Recovery of excess pay from a retired Group C employee is impermissible absent misrepresentation.

The applicant, a retired Railway Carpenter (MCM), superannuated on 31 July 2024.

During pre-retirement scrutiny of his service records, the respondents found that his pay had allegedly been wrongly fixed and revised the fixation retrospectively with effect from 1 November 2003.

On the basis of the revised calculation, ₹2,20,000 was recovered in lump sum from his terminal benefits/gratuity, and his pension was reduced.

The applicant contended that the excess payment resulted solely from an administrative error, that he had neither misrepresented facts nor furnished false information, and that no show-cause notice or opportunity of hearing was given before recovery.

After his representations and legal notice received no effective relief, he approached the Tribunal under Section 19 of the Administrative Tribunals Act, 1985, seeking quashing of the impugned action, refund of the recovered amount and restoration of the pensionary difference with interest.

1. Whether recovery of ₹2,20,000 from the applicant’s terminal benefits, without issuing a show-cause notice or granting an opportunity of hearing, violated the principles of natural justice.

2. Whether recovery of excess salary payments made due to an alleged error in pay fixation was permissible when the applicant had neither misrepresented facts nor committed fraud.

3. Whether the applicant was entitled to refund of the recovered amount and consequential relief regarding the reduced pension.

The Tribunal exercised jurisdiction under Section 19 of the Administrative Tribunals Act, 1985.

It applied the principles of natural justice, particularly the requirement of notice and a reasonable opportunity of hearing before taking an adverse recovery action.

The Tribunal principally relied on State of Punjab & Ors. v. Rafiq Masih & Ors., 2015 (1), which restricts recovery of excess payments from employees in circumstances where the overpayment resulted from an employer’s mistake and there was no misrepresentation or fraud by the employee.

It also noted the Government of India’s Office Memorandum dated 2 March 2016 concerning recovery of wrongful excess payments from Government servants, stated to be consistent with Rafiq Masih.

The applicant additionally relied on Rule 90 of the Railway Service Pension Rules and decisions of the Chandigarh Bench in Bhopal Singh v. Union of India and Bachan Singh v. Union of India.

The Tribunal found that the respondents had retrospectively revised the applicant’s pay at the stage of superannuation and recovered the resulting alleged overpayment in a lump sum from his settlement dues.

Since the incorrect pay fixation was attributable to the administration and there was no allegation or finding that the applicant had misrepresented facts or committed fraud, the recovery fell within the protective principle recognised in Rafiq Masih.

Further, the respondents had not issued a show-cause notice or provided the applicant an opportunity to contest the proposed recovery, rendering the action contrary to natural justice.

The Tribunal therefore treated the recovery as unjustified and directed restoration of the amount.

It held that the lump-sum recovery of ₹2,20,000 from his terminal benefits, having arisen from an administrative error in pay fixation and having been effected without notice or hearing, was impermissible.

The original application was allowed, and the respondents were directed to refund the recovered amount to the applicant within six weeks from receipt of a certified copy of the order.

No order as to costs was made.