Erroneous pay fixation may be corrected, but pension reduction requires prior opportunity of hearing.

The applicants, retired employees of the National Institute of Occupational Health, ICMR, challenged the fixation of their last basic pay and consequential pension.

In the lead case, Atulkumar Pandya was appointed as an LDC in 1984, promoted as UDC, and granted financial upgradations under the ACP Scheme.

His second ACP was granted with effect from 1 April 2008 in the pre-revised scale of ₹5,500–9,000, after which the respondents extended to him the upgraded scale and later fixed his pay at ₹13,860 plus Grade Pay of ₹4,600 pursuant to departmental instructions dated 9 July 2010.

He was subsequently promoted to Office Assistant, granted third MACP, and promoted as Section Officer and Administrative Officer.

At retirement, the respondents treated his last basic pay as ₹59,500 and fixed his pension at ₹29,750, whereas he claimed that his last basic pay ought to have been ₹75,400 and his pension ₹37,700.

The applicants relied on the ACP/MACP instructions and the ICMR communication dated 9 July 2010, while the respondents contended that the higher fixation had been mistakenly granted because that communication applied to employees promoted as Assistants/Personal Assistants, not employees receiving ACP financial upgradation.

The respondents also relied on a clarification dated 21 April 2015 stating that the scale of ₹6,500–10,500 could not, in the applicants’ circumstances, be treated as upgraded to ₹7,450–11,500.

1. Whether the applicants were substantively entitled, under the ACP Scheme and applicable pay-fixation instructions, to the pre-revised scale of ₹7,450–11,500 and Grade Pay of ₹4,600?

2. Whether the respondents could correct the earlier pay fixation on the ground that the higher benefit had been granted erroneously?

3. Whether the respondents could reduce the applicants’ pay and consequential pension after retirement without issuing notice and providing an effective opportunity of hearing?

The Tribunal applied Section 19 of the Administrative Tribunals Act, 1985, under which the applications were filed.

It relied on the ACP Scheme dated 9 August 1999, under which financial upgradation is granted within the existing hierarchy and does not amount to promotion to a higher post.

The DoP&T OM dated 19 May 2009 permits an option regarding the date and manner of pay fixation but does not enlarge the employee’s substantive entitlement to an otherwise inadmissible scale.

The ICMR communication dated 9 July 2010 concerned employees promoted as Assistants/Personal Assistants between 1 January 2006 and 31 August 2008.

The Tribunal relied on Chandi Prasad Uniyal v. State of Uttarakhand, (2012) 8 SCC 417, for the principle that an erroneous pay fixation may ordinarily be corrected, subject to equitable limitations on recovery.

It further applied State of Punjab v. Rafiq Masih (Whitewasher), (2015) 4 SCC 334, which restricts recovery of excess payments in cases including recovery from retired employees and long-standing payments made without employee fraud or misrepresentation.

The principles of natural justice require an effective opportunity of representation before an adverse alteration of a settled pensionary entitlement, unless the hearing would genuinely be a useless formality; State of Karnataka v. Mangalore University Non-Teaching Employees’ Association, (2002) 3 SCC 302, was considered in this context.

The Tribunal also applied the principle that Article 14 does not permit “negative equality,” meaning that an employee cannot claim continuation of an otherwise illegal benefit merely because it was granted to others.

The Tribunal distinguished promotion from ACP financial upgradation.

The applicants’ higher benefit arose from ACP and not from promotion as Assistants/Personal Assistants during the period covered by the 9 July 2010 communication.

The option under the 19 May 2009 OM governed the date and mechanics of fixation but could not create an independent entitlement to the ₹7,450–11,500 scale or Grade Pay of ₹4,600.

The Tribunal found that the applicants’ service history showed entitlement to the ₹5,500–9,000 scale under the second ACP, and not an automatic right to the higher scale merely because another post or category had subsequently received an upgraded scale.

The earlier departmental fixation, even if continued for several years, could not perpetuate an erroneous benefit, and the respondents were legally competent to verify and correct it.

However, correction of an erroneous fixation was distinct from recovery of amounts already paid.

Since the earlier fixation had been made by the department, entered in the service records, and continued until retirement, any reduction in pension required a reasoned determination and an effective opportunity for the applicants to contest the proposed correction; the “useless formality” principle could not be mechanically invoked.

Nevertheless, it disposed of both OAs with procedural directions: the respondents must issue a reasoned communication explaining the alleged error, the governing rule or instruction, and the proposed pension calculation; provide the applicants a reasonable opportunity to submit representations and documents; and thereafter pass a speaking order within eight weeks of receiving the representations.

The respondents were directed to consider the pending representation dated 22 December 2021 in OA No. 21/2025 and the representation dated 11 August 2021 in OA No. 22/2025.

Any re-determination of pension had to comply with the applicable rules, while recovery of amounts already paid remained subject to Rafiq Masih and subsequent Supreme Court decisions concerning recovery from retired employees.

The OAs were disposed of without costs.