Employer Can't Deduct Excess Amount From Retiral Benefits Paid To Employee On Erroneous Fixation Of Pay Scale : Calcutta High Court

Background Facts

The respondent employee was appointed as a lecturer in Ramkrishna Mission Shilpapitha, Belgharia, Kolkata on 26.03.1996. He attained superannuation with effect from 21.12.2013. The employee was allowed Career Advancement Scheme (CAS) benefit from 26.03.2001 and the second CAS from 26.03.2006.

Later the appellant authorities observed that at the time of joining the post, the employee did not have the M.Tech. degree which was obtained on 25.03.1996. Therefore, in view of a Government order dated 24.10.2007, employee was entitled to a first CAS only after successfully completing 6 years of service and accordingly, the second CAS should have been awarded after lapse of further period provided. The appellant noticed the erroneous fixation of scale of pay by the extending benefit under the CAS. Therefore, authorities asked for the refund of the excess amount paid to the employee after he retired from the service.

Aggrieved by the same, the employee filed the writ petition. The single judge ruled in favour of the employee by holding that the authorities cannot recover excess amount paid to the employee. Therefore aggrieved, the authorities filed an appeal against the order of the single judge.

It was contended by the appellant that the service book was not forwarded to the authority before the superannuation of employee and as soon as the discrepancy was detected, it was immediately notified. It was further contended that the lecturer must have possessed the M.Tech. degree as on 01.01.1996 to avail the benefits of the Career Advancement Scheme but it was absent as the employee obtained the M.Tech degree on 25.03.1996 and therefore, was not entitled to the benefits of CAS.

On the other hand it was contended by the employee that while awarding the second CAS, a meeting was held on 25.01.2008 in presence of an Additional Director of the Department and 'no objection' was raised therein while extending the second CAS benefit. Therefore, the excess payment cannot be recovered from him after superannuation.

Findings of the Court

The case of Chandi Prasad Uniyal & Ors. Vs. State of Uttarakhand & Ors. was relied upon by the court wherein the Supreme Court held that any amount paid to the employee without any authority of law can always be recovered. Further court carved out an exception that if such recovery would cause extreme hardships, then any attempt to demand for refund would be an unjust enrichment.

In the case of State of Punjab & Ors. Vs. Rafiq Masih (Whitewasher), the Supreme Court laid down an illustration which would come within the ambit of an extreme hardship amounting to an unjust enrichment- “recoveries by the employers would be impermissible in law from the retired employees, or the employees who are due to retire within one year, of the order of recovery.”

The case of Shyam Babu Verma & Ors. Vs. Union of India & Ors. was relied upon by the court wherein the Supreme Court held that the authorities cannot deduct nor can seek for refund of the excess amount paid due to the erroneous fixation of scale of pay from the retiral benefits unless the employee had committed the act of fraud or misrepresentation.

The case of High Court of Punjab and Haryana & Ors. Vs. Jagdev Singh was also relied upon by the court wherein an officer furnished an undertaking at the time of availing the revised pay-scale that he will return any excess payment. Later the scale of pay was revised and the excess amount was sought to be recovered. The Supreme Court held that as officer had given an undertaking at the time of availing the scale of pay, therefore exception given in Rafiq Masih (Whitewasher) case will not apply.

It was claimed by the appellant that the employee had signed a declaration form. The form included a statement agreeing to refund any extra amount received due to an error in pay fixation. However, it was found by the court that the declaration form was not included in the records of the Trial Court. It was further observed by the court that the Government Notification dated 24.10.2007 did not contain any reference of a declaration form to be filled. Also employee did not give any undertaking at the time of extending the benefit under the CAS but gave it at the later point of time, which was not relevant. Therefore, it was held by the court that the principle laid down in Jagdev Singh case cannot be applied here.

It was held by the court that the appellant had no justification for attempting to recover the excess overdrawn amount from the employee's retirement benefits, as the case falls within the exception established in the Rafiq Masih (Whitewasher) case. The judgment of the Single Judge was upheld by the court.

With the aforesaid observations, the appeal was dismissed.

Case No. : MAT 2176 of 2023

Counsel for the Appellants : Tapan Kumar Mukherjee, Ld. AGP. ; Sourav Chowdhury, Adv; Sukla Das Chandra, Adv.