Recovery from Retired Employees Is Iniquitous Unless Fraud Is Proved:  Punjab & Haryana High Court Quashes Recovery as Unjust and Harsh

“It Ill Behoves the Bank to Recover Pension from a Widow After a Decade” —Punjab & Haryana High Court at Chandigarh delivered a compassionate and precedent-backed ruling in favour of a widow receiving family pension. Justice Jagmohan Bansal quashed recovery orders dated 27.08.2019 and 19.09.2019, observing that recovering alleged excess pension paid over a decade ago, without notice or fraud, is legally impermissible and morally untenable.

Quoting extensively from the Supreme Court’s landmark judgment in State of Punjab v. Rafiq Masih (2015) 4 SCC 334, the Court held: “Recovery from retired employees, or the employees who are due to retire within one year of the order of recovery, is impermissible in law. This principle applies with greater force when the recovery is initiated from a widow drawing family pension.”

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The case arose when Kamla Devi, a widow and family pensioner, challenged recovery initiated against her by the respondent bank, claiming she had received pension “in excess” of entitlement from 2008 to 2019 due to an internal miscalculation.

She was never accused of any fraud, misrepresentation or manipulation. Rather, the excess was admitted by the respondent’s counsel to be a “systemic lapse” resulting from pension fixation errors post-2006.

The Court noted: “Learned counsel for respondent No.5 expressed her inability to controvert that excess payment was made from July 2008 to 2019 and there was no connivance, misrepresentation, fraud or mischief on the part of the petitioner.”

Slamming this blind recovery practice, the Court relied on its earlier reasoning in Shivani Joshi v. State Bank of India, CWP No. 12431 of 2022, where it remarked:

“This Court every day is getting similar cases where there is excess payment on account of mistake on the part of bank... The bank has initiated recovery even from the widow. It ill behoves the banks.”

“No Recovery Shall Be Effected When It Is Iniquitous, Harsh or Arbitrary” — Recovery After 11 Years Declared Unconscionable

In light of the factual matrix and the legal position laid down in Rafiq Masih, the Court reiterated the five core circumstances where recovery by the employer is impermissible:

“(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 the employees who are due to retire within one year, of the order of recovery.
(iii) Recovery when excess payment has been made for more than five years before the recovery order.
(iv) Recovery where an employee was made to work on a higher post and paid accordingly, despite not being formally entitled.
(v) Recovery which is iniquitous, harsh or arbitrary, outweighing any equitable claim of the employer.”

The High Court emphasized that Kamla Devi’s case falls squarely under multiple of these categories, as:

• She is a widow pensioner (not at fault),

• The excess payment continued for 11 years, and

• There was no inquiry, show cause notice, or opportunity of hearing before ordering recovery.

Justice Bansal stated: “In the case in hand, the excess payment was made during 2008 to 2019. The petitioner is a widow and she is getting family pension. Her case is squarely covered by the judgment in Rafiq Masih.”

Allowing the writ petition, the High Court issued a clear directive: “The respondent-bank shall not effect further recovery.”

Thus, the recovery initiated without fault on the part of the pensioner was set aside as being legally unsustainable and morally unacceptable.

This ruling reinforces a crucial legal and social safeguard: Pensioners, particularly vulnerable individuals like widows, cannot be penalised for the errors committed by administrative machinery. The Court has once again echoed the principle that public institutions must act with accountability, fairness, and compassion, especially when dealing with the meagre survival entitlements of retirees.

“Recovery orders must serve justice, not defeat it. When the system errs, it must bear the consequence—not the pensioner who lived with dignity on what the system gave her.”

Date of Judgment: 12 September 2025