Excess HRA paid without employee fraud or misrepresentation cannot be recovered.

The applicant, a Civil Motor Driver appointed in 2017, received HRA at 16% while posted at Sukna.

The respondents later determined that Sukna fell within the ‘Z’ class and that the applicable HRA rate was 8%.

They alleged that excess HRA of ₹89,632 had been paid between 25 November 2017 and 31 March 2022 and proposed recovery through the applicant’s Last Pay Certificate and a subsequent communication.

The applicant challenged the recovery orders, contending that he had neither misrepresented facts nor received notice before recovery was initiated.

1. Whether recovery of the alleged excess HRA, without issuing the applicant a proper show-cause notice, was valid

2. Whether recovery was permissible where the excess payment was not attributable to any misrepresentation or fraud by the applicant

The respondents relied, among other things, on Rule 43(2) of the Central Government Account (Receipts and Payments) Rules, 2022 and Rule 14 of the Financial Regulations, Part I, Volume I.

The Tribunal relied on the Supreme Court’s decisions in State of Punjab v. Rafiq Masih (White Washer), Sahib Ram v. State of Haryana, Shyam Babu Verma v. Union of India, Union of India v. M. Bhaskar, V. Gangaram v. Regional Joint Director, and Thomas Daniel v. State of Kerala.

Applying those authorities, it stated that recovery of excess pay or allowances may be barred as a matter of equitable judicial discretion where the employee did not obtain the payment through fraud or misrepresentation and the overpayment resulted from the employer’s erroneous calculation or interpretation—particularly where recovery would cause hardship to a Group C or Group D employee.

The Tribunal also considered the Department of Expenditure’s Office Memorandum dated 1 April 2025 and a departmental communication dated 16 July 2025 concerning waiver of excess HRA recovery.

The alleged overpayment arose from the respondents’ classification of Sukna and their consequent application of the HRA rate; the Tribunal found no misrepresentation or fraud by the applicant.

It considered recovery without a proper show-cause notice unjustified and applied the equitable principles in the cited Supreme Court decisions against recovery in those circumstances.

The Tribunal also took account of the departmental communication concerning waiver of excess HRA recovery.

It quashed the orders dated 29 March 2025 and 31 July 2025 insofar as they directed recovery of ₹89,632, and directed the respondents to refund any amount already recovered within two months of receiving the order.

The OA was disposed of with no order as to costs.