Excess personal pay cannot be recovered from Group-D employees absent misrepresentation.

The petitioners were employees of the Police Transport Workshop-cum-Training School, Avadi, who had retired from service.

They had been granted 5% personal pay under G.O.Ms.No.664, Finance (Pay and Cell) Department, dated 24 August 1992, and the benefit was paid to them until retirement.

The respondents subsequently took the view that the petitioners’ pay scale—particularly the scale of Rs.555–990—was not one of the pay scales expressly specified in the Government Order and that the personal pay had therefore been wrongly granted.

After retirement, the respondents ordered recovery of the alleged excess payment from the petitioners’ Death-cum-Retirement Gratuity (DCRG); in the case of S. Ravikumar, the amount sought to be recovered was Rs.1,35,782.

The petitioners challenged the respective recovery orders and sought refund of the amounts deducted from their DCRG, relying principally on the absence of any misrepresentation on their part and the Supreme Court’s decision in State of Punjab v. Rafiq Masih.

1. Whether employees drawing the pay scale of Rs.555–990 were entitled to 5% personal pay under G.O.Ms.No.664 dated 24 August 1992, even though that precise scale was not expressly mentioned in the Government Order?

2. Whether the respondents could recover the personal pay already paid to the petitioners from their DCRG after retirement, in the absence of fraud or misrepresentation by the petitioners?

The Court applied G.O.Ms.No.664, Finance (Pay and Cell) Department, dated 24 August 1992, governing the grant of 5% personal pay.

Relying on the Division Bench decision in V. Rathinagiri v. State of Tamil Nadu, W.P.Nos.20156 and 13143 of 2000, dated 10 March 2006, the Court held that the benefit could extend to pay scales higher or lower than, and revised scales falling between, the scales specified in the Government Order.

The Court followed that view in preference to the contrary approach in Y. Immanuel v. Government of Tamil Nadu, W.P.No.6754 of 2015, dated 7 March 2017, noting that subsequent coordinate Benches and another Division Bench had followed Rathinagiri.

On recovery, the Court applied the principle in State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, that recovery of excess payments is impermissible in specified equitable circumstances, particularly where the employee was not responsible for the erroneous payment; this principle was stated to have been reiterated in High Court of Punjab and Haryana v. Jagdev Singh, (2016) 14 SCC 267, and Union of India v. N.M. Raut, 2024 SCC OnLine SC 3873.

The Court held that the petitioners’ pay scale of Rs.555–990 fell between the scales referred to in G.O.Ms.No.664 and was therefore eligible for the 5% personal-pay benefit under the interpretation adopted in Rathinagiri and followed by later Benches.

Consequently, the premise that the personal pay was unauthorised was unsustainable.

Independently, the Court found that the petitioners, being Group-D employees, had not made any misrepresentation or played any role in securing the benefit; it was granted and continued by the respondents themselves over several years.

Applying the equitable bar against recovery of excess payments in such circumstances, especially recovery from retirement benefits after retirement, the Court concluded that the deductions from DCRG could not be sustained.

The respondents were directed to refund the amounts deducted from the petitioners’ DCRG within four weeks from receipt of the order.

If the refund was not made within that period, the respondents were directed to pay interest at 8% per annum on the deducted amounts until actual payment.

No order was made as to costs, and the connected miscellaneous petitions were closed.