Calcutta High Court Directs State-Owned Corporation To Refund Overdrawn Amount Deducted From Group C Employee's Retiral Benefits

The Supreme Court in State of Punjab and Ors. v. Rafiq Masih held that the recovery by the employers is impermissible in law in the following conditions:

“(i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).

(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.

(iii) …………

(iv) …………..

(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.”

The petitioner was a Group- ‘C’ employee of the West Bengal State Minor Irrigation Corporation Limited (WBSMICL). He was superannuated from his service on March 31, 2019 and his retiral benefits were belatedly paid on October 25, 2019.

From the retiral benefits due and payable to the petitioner, a sum of Rs.8,43,465/- was deducted by the respondents on the ground of the same being overdrawn by the petitioner.

The Counsel appearing for the petitioner, challenged the said recovery of overdrawn amount on the ground that he was a Group ‘C’ employee and the recovery of the excess amount had been made post retirement which is in violation of the ratio laid down by the Apex Court in Rafiq Masih’s case.

The Counsel appearing for WBSMICL submitted that pay fixation/enhancement of the pay was ‘provisional’ and ‘overdrawal’, if any, could be recovered forthwith as provided under circular dated July 14, 2010 issued by Managing Director, WBSMICL.

The court noted that the petitioner was a Group ‘C’ employee and the recovery of the overdrawn amount was made post retirement, therefore, the case of the petitioner is covered by the ratio laid down in Rafiq Masih’s case.

The court further observed that the overpayment/overdrawal made to the petitioner was not on account of any misrepresentation by the petitioner.

The court observed:

“In the light of the discussions above, this Court finds that the petitioner who has superannuated from service on March 31, 2019 will suffer extreme hardship in the event the said amount of Rs.8,43,465/- is not paid to him. The deduction of the amount for being overdrawn has already caused hardship to the petitioner. Furthermore the petitioner suffered extreme hardship due to belated payment of retiral dues.”

Thus, the court set aside the impugned order dated October 25, 2019 and directed the respondents to pay within six weeks, the said overdrawn amount of Rs.843,465/- along with the interest at 6 percent per annum from April 1, 2019 (being the date succeeding the date of retirement) till the date of actual payment.

Case Title: Biswanath Paul v. The State of West Bengal & Ors.

Citation: 2023 LiveLaw (Cal) 88

Coram: Justice Lapita Banerji

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