Recovery of Excess Pay from Retired Employees Without Fault Is Impermissible.

The applicant, Manne Vasanthakumar, was appointed as an Inspector on May 3, 1979

His pay was fixed under the 5th Central Pay Commission and then the 6th Central Pay Commission recommendations, where he was granted a Grade Pay (GP) of Rs. 6,600/-

Subsequently, the 3rd respondent introduced the MACP Scheme, and the 4th respondent issued an order granting the applicant 3rd MACP with a GP of Rs. 7,600/-

Annual increments were withheld for 2016 and 2017

The 4th respondent issued a Show Cause Notice on August 4, 2017, for recovering excess pay drawn, to which the applicant replied

On June 21, 2018, the 4th respondent issued two impugned orders withdrawing the 3rd MACP, reducing the GP to Rs. 6,600/-, and recovering/withholding Rs. 1,58,517/- from his retirement benefits

Consequently, the 3rd respondent re-fixed his pension based on the lower GP of Rs. 6,600/-

The applicant retired on August 31, 2018

He filed an appeal on January 16, 2019, but received no reply

There was no fraud or misrepresentation by the applicant

Whether the Office Order No. 121/332/2017/AD/Vol. IV dated June 21, 2018, and Memo dated June 21, 2018, withdrawing the 3rd MACP and reducing the Grade Pay from Rs. 7,600/- to Rs. 6,600/- for the applicant are valid

Whether the recovery of Rs. 1,58,517/- from the applicant's retirement benefits and the re-fixing of his pension based on a lower Grade Pay of Rs. 6,600/- are legally permissible

Whether the applicant is entitled to the refund of the recovered/withheld amount with penal interest and refixed pension based on a Grade Pay of Rs. 7,600/-

The court primarily relied on the precedent set by the Hon'ble Supreme Court's order dated April 30, 2025, in Civil Appeals arising out of SLP (C) Nos. 10491-10492 of 2022 in the case of K.V. Gopalakrishnan v. Union of India and ors., which confirmed the judgment of the Bangalore Bench of this Tribunal in OA 178/2018

This judgment established that a pensioner should not suffer due to the employer's remissness, especially when there is no fraud or misrepresentation by the employee

It also affirmed that recoveries from retired employees or those retiring within one year of the recovery order are impermissible, citing DoPT OM F. No. 18/03/2015-Estt.(Pay-I) dated March 2, 2016

The Supreme Court's decision in Rafiq Masih v. State of Punjab was also referenced for the principle against recovery of excess payments initiated more than five years after the financial upgradation was earned

The Tribunal found that the core issue in the present OA was identical to the one addressed by the Hon'ble Supreme Court in K.V. Gopalakrishnan v. Union of India and ors.

In that case, the Supreme Court had confirmed the Bangalore Bench's order, which reversed the Karnataka High Court's decision, thus upholding the position that the Grade Pay should be Rs. 7,600/-

The Supreme Court in K.V. Gopalakrishnan had explicitly criticized the employer's conduct for not making full disclosure to the High Court and emphasized that a pensioner should not be made to suffer unnecessarily due to the employer's neglect

It further noted that the recovery process initiated more than five years after the third financial upgradation was earned was not in accord with the decision in Rafiq Masih v. State of Punjab

In the present case, the applicant's 3rd MACP was granted in 2012, and the recovery was initiated much later

The respondents failed to produce any contrary judgment to the precedents cited by the applicant

The recovery in this case was also contrary to the DoPT OM dated March 2, 2016, which prohibits recovery from retired employees or those due to retire within one year, as the applicant retired on August 31, 2018, and the recovery order was issued on June 21, 2018

It also quashed the impugned memorandum dated June 21, 2018, for withholding Rs. 1,58,517/- from his gratuity amount

The respondents were directed to restore the applicant's Grade Pay to Rs. 7,600/- from the date of its reduction and refund the recovered amount of Rs. 1,58,517/- with 6% interest per annum from the date of actual recovery

Furthermore, the respondents were directed to pay the retiral benefits by treating the Grade Pay as Rs. 7,600/- at the time of retirement (August 31, 2018) and release the differential amount of unpaid retiral benefits with identical interest

This exercise was ordered to be completed within two months