Karnataka HC Bars Recovery of Employer’s Excess Payment From Retiree

The Karnataka High Court has ruled that excess salary paid due to an employer’s error cannot be recovered after retirement.

When can excess payment be recovered?

Justice M Nagaprasanna held that excess amounts paid to an employee are not recoverable if the payment was not obtained through fraud or misrepresentation by the employee.

The ruling came while the court was considering a petition by retired assistant lineman Manjunath N, who challenged the recovery of ₹2,81,887 from his pension. The amount related to an increment that had been erroneously granted 15 years earlier. The court directed Bangalore Electricity Supply Company Limited (Bescom) to refund the recovered amount along with interest within eight weeks.

Manjunath retired on April 30, 2025. His counsel, Devaraj N, argued that the excess payment had resulted from an alleged error by Bescom and had not been obtained through fraud or misrepresentation by the employee.

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What did the High Court say?

In its September 25 order, the court said excess payments of emoluments or allowances cannot be recovered where they were not made because of any fraud or misrepresentation by the employee.

The finding placed responsibility on the circumstances in which the payment was made rather than merely on the fact that an employee had received more than was due. Bescom also admitted that money could not be recovered from a retired employee unless fraud or misrepresentation on the employee’s part was involved.

Which Supreme Court ruling was cited?

The High Court referred to the Supreme Court’s 2025 judgment in Jogeswar Sahoo vs District Judge, Cuttack while considering the dispute.

According to the principle cited by the court, excess payments are not recoverable when they arise from an employer applying a wrong principle while calculating pay or allowances, or from an interpretation of a rule or order that is subsequently found to be erroneous.

The same protection applies where the employee did not secure the excess amount through fraud or misrepresentation.

Why was the refund ordered?

The High Court found that Manjunath had been accused of neither fraud nor misrepresentation in relation to the excess payment. It therefore held that the amount recovered from his pension could not be retained. The court consequently directed Bescom to refund ₹2,81,887 with interest within eight weeks.

The ruling makes a distinction between an excess payment caused by an employer’s own mistake and money obtained through wrongdoing by an employee. In this case, with no allegation of fraud or misrepresentation against the retired employee, the court found that recovery of the amount was not permissible.