By Office Order No. 63 dated 10.05.2017 the District Judge credited retrospective promotions and financial benefits w.e.f. 01.04.2003 pursuant to implementation of recommendations of the Shetty Commission, resulting in the payment of various sums to the appellants. The District Judge later directed recovery of those sums on the ground that the extension of Shetty Commission benefits to the appellants reflected an erroneous interpretation. Recovery orders were issued in 2023, by which time the appellants had retired in 2020. The appellants challenged the recovery before the Orissa High Court by writ petition; the High Court dismissed their petition, prompting the present appeal.

The appellants argued that the payments were bona fide, made without fraud or misrepresentation, and that recovery after retirement was illegal and arbitrary; they relied on a line of this Court’s precedents that restrained recovery in comparable circumstances. The respondents maintained that the payments were incorrectly extended and that the administrative power to direct recovery, coupled with undertakings given by employees, justified restitution.

The Supreme Court examined established authorities including Sahib Ram v. State of Haryana, Shyam Babu Verma v. Union of India, Union of India v. M. Bhaskar, V. Gangaram v. Regional Joint Director and Thomas Daniel v. State of Kerala. The Court noted that recovery is generally impermissible where excess payment resulted from a wrong interpretation and not from any fraud or misrepresentation by the employee, particularly where the employee had retired and where no hearing was afforded. The Court also noted the respondents’ reliance on alleged undertakings but found the absence of any opportunity of hearing and the passage of time (payment in 2017, retirement in 2020, recovery in 2023) militated against ordering recovery. The appeal was allowed and the impugned orders for deposit of excess drawn arrears were set aside. No interim directions other than the setting aside of recovery orders were recorded in the judgment.

Case Details: Case No.: Civil Appeal No.(s). __________ of 2025 (Arising out of SLP(C) No. 5918/2024) Case Title: Jogeswar Sahoo & Ors. v. The District Judge, Cuttack & Ors. Appearances: For the Petitioner(s): Counsel not specified in the reported judgment For the Respondent(s): Counsel not specified in the reported judgment