Recovery Of Excess Payments Made To Employee Due To Wrong Interpretation Of Rules Not Permissible Post Retirement: Jammu & Kashmir High Court

A single judge bench of the High Court of Jammu & Kashmir and Ladakh comprising of Justice Wasim Sadiq Nargal, while deciding Writ Petition in the case of Mst. Raja & Ors vs. State of Jammu & Kashmir & Ors, held that after an employee retires, it is not permissible to recover excess payments made to them due to a mistaken interpretation of rules. Background Facts Mohammad Ramzan Tantray and others (Employees) were initially appointed as a daily wager to work as an orderly in 1976. In 1981, they were temporarily appointed as a Chowkidar by the Srinagar Development Authority (SDA) due to an available vacancy. In 1993, Employees' designation were changed from Chowkidar-cum-Orderly to Pump Operator, considering their technical skills. In 1994, their post were upgraded from the pay scale of Rs. 750-940 to Rs. 940-1400, effective from May 1, 1995. Employees continued to serve as a pump operator until their retirement on March 31, 2014. As their retirement approached, employees obtained No Objection Certificates (NOCs), indicating no outstanding issues against them. In October 2014, the Examine/CAO, Local Fund Audit and Pensions (Employer) issued a letter stating that employees' pay scale upgrade from 1994 was against the rules and recommended recovery of the excess payments made from May 1, 1994, to the date of their retirement. This recommendation led to the withholding of employees' pensionary benefits. Aggrieved by the same, the employees filed the writ petition. The employees contended that the impugned letter dated October 14, 2014, was issued without affording them any opportunity to present their case or respond to the allegations. They asserted that the upgradation was based on their qualifications, technical skills, and the nature of the duties performed by them as a Pump Operator. The employees argued that if there were any irregularities in the pay scale upgradation, the respondents should have addressed them during their service period, rather than issuing the recovery order after their retirement. On the other hand, it was contended by the employer that the upgradation was not in accordance with the rules and regulations governing pay scale revisions. The employer emphasized that theSrinagar Development Authority(SDA) did not have the authority to unilaterally re-designate positions and revise pay scales. The employer acknowledged that there was no allegation of misrepresentation or fraud on employees' part regarding the receipt of excess payments. However, they argued that the recovery of excess payments was necessary to rectify the financial error, regardless of employees' intent. Findings of the Court The court observed that while the employer claimed this upgradation was illegal, there was no evidence presented to support this assertion. The court noted that there was no allegation of misrepresentation or fraud on employees' part regarding the receipt of excess payments. It emphasized that employees had not acted unlawfully in receiving the payments, and therefore, recovery of excess payments solely on the basis of a financial error was unjustified. The court relied on the case of Thomas Daniel v. State of Kerala & ors. wherein the Supreme Court held that if the excess amount was not paid due to misrepresentation or fraud of the employee, then recovery may not be allowed to prevent hardship to employees. The court emphasized the principles of equity and fairness in cases involving recovery of excess payments made to employees due to administrative errors. The court relied on the case of Syed Abdul Qadir v. State of Bihar wherein the Supreme Court held that the recovery of the excess amount made to the employee due to mistake or wrong interpretation of rules cannot be made. The court emphasized that recovery can be prevented if it would result in inequity or hardship to the employee, particularly in cases involving retired employees. The court relied on the case of O.P. Abrol v. State & Ors wherein the Supreme Court held that correctness of an order of pay fixation can be looked into for a maximum period of 24 months preceding the date of retirement and cannot be looked into when the employee retired on superannuation. The court ruled in favor of the employees, quashing the impugned order recommending recovery and directing the employer to release all pensionary benefits to the employees. With the aforesaid observations, the Writ Petition was allowed. Case No. : SWP No. 2237/2014Citation: 2024 LiveLaw (JKL) 153 Case Name : Mst. Raja & Ors vs. State of Jammu & Kashmir & Ors Counsel for the Petitioners : Mohammad Ashraf Bhat, Advocate Counsel for the Respondents : Rais-u-din Ganai and Mr. Syed Musaib, Deputy AGsClick Here To Read/Download Judgment/Order

Recovery Of Excess Payments Made To Employee Due To Wrong Interpretation Of Rules Not Permissible Post Retirement: Jammu & Kashmir High Court

Namdev Singh

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