Erroneous pay fixation causing pensionary loss constitutes a continuing cause of action, not barred by limitation.

The deceased original applicant, Birendra Nath Bhadra, was an employee of the Northeast Frontier Railway who was promoted as Assistant Vigilance Officer/Traffic (AVO/T/HQ) in the pay scale of ₹7,500–12,000 with effect from 7 April 1998.

His pay before promotion was ₹7,500. He exercised the option to have his promotional pay fixation deferred until his next increment date, 1 May 1998.

The applicant contended that, on that date, he was entitled to both the annual increment under Para 1318 of the Indian Establishment Code/Rules and the promotional increment under Para 1313, resulting in fixation at ₹8,000.

According to the applicant, the pay was subsequently reduced to ₹7,500 without notice or a formal order, and consequential recoveries were made from his retiral and pensionary benefits.

The respondents rejected the claim by speaking order dated 4 March 2024, stating that his pay had been correctly fixed at ₹7,500 on promotion to an Assistant Commercial Manager, Group B post.

During the pendency of the Original Application, the original applicant died on 6 February 2025. His widow, Smt. Runu Bhadra, was substituted as applicant pursuant to the Tribunal’s order dated 6 June 2025 in M.A. No. 109/2025.

The respondents opposed the claim principally on limitation, contending that the dispute related to events occurring more than 27 years earlier and could not be revived by subsequent representations.

Whether the applicant’s pay was correctly fixed at ₹7,500 on promotion as AVO/T/HQ, or whether he was entitled to fixation at ₹8,000 with effect from 1 May 1998 and corresponding subsequent increments?

Whether the respondents could reduce the applicant’s pay and effect consequential recoveries from his retiral or pensionary benefits without issuing notice or providing an opportunity of hearing?

Whether the claim was barred by limitation on the ground that it challenged a pay-fixation decision made more than two decades earlier?

Whether the speaking order dated 4 March 2024, which proceeded on the basis that the applicant had been promoted to the post of Assistant Commercial Manager, Group B, was legally sustainable?

The Tribunal exercised jurisdiction under Section 19 of the Administrative Tribunals Act, 1985.

It applied the principle in M.R. Gupta v. Union of India, (1995) 5 SCC 628, that an incorrect pay fixation gives rise to a recurring and continuing cause of action whenever salary or pension is calculated.

It also relied on Union of India v. Tarsem Singh, decided on 13 August 2008, concerning continuing wrongs and recurring claims in service matters.

The Tribunal applied the principles of natural justice, holding that a reduction of pay and consequential recovery affecting an employee’s financial entitlements cannot ordinarily be made without notice and an opportunity of hearing.

It further relied on State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, which restricts recovery of excess payments from retired employees, particularly where there is no fraud or misrepresentation on the employee’s part.

The pay-fixation claim was considered with reference to Para 1313, relating to promotional increment, and Para 1318, relating to annual increment, of the applicable Indian Railway Establishment provisions.

The Tribunal rejected the limitation objection because the alleged incorrect fixation affected the applicant’s salary, retiral dues and continuing pensionary entitlements, thereby constituting a recurring cause of action under M.R. Gupta and Tarsem Singh.

On the merits, it accepted that the applicant’s promotion was to AVO/T/HQ with Railway Board approval and not to the post of Assistant Commercial Manager, Group B.

The speaking order dated 4 March 2024 was therefore based on an incorrect factual premise and could not be sustained.

Since the applicant had opted for fixation from the next increment date, the Tribunal held that he was entitled on 1 May 1998 to the annual increment and the promotional increment, taking his pay from ₹7,500 to ₹8,000 under Paras 1313 and 1318.

The subsequent reduction to ₹7,500, allegedly made without a written order, notice or hearing, violated natural justice.

The Tribunal also held that recovery from a retired employee’s retiral or pensionary benefits, absent fraud or misrepresentation, was impermissible in light of Rafiq Masih.

The speaking order dated 4 March 2024 was quashed and set aside.

The respondents were directed to restore the deceased employee’s pay at ₹8,000 with effect from 1 May 1998, and to grant the consequential increments of ₹8,250 from 1 May 1999 and ₹8,500 from 1 May 2000 up to his retirement on 31 October 2000.

They were further directed to calculate and refund to Smt. Runu Bhadra all amounts recovered from the deceased employee’s retiral benefits or pension and to re-fix her family pension on the basis of the corrected last pay drawn, within three months of receiving a certified copy of the order.

No order as to costs was made, and any pending Miscellaneous Application was disposed of.