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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)To issue an order or direction commanding the respondents that they may not deduct Rs. 197317/- from the pension of applicant and also quashed the order dated 3.4.2025 passed by the Assistant Personnel Officer, North Central Railway, Agra for recovery of aforesaid amount and further they be directed that of any deduction was made they may be refunded the same to applicant to the date of deduction with 12% interest otherwise the applicant will suffer an irreparable loss and injury.
(ii)To issue any other and further relief which this Hon’ble Tribunal may deem fit and proper be also awarded to the applicant.
(iii)Cost of proceeding be awarded to the applicant”.
The brief facts of the case are as follows:-The applicant was appointed as an Apprentice Assistant Driver with effect from 03.12.1992. He was promoted to the post of Loco Pilot Goods with effect from 05.06.2006. Thereafter, he was promoted as Loco Pilot Passenger on 17.07.2012 and subsequently as Loco Pilot Mail on 31.12.2017. The applicant applied for voluntary retirement, which was accepted by the respondents and he retired from service with effect from 30.04.2024. After his retirement, the respondents issued a letter dated 03.04.2025 directing the applicant to deposit a sum of Rs.1,97,317/- on the ground that excess payment had been made to him. The respondents further stated that, if the amount was not deposited, the same would be recovered from his pension. Aggrieved by the impugned letter/order dated 03.04.2025 directing recovery of Rs.1,97,317/- from him after his retirement, the applicant has filed the present Original Application.
Per contra, the official respondents have filed their counter affidavit contending therein that the applicant was working as Chief Loco Inspector in the Railway Department and took voluntary retirement from service with effect from 30.04.2024. At the time of his retirement, due to a clerical error, his pensionary benefits were calculated by taking 30% of the pay element. Accordingly, PPO No. 20247320400093 dated 18.06.2024 was issued. As per the Railway Board’s letters dated 25.11.1992, 13.11.2017 and 06.03.2019, the applicant had completed 7 years of service as Chief Loco Inspector. Therefore, his pensionary benefits were required to be calculated by taking 21% of the pay element and not 30%. Accordingly, the earlier PPO was revised and the applicant’s pensionary benefits were correctly calculated by taking 21% of the pay element. Since the applicant had already received pensionary benefits on the basis of the earlier PPO, an excess amount of Rs.1,97,317/- was paid to him. The applicant was therefore directed, vide letter dated 03.04.2025, to deposit the excess amount of Rs.1,97,317/-. The said amount was sought to be recovered as it had been paid due to an error in calculating the pensionary benefits. Thus, the respondents submit that the recovery is only of the excess amount wrongly paid to the applicant and the impugned action has been taken in accordance with the applicable Railway Board instructions. Therefore, the present Original Application is liable to be dismissed.
No rejoinder affidavit has been filed by the applicant.
I have heard Shri Shiv Mangal Prajapati, learned counsel for the applicant and Shri K.K. Ojha, learned counsel for the respondents and perused the records.
