Central Administrative Tribunal - Delhi
Ram Narain vs Revenue on 4 September, 2025
(OA No.1135/2022)
(1)
Central Administrative Tribunal
Principal Bench, New Delhi
O.A. No.1135/2022
Reserved on: 18.08.2025
Pronounced on:04.09.2025
Hon'ble Mr. Sanjeeva Kumar, Member (A)
Ram Narain, Aged 63 years
S/o Late Shri Badlu Ram
Retired as Joint Commissioner
From Central Board of Indirect Taxes and Customs
Department of Revenue, Ministry of Finance
R/o House No. 940, Sector 15, Part II
Gurugram (Haryana) ...Applicant
(By Advocate:Shri Padma Kr. S. with Mr. Gurpreet Singh)
Vs.
1. Union of India, through
The Revenue Secretary,
Department of Revenue
Ministry of Finance
North Block, New Delhi-110001.
2. The Chairman,
Central Board of Indirect Taxes & Customs,
Ministry of Finance, North Block,
New Delhi-01.
3. The Chief Commissioner of CGST & Central Excise,
Delhi Zone (Cadre Controlling Authority),
C.R. Building, l.P. Estate,
New Delhi-110002.
4. The Principal Commissioner,
Indirect Taxes (Central GST), Plot No.36-37.
Sect 32, Gurugram, Haryana 122001
5. The Pay and Accounts Officer (PAO)
Central Excise Delhi,
Central Revenue Building, IP Estate
New Delhi-110002. ...Respondents
(By Advocate:Dr.L.C.Singhi)
ORDER
By way of this OA filed under Section 19 of the Administrative Tribunals Act, 1985, the applicant has sought the following relief(s):-
"(a) Quash and set aside the impugned Order dated 14.03.2019 to the extent it recovered of Rs.2,28109/- from the Gratuity of the Applicant.
(OA No.1135/2022) (2)
(b) Direct the respondents to release the recovered amount of Rs.2,28,109/- with interest thereon.
(c) Award the cost of litigation to the applicant.
(d) pass any further orders as this Hon'ble Tribunal may deemed fit and proper in the facts and circumstances of the case."
2. The facts of the case, in brief, as indicated in the OA are that the applicant, who retired from service under Department of Revenue, Ministry of Finance, Government of India on 31.01.2019, had been promoted to the post of Joint Commissioner of Indirect Taxes and Customs on 01.01.2019 in Pay Level-12, from the post of Deputy Commissioner of Indirect Taxes and Customs (Pay Level 11).
Consequent to the promotion of the applicant to the level of Joint Commissioner of Indirect Taxes and Customs, his pay was fixed at Rs.1,09,100/- w.e.f. 01.01.2019. As mentioned, the applicant retired on superannuation on 31.01.2019, his retirement benefits should have been paid as per the last pay drawn on the next day of his superannuation, as per rule. However, the retirement benefits were not released to the applicant in accordance with the rules.
3. It is submitted that vide letter dated 13.03.2019, a revised Pay Fixation Order was conveyed to the applicant whereunder his basic pay was illegally and arbitrarily re-fixed from the year 2007 onwards and resultantly the last pay drawn by the applicant was also reduced from the earlier amount of Rs. 1,09,100/- to Rs.1,05,900/-. The above action of the respondents was without following the principles of natural justice. Notwithstanding the fact that the respondents inflicted serious civil consequence to the applicant without following the principles of natural justice, the applicant made a representation on 19.02.2019. The respondents thereafter issued an order dated 14.03.2019 authorizing gratuity to the applicant whereby a recovery of Rs.2,28,109/- was (OA No.1135/2022) (3) effected from the gratuity. The applicant thereafter submitted another representation dated 10.10.2021 which was followed by reminder dated 29.11.2021.
4. It is further submitted that the entire action of the respondents is fraught with illegality as the respondents have inflicted the civil consequence not only without following principles of natural justice but also against the law laid down by the Hon'ble Supreme Court in State of Punjab and Others etc. vs. Rafiq Masih (White Washer) etc. AIR 2015 SC 696.
