Recovery of excess payments from Group C employees is impermissible under Rafiq Masih.

The applicant, a Group ‘C’ railway employee who had been medically decategorised and absorbed as a Power Controller, received pay fixed at a Grade Pay of ₹4,600 in 2010.

In 2022, the Railway retrospectively refixed his pay from 26 July 2007 at a Grade Pay of ₹4,200, treating the difference as an overpayment of ₹3,47,377 and directing recovery in instalments.

The applicant challenged the recovery, asserting that the excess payment resulted from the employer’s error and that he had made no misrepresentation or committed fraud.

He retired on 31 May 2023; his representation seeking refund was rejected on 13 December 2024.

He sought to set aside the pay-refixation and recovery order and the rejection of his refund claim

Whether recovery of the alleged excess pay was impermissible because the applicant belonged to Group ‘C’ service

Whether recovery was barred because the excess payment had continued for more than five years before the recovery order and the applicant was due to retire within one year of that order

Whether the impugned orders should be set aside and the amount recovered refunded

In State of Punjab v. Rafiq Masih (White Washer), AIR 2015 SC 696, the Supreme Court held that recovery of excess payments made through an employer’s mistake, without employee misrepresentation or fraud, is impermissible in specified circumstances, including recovery from Group ‘C’ or Group ‘D’ employees; recovery from retired employees or those due to retire within one year of the recovery order; and recovery where the excess payment had been made for more than five years before that order.

The Department of Personnel and Training’s Office Memorandum dated 2 March 2016 and Railway Board letter, RBE No. 72/2016 dated 22 June 2016, directed that such cases be dealt with in accordance with Rafiq Masih.

The Tribunal found that the applicant was a Group ‘C’ employee, that the pay had been refixed retrospectively after more than five years of excess payment, and that the recovery order was made when he was due to retire within one year.

His case therefore fell within three of the categories identified in Rafiq Masih.

Because the recovery was directed despite the Supreme Court’s ruling and the applicable DoPT and Railway Board instructions, the Tribunal held it impermissible in law.

It directed the respondents to refund ₹3,47,377 within six months of receiving a copy of the order, without interest during that period; if payment is not made within six months, interest at 6% is payable until refund.

No order as to costs.