“Recovery Is Found Unsustainable”: Supreme Court Quashes Post-Retirement Deductions from Cuttack Court Stenographers Paid Under Shetty Commission Benefits Without Misrepresentation
Safiya Malik
The Supreme Court Division Bench comprising Justice Pamidighantam Sri Narasimha and Justice Prashant Kumar Mishra delivered a judgment on April 4, 2025, setting aside the recovery of financial benefits previously granted to retired stenographers of the District Judiciary, Cuttack. The Court held that recovery initiated after retirement and without an opportunity of hearing was legally unsustainable.
The appeal was directed against the final judgment and order dated November 9, 2023, passed by the High Court of Orissa at Cuttack in WP (C) No. 33482 of 2023. The appellants, who had served as Stenographer Grade-I and Personal Assistants in the District Judiciary, Cuttack, challenged orders dated September 12, 2023, and September 8, 2023, issued by the Special Judge, Special Court, Cuttack and the Registrar, Civil Courts, Cuttack respectively. These orders directed recovery of excess payments amounting to Rs. 26,034, Rs. 40,713, Rs. 26,539, Rs. 24,683, and Rs. 21,485 from the appellants.
The background of the case reveals that these financial benefits had been granted via Office Order No. 63 dated May 10, 2017, by the District Judge, Cuttack. The benefits arose from retrospective promotion/appointment effective from April 1, 2003, due to upgradation of the stenographer cadre in compliance with the Shetty Commission recommendations. Following this, the appellants retired from service in 2020.
However, three years after retirement and six years post-sanction of the benefits, recovery proceedings were initiated. The reason cited by the respondent authorities was an alleged erroneous interpretation of the Shetty Commission's recommendations during the grant of financial benefits.
The appellants argued that the benefits were extended without any fraud or misrepresentation on their part. It was also asserted that no opportunity of hearing was provided before initiating recovery. The High Court, however, dismissed the writ petition, leading to the present appeal.
On the other side, counsel for the respondents contended that the appellants were not entitled to the benefits, as the extension was based on a misconstrued interpretation of the Shetty Commission’s report. Furthermore, it was submitted that the appellants had submitted undertakings agreeing to refund excess amounts if found payable later.
The Supreme Court clarified that the issue under consideration was not the legality of the retrospective promotion or the financial benefits granted in 2017. The specific issue was whether such recovery post-retirement, without an opportunity of hearing, was legally permissible.
The Court recorded: "The law in this regard has been settled by this Court in catena of judgments rendered time and again; Sahib Ram vs. State of Haryana, Shyam Babu Verma vs. Union of India, Union of India vs. M. Bhaskar and V. Gangaram vs. Regional Jt. Director and in a recent decision in the matter of Thomas Daniel vs. State of Kerala & Ors."
Referring to these precedents, the Court held: "If the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous, such excess payments of emoluments or allowances are not recoverable."
The Court quoted extensively from Thomas Daniel, Sahib Ram, Col. B.J. Akkara, Syed Abdul Qadir, and State of Punjab v. Rafiq Masih. In Rafiq Masih, the Court had laid down specific scenarios where recovery was impermissible, including:
(i) Recovery from Class III and IV employees; (ii) Recovery from retired employees, or those due to retire within one year; (iii) Recovery for payments made over five years prior to the recovery order; (iv) Recovery in cases of wrongful deployment to higher posts; (v) Recovery that causes undue hardship outweighing the employer’s right to recover.
In the present case, the Court recorded: "It is not reflected in the record that such payment was made to the appellants 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."
Further, it was noted that the appellants, who had superannuated as ministerial staff and were not gazetted officers, were not provided any hearing before the recovery orders were passed.
"The appellants having superannuated on a ministerial post of Stenographer were admittedly not holding any gazetted post as such applying the principle enunciated by this Court in the above quoted judgment, the recovery is found unsustainable."
Accordingly, the Supreme Court passed the following order:
"We allow the appeal and set aside the order of the High Court and in consequence the orders dated 12.09.2023 and 08.09.2023 by which the appellants were directed to deposit the excess drawn arrears are set aside."
Advocates Representing the Parties:
For the Petitioner(s): Mr. Kedar Nath Tripathy, Advocate-on-Record; Mr. Aditya Narayan Tripathy, Advocate
For the Respondent(s): Mr. Joby P. Varghese, Advocate-on-Record; Mr. Shovan Mishra, Advocate
Case Title: Jogeswar Sahoo & Ors. vs. The District Judge, Cuttack & Ors.
Neutral Citation: 2025 INSC 449
Case Number: Civil Appeal No(s). of 2025 (Arising out of SLP(C) No(s). 5918/2024)
Bench: Justice Pamidighantam Sri Narasimha, Justice Prashant Kumar Mishra
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