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Judgment
The present Original Application has been filed by the applicant under section 19 of the Administrative Tribunal Act, 1985 seeking following reliefs:-
“(i)This Hon’ble Court may graciously be pleased to direct the respondents to refund the recovered amount of Rs. 1,70,113/- with 18% compound interest from the date of recovery to the date of actual payment.
(ii)Any other relief, which this Hon’ble Tribunal may deem fit and proper in the circumstances of the case may be given in favour of the applicant.
(iii)Award the costs of the original application in favour of the applicant”.
The brief facts of the case are as follows:-The applicant was initially appointed in the Railway Department on 20.03.1986 in Group ‘C’ cadre. During his service, he was promoted from time to time and ultimately promoted to the post of Loco Pilot (Mail/Express) in Grade Pay of Rs. 4,200/-. He retired from service on 31.10.2024 from the post of Loco Pilot (Mail/Express) in the Grade Pay of Rs. 4,200/-. After his retirement, the respondents issued the PPO and released his pensionary benefits. Subsequently, the respondents found that excess payment had been made to the applicant and, accordingly, recovered an amount of Rs. 2,40,313/- from his gratuity without giving Central Administrative Tribunalhim any opportunity of hearing. Aggrieved by the said recovery, the applicant submitted a representation dated 05.05.2025 before the respondents, requesting them to refund the amount of Rs. 2,40,313/-recovered from his gratuity.
Per contra, the official respondents have filed their counter affidavit contending therein that applicant was appointed as Fireman/Assistant Loco Pilot on 01.05.1987 in the pay scale of Rs. 950-1500 after completion of training. During his service, he was promoted successively to the posts of Loco Pilot (Shunter) on 31.12.1993, Loco Pilot (Goods) on 16.08.1994, Loco Pilot (Passenger) on 12.10.2001 and Loco Pilot (Mail) on 17.08.2006. Thus, the applicant had already received four promotions by 17.08.2006. The respondents have further stated that Assistant Loco Pilot has a regular promotional channel to higher posts such as Senior Assistant Loco Pilot, Loco Pilot (Shunting) Grade-II, Loco Pilot (Shunting) Grade-I and other higher posts, as per the rules in force. The relevant Avenue of Promotion Chart issued in terms of RBE No. 196/2019 has also been placed on record. It is further stated that after implementation of the 6th Central Pay Commission, the Modified Assured Career Progression (MACP) Scheme was introduced vide RBE No. 101/2009 dated 10.06.2009. Under the scheme, financial upgradation is available at the prescribed intervals to employees who do not receive regular promotions. However, in the present case, the applicant had already received four regular promotions during his service. Due to an incorrect interpretation of the applicable Railway Board instructions, the applicant was granted financial upgradation to Grade Pay of Rs. 4600/- under the MACP Scheme with effect from 01.09.2008. Since the applicant had already received four regular promotions, the said financial upgradation was not admissible to him. The mistake was subsequently noticed and the excess amount paid to the applicant was treated as overpayment and recovered from his dues at the time of his retirement. The applicant retired from the post of Loco Pilot (Mail) on 31.10.2024. The respondents further stated that the recovery was made towards the excess payment arising out of the grant of an inadmissible financial upgradation and was made during the final settlement of his retiral dues.
The applicant has filed Rejoinder Affidavit to the Counter Affidavit as filed by the respondents refuting the contentions made by the respondents in their Counter Affidavit while reiterating the averments made in the O.A. and nothing new has been added.
I have heard Shri Rajesh Kumar, learned counsel for the applicant and Ms. Pooja Mishra, learned counsel for the respondents and perused the records.
Submission of learned counsel for the applicant is that the recovery was made without issuing any show-cause notice to the applicant and without giving him any opportunity of hearing. It is submitted that, in the absence of such notice and reasonable opportunity of hearing, the recovery from the applicant is not permissible. Learned counsel for the applicant further submitted that, immediately after coming to know about the recovery, the applicant submitted a representation dated 05.05.2025, requesting the respondents to refund the amount of Rs. 2,40,313/- recovered from his gratuity. However, the said representation has not been considered or decided by the respondents. It is submitted that failure to consider the representation has also resulted in violation of the principles of natural justice. Learned counsel for the applicant further submitted that the applicant is a retired Government employee and the alleged excess payment was not made due to any fraud, misrepresentation or concealment of facts on his part. If any excess payment was made, it was due to an error on the part of the respondents in fixing his pay and pensionary benefits. The applicant had no role in calculating or fixing his pay or pensionary benefits and had received the amount in good faith. Learned counsel for the applicant placed reliance upon the judgment of the Hon’ble Supreme Court in State of Punjab and Others Vs. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334, and submitted that recovery of excess payment from a retired employee is not permissible, particularly when the excess payment was not made due to any fraud or misrepresentation on the part of the employee. According to learned counsel for the applicant, the case of the applicant is covered by the Central Administrative Tribunalprinciples laid down in Rafiq Masih (supra), as the applicant is a retired employee and there is no allegation of fraud, misrepresentation or concealment of facts against him. Learned counsel for the applicant also relied upon the judgment of the Hon’ble Supreme Court in Thomas Daniel Vs. State of Kerala and Others, (2022) 5 SCC 470, and submitted that where excess payment has been made due to a mistake on the part of the department and there is no fraud or misrepresentation on the part of the employee, recovery of such excess amount, particularly after retirement and where it causes hardship to the employee, should not ordinarily be made. It was further submitted that the respondents have not placed any material on record to show that the applicant was responsible for the alleged excess payment or that he had knowledge that the amount paid to him was in excess of his entitlement. The applicant was also not given any opportunity to explain his case before the recovery was made. Therefore, the impugned recovery is also violative of the principles of natural justice. Thus, learned counsel prayed that the respondents be directed to refund the amount of Rs. 2,40,313/- recovered from the gratuity of the applicant.
