Employers may rectify erroneous pay scales but are barred from recovering excess payments from Group C and D employees.

The petitioners (UT of J&K) challenged several orders of the Central Administrative Tribunal (CAT), Jammu, which had quashed recovery actions and re-fixation of pay/pension for employees in the Jal Shakti (PHE) and other departments

The employees (respondents) had been granted higher pay scales (₹950-1500) under SRO 59 of 1990 and subsequently received in-situ promotions under SRO 14 of 1996

The Government contended that these constituted "dual benefits" for the same purpose, resulting in a loss to the exchequer

Following a 2021 Finance Department circular, the authorities attempted to re-fix salaries and recover excess payments made over several decades

The CAT ruled in favor of the employees, citing Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR), which prohibits verifying the correctness 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 CSR applies to cases of unauthorized dual benefits

2. Whether the Government has the right to re-fix pay/pension once an administrative error or illegal benefit is identified, notwithstanding the lapse of time

3. Whether the petitioners are legally entitled to recover excess amounts already paid to Group 'C' and 'D' employees

The Court applied Article 242 of the J&K Civil Service Regulations (CSR), specifically Instruction No. 1 (limiting verification of emoluments to 24 months prior to retirement) and the newly inserted Instruction No. 2 via S.O. 129 (waiving the 24-month bar for benefits granted under deleted/withdrawn SROs)

It relied on the equitable principles established in Syed Abdul Qadir v. State of Bihar (2009) regarding relief against recovery

and State of Punjab v. Rafiq Masih (White Washer) (2015), which prohibits recovery from Group 'C' and 'D' employees or retired personnel where excess payment was made for over five years

It further referenced ITC Ltd. v. State of U.P. (2007) regarding the protection of innocent employees from hardship caused by the employer's wrong interpretation of rules

The Court distinguished between "correctness of emoluments" (clerical/arithmetical errors) and the "unauthorized grant of dual benefits"

It reasoned that Instruction No. 1 to Article 242 was never intended to allow employees to benefit indefinitely from a fundamental administrative error that places an unnecessary burden on the state exchequer

The Court held that even if recovery is barred by equity, an employee has no vested right to continue receiving an erroneous benefit in perpetuity; thus, the employer has an inherent right to rectify the pay structure for the future

On the facts, the Court found the respondents received overlapping benefits from SRO 59 and SRO 14 due to departmental oversight

However, since the respondents belonged to Group 'C' and 'D', the Court applied the Rafiq Masih criteria, noting that recovering funds paid over decades would be iniquitous and harsh as these employees typically spend their earnings on essential needs

If any such amounts had already been recovered during the pendency of the litigation, the petitioners were directed to refund them within the period prescribed by the Tribunal