Submission of the learned counsel for the applicant is that the Central Administrative Tribunalimpugned order dated 03.04.2025 is illegal and arbitrary, as the applicant had already retired from service on 30.04.2024 and the recovery was ordered after his retirement. He further submitted that the applicant was a Group ‘C’ employee and the alleged excess payment was not made due to any fraud, misrepresentation or concealment of facts on his part. Learned counsel for the applicant also submitted that the alleged excess payment was made due to a mistake or clerical error on the part of the respondents while calculating the pensionary benefits of the applicant, and the applicant had no role in calculating or fixing his pension. Learned counsel for the applicant further submitted that the Hon’ble Supreme Court in State of Punjab and Others v. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334, has observed that recovery of excess payment from retired employees and employees belonging to Group ‘C’ and Group ‘D’ is generally impermissible, particularly where the excess payment was not made due to any fraud or misrepresentation on the part of the employee. According to him, the case of the applicant is squarely covered by the principles laid down in Rafiq Masih (supra), as he is a retired Group ‘C’ employee and there is no allegation of fraud or misrepresentation against him. Learned counsel for the applicant further submitted that the Hon’ble Supreme Court in Thomas Daniel v. State of Kerala and Others, (2022) 5 SCC 470, has also observed that recovery of excess payment caused by a mistake of the department should not be made from an employee where there was no misrepresentation or fraud on his part and such recovery would cause hardship. He submitted that the respondents cannot recover the alleged excess amount merely because they subsequently found that the pension had been wrongly calculated. The mistake was committed by the respondents themselves while issuing the PPO. He next submitted that the respondents have not produced any material 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. He further submitted that the respondents did not provide the applicant with a proper opportunity to explain his case before directing recovery from his pension. Therefore, the impugned action is also in violation of the principles of natural justice. Learned counsel for Central Administrative Tribunalthe applicant also contended that the Railway Board instructions relied upon by the respondents may justify correction of the pensionary benefits for the future, but they cannot, by themselves, justify recovery of the amount already paid to a retired Group ‘C’ employee when there was no fraud or misrepresentation on his part. Therefore, learned counsel for the applicant submitted that the impugned order dated 03.04.2025 directing recovery of Rs.1,97,317/- is illegal, arbitrary and contrary to the settled law. He, therefore, prayed that the respondents be restrained from recovering the said amount from the pension of the applicant and, if any amount has already been recovered, the same be refunded to the applicant.
In rebuttal, learned counsel for the respondents argued that the present Original Application is liable to be dismissed, as the respondents have only sought to recover the excess amount wrongly paid to the applicant. He further submitted that the applicant’s pensionary benefits were wrongly calculated at 30% of the pay element due to a clerical error at the time of his retirement. As per the applicable Railway Board instructions dated 25.11.1992, 13.11.2017 and 06.03.2019, the applicant was entitled to pensionary benefits calculated by taking 21% of the pay element. The applicant had completed the required period of service as Chief Loco Inspector and, therefore, his pensionary benefits were required to be calculated on the basis of 21% pay element and not 30%. Learned counsel for the respondents further submitted that the earlier PPO contained an error, which was subsequently corrected by issuing a revised PPO. Due to the wrong calculation in the earlier PPO, the applicant received an excess amount of Rs.1,97,317/-. The respondents are entitled to recover the amount which was paid to the applicant in excess of his lawful entitlement. He further argued that the recovery is not by way of punishment, but is only for recovery of public money which was wrongly paid to the applicant. The respondents are under a duty to protect public money and to make payment only in accordance with the applicable rules. The applicant has no vested right to retain an amount which was not legally payable to him. Correction of the pension calculation does not amount to any penalty against the applicant. Learned counsel for the Central Administrative Tribunalrespondents further submitted that the judgment in Rafiq Masih (supra) is not an absolute bar against every recovery of excess payment and that the facts and circumstances of each case have to be considered. He further relied upon the judgment of the Hon’ble Supreme Court in High Court of Punjab and Haryana v. Jagdev Singh, (2016) 14 SCC 267 and submitted that where an employee has given an undertaking to refund any excess amount paid to him, recovery of such amount is legally permissible. He submitted that the principle laid down in Rafiq Masih (supra) cannot be applied where the employee has specifically undertaken to refund any excess payment. The respondents further submitted that the letter dated 03.04.2025 was issued to give the applicant an opportunity to deposit the excess amount voluntarily. The applicant was informed that, if the amount was not deposited, the same would be recovered from his pension. Learned counsel for the respondents lastly submitted that the respondents have acted in accordance with the applicable Railway Board instructions and have corrected the pensionary benefits according to the applicant’s actual entitlement. Therefore, there is no illegality in revising the pensionary benefits and seeking recovery of the excess amount of Rs.1,97,317/-. The present Original Application is, therefore, 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.
