Recovery of excess salary is impermissible absent employee fraud or misrepresentation when it is inequitable and harsh.

The petitioner was appointed as a Road Roller Khalasi on 5 July 1985 in the Work Charge Establishment.

His service was regularised in 2014, with his past service counted from 6 July 1985.

On completion of ten years’ service, he was granted First Time-Bound Promotion with effect from 6 July 1995 by Memo No. 199 dated 1 October 2018.

The promotion was subsequently approved by the Commissioner, Patna Division, on 4 December 2018 after consideration by the Establishment Committee and verification of records.

By Office Order No. 5, contained in Memo No. 51 dated 10 March 2021, the respondents cancelled the petitioner’s promotion.

By a consequential order contained in Memo No. 69 dated 24 March 2021, his salary was re-fixed and recovery of alleged excess payment was directed.

During the writ proceedings, the respondents further directed recovery of ₹5,70,600 in 32 instalments by Memo No. 162 dated 24 July 2024, which was also challenged by interlocutory application.

The State contended that the Time-Bound Promotion Scheme had been discontinued with effect from 1 January 1996 and that the petitioner, having been regularised only in 2014, was not entitled to the benefit.

Whether the petitioner’s First Time-Bound Promotion with effect from 6 July 1995 could be cancelled on the ground that his service was formally regularised only in 2014, notwithstanding that his past Work Charge service had been counted from 6 July 1985?

Whether recovery of ₹5,70,600 from the petitioner was legally permissible when the excess payment was not attributable to fraud or misrepresentation on his part and had continued for several years?

Whether the respondents were required to comply with the principles of natural justice before finally determining the petitioner’s entitlement to the promotion?

The Court applied the applicable policy governing counting of Work Charge service for Time-Bound Promotion, including Memo No. 3/PAR-03-1/92/5000 dated 21 September 1992.

It held that where past Work Charge service is counted for regularisation, benefits accruing during that period cannot ordinarily be withdrawn unless the order of regularisation or governing rules clearly exclude the employee.

The Court also applied State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, which identifies circumstances in which recovery of excess payments is impermissible, including recovery from Group C or Group D employees, recovery relating to payments made for more than five years, and recovery that is harsh, arbitrary or inequitable.

Relying on Thomas Daniel v. State of Kerala, AIR 2022 SC 2152, and Jogeswar Sahoo v. District Judge, Cuttack, (2025) SCC 724, the Court reiterated that excess payment caused by an employer’s erroneous interpretation or calculation, without fraud or misrepresentation by the employee, is ordinarily not recoverable where recovery would cause undue hardship.

The Court further invoked Article 14 and the principles of natural justice.

The Court found that the petitioner’s service had been regularised by expressly taking into account his past Work Charge service from 6 July 1985.

Consequently, he had completed ten years of service on 6 July 1995, before the Time-Bound Promotion Scheme was withdrawn with effect from 1 January 1996.

The Court therefore held that the benefit had accrued before the scheme was discontinued and could not be retrospectively defeated merely because formal regularisation occurred in 2014.

However, the Court preserved the authorities’ ability to reconsider the petitioner’s final entitlement after providing an opportunity of hearing and following natural justice.

As to recovery, the Court noted that the petitioner had neither committed fraud nor made any misrepresentation.

The payment resulted from decisions taken by the competent departmental authorities, including approval by the Commissioner, Patna Division.

Since the petitioner belonged to the lower service category and the alleged excess payment had continued over a substantial period, recovery of ₹5,70,600 was held to be arbitrary, harsh and inequitable under the principles laid down in Rafiq Masih, Thomas Daniel and Jogeswar Sahoo.

Any amount already recovered from or deposited by the petitioner was directed to be returned within eight weeks from receipt or production of the judgment.

The Court clarified that the respondents could reconsider and finally determine the petitioner’s entitlement to Time-Bound Promotion, but only after following the principles of natural justice.