Recovery of excess payments from Group C and D employees is impermissible, though pay re-fixation remains valid.

The Government of UT of J&K challenged multiple orders passed by the Central Administrative Tribunal (CAT), Jammu, which had quashed recovery proceedings and directed the restoration of higher pay scales for several employees (respondents)

The respondents, belonging to Group ‘C’ and ‘D’ services in the Hydraulic/PHE departments, had been receiving upgraded pay scales (₹950-1500) and three *in-situ* promotions simultaneously under SRO 59 of 1990 and SRO 14 of 1996

Following a 2021 Finance Department audit, the petitioners sought to re-fix pay and recover excess payments, arguing these were "dual benefits" resulting in a loss to the exchequer

The respondents argued that Government Instruction No. 1 to Article 242 of the CSR barred the examination of emoluments beyond 24 months preceding retirement

The Court primarily applied Article 242 of the Jammu & Kashmir Civil Service Regulations (CSR), specifically Government Instruction No. 1, which limits pay verification to 24 months prior to retirement, and the newly inserted Government Instruction No. 2 (via S.O. 129), which waives this limit for benefits granted under deleted/withdrawn SROs to safeguard the exchequer

It relied on the principle of equity from *Syed Abdul Qadir v. State of Bihar*

the prohibitory criteria for recoveries from Class-III and Class-IV employees established in *State of Punjab v. Rafiq Masih (White Washer)*

The Court also referenced *ITC Ltd. v. State of U.P.* regarding relief for innocent employees benefiting from a wrong interpretation of rules

The Court reasoned that "correctness of emoluments" under Instruction No. 1 refers to individual arithmetical or clerical errors, but does not shield a whole class of employees from the rectification of systemic, unauthorized "dual benefits"

By introducing Instruction No. 2 via S.O. 129, the Government explicitly allowed the correction of errors resulting from the application of defunct SROs regardless of the 24-month bar

The Court found that the respondents were erroneously extended benefits under both SRO 59 and SRO 14, which were mutually exclusive in intent

While the "mistake" was on the part of the employer, the Court held that an employee has no vested right to receive erroneous benefits in perpetuity, allowing for the re-fixation of future pay and pension

However, applying *Rafiq Masih*, the Court determined that recovering past payments from Group ‘C’ and ‘D’ employees after decades would be "iniquitous" and cause "undue hardship"

The petitioners are at liberty to re-fix the respondents' pay and pension by excluding the wrongly granted dual benefits

The petitioners are strictly prohibited from recovering any excess amounts already paid to the respondents

Any amounts already recovered must be refunded within the period prescribed by the Tribunal

The Court concluded that while the employer has the right to correct a mistake, the principle of equity prevents the recovery of past payments from low-income groups