Recovery of excess pay from a retired employee is impermissible absent fraud or misrepresentation.

The applicant, Ravi Kant, an Accounts Officer (TES Group-B) in BSNL, superannuated on 31 January 2019 while posted at Bettiah. His Last Pay Certificate reflected a basic pay of ₹49,040 per month.

However, during scrutiny of his service records, the respondents found that a second increment granted pursuant to financial upgradation was irregular because the applicant had not completed the prescribed mandatory training. His pay was consequently re-fixed at ₹39,850 per month, and his pensionary benefits were calculated on that basis.

The respondents further recovered ₹7,00,200 from the applicant’s DCRG towards alleged excess payment.

The applicant challenged the reduction in pay, the consequential fixation of pensionary benefits, and the recovery, contending that the action was contrary to Rules 33 and 59(1)(b)(iii) of the CCS (Pension) Rules, 1972, the principles in State of Punjab v. Rafiq Masih (White Washer), and the decisions in D.N. Chaudhary and J.A. Tirkey.

The respondents maintained that the pay had been erroneously fixed because the applicant failed to undergo mandatory training and, being an Accounts Officer, was expected to understand the applicable financial rules. They contended that the correction of pay and recovery of excess payment were legally permissible.

1. Whether the respondents were competent to scrutinize the applicant’s service record and correct an erroneous fixation of pay after his retirement?

2. Whether the respondents were legally entitled to recover ₹7,00,200 from the applicant’s DCRG towards alleged excess payment arising from the earlier pay fixation?

3. Whether the applicant was entitled to restoration of the basic pay of ₹49,040 and consequential re-fixation of his pensionary benefits?

The Tribunal applied Rules 33 and 59(1)(b)(iii) of the CCS (Pension) Rules, 1972, concerning admissible emoluments and verification of service and pay records for determination of pensionary benefits, as well as Rule 65, which permits the competent authority to requisition and scrutinize service records.

It relied principally on State of Punjab & Ors. v. Rafiq Masih (White Washer), (2015) 4 SCC 334, which recognizes that recovery of excess payments may be impermissible where it is inequitable, harsh or arbitrary, particularly in the case of retired employees or employees retiring within one year, absent fraud or misrepresentation.

The Tribunal also considered the DoPT Office Memorandum dated 2 March 2016 and relevant BSNL instructions, while holding that administrative instructions cannot override the binding principles laid down by the Supreme Court.

The governing distinction was that correction of an erroneous pay fixation and recovery of amounts already paid are separate legal questions.

The Tribunal held that the respondents were entitled to examine the applicant’s service record and correct an erroneous pay fixation. The mandatory-training condition was incorporated in the financial-upgradation order, and the record indicated that the irregularity had been communicated to the applicant before his retirement.

Since pensionary benefits must be based on legally admissible emoluments, the respondents were not required to perpetuate an erroneous fixation merely because it had continued for some time or had been reflected in the Last Pay Certificate. Rule 59(1)(b)(iii) did not confer an indefeasible right to retain an erroneous pay fixation.

The position was different regarding recovery. The applicant had already retired when ₹7,00,200 was recovered from his DCRG. The respondents did not establish fraud, misrepresentation or deliberate concealment by the applicant.

Applying Rafiq Masih, the Tribunal found that recovery from a retired employee in these circumstances was inequitable and impermissible. The applicant’s failure to immediately object to the communication regarding re-fixation did not, by itself, amount to fraud or misrepresentation.

Nor could the fact that the amount had already been deducted from the DCRG validate a recovery that was otherwise legally barred.

The Tribunal therefore upheld the revised pay fixation but rejected the recovery of past excess payments as legally unsustainable.

The Tribunal upheld the respondents’ authority to re-fix the applicant’s pay at ₹39,850 per month and declined to direct restoration of the earlier pay of ₹49,040 or consequential re-fixation of pensionary benefits.

However, it held that recovery of ₹7,00,200 from the applicant’s DCRG was impermissible and directed the respondents to refund that amount within two months from receipt or production of the order before the competent authority.

No interest or costs were awarded.