5. The respondents in their counter reply have submitted that the applicant retired on superannuation on 31.01.2019 and prior to his retirement, pension papers were sent vide letter dated 08.01.2019 to Pay & Accounts Officer, GST, New Delhi for processing. On scrutiny of the documents, the Pay and Accounts Officer vide letter dated 23.01.2019 informed that NFG and 2nd ACP have been granted with effect from 01.10.2007 and further 3rd 'MACP granted in the Grade Pay of Rs.6600/- on completion of 30 years of regular service, which is not in order as per the rules/instructions on the matter. In this connection, CBEC letter dated 20.06.2016 may please be referred to. Since the NFSG has been treated as a financial upgradation in GP Rs.5400 (PB-I) under the MACP Scheme, the 3rd MACP is entitled in the Grade Pay of Rs.
5400/-(PB-3). In this connection, it is mentioned that a copy of the above letter was also received by the applicant on 25.01.2019 and in response to the above letter, the applicant submitted a representation dated 29.01.2019 to the Commissioner, CGST, Gurugram alleging that the letter of Pay and Accounts Officer referred to above is illegal and ultra-vires and requested to expedite his pension case. The said (OA No.1135/2022) (4) representation was also forwarded to the Pay & Accounts Office for consideration vide letter dated 06.02.2019.
6. It is submitted that the Pay and Accounts Office vide letter dated 05.03.2019 returned the pension case of the applicant again with the remark that the observations raised earlier with regard to the grant of NFG/2nd ACP/3rd MACP have not been rectified with due consideration.
However, the Pay and Accounts Office suggested that the pay fixation of the applicant on grant of NFG/2nd ACP/3rd MACP should be audited from the audit authority and re-submitted the case accordingly. It was also suggested that the clarification issued vide CBEC letter dated 20.06.2016 may be kept in view. In pursuance of the above-mentioned communications and taking into consideration the CBEC circular dated 20.06.2016, the pay fixation made earlier in case of the applicant was revised vide orders dated 12.02.2019 and accordingly re-fixing of the pay of the applicant was effected by reducing the NFG increment.
Consequent thereupon, the excess amount paid to the applicant was recovered vide the impugned order from his gratuity amount.
7. It is further submitted that the fact concerning over-payment of the salary due to grant of both NFSG and 2nd ACP with effect from 01.10.2007 was noticed only after submission of the pension papers by the applicant before retirement. There can be no dispute that the pay fixation done in case of the applicant was in contravention of the provisions of the MACP Scheme and the Government guidelines. It is also not in dispute that the grant of NFSG and 2nd ACP both was contrary to the CBEC Circular dated 20.06.2016. The fact that NFSG has to be treated as financial upgradation in Grade Pay of Rs.5400 (PB-2) under the MACP scheme was completely ignored in case of pay fixation of the (OA No.1135/2022) (5) applicant. The error in the matter of fixation of pay in case of the applicant was rightly noticed by the Pay and Accounts Office and was subsequently reiterated by the audit. That re-fixation of the pay of the applicant and consequent recovery of the excess amount paid by the impugned order is therefore, just and proper and in no way it can be treated either illegal or arbitrary. The contention of the applicant that there was violation of the principles of natural justice is also incorrect.
Hence the respondents submitted that the applicant is not entitled to any relief as claimed in the present OA which is liable to be dismissed.
8. I have heard both the counsels and perused the pleadings on record.
9. Learned counsel for the applicant draws attention to the judgment of the Hon'ble High Court of Delhi in the matter of MTNL versus Shri Ramdhan Gupta & Anr. in WP(C) No.1558/2019 dated 15.02.2019, specifically to paragraph 11. The same is reproduced herein below:
"11. From the above, it would be seen that so far as employee belonging to Class III and Class IV services (or Group C and D services), are concerned, recovery was declared to be impermissible in all situations, where excess payment had been made to them mistakenly by the employer, for which they were not responsible in any way. The categories (ii) to (v), above, however, are not restricted to employees belonging to Class III and Class IV, or Group C and Group D services."