In rebuttal, learned counsel for the respondents opposed the claim of the applicant and submitted that the recovery made from the applicant was lawful and was made towards the excess amount paid to him due to an incorrect grant of financial upgradation under the MACP Scheme. Learned counsel for the respondents further submitted that the applicant had already received four regular promotions during his service, namely, Loco Pilot (Shunter) on 31.12.1993, Loco Pilot (Goods) on 16.08.1994, Loco Pilot (Passenger) on 12.10.2001 and Loco Pilot (Mail) on 17.08.2006. Therefore, the applicant was not entitled to any further financial upgradation under the MACP Scheme. It was further submitted that due to an incorrect interpretation of the Railway Board instructions, the applicant was wrongly granted Grade Pay of Rs. 4,600/- under the MACP Scheme with effect from 01.09.2008. The said benefit was not admissible to the applicant, as he had already received regular promotions. The mistake was subsequently noticed and the excess amount paid to the applicant was recovered at the time of final settlement of his retiral dues. Learned counsel for the respondents further submitted that the applicant was actually entitled to Grade Pay of Rs. 4,200/- on the post of Loco Pilot (Mail/Express), whereas the higher Grade Pay of Rs. 4,600/- had been wrongly granted to him. Therefore, the recovery was only of the excess amount paid to him and not any penalty imposed upon him. It was also submitted that the applicant had no vested right to retain an amount which was paid to him in excess of his actual entitlement. The respondents are entitled to correct an erroneous fixation of pay and to recover the excess amount paid on account of such mistake, subject to the applicable rules and law. Learned counsel for the respondents further submitted that the judgments relied upon by learned counsel for the applicant, including Rafiq Masih (supra) and Thomas Daniel (supra), have to be considered in the facts and circumstances of each case. In the present case, the excess payment arose because an inadmissible financial upgradation was granted to the applicant, despite the fact that he had already received four regular promotions. It was further submitted that the applicant was aware of his service record and the promotions received by him. The grant of financial upgradation under the MACP Scheme was, therefore, not in accordance with his actual entitlement. The respondents subsequently corrected the mistake and recovered the excess amount during the final settlement of his retiral dues. Learned counsel for the respondents also submitted that the applicant has not challenged the correctness of the calculation of the alleged excess payment. His only grievance is regarding the recovery of the amount. Therefore, the applicant cannot claim refund of an amount which was not legally due to him. As regards the representation dated 05.05.2025, learned counsel submitted that mere non-disposal of the representation does not confer any legal right upon the applicant to retain the excess amount. The recovery was made on the basis of the applicant’s actual entitlement and the applicable Railway rules and instructions. Thus learned counsel for the respondents submitted that there is no illegality in the recovery of the excess amount from the applicant’s retiral dues. The Original Application is, accordingly, liable to be dismissed.
I have carefully considered the rival submissions advanced by learned counsel for the parties and have perused the entire material available on record.
It is not in dispute that the applicant retired from service on 31.10.2024 from the post of Loco Pilot (Mail/Express). It is also not disputed that the alleged excess payment was made on account of grant of higher Grade Pay of Rs. 4,600/- under the MACP Scheme and the applicant himself had not made any misrepresentation or concealed any fact for obtaining the said benefit. The respondents have also not placed any material on record to show that the applicant was responsible for the alleged wrong fixation of his pay or that he had played any role in granting the higher Grade Pay.
It is also an admitted position that the alleged excess payment continued for a considerable period and the applicant retired from service before the recovery was made. The recovery was thereafter made from his retiral dues/gratuity. The applicant was not issued any show-cause notice or given any opportunity to explain his case before making the recovery.
The Hon’ble Supreme Court in the case of Rafiq Masih (supra) has held as under:-
”It is not possible to postulate all situations of hardship, which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to herein above, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:
(i)Recovery from employees belonging to Class-III and Class-IV service (or Group ‘C’ and Group ‘D’ service).
