Excess salary arrears mistakenly paid, cannot be recovered : Supreme Court

way2barak, October 2: Supreme Court has granted relief to five retired employees of the Odisha judiciary department who had mistakenly received excess salary arrears. The Supreme Court ruled that such excess payments made to employees cannot be recovered if the employees did not engage in any fraud or misrepresentation that led to the erroneous payment.

The pertinent details of this case indicate that these five retired employees served as stenographers of Grade-I and Personal Assistant cadre in the Cuttack district judiciary department, Odisha. In 2017, they received financial benefits totalling Rs 26,034, Rs 40,713, Rs 26,539, Rs 24,683, and Rs 21,485, credited to their bank accounts, due to their retrospective promotion to Stenographer Grade-I, Grade-II, and Grade-III.

The financial benefits they received (arrears of salary) resulted from the interpretation of the Shetty Commission’s report, which made them eligible for these higher pay scales and promotions. After receiving these benefits in 2017, they retired from their respective positions in 2020.

Three years after retirement and six years following the granting of the financial benefits, the Odisha District judiciary department, Cuttack, ordered the recovery of the said amount. The decision was based on the assertion that extending the benefits of the Shetty Commission’s recommendations to them was based on an erroneous interpretation of those recommendations, thereby rendering the financial benefit subject to recovery.

The Cuttack Judiciary department issued orders dated September 8 and 12 of 2023 and directed the five retired employees to deposit the excess drawn salary arrears.

Since these orders were issued without providing the now-retired employees any opportunity to be heard, they filed a writ petition before the Odisha High Court, which was consequently dismissed under the impugned judgment order dated November 9, 2023.

These retired employees then filed an appeal in the Supreme Court, and on April 4, 2025, they won.

The counsel appearing for the retired employees argued in the Supreme Court that they were granted financial benefit without there being any fraud or misrepresentation by them; therefore, recovery of the amount after three years of their retirement is illegal and arbitrary. It was also argued that the Odisha High Court has failed to consider the settled legal position in light of decisions of the Supreme Court wherein such recovery from a low-paid employee after retirement has been held bad in law.

The Supreme Court said that it is not reflected in the record that such payment was made to them on account of any fraud or misrepresentation by them. It seems when the financial benefit was extended to the appellants by the District Judge, Cuttack, the same was subsequently not approved by the High Court, which resulted in the subsequent order of recovery.

The Supreme Court also said that it is also not in dispute that the payment was made in 2017, whereas the recovery was directed in 2023. However, in the meanwhile, the appellants (retired employees) retired in 2020.

The Supreme Court also said that it is an admitted position that the appellants (retired employees) were not afforded any opportunity of a hearing before issuing the order of recovery.