The short question which arises for consideration is whether the respondents can recover the alleged excess amount of Rs.1,97,317/-from the applicant paid to him in excess in lieu of pension, when the excess payment was admittedly made due to a clerical error in calculating his pensionary benefits and there is no allegation of fraud, misrepresentation or concealment of facts on the part of the applicant.
It is not in dispute that the applicant retired from service on 30.04.2024 and the impugned order for recovery was issued on 03.04.2025, i.e. after his retirement. It is also not in dispute that the applicant belongs to Group ‘C’ service. The respondents themselves Central Administrative Tribunalhave stated that the excess payment was made due to a clerical error in calculating his pensionary benefits. Thus, there is no allegation that the applicant had played any role in the alleged wrong calculation or had made any misrepresentation for obtaining the said benefit.
11 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 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”.
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 Central Administrative Tribunal 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.
(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.”
From the perusal of aforesaid judgments of Hon’ble Supreme Central Administrative TribunalCourt, it is clear that recovery of excess payment is not permissible when it appears that recovery if permitted it would be iniquitous or harsh or arbitrary. Applicant is retired Government servant and receiving pension. Excess payment said to have been made to the applicant would have been spent. If recovery is permitted then also applicant will get very less amount till recovery for his expenses which will be detrimental to the applicant. It is also clear that excess payment was made due to a mistake or wrong calculation by the employer and there was no fraud, misrepresentation or concealment on the part of the employee. In the present case, the alleged excess payment was made due to a clerical error of the respondents while calculating the applicant’s pensionary benefits and there is nothing on record to show that the applicant had played any role in the said error or had knowledge that the payment made to him was in excess. Therefore, the case of the applicant is squarely covered by the ratio laid down by the Hon’ble Supreme Court in Rafiq Masih (supra) and Thomas Daniel (supra) cases. The recovery of Rs.1,97,317/- from the applicant would cause undue hardship and would be inequitable. Accordingly, the respondents cannot recover the said amount from the applicant.
The respondents have relied upon the judgment of the Hon’ble Supreme Court in Jagdev Singh (supra) wherein it has been held as under:-
“The High Court of Punjab and Haryana allowed, by its judgment dated 1 August 2005, a petition filed by the Respondent under Article 226 of the Constitution to challenge a direction issued by the State to the Accountant General for the recovery of an excess payment towards salary.
2 The facts lie in a narrow compass. The Respondent was appointed as a Civil Judge (Junior Division) on 16 July 1987 and was promoted as Additional Civil Judge on 28 August 1997 in the judicial service of the State. By a notification dated 28 September 2001, a pay scale of Rs. 10000-325-15200 (senior scale) was allowed under the Haryana Civil Service (Judicial Branch) and Haryana Superior Judicial Service Revised Pay Rules 2001. Under the rules, each officer was required to submit an undertaking that any excess which may be found to have been paid will be refunded to the Government either by adjustment against future payments due or otherwise.
3 The Respondent furnished an undertaking and was granted the revised pay scale and selection grade of Rs. 14300-400-18000-300. While opting for the revised pay scale, the Respondent undertook to refund any excess payment if it was so detected and demanded subsequently. The revised pay scale in the selection grade was allowed to the Respondent on 7 January 2002.
4 The Respondent was placed under suspension on 19 August 2002 and eventually, was compulsorily retired from service on 12 February 2003. 5 In the meantime, this Court in Civil Writ (C) 1022 of 1989 accepted the recommendations of the First National Judicial Pay Commission (Shetty Commission). Thereupon, the Haryana Civil Services (Judicial Branch) and Haryana Superior Judicial Service Revised Pay Rules 2003 were notified on 7 May 2003. 6 In view thereof the pay scales of judicial officers in Haryana were once again revised with effect from 1 January 1996. An exercise was undertaken for adjustment of excess payments made to judicial officers, following the notification of the revised pay rules. On 18 February 2004, a letter for the recovery of an amount of Rs. 1,22,003/- was served upon the Respondent pursuant to the direction of the Registrar of the High Court. 7 The Respondent challenged the action for recovery in writ proceedings under Article 226. The petition was allowed by the impugned judgment of the High Court. The High Court found substance in the grievance of the Respondent that the excess payment made to him towards salary and allowance prior to his retirement could not be recovered at that stage, there being no fraud or misrepresentation on his part. 8 The order of the High Court has been challenged in these proceedings. From the record of the proceedings, it is evident that when the Respondent opted for the revised pay scale, he furnished an undertaking to the effect that he would be liable to refund any excess payment made to him. In the counter affidavit which has been filed by the Respondent in these proceedings, this position has been specifically [1]admitted. Subsequently, when the rules were revised and notified on 7 May 2003 it was found that a payment in excess had been made to the Respondent. On 18 February 2004, the excess payment was sought to be recovered in terms of the undertaking.
