Recovery from Class-IV employees for excess payment is impermissible in the absence of fraud or misrepresentation.

The twenty applicants are Class-IV employees of the Public Health Engineering (PHE)/Jal Shakti Department, initially engaged as daily wagers and later regularized.

Following various judicial directions from the Hon’ble High Court of J&K, the applicants were granted higher pay scales/grades through departmental orders, with corresponding entries recorded in their service books.

On 12.10.2018, Respondent No. 3 issued a communication directing the rectification of these benefits and recovery of "excess" payments, citing Government Order No. 277-F of 2018.

The applicants challenged this order, arguing it was issued without notice, years after the benefits were granted, and in the absence of any fraud or misrepresentation.

The case was transferred from the High Court (SWP No. 113/2019) to the Tribunal.

1. Whether the respondents are justified in ordering the rectification of pay/pension and effecting recoveries from Class-IV employees after a long lapse of time when the benefits were granted by the department without any fraud by the employees.

2. Whether the impugned order dated 12.10.2018 is sustainable given the alleged violation of the principles of natural justice.

The Tribunal primarily applied the equitable principles established by the Hon’ble Supreme Court in State of Punjab & Ors. v. Rafiq Masih (White Washer), which prohibits recovery from Class-III and Class-IV employees, retired employees, or when excess payment was made for over five years.

It also relied on Thomas Daniel v. State of Kerala, reiterating that recovery is unjustified if the employee is not at fault.

Jagdish Prasad Singh v. State of Bihar, which held that the State cannot retrospectively reduce pay scales after a long-time gap.

Furthermore, the Tribunal followed its own precedent in O.A. No. 1284/2021, which addressed identical issues within the same department.

The Tribunal reasoned that the higher pay scales were not "self-assumed" but formally granted by the respondents through departmental orders and service book entries.

Applying the Rafiq Masih criteria, the Tribunal found that the applicants, as Class-IV employees (many retired or nearing retirement), fall within the "protective sweep" of the law, as recovery would cause disproportionate hardship.

The Tribunal rejected the respondents' absolute right to correct mistakes, noting that such corrections must be tested against fairness and equity where no fraud or misrepresentation by the employee exists.

Additionally, the Tribunal found the impugned order arbitrary and a violation of natural justice, as it sought to withdraw benefits with civil consequences without providing the applicants an opportunity to be heard.

The reliance on Government Order No. 277-F of 2018 was deemed misplaced as it could not mechanically unsettle benefits granted years prior.

It held that the respondents are prohibited from effecting recoveries or retrospectively reducing pay/pensionary benefits unless fraud is established.

The respondents were directed to restore and maintain the applicants' pay/pensionary benefits as they existed prior to the 2018 order and to refund any amount already recovered within three months. No recovery for the past period is permitted.