Recovery of excess salary after prolonged payment is impermissible absent misrepresentation or repayment undertaking.

The petitioners, all serving as Group-B employees in various subordinate courts in Tamil Nadu, had received pay fixation under the applicable Pay Rules and Government Orders.

An internal audit subsequently concluded that their pay had been incorrectly fixed and that one additional increment had been granted beyond their entitlement. The authorities accordingly ordered re-fixation of pay and recovery of the excess salary already paid, issuing recovery notices to the respective petitioners.

The petitioners challenged the recovery proceedings under Article 226 of the Constitution, contending that the excess payment was not attributable to any misrepresentation or undertaking on their part and that recovery after a considerable lapse of time would cause hardship.

Whether the respondents could recover excess salary paid pursuant to an erroneous pay fixation where there was no misrepresentation by, or undertaking from, the employees.

Whether recovery of excess salary after a prolonged period would be impermissible as harsh, arbitrary or inequitable under the principles laid down in State of Punjab v. Rafiq Masih.

Whether the employees’ pay could nevertheless be re-fixed in accordance with the applicable Pay Rules and Government Orders.

The Court applied the principle that recovery of excess payments made by an employer may be impermissible where it would cause undue hardship or be harsh, arbitrary or inequitable.

It relied principally on State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, which identifies circumstances in which recovery is impermissible, including recovery after the excess payment has continued for more than five years and any case where recovery would be so iniquitous or harsh as to outweigh the employer’s equitable right to recover.

The Court also recognised that an authority may correct an erroneous pay fixation prospectively or otherwise in accordance with the governing Pay Rules and Government Orders, even where recovery of past excess payments is barred.

The Court found that the respondents were unable to establish either misrepresentation by the petitioners or any undertaking by them to repay excess amounts.

The additional increment had been granted as a result of the authorities’ erroneous pay fixation, rather than through fraud or misleading conduct by the employees.

Since the recovery was sought after a prolonged period, the Court held that compelling the petitioners to repay the excess salary would cause hardship and fall within the inequitable and harsh category recognised in Rafiq Masih.

However, the Court distinguished between correcting the employees’ pay prospectively and recovering amounts already paid: the former was permissible under the Pay Rules and Government Orders, while the latter was not sustainable in the circumstances.

Any amount already recovered from the petitioners was directed to be refunded within twelve weeks from the date of receipt of a copy of the order.

The connected miscellaneous petitions were closed, with no order as to costs.