Pay revision may stand, but delayed recovery of excess salary without employee misrepresentation is impermissible.

The petitioner, initially appointed temporarily as an Office Assistant and subsequently made permanent and promoted, was sanctioned a Justice Shetty Commission increment under G.O. Ms. No. 1011, Home (Cts-V), dated 7 December 2010, while serving as a Dalayat.

Following an internal audit, the respondents concluded that the Dalayat post was not among the categories eligible for the increment.

The petitioner’s pay was accordingly revised, and by proceeding D. No. 2256 of 2024 dated 15 July 2024, the fourth respondent sought recovery of ₹39,343/- allegedly paid in excess from the petitioner’s salary.

The petitioner challenged the proceeding under Article 226 of the Constitution.

1. Whether the respondents were entitled to revise the petitioner’s pay and withdraw the Justice Shetty Commission increment on the basis of the audit objection.

2. Whether recovery of the excess salary paid to the petitioner, in the absence of misrepresentation and after a considerable lapse of time, was legally permissible.

The Court applied the principle that unjust enrichment from public funds cannot be permitted and that competent authorities may rectify erroneous pay fixation and continue the correct pay fixation in accordance with the applicable Pay Rules and Government Orders.

However, it relied on State of Punjab v. Rafiq Masih (Whitewasher), (2015) 4 SCC 334, which holds that recovery of excess payments may be impermissible where it would be harsh, inequitable or arbitrary, including recovery from Class III/Class IV employees, retired employees or employees nearing retirement, recovery relating to payments made for more than five years, and other cases where recovery would cause disproportionate hardship.

The Court also applied the principle that an employee should not be penalised for an administrative error in pay fixation where there was no misrepresentation by the employee.

The Court held that the audit objection justified correction of the petitioner’s pay because the Dalayat post was not eligible for the Justice Shetty Commission increment.

Accordingly, the revised pay fixation was sustained.

However, the respondents failed to establish that the petitioner had made any misrepresentation or fraudulently induced the erroneous fixation of pay.

Since the excess payment resulted from an establishment-level error and recovery was sought after a lapse of many years, the Court found that recovery would cause extreme hardship and fall within the principles laid down in Rafiq Masih.

Thus, the Court distinguished between lawful correction of pay and impermissible recovery of amounts already paid.

The revision of the petitioner’s pay pursuant to the audit objection was confirmed, but recovery of the excess salary was set aside.

Any amount already recovered under the impugned proceeding was directed to be repaid to the petitioner within twelve weeks from receipt of a copy of the order.

The proceeding in D. No. 2256 of 2024 dated 15 July 2024 was quashed only insofar as it directed recovery of excess salary; there was no order as to costs.