Recovery of Excess Pay From Retired Employee is Impermissible Under Rafiq Masih Guidelines

The applicant, an Accounts Officer in Bharat Sanchar Nigam Limited (BSNL), retired voluntarily on 31.01.2020. At the time of retirement, his basic pay was Rs. 41,670/-

However, upon issuing the Pension Payment Order (PPO) on 27.05.2020, the respondents reduced his basic pay to Rs. 39,500/-, resulting in a lower pension fixation

The respondents claimed the applicant's pay had been wrongly fixed since 31.12.2006

Consequently, the respondents recovered Rs. 2,74,357/- from the applicant’s VRS Ex Gratia payment without a prior show-cause notice

The applicant challenged the pay reduction, the revised PPO, and the recovery of the alleged overpayment

1. Whether the respondents were legally permitted to recover excess payments from a retired employee under the circumstances of the case

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

The court primarily applied the principles established by the Hon’ble Supreme Court in State of Punjab Ors. v. Rafiq Masih (White Washer) (2015), which prohibited recovery from retired employees or those due to retire within a year, and in cases where excess payment exceeded five years

Regarding pay fixation, the court relied on State of Punjab Ors. v. Jagjit Singh Ors. (2017), which held that the determination of pay scales is an executive function and not a judicial one, barring exceptional circumstances

It also noted the precedent in Chandi Prasad Unyal Ors. v. State of Uttarakhand (2012) regarding the recovery of irregular pay fixation

The Tribunal examined the recovery against the five-point criteria set in Rafiq Masih. It determined that the applicant, as a retired employee, fell squarely within the protected categories—specifically clauses (i) to (iv)—making the recovery of Rs. 2,74,357/- iniquitous and "impermissible in law"

The Tribunal found that the hardship caused to the retired employee outweighed the employer's right to recover funds overpaid due to their own clerical errors

Conversely, regarding the reduction of basic pay from Rs. 41,670/- to Rs. 39,500/-, the Tribunal declined to interfere, reasoning that the technical evaluation of pay scales and the rectification of fixation errors remain the exclusive domain of executive "expert bodies" unless found to be grossly arbitrary

The respondents were directed to refund the entire recovered amount (Rs. 2,74,357/-) to the applicant within three months of receipt of the order