F.No. 1 8/03/20 1 5-Estt. (Pay-I) 

Government of India 

Ministry of Personnel, Public Grievances & Pensions 

Department of Personnel & Training 

New Delhi, the 2nd  March, 2016 

OFFICE MEMORANDUM 

Sub: Recovery of wrongful / excess payments made to Government servants. 

The undersigned is directed to refer to this Department's OM No.18/26/2011-Estt 

(Pay-I) dated 6th  February, 2014 wherein certain instructions have been issued to deal 

with the issue of recovery of wrongful / excess payments made to Government servants in 

view of the law declared by Courts, particularly, in the case of  Chandi Prasad Uniyal And 

Ors. vs. State of Uttarakhand And Ors., 2012 AIR SCW 4742, (2012) 8 SCC 417.  Para 

3(iv) of the OM  inter-alia  provides that recovery should be made in all cases of 

overpayment barring few exceptions of extreme hardships. 

2.  The issue has subsequently come up for consideration before the Hon'ble Supreme 

Court in the case of State of Punjab & Ors vs Rafiq Masih (White Washer) etc in CA 

No.11527 of 2014 (Arising out of SLP(C) No.11684 of 2012)  wherein Hon'ble Court on 

18.12.2014 decided a bunch of cases in which monetary benefits were given to employees 

in excess of their entitlement due to unintentional mistakes committed by the concerned 

competent authorities, in determining the emoluments payable to them, and the 

employees were not guilty of furnishing any incorrect information / misrepresentation / 

fraud, which had led the concerned competent authorities to commit the mistake of 

making the higher payment to the employees. The employees were as innocent as their 

employers in the wrongful determination of their inflated emoluments. The Hon'ble 

Supreme Court in its judgment dated 18 th  December, 2014  ibid has,  inter-alia,  observed 

as under: 

"7.  Having examined a number of judgments rendered by this Court, we 

are of the view, that orders passed by the employer seeking recovery of 

monetary benefits wrongly extended to employees, can only be interfered with, 

in cases where such recovery would result in a hardship of a nature, which 

would far outweigh, the equitable balance of the employer's right to recover. In 

other words, interference would be called for, only in such cases where, it would 

be iniquitous to recover the payment made. In order to ascertain the parameters 

of the above consideration, and the test to be applied, reference needs to be 

made to situations when this Court exempted employees from such recovery, 

even in exercise of its jurisdiction under Article 142 of the Constitution of India. 

Repeated exercise of such power, "for doing complete justice in any cause" 

would establish that the recovery being effected was iniquitous, and therefore, 

arbitrary. And accordingly, the interference at the hands of this Court." 

"10. In view of the afore-stated constitutional mandate, equity and good 

conscience, in the matter of livelihood of the people of this country, has to be the 

Contd. on pg.2 basis of all governmental actions. An action of the State, ordering a recovery 

from an employee, would be in order, so long as it is not rendered iniquitous to 

the extent, that the action of recovery would be more unfair, more wrongful, 

more improper, and more unwarranted, than the corresponding right of the 

employer, to recover the amount. Or in other words, till such time as the 

recovery would have a harsh and arbitrary effect on the employee, it would be 

permissible in law. Orders passed in given situations repeatedly, even in 

exercise of the power vested in this Court under Article 142 of the Constitution 

of India, will disclose the parameters of the realm of an action of recovery (of an 

excess amount paid to an employee) which would breach the obligations of the 

State, to citizens of this country, and render the action arbitrary, and therefore, 

violative of the mandate contained in Article 14 of the Constitution of India." 

3.  The issue that was required to be adjudicated by the Hon'ble Supreme Court was 

whether all the private respondents, against whom an order-of recovery (of the excess 

amount) has been made, should be exempted in law, from the reimbursement of the same 

to the employer. For the applicability of the instant order, and the conclusions recorded 

by them thereinafter, the ingredients depicted in paras 2&3 of the judgment are essentially 

indispensable. 

4.  The Hon'ble Supreme Court while observing that it is not possible to postulate all 

situations of hardship which would govern employees on the issue of recovery, where 

payments have mistakenly been made by the employer, in excess of their entitlement has 

summarized the following few situations, wherein recoveries by the employers would be 

impermissible in law:- 

(i) Recovery from employees belonging to Class-III and Class-IV service (or 

Group 'C' and Group 'D' service). 

(ii) Recovery from retired employees, or employees who are due to retire within 

one year, of the order of recovery. 

(iii) Recovery from employees, when the excess payment has been made for a 

period in excess of five years, before the order of recovery is issued. 

(iv) Recovery in cases where an employee has wrongfully been required to 

discharge duties of a higher post, and has been paid accordingly, even 

though he should have rightfully been required to work against an inferior 

post. 

(v) In any other case, where the Court arrives at the conclusion, that recovery if 

made from the employee, would be iniquitous or harsh or arbitrary to such 

an extent, as would far outweigh the equitable balance of the employer's 

right to recover. 

5.  The matter has, consequently, been examined in consultation with the Department 

of Expenditure and the Department of Legal Affairs. The Ministries / Departments are 

advised to deal with the issue of wrongful / excess payments made to Government 

servants in accordance with above decision of the Hon'ble Supreme Court in  CA 

No.11527 of 2014 (arising out of SLP (C) No.11684 of 2012) in State of Punjab and 

others etc vs Rafiq Masih (White Washer) etc.  However, wherever the waiver of recovery 

in the above-mentioned situations is considered, the same may be allowed with the 

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Contd. on pg.3 express approval of Department of Expenditure in terms of this Department's OM 

No.18/26/2011-Estt (Pay-I) dated 6

th 

 February, 2014. 

6. In so far as persons serving in the Indian Audit and Accounts Department are 

concerned, these orders are issued with the concurrence of the Comptroller and Auditor 

General of India. 

7. Hindi version will follow. 

(A.K. Jain) 

Deputy Secretary to the Government of India 

All Ministries / Departments of Government of India 

NIC, DOP&T — with a request to upload this OM on the Department's website 

under OMs & Orders (Establishment —> Pay Rules) and also under "What is New". 

Copy also forwarded to: 

1. The Comptroller & Auditor General of India. 

2. Secretary General, Supreme Court of India. 

3. Controller General of Accounts / Controller of Accounts, Ministry of Finance. 

4. Union Public Service Commission / Lok Sabha Sectt. / Rajya Sabha Sectt. / 

Cabinet Sectt. /Central Vigilance Commission / President's Sectt ./ Vice- 

President's Sectt. / Prime Minister's Office / Niti Aayog. 

5. Governments of all States and Union Territories. 

6. Department of Personnel and Training (AIS Division) / JCA /Admn. Section. 

7. Secretary, National Council of JCM (Staff Side), 13-C, Feroz Shah Road, New 

Delhi. 

8. All Members of Staff Side of the National Council of JCM / Departmental 

Council. 

9. All Officers / Sections of Department of Personnel and Training / Department of 

Administrative Reforms & Public Grievances / Department of Pensions & 

Pensioners' Welfare / PESB. 

10. Joint Secretary (Pers), Department of Expenditure, Ministry of Finance. 

11. Additional Secretary (Union Territories), Ministry of Home Affairs. 

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