10. Further, learned counsel for the applicant also draws my attention to the judgment of the High Court of Delhi in the matter of S.K. Singh and Ors. Vs. Union of India & Ors. in WP(C) No. 2026/2019 dated 27.02.2019 and argues that though the applicant was a Group-A employee, the ratio of the said judgment applies to the category to which the applicant belongs. He further relies upon the judgment of this Tribunal in OA No. 2389/2022 pronounced on 03.10.2024 in the matter of Abdul Shakoor Azad Vs. GNCTD and judgment of the Hon'ble Apex Court in Civil Appeal No. 1635 of 2013 in the matter of Jagdish Prasad Singh Vs. State of Bihar & Ors. He also submits that the law laid down by the Hon'ble Supreme Court in the matter of Rafiq Masih, that no recovery of overpayment is to be effected either after retirement or during the last year of service of a public servant.
(OA No.1135/2022) (6)
11. At the outset, learned counsel for the respondents, Dr. L. C. Singhi submits that it is an admitted fact that the pay fixation of the applicant itself was erroneous and when it subsequently came to the notice, the said recovery was made. Learned counsel would also argue that pay fixation has not been challenged by the applicant. He contended that:
i) The judgment relied upon by the applicant in the matter of Rafiq Masih is not applicable in this case because he is a Group A employee.
ii) On the issue that a show cause notice was not served on the applicant before recovery, learned counsel contends that the same was not required because it is an administrative matter where fixation of pay was in question.
iii) Moreover, the applicant being a Drawing and Disbursing Officer, was aware of the excess pay being drawn by him throughout and he never brought it to the notice of the respondents.
iv) On the point of principles of nature justice, it is argued that the same has not been violated in the case of applicant because the applicant made a representation which has duly been considered and accordingly, opportunity of post-decisional hearing was granted to him.
v) He also rebuts the contention of the learned counsel for the applicant that the judgment cited by the applicant's counsel, wherein it has been mentioned that the ratio of the judgment in the case of Rafiq Masih (supra) is applicable in the case of Group A employees also.
12. Per contra, learned counsel for the applicant contends that the ground of the applicant being granted the opportunity to post-decisional hearing is not tenable as before civil consequences were inflicted, the hearing should have taken place and thus a show notice was mandatory but in this case, recovery was done without taking recourse to the same. He further submits that nowhere in the counter reply, it is stated that the applicant was DDO himself and as such, aware of the veracity of the amount drawn. Learned counsel for the respondents does not contest this.
(OA No.1135/2022) (7)
13. The matter regarding recovery for wrongful payments to an employee during service period and after superannuation has been succinctly discussed Ors by the Apex Court in its judgment in State of Punjab and Ors vs Rafiq Masish (White Washer), (2015) 4 SCC Decided on 18.12.2014. This judgment derived its basis from the Directive Principles of the Constitution of India enshrined in Articles 38, 39, 39-A, 43, 46. A holistic essence of these Articles mandates the state to ensure adequate means of livelihood, and by providing for adequate wages so as to ensure appropriate standards of living to the citizens of this country. This extends to the employees, serving or retired, of the state. Hence, any action by the state, as an employer, ordering recovery from an employee would be sustainable as long as it is not rendered iniquitous to extent that action of recovery would be more unfair wrongful, improper, unwarranted than corresponding right of employer to recover.
14. The Apex court has in the Rafiq Masih (supra) case, has not prohibited recovery of such undue benefits from an employee who was accessory to mistake committed by employer, or was guilty of furnishing any factually incorrect information, or fraud or misinterpretation.
15. With the above contextual background, the Apex court has laid down specific instances/circumstances when recovery from the employee would be impermissible. Paragraph 18 of the Rafiq Masih judgment states:
"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 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."
