Patna High Court Stops Pension Recovery, Orders Correction with Due Process

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Case Name

Hrishikesh Singh @ Rishikesh Singh vs. The State of Bihar & Ors. (High Court of Patna)

Civil Writ Jurisdiction Case No. 10873 of 2023

Date: 19th January 2024

Key Takeaways

• No Sudden Recovery: The court held that recovering excess pension from a retired employee, especially after many years and without notice, is not permissible.
• Due Process Required: Any correction or recovery must follow the Reserve Bank of India’s (RBI) Master Circular guidelines, including consulting the pension sanctioning authority and giving the pensioner a chance to be heard.
• Protection for Retirees: The court relied on Supreme Court precedents that protect retired employees from harsh recoveries, especially when the overpayment was not their fault.
• Bank’s Role Limited: The bank is only a disbursing authority, not the employer, and must act according to government and RBI instructions.

Issue

Can a bank or government authority recover excess pension payments from a retired employee, years after retirement, without notice and due process, when the overpayment was due to an official error and not the retiree’s fault?

Facts

• Who: Hrishikesh Singh, a retired Assistant Teacher from High School, Amarpura, Naubatpur, Patna, Bihar.
• What Happened: He retired in 2006. His pension was initially set higher than it should have been due to a mistake by the Accountant General’s office. For years, he received this higher pension, which was revised upwards with each pay commission.
• The Dispute: In 2022, after Singh requested restoration of his commuted pension (which is allowed after 15 years of retirement), the bank discovered the overpayment. Without prior notice, his pension was drastically reduced, and the bank began recovering the “excess” amount (over ₹22 lakhs) at ₹15,000 per month from his pension.
• Singh’s Response: He challenged this action, arguing it was arbitrary, without notice, and contrary to law, especially since he had not committed any fraud or misrepresentation.

Arguments

Petitioner (Hrishikesh Singh)

• Pension is a right, not a reward, and cannot be reduced arbitrarily after so many years.
• No fraud or misrepresentation on his part; the overpayment was due to official error.
• Cited Supreme Court cases:
• State of Punjab vs. Rafiq Masih (White Washer) (2015) 4 SCC 334
• Thomas Daniel vs. State of Kerala and Ors, 2022 SCC OnLine 536
• Argued that recovery after 17 years is unfair, especially for a senior citizen.

Respondents (Bank, State, Accountant General)

• The error was in the initial pension fixation by the Accountant General, not the bank.
• The bank acted as per RBI and government circulars once the error was discovered.
• Cited RBI Master Circulars and the High Court of Punjab & Haryana & Ors. vs. Jagdev Singh, 2016 (4) PLJR (SC) 78 to justify recovery.
• Claimed the petitioner was informed about the recovery and given calculation sheets.

Key Legal Precedents

1. State of Punjab vs. Rafiq Masih (White Washer) (2015) 4 SCC 334

• Recovery from retired employees or those about to retire, or where overpayment was not due to employee’s fault, is generally impermissible.
• Summarized situations where recovery is not allowed, especially for retirees and when overpayment lasted more than five years.

2. Thomas Daniel vs. State of Kerala and Ors, 2022 SCC OnLine 536

• Reinforced that recovery after many years, when the employee is not at fault, is unjustified.

3. High Court of Punjab & Haryana & Ors. vs. Jagdev Singh, 2016 (4) PLJR (SC) 78

• Cited by the bank, but the court found it not applicable here since the bank is not the employer and the error was not on the bank’s part.

4. RBI Master Circular-Disbursement of Government Pension by Agency/Banks dated 01.04.2022

• Outlines the process for recovery of excess pension, requiring consultation with the pension sanctioning authority and proper notice to the pensioner.

Judgement

• Decision: The court allowed the writ petition, setting aside the bank’s orders to recover the excess pension from Singh.
• Reasoning: The recovery process was contrary to RBI guidelines, as the bank did not consult the pension sanctioning authority or give Singh a fair hearing. The overpayment was due to an official error, not Singh’s fault.
• Orders:
• The ongoing recovery from Singh’s pension must stop.
• Authorities may correct the pension amount, but only after following due process, including giving Singh an opportunity to be heard.
• The court relied on the principles from Rafiq Masih and Thomas Daniel to protect retirees from harsh recoveries.

FAQs

Q1: Can the government or bank recover excess pension from a retiree after many years?

A: Not without following due process. If the overpayment was not the retiree’s fault, and especially if many years have passed, recovery is generally not allowed, as per Supreme Court rulings and RBI guidelines.

Q2: What should happen if a pension is found to be overpaid due to an official error?

A: The authorities must consult the pension sanctioning authority, follow RBI guidelines, and give the pensioner a chance to be heard before making any corrections or recoveries.

Q3: What if the retiree committed no fraud or misrepresentation?

A: If the overpayment was purely due to official error, and the retiree was not at fault, recovery is usually considered unfair and is not permitted.

Q4: What is the role of the bank in pension disbursement?

A: The bank acts as a disbursing authority, not as the employer. It must follow government and RBI instructions and cannot act unilaterally in recovering excess payments.

Q5: What happens next for the petitioner?

A: The recovery from his pension must stop. If authorities wish to correct the pension, they must do so by following proper procedures and after giving him a fair hearing.