PREMA DEVI vs EAST CENTRAL RAILWAY on 8 October 2026

O R D E R

[ Per: Kumar Rajesh Chandra, Member(A)]

This OA has been filed under Section 19 of the Administrative Tribunals Act, 1985 seeking the following relief:-

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“(i) Your Lordships may graciously be pleased to pass necessary order/orders, direction/directions to set aside the recovery order dated 30.09.2013 by which Divisional Railway Manager (Personnel), East Central Railway, Samastipur has deducted Rs. 176274/- from the payable amount of retirement benefits of the applicant.

(ii) Your Lordships may graciously be pleased to pass necessary order/orders, direction/directions commanding the concerned respondents to pay the balance of retirement benefits, i.e. Rs. 176274/- with up to date interest @ 10% per annum which has been illegally deducted by the respondents.

(iii) Your Lordships may graciously be pleased to pass necessary order/orders, direction/directions commanding the concern respondents to re-fix his pension by taking Grade Pay of Rs. 4600/- which was his last Grade pay, instead of Rs. 4200/- and thereafter pay the arrears of revised pension to the applicant.”

2. The applicant has filed the present Original Application under Section 19 of the Administrative Tribunals Act, 1985, principally seeking quashing of the recovery order dated 30.09.2013 whereby a sum of ₹1,76,274/- was deducted from the retiral dues of the applicant’s husband, together with consequential refund and interest. The applicant has also challenged the reduction of the Grade Pay from ₹4,600/- to ₹4,200/- and consequential refixation of pension. The reliefs claimed in the OA have been noticed in the original record.

3. The matter has an earlier litigation history which is material for the present adjudication. The OA was earlier dismissed by this Tribunal vide order dated 09.08.2017. The said order was challenged before the Hon’ble High Court of Jharkhand in W.P.(S) No. 5960 of 2017. The Hon’ble High Court, vide order dated 10.10.2018, quashed and set aside the order of this Tribunal.

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4. Thereafter, the Union of India preferred Civil Review No. 53 of 2019, while the applicant had instituted Contempt Case (Civil) No. 187 of 2019. Both matters were considered by the Hon’ble High Court of Jharkhand and, vide order dated 01.09.2022, the review was allowed and the matter was remanded to this Tribunal for fresh adjudication of the OA on merits. The contempt case was dismissed. The OA was thereafter restored to its original number vide order dated 20.05.2026 passed in M.A. No. 234/2025.

5. It is important to record at the outset that the Hon’ble High Court, while exercising review jurisdiction, specifically observed that, consequent upon quashing of the earlier order of this Tribunal, the matter ought to have been remanded for fresh determination on merits. The Hon’ble High Court expressly refrained from commenting upon the merits of the recovery and directed that the Tribunal should decide the OA afresh without being prejudiced by observations made in the earlier writ/review proceedings.

6. We have, therefore, considered the matter independently on the basis of the pleadings and material available on record.

7. The case of the applicant is that her husband had been granted the benefit of Grade Pay of ₹4,600/- under the third financial upgradation/MACP vide order dated 26.05.2010 and had continued to draw salary with the said Grade Pay till his retirement on 30.06.2013. The applicant has relied upon the relevant pay

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documents, including the pay slip for March 2013. It is further her case that, after retirement, the respondents reduced the Grade Pay to ₹4,200/- and made a recovery of ₹1,76,274/- from the retiral dues without issuing any prior notice or affording an opportunity to contest the alleged liability.

8. The respondents, on the other hand, have contended that the deceased employee had already received three promotions during his service career and was, therefore, not entitled to the third financial upgradation under MACP. According to them, the earlier fixation at Grade Pay ₹4,600/- was erroneous and the correct Grade Pay was ₹4,200/-. They have also justified the recovery on the ground that the employee had retained a railway quarter and was liable to pay damage rent.

9. The recovery of ₹1,76,274/- comprises two distinct components, namely, ₹21,380/- towards alleged excess payment and ₹1,54,894/- towards alleged damage rent. The two liabilities have different factual and legal foundations and, therefore, cannot be treated as one composite issue.

10. As regards the alleged damage rent of ₹1,54,894/-, the respondents have relied upon the audit report dated 04.02.2013 and the subsequent communication/order dated 18.06.2013. Their case is that the applicant’s husband had retained a railway quarter and that the allotment/retention relied upon by him was not valid

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because the Assistant Divisional Engineer was not competent to make such allotment or pass an order of temporary transfer. It has also been contended that the competent authority for allotment of railway accommodation was the Divisional Railway Manager.

11. We find, however, that the respondents have not placed sufficient material on record to establish the precise legal and factual basis for quantification of ₹1,54,894/- as damage rent. In particular, the record does not satisfactorily disclose the date from which the occupation allegedly became unauthorised, and the period for which damage rent was calculated. The applicant has placed Annexure A-3 with his O.A. that allowed allotment to the applicant on his own request the same government accommodation that was already in his possession. In the written statement of the Respondents this Annexure A-3 has been acknowledged to be existing but issued by an incompetent authority. But they have not placed any document that they have cancelled this allotment letter or initiated any action against the said incompetent authority.