9 The submission of the Respondent, which found favour with the High Court, was that a payment which has been made in excess cannot be recovered from an employee who has retired from the service of the state. This, in our view, will have no application to a situation such as the present where an undertaking was specifically furnished by the officer at the time when his pay was initially revised accepting that any payment found to have been made in excess would be liable to be adjusted. While opting for the benefit of the revised pay scale, the Respondent was clearly on notice of the fact that a future re-fixation or revision may warrant an adjustment of the excess payment, if any, made.
10 In State of Punjab & Ors etc. vs. Rafiq Masih (White Washer) etc1. this Court held that while it is not possible to postulate all situations of hardship where payments have mistakenly been made by an employer, in the following situations, a recovery by the employer 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 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.” (emphasis supplied).
11 The principle enunciated in proposition (ii) above cannot apply to a situation such as in the present case. In the present case, the officer to whom the payment was made in the first instance was clearly placed on notice that any payment Central Administrative Tribunalfound to have been made in excess would be required to be refunded. The officer furnished an undertaking while opting for the revised pay scale. He is bound by the undertaking.
12 For these reasons, the judgment of the High Court which set aside the action for recovery is unsustainable. However, we are of the view that the recovery should be made in reasonable instalments. We direct that the recovery be made in equated monthly instalments spread over a period of two years. 13 The judgment of the High Court is accordingly set aside. The Civil Appeal shall stand allowed in the above terms. There shall be no order as to costs”.
In the case of Jagdev Singh (supra), the employee had given a specific undertaking, at the time of opting for the revised pay scale, that any excess payment made to him would be refunded to the Government. He was also a Group ‘A’/’B’ officer. Thus, no benefit could be extended to the respondents on the basis of Jagdev Singh (supra) case.
The submission of the respondents that public money cannot be allowed to remain with a person who was not legally entitled to receive it cannot be accepted in isolation. No doubt, the Government has a right and duty to protect public money. However, such right is subject to the law laid down by the Hon’ble Supreme Court regarding recovery of excess payment. The right of recovery has to be balanced with the principles of equity, fairness and undue hardship.
In view of the aforesaid discussion, this Tribunal is of the considered view that recovery of Rs.1,97,317/- from the applicant cannot be sustained. The impugned letter/order dated 03.04.2025 is, therefore, liable to be quashed to the extent it directs recovery of the said amount from the applicant.
Accordingly, the Original Application is allowed and the impugned letter/order dated 03.04.2025 is hereby quashed. The respondents are restrained from recovering the said amount from the pension or pensionary benefits of the applicant. If any amount has already been recovered from the applicant pursuant to the impugned order, the respondents shall refund the same within a period of three months. In case the amount is not refunded within the aforesaid period, the applicant shall be entitled to interest at the rate of 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. However, the respondents shall be at liberty to examine the circumstances in which the excess payment was made. If the records show that the excess payment was made due to any clerical or administrative error on the part of any dealing official/officer, the respondents may fix responsibility and take appropriate action against the person(s) responsible, strictly in accordance with law and after following the prescribed procedure. There shall be no order as to costs. All pending Misc. Applications, if any, stand disposed of.