Recovery of excess pay from Group C/D employees without fraud is impermissible.

The applicants, 15 individuals, joined Bharat Sanchar Nigam Limited (BSNL) and served in non-executive posts, working as Assistant Telecom Technicians (ATT) in the NE-2 Pay Scale (Rs. 7840-14700/-).

They were promoted to the NE-3 Scale (Rs. 7900-14880/-) on December 1, 2018.

Following this upgrade, their pay was fixed, with applicant No. 1's pay fixed at Rs. 15,610/- as of December 1, 2018.

Subsequently, the respondent authorities issued communication dated October 4, 2021, intimating recovery from the applicants.

This was followed by another communication dated December 1, 2021, regarding recovery of excess pay.

The applicants, through the National Federation of Telecom Employees, submitted a representation on November 20, 2021, to waive the recovery.

The respondents, in their counter-affidavit, stated that pay fixations for 2017-18 and 2018-19 were verified, and erroneous cases were identified.

Consequently, a revised pay fixation order was issued on December 19, 2019, and recovery details were intimated to concerned employees and controlling officers via letter dated October 4, 2021.

The respondents claimed the recovery was permissible as pay fixation is subject to post-facto scrutiny and audit, and the revised fixation was issued within five years of the original.

They also argued that the Hon'ble Supreme Court's judgment in *Rafiq Masih* (supra) did not apply, as the applicants were in a "higher ladder of the N.E. Pay Scale".

1. Whether the applicants belong to Grade ‘C’/Grade ‘D’ employees

2. Whether the respondent authorities can recover the excess payment made effective December 1, 2018, by way of recovery Memo dated October 4, 2021

The court primarily applied the principle established in *State of Punjab and Ors. Vs. Rafiq Masih (White Washer) and Ors.*, reported in (2015) 4 SCC 334, which lists situations where recovery by employers would be impermissible in law, including recovery from Class III and Class IV service (or Group C and Group D service) employees.

It further considered *Thomas Daniel Vs State of Kerala & Others* 2022 Live Law (SC) 438, which held that relief against recovery is granted in equity to prevent hardship to employees, especially when the employee had no role in the excess payment.

The judgment in *Jagdish Prasad Singh Vs. State of Bihar & Ors* (Civil Appeal No. 1635 of 2013) dated 08.08.2024 was also referenced, stating that the State Government cannot retrospectively reduce an employee's pay scale and recover excess amounts, particularly after a long time gap.

The court also noted *Hon’ble High Court of Punjab and Haryana and Ors. Vs. Jagdev Singh*, reported in (2016) 14 SCC 267, which carved out an exception where recovery is permissible if an employee was put on notice at the time of payment that any excess payment made would be refundable.

The court first established that the respondents did not dispute that the applicants belonged to Group 'C'/'D' employees.

Regarding recovery, the court relied on the established principle that financial benefits granted to retired or Group 'C' employees based on an erroneous interpretation of rules cannot be recovered unless there is fraud or misrepresentation by the employee.

The respondents did not allege any fraud or misrepresentation by the applicants.

The court found that the *Jagdev Singh* exception regarding prior notice for recovery was not applicable here, as no material was placed on record to suggest the applicants were put on such notice at the time of payment.

Applying the principles from *Rafiq Masih*, the court noted that recovery from Group 'C'/'D' employees is impermissible.

Furthermore, drawing from *Thomas Daniel*, the court stated that judicial discretion is exercised in equity to prevent hardship when an employee had no role in the excess payment.

The court also highlighted the ruling in *Jagdish Prasad Singh* against retrospective reduction of pay and recovery, especially after a significant time gap.

The court concluded that the recovery proceedings were initiated in violation of these settled legal precedents.

The court, therefore, allowed the Original Application, quashing and setting aside the proposed recovery Order No. AO(P&A)/GMK/Office ORD/2019-20/8 dated October 10, 2021, and communications No. GMT/EST-282/Pay Fixation/ATT/Gr.D/2017-18/74 dated October 4, 2021, and AO(P&A)/GMK/Genl./Req./2021-22 dated December 1, 2021, as far as they concerned the applicants.

No order was made as to costs.