Recovery of excess pay from retired employees’ retiral dues is impermissible absent misrepresentation.

The applicant, Manjit Singh, joined Northern Railway as a Diesel Cleaner in November 1987 and was subsequently promoted to various posts, ultimately serving as Chief Ticket Inspector before retiring on 31 December 2024.

During scrutiny of his service records, the Accounts Department allegedly detected erroneous fixation of his basic pay at ₹15,810 instead of ₹14,270 from 11 October 2011, resulting in an alleged excess payment of ₹8,21,864. The respondents issued a show-cause notice on 18 September 2024 and thereafter revised his pay and ordered adjustment/recovery of the excess amount from his retiral benefits through order dated 29 November 2024.

The applicant challenged the recovery and sought refund of the deducted amount with interest at 18% per annum.

The respondents contended that the applicant had been informed of the proposed recovery, had not submitted objections, and that the pay revision was made under applicable Railway instructions.

Whether recovery of the alleged excess salary from the applicant’s retiral benefits was legally permissible when the excess payment resulted from departmental pay-fixation error and the applicant had not misrepresented or concealed any facts?

Whether the respondents could retrospectively revise the applicant’s pay and recover the alleged excess amount, notwithstanding his retirement and the principles laid down in State of Punjab v. Rafiq Masih?

The Tribunal applied Section 19 of the Administrative Tribunals Act, 1985, under which the application was filed.

It principally relied on State of Punjab v. Rafiq Masih, (2015) 4 SCC 344, which prohibits recovery of excess payments in, inter alia, cases involving retired employees or employees due to retire within one year, and where recovery would be inequitable, harsh, or arbitrary, particularly when the employee was not responsible for the erroneous payment.

The Tribunal further held that the department remained at liberty to refix pay prospectively, but could not retrospectively recover the excess amount from the applicant’s retiral dues.

The Tribunal found that the erroneous pay fixation was attributable to the department and that the applicant had neither misrepresented facts nor contributed to the mistake.

Since the recovery was ordered immediately before or at the time of the applicant’s retirement and was sought to be made from his pensionary benefits, it fell within the categories of recovery disapproved in Rafiq Masih.

The applicant’s alleged failure to respond to the show-cause notice did not validate a recovery that was otherwise impermissible in law.

Accordingly, while the respondents could correct the applicant’s pay prospectively in accordance with the applicable rules, they could not retrospectively recover ₹8,21,864 from his retiral benefits.

The respondents were directed to refund ₹8,21,864 deducted from the applicant’s pensionary/retiral dues within three months of receiving a certified copy of the order.

Any delay beyond that period would attract interest at the applicable General Provident Fund rate.

The claim for 18% interest was not granted, and there was no order as to costs.