(OA No.1135/2022) (8)
16. The Union of India through DOPT has in line with the above mentioned judgment of the Apex Court, directed various departments and Ministries to deal with the issue of wrongful/excess payments made to government servants in accordance with the said judgment. Particularly, the DOPT OM No. F.No.18/03/2015 - Estt. (Pay-I) dated 2.3.2016 states:
"5. The matter has, consequently, been examined in consultation with the Department of Expenditure and the Department of Legal Affairs. The Ministries / Departments are advised to deal with the issue of wrongful / excess payments made to Government servants in accordance with above decision of the Hon'ble Supreme Court in CA NoJ1527 of 2014 (arising out of SLP (C) No.11684 of 2012) in State of Punjab and others etc vs Rafiq Masih (White Washer) etc. However, wherever the waiver of recovery in the above-mentioned situations is considered, the same may be allowed with the express approval of Department of Expenditure in terms of this Department's OM No.18/26/201 1-Estt (Pay-I) dated 6th February, 2014."
17. In most of the cases, the government departments/ministries revise the pay scales granted earlier to the government servant at the fag end of the career and after re-fixation of the pay scales with effect from certain back date, order recovery of such irregular payment. The DOPT has again reiterated this decision of the Government vide OM No. 18/03/2015-Estt (Pay-i) dated October, 2022. This OM states:
"4. In this context, it is observed that the time taken by the Ministries/Departments/Offices to discover mistakes/clerical faults in pay fixation of their employees is highly avoidable. The situation of overpayments occurs on account of erroneous calculation of payments due to an employee. If not detected in time, amount becoming due for recovery due to these excess payments keep accruing. In many cases, these overpayments come to notice of the administrative authority at a very late stage resulting in substantial amounts becoming due for recovery. However, in the wake of the Order dated
18.12.2014 of the Hon'ble Supreme Court referred above, these recoveries are to be considered for waiver in the types of cases identified therein. As a result, the administrative authorities concerned are compelled to explore other alternatives available to recover the amount involved or seek approval of the D/o Expenditure to waive off the same in accordance with the procedure prescribed in this Department's OM dated 02.03.2016 read with the instructions contained in DoPT's OM No 18/26/2011-Estt (Pay-I) dated 06.02.2014. 5. The matter has been examined in consultation with the D/o Expenditure. It is advised that --
i. Ministries / Departments / Offices may exercise extreme caution and take suitable measures while handling pay fixation of their employees as also in other cases involving payments so as to ensure that such lapses/mistakes do not occur;
ii. Pay fixation orders issued due to grant of MACP/ACP/financial upgradation/ increment! promotion etc. may necessarily be audited by the internal audit and/or the Pay & Accounts Office concerned within 3 months of issuing such orders; and iii. In cases where the employee is due to retire within next 4 years, audit of previous pay fixation orders shall be done on priority."
18. It has been argued by the learned counsel for the respondents that the ratio of the judgment in Rafiq Masih (supra) is not applicable in this (OA No.1135/2022) (9) case as the applicant belongs to Group 'A'. He has neither retired nor he is due to retire within one year. Moreover, the order for recovery from applicant was issued on 12.08.2022. Also, recovery in his case is nothing to do with discharge of duties of higher post and the recovery is not iniquitous, harsh and arbitrary against the principle of equity. Given the gross emolument of Rs.117524/- per month and the fact that the applicant's wife is also working as Education Officer, I have considered these submissions.
19. However, we find that the applicant is not held guilty of furnishing any factually incorrect information, or fraud or misinterpretation which had led the competent authority to recover the alleged higher payment to him. It is also seen that the impugned order for recovery was issued on 12.08.2022. It is also evident that the recovery is for the excess payment made to him from 01.01.2006 to 31.03.2021 which is more than 15 years. Thus, the excess payment made to the applicant for the period far exceeds 5 years and therefore the same is impermissible as per law laid down by the Hon'ble Supreme Court in Rafiq Masih (supra), more specifically the situation indicated at Para (iii) which reads as follows:
"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."
