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

The Government of Jammu & Kashmir challenged various orders passed by the Central Administrative Tribunal (CAT), Jammu, which had quashed recovery proceedings and directed the restoration of pay/pension for several employees.

The employees, belonging to Group ‘C’ and ‘D’, had been receiving higher pay scales (specifically ₹950-1500) under SRO 59 of 1990 and subsequent departmental circulars from 1993.

The Government contended that with the implementation of SRO 14 of 1996 (providing in-situ promotions), the benefits of SRO 59 were superseded.

The Government argued that employees were illegally drawing "dual benefits" from both SROs, leading to a loss to the exchequer, and sought to re-fix pay and recover excess payments made over several decades.

1. Whether the 24-month limitation for verifying the 'correctness of emoluments' under Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR) bars the Government from rectifying a "dual benefit" error.

2. Whether the Government is entitled to recover excess payments made to Group ‘C’ and ‘D’ employees resulting from administrative lapses and misinterpretation of rules.

The Court applied Article 242 of the Jammu & Kashmir Civil Service Regulations (CSR), specifically Government Instruction No. 1, which generally limits the verification of past emoluments to 24 months preceding retirement.

This was read alongside S.O. 129 (2022), which inserted Instruction No. 2, waiving the 24-month bar in cases involving the unauthorized extension of deleted or withdrawn SRO benefits.

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

The specific prohibitory criteria for recovery from Class-III and Class-IV employees laid down in *State of Punjab v. Rafiq Masih (White Washer)*.

The Court distinguished between a mere clerical "arithmetical error" in pay fixation and the systemic grant of "unauthorized dual benefits".

It reasoned that while Instruction No. 1 to Article 242 protects against distant re-examination of individual clerical errors, it does not provide a vested right to continue receiving illegal benefits in perpetuity.

The Court found that SRO 59 and SRO 14 were mutually exclusive, and the respondents had been erroneously receiving both.

While the Government has an inherent right to rectify its records and re-fix future pay/pension to prevent unjust enrichment of the employee at the cost of the exchequer, the Court held that the actual recovery of past payments was impermissible.

Applying the *Rafiq Masih* doctrine, the Court noted that these employees belonged to Group ‘C’ and ‘D’ and had utilized the funds for basic needs over decades; thus, recovery would be "iniquitous" and cause "undue hardship".

It held that the Government is at liberty to re-fix the pay and pension of the respondents by excluding the wrongly granted dual benefits.

However, the Court strictly prohibited the petitioners from effecting any recovery of the excess amounts already paid.

Any amounts already recovered must be refunded to the employees within the period prescribed by the Tribunal.