Recovery of excess payment from retired Group 'C' employees, without misrepresentation, is impermissible.

The applicants in five original applications (OAs) were Group-C employees of the Chandigarh Police, who voluntarily retired from service, with O.A. No. 195/2024 detailing Surjit Singh's case, who retired on November 1, 2019, as an ORP Inspector.

Prior to retirement, a 'No Due Certificate' was issued, and his retiral dues, including pension, were released.

The Chandigarh Administration adopted the Punjab Civil Services (Revised Pay) Rules, 2021, effective January 1, 2016, and the applicant submitted an option form for revised pay.

Subsequently, Respondent No. 5 (Accountant General) revised his pay fixation and directed the recovery of an overpayment of Rs. 1,02,468/- from his Death-cum-Retirement Gratuity (DCRG) without a show cause notice.

The alleged overpayment resulted from a rectification of a pay step-up granted in 2016, which equated his pay with a junior, HC Dalbir Singh, effective October 21, 2007.

The department retrospectively rectified the annual increment date associated with this pay step-up, leading to the recovery order.

The applicants contend they never misrepresented facts for pay fixation, which was done by the department due to erroneous rule interpretation.

Respondents argued the recovery was justified under the Punjab Civil Services Rules to correct a mistake and avoid salary/pension anomalies.

They also stated that the applicant had given a written undertaking on November 1, 2019, to be bound by recovery decisions.

1. Whether the recovery of overpaid amounts from retired Group-C employees, particularly from DCRG, due to an administrative error in pay fixation without any misrepresentation by the employee, is permissible in law.

2. Whether the lack of a show cause notice or opportunity for hearing prior to effecting recovery renders the recovery order illegal and arbitrary.

The court primarily applied the principles laid down by the Hon'ble Apex Court in State of Punjab & Ors. Vs. Rafiq Masih, SCT 2015 (1) 195, which identified specific situations where recovery by employers would be impermissible, including from Class-III and Class-IV (Group 'C' and Group 'D') employees and from retired employees, or those due to retire within one year.

It also considered the judgment in Thomas Daniel Vs. State of Kerala, 2022 INSC 497, which held that belated recovery after a long lapse is inequitable and impermissible.

The court also noted a DoPT OM dated March 2, 2016 (Annexure A-7), adopted by UT Chandigarh, which prohibits recovery from retired employees, Group-C employees, and excess payments due to administrative errors.

The principles of natural justice, requiring a show cause notice or opportunity of hearing before an action having civil consequences, were also implicitly applied.

The court found that the factual matrix, particularly the administrative nature of the pay step-up and subsequent error in annual increment calculation, was largely undisputed.

It was clear that the department itself initiated the stepping-up of pay in 2016 to bring the applicant at par with a junior, and the applicant retired in 2019, receiving a 'No Dues Certificate'.

The court emphasized that there was no allegation of fraud, misrepresentation, or fault on the applicant's part, attributing the erroneous pay fixation to the "negligence of the concerned official".

Applying the principles from Rafiq Masih (supra), the court noted that the applicants, being retired Group-C employees, clearly fell into categories (i) and (ii) where recovery is impermissible.

The court further referenced Thomas Daniel (supra), which bars belated recovery after a long lapse, highlighting that the recovery was initiated significant time after retirement.

Crucially, the court also found that the impugned recovery orders were issued without a show cause notice to the applicants, violating principles of natural justice and rendering the orders "bad in law".

The argument that a 'No Dues Certificate' does not bar subsequent recovery was essentially rejected in light of the specific circumstances and the lack of employee culpability.

The undertaking given by the applicant on November 1, 2019, regarding future recoveries, was not determinative in overcoming the established legal precedents against recovery from retired Group-C employees for departmental errors.

The Tribunal concluded that the recovery from the DCRG of the applicants was "illegal, arbitrary, unjust and unsustainable".

Consequently, the impugned recovery orders, dated April 5, 2023 (in OA No. 195/2024), December 15, 2023 (in OA No. 197/2024), March 22, 2023 (in OA No. 300/2024), June 29, 2023 (in OA No. 302/2024), and May 26, 2023 (in OA No. 469/2024), are quashed and set aside.

The respondents are directed to refund the recovered amounts to the applicants, along with interest at the GPF rate from the date of recovery until the date of actual payment, within eight weeks from the receipt of a certified copy of this order.