The Patna High Court has held that the State cannot adjust or recover alleged “excess salary” from the leave encashment of a retired Class-III employee, especially after an unexplained delay in settling admitted post-retiral dues. The Court directed payment of the withheld amount within one month and imposed costs for the delay.

The case concerned a retired Assistant from a government medical college in Patna. After retirement on 31 March 2013, the petitioner initially received only 90% provisional pension and 90% gratuity, while group insurance was paid in full. Years later, during scrutiny related to his time-bound promotion and service records, the authorities discovered what they considered a wrong fixation of pay leading to alleged excess salary payments. They decided to recover ₹1,77,121 by deducting it from the petitioner’s leave encashment dues. The petitioner challenged this recovery and the prolonged delay in releasing his full retiral benefits.

The High Court noted that the petitioner’s service history included appointment in a private medical college that was later taken over by the State with effect from 1 January 1980, followed by his transfer to a Patna medical college in September 1980. The authorities issued a letter in March 2017 asking the petitioner to explain gaps or authentication issues in the service book for 1973–1980 and the date of joining in September 1980. The Court specifically observed that objections had actually been raised as far back as November 2014, yet the superintendent’s letter was issued only in March 2017—two and a half years later—with no explanation in the pleadings for this delay.

In its pleadings and counter-affidavit, the State reported that the remaining 10% pension and gratuity had since been authorized and that leave encashment admissible to the petitioner had also been processed. However, the sanctioning authority found a pay-fixation error causing “excess salary” of ₹1,77,121. Against a total leave encashment entitlement of ₹4,10,510, the department deducted this amount and authorized a net payment of ₹2,33,459. The petitioner argued that such recovery from a retired Class-III employee’s post-retiral dues is impermissible in view of the Supreme Court decision in State of Punjab v. Rafiq Masih (White Washer) (2015) 4 SCC 334.

The State attempted to distinguish the case by submitting that it was not clawing back pension or gratuity per se, but only adjusting “excess salary” from leave encashment, which it claimed was lawful. The Court rejected this position. It emphasized that the facts were largely undisputed: the petitioner retired in 2013; the authorities took nearly seven years to settle the admitted retiral dues; and recovery was sought solely on the ground of wrong pay fixation. In such circumstances—and considering the settled legal position laid down by the Supreme Court—the High Court held that the proposed recovery from leave encashment was unjust and improper.

Importantly, the Court relied on paragraph 18 of Rafiq Masih, which lists instances where recovery is impermissible, including recovery from Class-III/IV employees and recovery from retired employees. Applying those principles, the Court directed the respondents to release the withheld leave encashment amount of ₹1,77,121 within one month from receipt/production of the order. Recognizing the unexplained delay in clearing admitted dues, the Court also imposed costs of ₹10,000 on the concerned respondent to be paid within the same period.

This judgment reiterates that once an employee has retired—particularly from Group C/D service—recoveries based on historical pay-fixation errors are not to be foisted upon their terminal benefits, save in exceptional circumstances recognized in law. It also underscores that government departments must process retiral claims promptly and cannot use alleged “excess salary” determinations as a belated set-off against leave encashment without strong legal footing.

Significance or Implication of the Judgment (For general public or government)

This decision carries practical importance for retiring and retired government employees in Bihar, especially those in Class-III/Class-IV (Group C/D) service:

• It clarifies that departments cannot adjust alleged past “excess salary” from leave encashment after retirement when the basis is wrong pay fixation—doing so would run afoul of the principles recognized by the Supreme Court in Rafiq Masih.
• It discourages delayed processing of pension, gratuity, and leave encashment. The Court expressly noted the seven-year delay in settling admitted dues and levied costs, signaling that administrative laxity will draw judicial censure.
• For government administrators, the judgment is a reminder to maintain accurate service records and resolve pay-fixation issues during service tenure, not post-retirement, and certainly not by eroding retiral benefits without clear legal authority.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether the State could recover alleged “excess salary” due to wrong pay fixation by deducting it from a retired Class-III employee’s leave encashment.
  Decision: No. Recovery from post-retiral dues (including leave encashment) is impermissible in such situations, particularly for Class-III/IV employees and retired persons, as per the principles summarized in Rafiq Masih. The Court found the proposed adjustment to be unjust and improper.
• Whether unexplained administrative delay affects the permissibility of recovery.
  Decision: Yes. The Court was critical of the prolonged, unexplained delay—nearly seven years—in settling admitted retiral benefits. This delay reinforced the conclusion that recovery should not be permitted and warranted the imposition of costs.
• Appropriate relief and directions.
  Decision: The Court directed release of the withheld ₹1,77,121 leave encashment within one month and imposed costs of ₹10,000 on the concerned respondent, payable within the same period.

Judgments Referred by Parties (with citations)

• State of Punjab and Others v. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334. The petitioner relied on this decision to submit that recovery from a retired Class-III employee’s retiral dues is impermissible.

Judgments Relied Upon or Cited by Court (with citations)

• State of Punjab and Others v. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334 — paragraph 18 extracted and applied to hold that recovery from Class-III/IV employees and retired employees is barred in such circumstances.

Case Title

• Petitioner v. State of Bihar & Others (Patna High Court) — generic reference used in place of personal names as per publication policy.

Case Number

• Civil Writ Jurisdiction Case No. 4066 of 2019.

Citation(s)

2021(2) PLJR 411

Coram and Names of Judges

• Hon’ble Mr. Justice Chakradhari Sharan Singh. Date of Judgment: 17 March 2021.

Names of Advocates and who they appeared for

• For the petitioner: Mr. Ajit Kumar, Advocate.
• For the Respondent State: Mr. S. D. Yadav, AAG-9; assisted by Mrs. Shama Sinha, AC to AAG-9.

Link to Judgment

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