Employers may rectify erroneous pay/pension fixation but are barred from recovering 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 the recovery of alleged excess payments from retired and serving employees (respondents).

The dispute arose because the respondents, primarily Class-III and Class-IV employees, were receiving benefits under SRO 59 of 1990 (a higher pay scale) alongside benefits from SRO 14 of 1996 (in-situ promotions).

The Government contended that these benefits were mutually exclusive and that the "dual benefit" resulted in a loss to the exchequer.

The respondents relied on Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR), which prohibits re-opening emolument records older than 24 months preceding retirement.

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

It also considered S.O. 129 (Government Instruction No. 2), which waives this 24-month bar where undue benefits were granted under deleted/withdrawn SROs.

The Court relied on *Syed Abdul Qadir v. State of Bihar* [2009 (3) SCC 475] regarding the equitable nature of relief against recovery.

The Court relied on the landmark decision in *State of Punjab v. Rafiq Masih (White Washer)* [2015 AIR (SC) 696], which prohibits recovery from Class-III/IV employees or where payments exceeded five years.

The Court reasoned that while Instruction No. 1 to Article 242 generally bars examining old records, it relates to individual "correctness of emoluments" (clerical/arithmetical errors) rather than the systemic grant of unauthorized dual benefits to a class of employees.

The Court found that SRO 59 and SRO 14 were intended to serve the same purpose; thus, receiving both constituted an "unjust enrichment" at the cost of the state exchequer.

While the employer has an inherent right to rectify a mistake and re-fix future pay/pension to prevent perpetual error, the Court held that the actual recovery of past payments was impermissible.

Applying the *Rafiq Masih* criteria, the Court noted that the respondents were Group ‘C’ and ‘D’ employees, and recovering funds paid over decades would cause "undue and inequitable hardship".

It held that the petitioners (Government) are 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 respondents within the period prescribed by the Tribunal.