20. It is also not in dispute that the impugned order has been passed without issuing any show cause or without giving any opportunity to the applicant to explain his case, even if it was a matter of wrongful fixation of pay. I see no reason as to why the applicant was not notified before passing the impugned order. Thus, the principle of natural justice has not been followed in the instant case.
21. Learned counsel for the respondents states that the applicant was not a Class III or Class IV employee. He received retiral dues to the tune of Rs.16,76,503/- (Sixteen Lakhs, Seventy Six Thousand, Five Hundred & Three Only) and therefore, the deduction of Rs.2,28,109/- from the gratuity of the applicant was not so grave as to cause undue hardship to him.
22. I have considered the above submission. In Civil Appal No.1635/2013 decided on 08.08.2024 in the matter of Jagdish Prasad (OA No.1135/2022) (10) Singh vs. State of Bihar and Others, the Hon'ble Supreme Court held as follows:
"21. We firmly believe that any decision taken by the State Government to reduce an employee's pay scale and recover the excess amount cannot be applied retrospectively and that too after a long time gap. In the case of Syed Abdul Qadir and Others v.State of Bihar and Others, (2009) 3 SCC 475, this Court held that when the excess unauthorised payment is detected within a short period of time, it would be open for the employer to recover the same. Conversely, if the payment had been made for a long duration of time, it would be iniquitous to make any recovery. The relevant paras of the Syed Abdul Qadir (supra) are extracted hereinbelow:-
"57. This Court, in a catena of decisions, has granted relief against recovery of excess payment of emoluments/allowances if (a) the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee, and (b) 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.
58. The relief against recovery is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to relieve the employees from the hardship that will be caused if recovery is ordered. But, if in a given case, it is proved that the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where the error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, courts may, on the facts and circumstances of any particular case, order for recovery of the amount paid in excess.
59. Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counter-affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of r the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made."
(emphasis supplied)
22. Similarly, this Court in ITC Limited v. State of Uttar Pradesh and Others, held as under:-
"108. We may give an example from service jurisprudence, where a principle of equity is frequently invoked to give relief to an employee in somewhat similar circumstances. Where the pay or other emoluments due to an employee is determined and paid by the employer, and subsequently the (OA No.1135/2022) (11) employer finds, (usually on audit verification) that on account of wrong understanding of the applicable rules by the officers implementing the rules, excess payment is made, courts have recognised the need to give limited relief in regard to recovery of past excess payments, to reduce hardship to the innocent employees, who benefited from such wrong interpretation."
23. In the case of State of Punjab and Others v. Rafiq Masih (White Washer) and Others, this Court held 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, summarise 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 employer. 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)
24. Recently, this Court in Thomas Daniel v. State of Kerala and Others, 2022 SCC OnLine SC 536, held that the State cannot recover excess amount paid to the ex-employee after the delay of 10 years.
25. The Government Resolution dated 8th February, 1999 to be specific, the highlighted portion supra is amenable to the interpretation that it protects the status and pay of those employees who had received their time bound promotions prior to 31 December, 1995. As a consequence, the Secretary concerned, while rejecting the representation clearly misinterpreted and misapplied the said Resolution to the detriment of the appellant."
23. From the foregoing, it would be seen that so far as employee belonging to Class III and Class IV services (or Group C and D services), are concerned, recovery was declared to be impermissible in situations, where excess payment had been made to them mistakenly by the employer, for which they were not responsible in any way.
(OA No.1135/2022) (12)
24. In view of above, the OA is allowed and the impugned order dated 14.03.2019 to the extent of recovery of Rs.2,28,109/- from the Gratuity of the applicant is set aside. The respondents are directed to release the amount of Rs.2,28,109/- of Gratuity. The respondents are further directed to do the needful in this regard as expeditiously as possible and preferably within eight weeks from the date of receipt of a certified copy of this order, failing which the applicant will be entitled to payment of interest as per prevailing GPF rate till the gratuity is released. No order as to costs.
(Sanjeeva Kumar) Member (A) /kdr/