12. The mere assertion that the employee was aware of the Railway rules cannot, by itself, establish the monetary liability. The respondents were required to demonstrate, by reference to the applicable rules and the relevant factual record, the basis upon which the amount was recoverable from the employee after declaring the

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allotment letter of the said accommodation as cancelled and thereafter continued occupation as unauthorised.

13. The respondents have also relied upon the proposition that the Assistant Divisional Engineer was not competent to allot or re- allot the railway quarter. Even assuming that there was an issue regarding the competence of the authority which issued the allotment order dated 24.02.2010, the respondents were nevertheless required to establish, through a proper determination, the legal consequence of that alleged lack of competence and the precise liability of the employee for damage rent. No such determination has been satisfactorily demonstrated before us. The record also does not disclose any allegation that the deceased employee obtained the allotment by fraud, misrepresentation or suppression of material facts.

14. Significantly, the applicant was not afforded an opportunity, before the recovery was effected from his retiral dues, to dispute the alleged liability, the period of alleged unauthorised occupation, the applicable rate or the computation of damage rent. The impugned recovery, insofar as it relates to the damage rent, therefore suffers from violation of the principles of natural justice.

15. Where a monetary liability is sought to be recovered from retiral dues and the employee disputes the underlying factual and legal basis of such liability, the authority must act upon a legally

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sustainable determination and cannot merely rely upon an audit objection or an unexplained calculation.

16. We accordingly hold that the respondents have failed to establish, on the material placed before us, the legality and correctness of the recovery of ₹ 1,54,894/- towards damage rent from the retiral dues of the deceased employee.

17. We next consider the recovery of ₹ 21,380/- stated to be on account of excess payment. The respondents contend that the Grade Pay of ₹4,600/- was wrongly allowed and that, upon scrutiny of the service records, the pay was subsequently corrected. The applicant disputes the alleged wrong fixation and relies upon the fact that the higher Grade Pay had been sanctioned and paid during service.

18. The record indicates that the benefit of Grade Pay of ₹4,600/- had been extended during the employee’s service and that he continued to draw the said pay till retirement. The respondents have not demonstrated any misrepresentation or fraud attributable to the employee in obtaining the benefit. The alleged error was, according to the respondents themselves, an error committed in the course of official pay fixation.

19. In the circumstances, recovery from retiral dues of an amount representing alleged excess payment, particularly after the employee had retired and without establishing fraud, misrepresentation or

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deliberate suppression on his part, cannot be sustained merely on the basis of a subsequent administrative re-examination of the pay fixation. The respondents have also not demonstrated that the employee had been put on notice of the proposed recovery and afforded a meaningful opportunity to contest the same before deduction from his retiral benefits.

20. The fact that an administrative authority may correct an erroneous fixation for future purposes does not automatically confer an unfettered right to recover every amount already paid, particularly from retiral dues, irrespective of the circumstances in which the payment was made and the employee's role in the alleged error.

21. We are, therefore, of the considered view that the respondents have failed to establish that the recovery of ₹21,380/- from the retiral dues of the deceased employee was legally sustainable in the facts and circumstances of the present case.

22. As regards the claim for continuation of Grade Pay of ₹4,600/- and consequential refixation of pension, we find that the respondents have relied upon the employee’s earlier promotions and have asserted that he was not entitled to the third MACP. However, the earlier order of this Tribunal did undertake an adjudication of this aspect. The present record does not enable us to conclusively uphold

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the applicant’s entitlement to Grade Pay ₹4,600/- merely on the basis that the amount was earlier paid.

23. We therefore do not consider it appropriate, on the material presently available, to issue a positive direction for fixation of pension at Grade Pay ₹4,600/- without such determination.

24. In view of the foregoing discussion, the OA deserves to be partly allowed. The recovery of ₹1,76,274/- effected from the retiral dues pursuant to order dated 30.09.2013 cannot be sustained in its present form.

25. Accordingly, the Original Application is partly allowed in the following terms:

(i) The recovery/deduction of ₹1,76,274/- made from the retiral dues of the deceased employee pursuant to the order dated 30.09.2013 is quashed to the extent challenged in the present OA.

(ii) The respondents shall refund the amount actually recovered, if any, pursuant to the said order, after verification of the retiral records, to the applicant/widow within a period of three months from the date of receipt of a copy of this order.

26. We make it clear that we have not expressed any opinion on any issue beyond what is necessary for deciding the present OA

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pursuant to the remand order of the Hon’ble High Court of Jharkhand, Ranchi. The respondents shall take the consequential decision strictly in accordance with the applicable statutory rules and the observations contained herein.

27. Pending MAs, if any, stand disposed of accordingly.

28. There shall be no order as to interest and costs. Sd/- Sd/- [ Kumar Rajesh Chandra] [ Justice Narendra Kumar Johari] Member[A] Member[J] Srk.

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