(ii)Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.
(iii)Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
(iv)Recovery in cases where an employee has wrongfully been required to Central Administrative Tribunaldischarge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.
(v)In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer’s right to recover”.
12 The same principle has been reiterated by the Hon’ble Supreme Court in Thomas Daniel (supra). The Hon’ble Supreme Court has held that
“(9)This Court in a catena of decisions has consistently held that if the excess amount was not paid on account of any misrepresentation or fraud of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order which is subsequently found to be erroneous, such excess payment of emoluments or allowances are not recoverable. This relief against the recovery is granted not because of any right of the employees but in equity, exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered. This Court has further held that if in a given case, it is proved that an employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, the courts may on the facts and circumstances of any particular case order for recovery of amount paid in excess.
(10)In Sahib Ram v. State of Haryana and Others1 this Court restrained recovery of payment which was given under the upgraded pay scale on account of wrong construction of relevant order by the authority concerned, without any misrepresentation on part of the employees. It was held thus :
“5.Admittedly the appellant does not possess the required educational qualifications. Under the circumstances the appellant would not be entitled to the relaxation. The Principal erred in granting him the relaxation. Since the date of relaxation, the appellant had been paid his salary on the revised scale. However, it is not on account of any misrepresentation made by the appellant that the benefit of the higher pay scale was given to him but by wrong construction made by the Principal for which the appellant cannot be held to be at fault.
Under the circumstances the amount paid till date may not be recovered from the appellant. The principle of equal pay for equal work would not apply to the scales prescribed by the University Grants Commission. The appeal is allowed partly without any order as to costs.”
(11)In Col. B.J. Akkara (Retd.) v. Government of India and Others2 this Court considered an identical question as under:
“27.The last question to be considered is whether relief should be granted against the recovery of the excess payments made on account of the wrong interpretation/understanding of the circular dated 76 1999. This Court has consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee, if the following conditions are fulfilled:
(a)The excess payment was not made on account of any misrepresentation or fraud on the part of the employee.
Central Administrative Tribunal(b)Such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous.”
In the aforesaid judgment, Hon’ble Apex Court further observed as under:-
“18.It is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarize the following few situations, wherein recoveries by the employers, would be impermissible in law:
(i)Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).
(ii)Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.
(iii)Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
(iv)Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.
(v)In any other case, where the court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover.”
In the present case, there is no allegation of fraud, misrepresentation or concealment of facts against the applicant. The respondents themselves have stated that the higher Grade Pay was granted due to an incorrect interpretation of the Railway Board instructions. Thus, the excess payment, if any, was the result of an error on the part of the department and not because of any act or omission on the part of the applicant.
The contention of learned counsel for the respondents that the applicant had no right to retain the amount which was not legally due to him cannot justify recovery from his retiral dues in the facts of the present case. The question is not merely whether the amount was otherwise payable to the applicant, but whether such amount could be recovered from a retired employee after the excess payment had been made due to a mistake of the department and without any fraud or misrepresentation on his part.
It is also relevant that the applicant had already retired when the recovery was made and the amount was recovered from his gratuity. Such recovery from retiral benefits has a direct bearing on the financial security of a retired employee. The Hon’ble Supreme Court has recognised that recovery in such circumstances may cause hardship and has granted relief against such recovery where the employee was not responsible for the excess payment.
The applicant has also specifically pleaded that no notice or opportunity of hearing was given to him before making the recovery. The respondents have not been able to show from the record that any show-cause notice was issued to the applicant or that he was given an opportunity to explain his position before the amount was recovered. Therefore, the recovery made without giving the applicant an opportunity of hearing also cannot be sustained.
So far as the representation dated 05.05.2025 submitted by the applicant is concerned, it is not disputed that the applicant requested the respondents to refund the amount recovered from his gratuity. The said representation has not been decided by the respondents. However, since I have already found that the recovery itself cannot be sustained in the facts of the present case, the non-disposal of the representation further shows that the grievance of the applicant has not been properly considered by the respondents.
In view of the above discussion, I am of the considered view that the recovery made from the retiral dues of the applicant cannot be sustained. The applicant was a retired employee, there is no allegation of fraud or misrepresentation against him and the alleged excess payment was made due to an error on the part of the department. The case of the applicant is, therefore, covered by the principles laid down by the Hon’ble Supreme Court in Rafiq Masih (supra).
Accordingly, the respondents are directed to refund the amount recovered from the gratuity/retiral dues of the applicant. The said amount shall be refunded to the applicant within a period of three months from the date of receipt of a certified copy of this order. In case the amount is not refunded within the aforesaid period, the applicant shall be entitled to 6 % per annum simple interest on the said amount from the date of expiry of the three month period till the date of actual payment.
The Original Application is, accordingly, allowed in the above terms. There shall be no order as to costs. All pending MAs are disposed of.