Executive instructions cannot override statutory rules governing pay fixation and recovery from retired employees.

The applicants, Mr. N. Sundararajan (OA 271/2021) and Mr. J. Sidhanandan (OA 337/2021), were promoted on an ad-hoc basis to Senior Scale and subsequently appointed to Group 'A' / Junior Scale of the Indian Railway Stores Service (IRSS) with effect from 2013 and 2014, respectively.

Their pay was re-fixed, allowing the benefit of pay fixation option from the date of their increment in the lower grade based on a clarification issued by the Railway Board on 29.10.2014.

Both applicants retired in 2017.

After their retirement, on 07.09.2020, the 2nd respondent initiated proceedings for downward revision of their pay, leading to the recovery of alleged overpayment from their pensions, gratuity, and other retirement benefits.

This action was based on reviews by Associate Finance in 2017 and subsequent clarifications from the Railway Board on 12.12.2018 and 06.01.2019, which reiterated that re-fixation of pay in the Senior Scale, if already officiating, should not be done upon conferment of Group A status, citing para 5.3 of the Railway Board's letter dated 16.06.2003 (RBE No. 93/2003).

The impugned Office Order No. PB/GAZ/012/124 dated 12/17.02.2021 was issued, revising the applicants' pay downwards.

Whether the recovery proceedings initiated by the respondents for revision of pay, leading to recovery of alleged overpayment from gratuity, pension, and other settlement benefits after the applicants' retirement, are permissible in law?

Whether the executive instructions issued by the respondent authorities are in accordance with or in contravention of Rule 1313 (FR-22(I)) of the Indian Railway Establishment Code (IREC)?

The court primarily applied the principles laid down by the Hon’ble Apex Court in State of Punjab & Others Vs. Rafiq Masih (White Washer) (Civil Appeal No. 11527 of 2014 & batch, order dated 18.12.2014), which established situations where recoveries from employees are impermissible, especially for retired employees.

The case also invoked Rule 1313 (FR-22(I)) of the Indian Railway Establishment Code (IREC) as applicable in 2013, which governs the fixation of initial pay for railway servants appointed to a post on a time scale of pay and provides an option for pay fixation on promotion.

Furthermore, the court considered the settled legal principle that executive instructions cannot override statutory rules, citing precedents such as Sant Ram Sharma Vs. State of Rajasthan (AIR 1967 SC 1910), Paluru Ramkrishnaiah Vs. Union of India (AIR 1990 SC 166), Union of India Vs. Ashok Kumar Aggarwal (AIRONLINE 2013 SC 479), and Employees’ State Insurance Corporation Vs. Union of India (2022 INSC 77).

The court found that the applicants were covered by the situations identified in Rafiq Masih where recovery is impermissible, specifically due to the recovery being initiated after their retirement and involving a period in excess of five years before the recovery order was issued.

Regarding the core legal issue, the court observed that Rule 1313 (FR-22(I)) of IREC provides an option for employees to have their pay fixed from the date of promotion or after taking the next increment in the lower post, and this rule does not explicitly distinguish between promotions within Group B or from Group B to Group A.

The court noted that the Railway Board's own letter dated 29.10.2014 had allowed the exercise of this option based on FR 22(1)(a)(i).

The court emphasized that executive instructions, such as those relied upon by the respondents (RBE No. 93/2003 and subsequent clarifications), cannot override statutory rules like Rule 1313 (FR-22(I)) of IREC.

The court critically noted that the Associate Finance remained silent when the promotional orders and pay fixation statements were endorsed in 2013 and raised the issue only after the employees retired in 2017.

Therefore, the respondent's denial of the statutory right provided under Rule 1313 (FR 22 (1)) through executive instructions was deemed to be in contravention of the law.

Furthermore, any recovery for inadvertent wrong fixation of pay four years after an employee's retirement is impermissible in law.

The impugned order dated 12/17.02.2021 was quashed and set aside.

The respondent authorities were directed to fix the pay of the applicants in accordance with their option exercised during promotion to Group A in 2013, along with all consequential benefits, and to refund any recovery effected within three months from the date of receipt of the order.

The OAs were allowed.