Employers may rectify erroneously granted dual benefits but are barred from recovering excess payments from Group C and D employees.

The Petitioners (UT of J&K) challenged various orders passed by the Central Administrative Tribunal (CAT), Jammu, which quashed recovery proceedings and refixation of pay/pension for employees of the Jal Shakti (formerly PHE) and other departments.

The employees had been receiving upgraded pay scales (specifically ₹950-1500) based on SRO 59 of 1990 and subsequent departmental circulars from 1993.

The Government contended that upon the implementation of SRO 14 of 1996 (providing in-situ promotions), SRO 59 stood substituted, making the simultaneous drawal of both benefits an illegal "dual benefit".

The CAT had restrained the Government from re-examining records older than 24 months based on Government Instruction No. 1 to Article 242 of the Civil Service Regulations (CSR) and ordered a refund of recovered amounts.

Whether the 24-month limitation on verifying the "correctness of emoluments" under Instruction No. 1 to Article 242 of the CSR bars the Government from rectifying pay/pension in cases of unauthorized dual benefits.

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 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 preceding retirement.

It further applied S.O. 129 dated 28.03.2022, which inserted Government Instruction No. 2, creating an exception to the 24-month bar where "undue benefit of deleted/withdrawn SROs" was granted.

Regarding recovery, the Court relied on the principles of equity and hardship established in Syed Abdul Qadir v. State of Bihar.

and the specific prohibitory criteria for recovery from Class-III/IV employees and retirees set out in State of Punjab v. Rafiq Masih (White Washer).

The Court reasoned that "correctness of emoluments" under Instruction No. 1 typically refers to clerical or arithmetical errors at an individual level, but does not shield a class of employees from the rectification of a fundamental legal error, such as the unauthorized grant of dual benefits under both SRO 59 and SRO 14.

The Court noted that S.O. 129 (Instruction No. 2) explicitly allows the Government to bypass the 24-month restriction to safeguard the exchequer from losses caused by withdrawn SROs.

It held that while an employee has no vested right to continue receiving an erroneous benefit in perpetuity, the principle of equity prevents the recovery of past payments.

Since the respondents were Group 'C' and 'D' employees who had received these payments over decades due to the petitioners' own oversight, a 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 unauthorized dual benefits, as the 24-month bar does not apply to such illegalities.

However, the Court restrained the Government 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.

This balanced the State's right to correct the pay structure with the employees' equitable right against the hardship of recovery.