Excess Salary Paid Due To Wrong Interpretation Of Rules Can't Be Taken Back From Retd Employee: J&K High Court Quashes Recovery Order

In allowing his plea Justice Wasim Sadiq Nargal cited Syed Abdul Qadir v. State of Bihar,(2009)and observed,

“the recovery of the excess amount made to the employee due to mistake or wrong interpretation of rules cannot be made”

Background of the Case:

Tantray was appointed as a daily wager to work as an orderly in 1976 and was temporarily appointed as a Chowkidar in 1981. In 1993, his designation was changed to Pump Operator due to his technical skills. Subsequently, his pay scale was upgraded from Rs. 750-940 to Rs. 940-1400.

Upon his retirement on March 31, 2014, the Examiner/CAO, Local Fund Audit and Pensions, issued a notice recommending recovery of the excess amount paid due to this upgradation, amounting to Rs. 6,08,022.

The petitioner's counsel argued that the impugned order was issued hastily without proper application of the rules, depriving the petitioner of an opportunity to present his case. Furthermore, it was contended that the respondents had not questioned the upgradation during Tantray's tenure and had failed to conduct any inquiry, thereby violating principles of natural justice.

The counsel also cited precedents from the Supreme Court, including Thomas Daniel v. State of Kerala & Ors. and State of Punjab & Ors. v. Rafiq Masih, to establish that recovery of excess payments due to administrative errors is inequitable.

Court's Observations:

Justice Nargal, in his detailed judgment, noted that the respondents had not substantiated their claim that the upgrade was against the rules. The court highlighted that no misrepresentation was made by the petitioner, and the respondents had not conducted any inquiry during his service or after his retirement.

“Admittedly, in the present case, there is no such allegation about misrepresentation on the part of the petitioner, thus by no stretch of imagination, consequential benefits can be taken at this belated stage after retirement of the petitioner”, the court recorded.

It added,

“The respondents have failed to explain as to how the upgradation of the petitioner is contrary to the rules and, if so, against which rules. In absence of any specific stand by the respondents with regard to the upgradation of the petitioner, the impugned letter dated 15.10.2014 cannot sustain in the eyes of law”

Commenting on the issue of recovery of an excess amount from an employee made due to a mistake or wrong interpretation of rules Justice Nargal referred to multiple Supreme Court judgments and emphasized the principle that recovery from employees, especially after retirement, causes undue hardship and is not permissible unless there was fraud or misrepresentation by the employee.

The bench further cited a previous ruling by the High Court in O.P. Abrol v. State & Ors., reinforcing that pay fixation issues cannot be scrutinized beyond a 24-month period preceding retirement.

Quashing the impugned letter the court directed the respondents to release all pensionary benefits due to Tantray, including an amount of Rs. 3,26,982 withheld from his gratuity. The court further mandated compliance within eight weeks, failing which an interest of 9% per annum would be applicable.

Case Title: Mst. Raja Vs State Of J&K

Citation: 2024 LiveLaw (JKL) 117

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