Employer Can Re-Fix Pay & Pension To Correct Erroneous Dual Benefits But Recovery From Group C & D Employees Impermissible: J&K&L High Court

The Court was hearing writ petitions filed by the UT of Jammu & Kashmir challenging orders passed by the Central Administrative Tribunal whereby recoveries were set aside and directions were issued restraining the authorities from altering pay and pension of the employees in matters relating to grant of benefits under SRO-59 and SRO-14.

A Bench of Chief Justice Arun Palli and Justice Rajnesh Oswal observed,

“the respondents were erroneously extended dual benefits under both SRO-59 and SRO-14… there is no legal justification to divest the employer of its right to rectify pay scales… however, excess payments made to Group-C and Group-D employees over long periods cannot be recovered as such recovery would be iniquitous and impermissible in law.”

Background:

The writ petitions arose out of several original applications filed before the Central Administrative Tribunal by employees of different departments who challenged orders directing recovery of excess amounts and re-fixation of their pay and pension. The Tribunal had set aside the recovery orders and directed the authorities not to deduct any amount from pay or pension and to restore earlier benefits.

The authorities contended that the employees had been granted benefits under SRO-59 of 1990 and later also availed in-situ promotions under SRO-14 of 1996, resulting in simultaneous grant of overlapping benefits which caused recurring loss to the State exchequer. According to the petitioners, such dual benefit was impermissible and required correction through re-fixation of pay and pension.

The employees argued before the Tribunal that Government Instruction No.1 to Article 242 of the Civil Service Regulations barred the authorities from examining correctness of emoluments beyond 24 months preceding retirement and therefore the pay and pension already fixed could not be reopened. The Tribunal accepted the contention and restrained the authorities from effecting recovery. Aggrieved by the orders of the Tribunal, the Union Territory filed the present writ petitions before the High Court.

Court's Observations:

The Court first examined the scope of Government Instruction No.1 to Article 242 of the Civil Service Regulations, which restricts verification of past emoluments to a period of 24 months preceding retirement while determining pension. The Court observed that the restriction applies to cases of incorrect pay fixation or clerical error but does not cover situations where employees were granted benefits to which they were never legally entitled.

It was observed that the expression “correctness of emoluments” refers to individual errors in fixation of pay scale or arithmetical mistakes, and not to cases where a class of employees received unauthorized dual benefits under different schemes. Therefore, the employer is not barred from examining such irregularities even beyond the 24-month period, the Court explained.

The Court noted that SRO-59 provided for revised pay scales, while SRO-14 introduced a scheme of time-bound in-situ promotions and both schemes had the same object of granting higher pay scales, and employees could not legally receive benefits under both simultaneously. The court also noted that the respondents had been granted higher pay scale under circulars issued in 1993 which were traceable to SRO-59, and thereafter also received promotions under SRO-14, resulting in unintended dual benefit.

Rejecting the contention that the benefit flowed independently from departmental circulars, the Court held that the source of the higher pay scale could be traced to SRO-59 and that grant of benefits under both SRO-59 and SRO-14 was erroneous. The Court held that such mistake could be corrected by the employer and there is no statutory provision preventing re-fixation of pay or pension to remove an illegality.

On the question of recovery, the Court relied on the decision of the Supreme Court in State of Punjab v. Rafiq Masih, where it was held that recovery of excess payment from Group-C and Group-D employees, from retired employees, or after long periods would be impermissible as it would cause undue hardship. The Court also referred to Syed Abdul Qadir v. State of Bihar to observe that relief against recovery is granted on equitable considerations to prevent hardship to employees who received payment without fault.

Applying these principles, the Court held that although the respondents had received benefits wrongly, they belonged to Group-C and Group-D services and the excess payments had continued for several years. Opining against recovery the court remarked,

“… Such recovery would be iniquitous, particularly for Group-C and Group-D employees who typically utilize their entire earnings for essential needs such as food, clothing, shelter, and education. Since the petitioners admit the respondents belong to these groups, attempting to recover funds paid out over several decades would impose an undue and inequitable hardship”

Holding that the Tribunal erred in restraining the authorities from correcting pay and pension, the court clarified that the employer is entitled to re-fix pay and pension by excluding the benefit wrongly granted under overlapping schemes.

However, the Court directed that no recovery shall be effected from the respondents, and if any amount had already been recovered, the same shall be refunded.

Accordingly, all the writ petitions were disposed of by modifying the orders of the Tribunal to the extent that re-fixation of pay/pension was permitted but recovery of excess payment was prohibited.

Case Title: UT of J&K Vs Maqbool Sheikh & connected matters

Citation: 2026 LiveLaw (JKL)

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