Employers may rectify erroneous pay and pension fixations but cannot recover excess payments from Group C and D employees.

The Petitioners (UT of J&K) challenged various orders of the Central Administrative Tribunal (CAT), Jammu, which had quashed recovery proceedings and directed the restoration of higher pay/pension for employees.

The dispute arose because certain employees in the Department of Jal Shakti (formerly PHE) were granted benefits under SRO 59 of 1990 (which provided specific pay scales) and subsequently also received time-bound in-situ promotions under SRO 14 of 1996.

The Government contended this constituted an illegal "dual benefit" and sought to re-fix pay and recover excess payments based on a 2021 Finance Department circular.

The respondents (employees) relied on Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR), which bars the verification of emoluments beyond 24 months preceding retirement.

1. Whether the 24-month limitation on verifying the correctness of emoluments under Instruction No. 1 to Article 242 of the CSR applies to cases involving unauthorized dual benefits.

2. Whether the Government is entitled to recover excess payments made to Group 'C' and Group 'D' employees over several decades due to administrative error.

The court primarily interpreted Article 242 of the J&K Civil Service Regulations (CSR), Vol-I, specifically Instruction No. 1 (limiting pay verification to 24 months prior to retirement) and the newly inserted Instruction No. 2 via S.O. 129 of 2022, which waives that time limit for benefits granted under deleted/withdrawn SROs.

It applied the principle of equity from *Syed Abdul Qadir v. State of Bihar* (2009), holding that recovery relief is a matter of judicial discretion to prevent hardship.

Crucially, it followed the criteria established in *State of Punjab v. Rafiq Masih (White Washer)* (2015), which prohibits recovery from Group ‘C’ and ‘D’ employees or where excess payment exceeded five years.

The Court reasoned that "correctness of emoluments" under Instruction No. 1 refers to individual clerical or arithmetical errors, not to the systemic grant of unauthorized dual benefits to a whole class of employees.

It held that Instruction No. 2 (S.O. 129) explicitly allows the Government to correct errors related to withdrawn SROs regardless of the 24-month bar.

The Court found that SRO 59 and SRO 14 were mutually exclusive, as both aimed to provide higher pay scales for stagnant cadres; therefore, granting both was a "mistake" that does not create a vested right for employees to receive such benefits in perpetuity.

However, applying the *Rafiq Masih* doctrine, the Court observed that since the respondents were Group ‘C’ and ‘D’ employees and the excess payments had occurred over decades, enforcing recovery would be "iniquitous" and cause undue hardship.

However, it prohibited the recovery of any excess amounts already paid; any amounts already recovered must be refunded to the employees within the period prescribed by the Tribunal.

The Court affirmed that while an error can be corrected for future payments, past payments to low-income groups resulting from administrative lapses cannot be clawed back.