Pay refixation may stand, but delayed recovery of excess salary is impermissible absent employee misrepresentation.

The petitioner was recruited through the Tamil Nadu Public Service Commission as a Steno-Typist Grade III and joined service on 14 February 2007.

Pursuant to G.O.Ms. No. 1011 dated 7 December 2010 and G.O.Ms. No. 351 dated 30 June 2011, he was granted one additional increment, which continued to be reflected in subsequent pay revisions.

Following an audit objection, the respondents re-fixed his pay by withdrawing the additional increment on the ground that it was inadmissible.

After issuing a show-cause notice, the fourth respondent passed proceedings in ROC No. 1096/2021 dated 21 January 2022, directing recovery of ₹1,62,185 as excess payment.

The petitioner challenged the recovery order under Article 226 of the Constitution, seeking quashing of the order and refund of the recovered amount.

Whether the respondents were entitled to revise the petitioner’s pay by withdrawing the additional increment found to be inadmissible pursuant to an audit objection?

Whether recovery of ₹1,62,185 from the petitioner, after the excess payment had continued for several years without any misrepresentation by him, was legally permissible?

Whether the amount already recovered was required to be refunded to the petitioner?

Public authorities may rectify erroneous pay fixation and recover amounts that were not legally due, since unjust enrichment from public funds is impermissible.

Recovery may be prohibited where the excess payment resulted from the employer’s error, there was no misrepresentation by the employee, recovery after a prolonged period would cause hardship, or the recovery would be harsh, arbitrary or inequitable.

The Court relied on State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, particularly the principle that recovery is impermissible where excess payment has continued for more than five years before the recovery order and in cases where recovery would be iniquitous, harsh or arbitrary.

The relevant Government Orders and applicable Pay Rules governed the correctness of the pay fixation, while the equitable limitations recognised in Rafiq Masih governed the permissibility of recovery.

The Court held that the respondents were competent to correct the petitioner’s pay fixation after determining, pursuant to the audit objection, that the additional increment was inadmissible; accordingly, the revised pay fixation was allowed to stand.

Nevertheless, the respondents failed to establish that the petitioner had made any misrepresentation or played any role in the erroneous fixation of pay.

Since the additional increment had been reflected in the petitioner’s pay for several years, recovery at that stage would impose extreme hardship and would be inequitable under the principles in Rafiq Masih.

The Court therefore distinguished between correction of an erroneous pay fixation, which was valid, and recovery of the resulting excess payment, which was impermissible in the circumstances.

The Court confirmed the revision of the petitioner’s pay consequent upon the audit objection but set aside the recovery of ₹1,62,185.

The respondents were directed to refund the amount already recovered to the petitioner within twelve weeks from the date of receipt of a copy of the order.

The connected miscellaneous petition was closed, with no order as to costs.