Recovery from retired employees for excess payments due to erroneous pay fixation is impermissible in law.

The applicant, a retired Accounts Officer from Bharat Sanchar Nigam Limited (BSNL), was granted voluntary retirement on 31.01.2020.

His last drawn basic pay was recorded as Rs. 41,670/-.

Upon issuing the Pension Payment Order (PPO) on 27.05.2020, the respondents determined that his pay had been wrongly fixed in May 2002 (eighteen years prior).

Consequently, the respondents reduced his basic pay to Rs. 39,500/-, downwardly revised his pension, and recovered Rs. 2,88,755/- from his VRS Ex-Gratia payment without a show-cause notice.

The applicant challenged the PPO (Annexure A-3) and the rejection of his representation (Annexure A-8).

1. Whether the respondents were legally permitted to recover excess payments from the retiral benefits of a retired employee due to a long-standing arithmetic error in pay fixation.

2. Whether the Court should interfere with the executive's re-fixation of the applicant's pay scales.

The court primarily applied the legal principles established by the Hon’ble Supreme Court in State of Punjab Ors. Vs. Rafiq Masih (White Washer) (2014), which prohibits recoveries from retired employees or when excess payment was made for a period exceeding five years before the recovery order.

It also considered Chandi Prasad Unyal Ors Vs. State of Uttarakhand Ors regarding the recovery of irregular pay.

Furthermore, it relied on State of Punjab and Ors. Vs. Jagjit Singh and Ors. (2017), affirming that the determination of pay scales is an executive function, not a judicial one.

The Tribunal found that while the executive has the primary authority to evaluate jobs and fix pay scales, the act of recovery in this specific instance was "impermissible in law".

The Court reasoned that the applicant’s case squarely fell under the prohibitive parameters of Rafiq Masih, as he was a retired employee and the alleged error occurred more than five years prior to the recovery.

The Tribunal determined that allowing the recovery of nearly three lakh rupees after retirement would be iniquitous and harsh, outweighing the employer's right to correct a fiscal mistake.

Regarding the downward revision of future pay/pension, the Tribunal declined to interfere, noting that the judiciary should not substitute its judgment for that of expert executive bodies in matters of pay equation.

It quashed the impugned order dated 21.07.2020 (Annexure A-8) specifically regarding the recovery.

The respondents were directed to refund the entire recovered amount (Rs. 2,88,755/-) to the applicant within three months.

The prayer to restore the higher basic pay for pension purposes was implicitly denied, as the court upheld the executive's right to rectify pay fixation while barring the retrospective recovery of dues.