RECOVERY OF EXCESS PAYMENT FROM RETIRED EMPLOYEE WITHOUT FAULT OR NOTICE IS IMPERMISSIBLE.

The applicant, a retired Senior Section Engineer under Eastern Railway, superannuated on February 28, 2022.

His pay was fixed in accordance with an Office Memorandum dated October 16, 2015, which was circulated in Railways via RBE No. 33/2016 and CPO Serial Circular No. 47/2016.

Subsequently, his pay was revised downward via Memo dated March 15, 2021, and Office Order dated July 9, 2021, on the ground that he had not submitted an option under the 6th CPC for fixation in the merger grade, leading to an alleged overpayment.

At the time of settlement of retiral dues, Rs. 4,34,510/- was deducted from his gratuity, of which Rs. 3,56,510/- was for the alleged overpayment and Rs. 78,000/- for the Railway Employees Liberalized Health Scheme (RELHS) contribution.

The applicant challenged this recovery and also raised a grievance regarding the exclusion of a two-year training period while granting financial upgradation under the MACP Scheme.

The respondents contended that the applicant had not exercised the option for fixation in the merger grade and that the earlier granted benefit was not tenable, justifying the deduction.

They also cited CPO Serial Circular No. 7/2012, stating that pre-appointment training is not reckoned for MACP purposes.

1. Whether the recovery of Rs. 3,56,510/- from the applicant's retiral gratuity, based on an alleged overpayment of salary after his retirement, is permissible in law.

2. Whether the two-year training period of the applicant should be counted for the purpose of financial upgradation under the MACP Scheme.

The court primarily applied the principle established by the Hon'ble Supreme Court in *State of Punjab & Ors. vs. Rafiq Masih (White Washer)*, reported in (2015) 4 SCC 334, and reiterated in *Thomas Daniel vs. State of Kerala & Ors.*, reported in (2022) 5 SCC 545, which holds that recovery from a retired employee is impermissible where the excess payment was not occasioned by any fraud or misrepresentation on the part of the employee.

The court found that the initial pay fixation was allowed by the competent authority and duly vetted by Accounts.

There was no allegation of fraud or misrepresentation by the applicant.

The recovery was made **after** his retirement and **without** issuing any show cause notice or providing an opportunity of hearing.

Applying the principles from *Rafiq Masih* and *Thomas Daniel*, the court concluded that such recovery from a retired employee, in the absence of fault on their part, is inequitable and legally unsustainable.

As for the MACP issue, the court noted that the applicant had received three financial upgradations and had not challenged the exclusion of the training period during his service, raising the grievance only in the present proceedings, thus making it a secondary issue not to be adjudicated in this context.

The court directed the respondents to refund Rs. 3,56,510/- to the applicant, which was deducted on account of alleged overpayment, within eight weeks from the date of receipt of the order.

The deduction of Rs. 78,000/- for RELHS contribution was not interfered with, subject to the applicant being covered under the scheme.

The MACP issue regarding the training period was not adjudicated in the present proceedings.

No order as to costs was made.