Retrospective downgrading of a temporary post is impermissible and cannot support recovery of paid salary.

Ram Prakash Gupta, the original applicant, was appointed as a Clerk on 14 May 1965 and was allowed to work as Deputy Postmaster/Postmaster in the HSG-I cadre at Fatehgarh on a temporary basis, at his own request and cost, from 2003 onwards.

He proceeded on leave from 23 September 2005 and voluntarily retired on 22 February 2006.

Although he had been drawing pay of Rs. 7,900 in the HSG-I cadre, the respondents retrospectively downgraded the post to HSG-II with effect from 1 August 2004 and regulated his pay at Rs. 7,550 with effect from 1 August 2005, resulting in recovery of Rs. 5,431.

His representation was rejected by order dated 18 July 2007, on the ground that his temporary HSG-I arrangement was irregular and could not be regularised because he was a BCR official and not a regular HSG-II employee.

After his death, his wife, Dhan Devi Gupta, was substituted as the applicant.

1. Whether the respondents could retrospectively downgrade the HSG-I post and reduce the applicant’s pay after having appointed him to, and taken work from him in, that post.

2. Whether the respondents could treat the temporary HSG-I arrangement as irregular and recover the alleged excess payment from the applicant.

3. Whether the recovery was impermissible under the principles laid down in State of Punjab v. Rafiq Masih (Whitewasher), (2015) 4 SCC 334.

The Tribunal applied the principle that administrative action having retrospective adverse financial consequences must not be arbitrary, particularly where the employee was appointed by the employer, performed the duties of the post, and was paid accordingly.

It further applied the doctrine of estoppel, holding that an employer that consciously created and acted upon a temporary arrangement could not subsequently negate that arrangement for the period during which it operated.

The Tribunal also relied on State of Punjab v. Rafiq Masih (Whitewasher), (2015) 4 SCC 334, which restricts recovery of payments made due to alleged administrative or interpretational error, especially from retired employees or where recovery is effected within the protected period surrounding retirement.

The temporary nature of the appointment permitted termination prospectively, but did not authorise retrospective alteration of the employee’s pay after services had been rendered and remuneration disbursed.

The Tribunal found that the applicant’s HSG-I posting was admittedly a temporary arrangement terminable without notice; however, the respondents themselves had made that arrangement because of the importance of the Fatehgarh posts and had accepted the applicant’s services in the HSG-I cadre.

Consequently, while the arrangement could be terminated prospectively, its retrospective downgrade from 1 August 2004 was arbitrary because it deprived the applicant of pay already earned for work performed and after HSG-I pay had been regularly disbursed.

The respondents were also estopped from characterising the arrangement as irregular for the entire period after having themselves created it and benefited from it.

Since the recovery was made within one year of the applicant’s retirement, it was additionally barred by the principles in Rafiq Masih.

The order dated 18 July 2007 was quashed and set aside to the extent that it endorsed recovery from the applicant.

The respondents were directed to refund the recovered amount to Dhan Devi Gupta, with interest at the applicable bank rate, within three months of receiving a certified copy of the order.

The Original Application was disposed of accordingly, with the parties directed to bear their own costs.