Employers may re-fix pay and pensions to rectify erroneous dual benefits but cannot recover past excess payments from Group C and D employees.

The petitioners (Government of UT of J&K) challenged several orders of the Central Administrative Tribunal (CAT), Jammu.

The CAT had quashed recovery orders and directed the restoration of pay/pension for employees (respondents) who had allegedly received "dual benefits" under both SRO 59 of 1990 and SRO 14 of 1996.

The Government contended that SRO 14 substituted SRO 59, making the simultaneous drawal of benefits illegal.

The respondents, some retired and some in service, argued that Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR) barred the re-opening of emolument records older than 24 months preceding retirement.

The Court applied Government Instruction No. 1 to Article 242 of the J&K CSR, which limits the verification of past emoluments to 24 months preceding retirement.

This was read alongside S.O. 129 (Government Instruction No. 2), which removes this 24-month bar in cases where undue benefits of deleted/withdrawn SROs were granted.

Regarding recoveries, the Court relied on the equitable principles established in Syed Abdul Qadir v. State of Bihar.

And the specific prohibitory guidelines for Group 'C' and 'D' employees set out in State of Punjab v. Rafiq Masih (White Washer).

It also noted ITC Ltd. v. State of U.P. regarding relief for innocent employees benefiting from wrong interpretations of rules by officials.

The Court reasoned that "correctness of emoluments" in Instruction No. 1 refers to individual arithmetical or clerical errors, but does not shield the grant of unauthorized dual benefits to a broad class of employees.

By introducing Instruction No. 2 via S.O. 129, the Government explicitly allowed the correction of errors related to withdrawn SROs regardless of the 24-month limit.

The Court found that while SRO 59 and SRO 14 both aimed to grant higher pay scales, they were mutually exclusive; thus, receiving both constituted unjust enrichment.

However, applying the Rafiq Masih precedent, the Court determined that since the respondents were Group 'C' and 'D' employees and the excess payments were made over decades due to the petitioners' own lapses, actual recovery of the money would be "iniquitous" and cause undue hardship.

It held that while the Government cannot recover the excess amounts already paid to Group 'C' and 'D' employees (and must refund any amounts already recovered), the Government is at liberty to re-fix the current pay and future pensions by excluding the erroneously granted benefits.

The Court affirmed that "once a mistake is always a mistake," and employees have no vested right to continue receiving erroneous benefits in perpetuity.