Pay protection cannot be withdrawn or recovered without individual determination and prior hearing.

The applicants were serving or former Government employees who subsequently applied for posts in the School Education Department as “in-service” candidates.

Their applications were forwarded through proper channels, and the Jammu & Kashmir Services Selection Board or Public Service Commission recognized them as in-service candidates.

Following their appointment, the competent authorities extended protection of their earlier pay under Article 77-D of the Jammu & Kashmir Civil Service Regulations, 1956.

By Circular No. DSEK-Acctt/2094 dated 17 June 2021, the respondents directed recovery of alleged excess payments made on account of pay protection.

The respondents argued that the applicants’ pay was governed by SRO-202 of 2015, which allegedly provided only the minimum of the applicable pay scale and grade pay during probation and did not authorize pay protection.

Whether the respondents could generally scrutinize and correct the grant of pay protection if it was contrary to the applicable statutory rules, notwithstanding that the benefit had previously been granted to the applicants?

Whether the respondents could withdraw or reduce the applicants’ pay protection and recover alleged excess payments without first making an individual determination that the original grant was erroneous?

Whether the applicants were entitled to notice, disclosure of the proposed grounds and relied-upon material, and a reasonable opportunity of representation before any adverse alteration of their pay or recovery was undertaken?

Whether any recovery from the applicants could be made merely on the basis of the impugned circular, particularly in the absence of fraud, misrepresentation or concealment?

The Tribunal applied Article 77-D of the Jammu & Kashmir Civil Service Regulations, 1956, concerning fixation and protection of pay when a Government servant is appointed to another service, cadre or department through direct recruitment, along with SRO-202 of 2015, which the respondents relied upon to regulate the applicants’ pay.

It held that the Government may correct a demonstrably erroneous pay fixation and that an employee cannot claim perpetuation of an illegality merely because the benefit was earlier granted; this principle was drawn from Sita Ram v. Union Territory of Jammu & Kashmir.

However, an adverse administrative decision involving civil or financial consequences must ordinarily comply with natural justice, including notice and an opportunity to respond, as established in State of Orissa v. Dr. (Miss) Binapani Dei, Canara Bank v. Debasis Das, and Dharampal Satyapal Ltd. v. Deputy Commissioner of Central Excise.

The Tribunal also directed that recovery be considered in accordance with State of Punjab v. Rafiq Masih, Sahib Ram v. State of Haryana, and Syed Abdul Qadir v. State of Bihar, particularly where there was no fraud, misrepresentation or concealment by the employee.

The Tribunal distinguished between the power to correct an established error and the impermissible presumption that every earlier grant of pay protection was erroneous.

Although the respondents were competent to examine whether Article 77-D applied in each case, the applicants’ individual records showed that their applications had been routed through proper channels, their in-service status had been recognized by the recruiting authorities, and pay protection had thereafter been granted by competent departmental authorities.

The impugned circular could therefore not, by itself, conclusively establish that the original grants were unlawful.

Since withdrawal of pay protection and recovery would have civil and financial consequences, the respondents were required to identify the specific defect in each applicant’s pay fixation, disclose the basis of the proposed action, and provide an opportunity of representation.

The Tribunal further held that the Law Department’s 2017 opinion had to be considered unless shown to have been superseded, modified or withdrawn.

The impugned circular dated 17 June 2021 was not quashed in its entirety, but it could not be implemented against the applicants to withdraw, reduce or otherwise adversely affect their pay protection, and no recovery could be made pursuant to it until an individual determination was completed.

The respondents were permitted to scrutinize each applicant’s entitlement under Article 77-D, SRO-202 of 2015 and the relevant service record.

Before passing any adverse order, they were required to issue notice, disclose the precise grounds and supporting material, and provide a reasonable opportunity of representation.

If pay protection was found lawful, it was to continue; if found erroneous, any re-fixation could be made only prospectively and in accordance with law.

The respondents were also required to consider the Law Department opinion dated 9 October 2017 and issue a reasoned and speaking order.

No recovery of amounts already paid was permissible merely on the basis of the circular, and any recovery had to comply with the principles governing recovery of excess payments laid down by the Supreme Court.

Any amount already recovered under SRO-59 of 1990 was directed to be refunded in accordance with law.

The exercise was to be completed preferably within ten weeks from receipt of the order.