Amu S Makwana vs M/o Railways on 26 October 2026

Order

No. 20167081800105 dated 13.05.2016. The applicant states that his last pay drawn was recorded as Rs.10,860/- in the applicable pay structure and that his basic pension was initially fixed at Rs.5,430/-. 2.4 Subsequently, by impugned memorandum No. ET/ZA/81 dated 28.02.2017, the respondents illegally revised the applicant‟s pay fixation retrospectively whereby his pay was reduced from 01.07.2006 from Rs. 7860/- to Rs. 7210/- without any show cause notice that too after the retirement of the applicant. The revision was stated to have been necessitated as the respondents have inadvertently granted the benefit of MACP to the applicant from the date to which he was not entitled. 2.5 The respondents thereafter issued a revised Pension Payment Order dated 26.05.2017 and fixed his pension to Rs. 13000/- w.e.f. 01.06.2016, however, the applicant credit in the bank account of the applicant from June 2017 is Rs. 5764/- instead of Rs. 13000/-. 2.6 Being aggrieved, the applicant submitted representations dated 08.06.2017 and 10.06.2017 through the recognised railway union, objecting to the retrospective revision of pay and recovery from his retiral benefits. However, the same has not been considered, hence, the applicant has filed the present OA challenging the legality of the impugned

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memorandum dated 28.02.2017, the consequential revision of his pension and the recovery of the alleged excess payment.

3. In support of the prayer sought in this OA, Ms. S.S. Chaturvedi learned counsel for the applicant mainly submitted that the principal grievance of the applicant is that, having retired from service on 31.05.2016, he was subjected to a retrospective revision of pay by memorandum dated 28.02.2017 (Annexure A/1), whereby his pay was reduced with effect from 01.07.2006 and accordingly a revised PPO No. 20167081800105 has been issued whereby his pension and other retiral benefits have been reduced and a recovery of an amount of Rs. 63,736/- is done his pension and other retiral benefits have been reduced. 3.1 That the applicant herein retired from the service on 31.05.2016 from the post of Pointsman (Group-C) and the respondents after his retirement has done a pay fixation (revised) retrospectively and without issuing any show-cause notice or affording any opportunity to the applicant recovered an amount of Rs. 63,736/- from the retiral dues of the applicant, the said conduct/action of the respondents is contrary to the law laid down by the Hon‟ble Supreme Court in case of State of Punjab & Ors. Vs. Rafiq Masih (White Washer) & Ors., (2015) 4 SCC 334. 3.2 Learned counsel for the applicant further argued that as per settled law recovery from an employee‟s salary must be preceded by a specific show-cause and opportunity of hearing.

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Therefore, the action of the respondents to effect such a huge recovery that too without issuing show cause is not tenable and in violation of principle of natural justice, hence, the impugned orders are bad in law and requires to be quashed and set aside. 3.3 Further, it is submitted that there was absolutely no misrepresentation, suppression of facts, fraud or deceit on the part of the Applicant at any point of time. The Applicant neither induced the Respondents to grant the benefit of MACP from the date to which he was not entitled nor obtained any pecuniary benefit by making any false declaration or by practicing any fraud. The the benefit of MACP was granted by the Respondents themselves in the ordinary course of administration after due scrutiny of the Applicant‟s service records. The Applicant merely received the salary lawfully disbursed by the competent authority and had no role whatsoever in the decision-making process relating grant of MACP, therefore, now after the retirement of the applicant, it is not open for the respondents to revise the pay of the applicant and effect a recovery as the said action of the respondent is in utter violation of judgment passed by the Hon‟ble Supreme Court in case of Rafiq Masih (White Washer) (supra). Hence, the impugned orders are bad in law and requires to be quashed and set aside.

4. Per contra, the respondents have filed the reply and denied the claim of the applicant. Ms. R.R. Patel learned counsel for the respondents by referring the reply mainly submitted as under:-

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4.1 That the recovery sought from the applicant's retirement dues is legal and as per the extent Rule viz. Rule 15 of Pension Manual, 1993 (Annexure R/1). Further, it is stated that the recovery made is as per the statement given by pay bill section on the basis of which Memo dated 28-02-2017 is issued by ET section and therefore also, recovery is legal and the pay fixation (revised) is correct. 4.2 Learned counsel by referring the Note No. ESB/774/SDD/2017 dated 14-04-2017 (Annexure R/2) submits that the recovery is also based on the said note and in compliance of it, the settlement section has obeyed the Rule in deducting over payment and which is sought to be effected vide the said Memo dated 28-02-2017. 4.3 Further, it is stated that the applicant had retired on 31-05- 2016 and therefore no question would arise to issue show cause notice before issuance of any Memorandum/Corrigendum in connection with the revision of pay. 4.4 Learned counsel submits that the change in MACP grant date i.e. instead of 01-09-2008, the same has to be effected from 06-06-2012 due to penalty imposed upon the applicant of removal from service and which remain in operation from 25- 04-2002 to 12-03-2004. It is stated that the applicant had preferred departmental Appeal, wherein, penalty was reduced from removal to reinstatement in scale of Rs.2610-3540 with effect from 12-03-2004 with a penalty of “reduction at the

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lowest stage at the same time of scale for three years with future effect.” This penalty had achieved finality 4.5 It is submitted that, change in basic pension had to be effected because of revision of pay due to revised MACP with effect from 06-06-2012 instead of 01-01-2008 which was based on observation of Associate Account. Recovery was made as per Note No. RJT/EP/E/773/7"CPC dated 29-11-2016 of senior DFM. Therefore, mistake which was committed by the administration was rectified by way of impugned order. 4.6 It is also submitted that the applicant had furnished an undertaking permitting recovery of excess payments from his retirement benefits if any mistake in the calculation of his entitlement was subsequently detected. Hence, the OA lacks merit and accordingly, the same may be dismissed.

5. In rejoinder, the applicant submits that that he retired from service on 31.05.2016, whereas the respondents issued the impugned memorandum dated 28.02.2017 revising his pay fixation retrospectively from the year 2006. The respondents sought to correct an alleged administrative mistake after a substantial lapse of time and after his retirement, thereby adversely affecting the benefits already determined or paid to him. Further, it is stated that the respondents‟ own in their reply admitted that a mistake had been committed by the

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administration and was subsequently rectified. In this regard, learned counsel for the applicant argued that this admission demonstrates that the alleged excess payment arose from an administrative error rather than any deliberate misrepresentation or fraud on his part. Consequently, the financial consequences of such an error should not be imposed upon him by recovering amounts from his retiral dues and monthly pension. 5.1 Learned counsel for the applicant also relied on the judgment passed by the Hon‟ble High Court of Madhya Pradesh in Rajendra Prasad Pandey v. State of Madhya Pradesh and Others and Mohd. Shahid v. State of Madhya Pradesh and Others, Writ Petition Nos. 5937/2016 and 13828/2016 wherein, the High Court considered the recovery of alleged excess payments from retired Group C employees and observed that a general undertaking in a proforma concerning refund of overpayments could not automatically be equated with the specific undertaking. Further, it is observed that the undertaking said to be given is in a proforma that simply mentions for refund of over payments, if any made, on account of incorrect fixation. The undertaking is a part of proforma and it is well known that the persons belonging to lower posts put signatures on such undertaking without application of mind and directed the respondents therein to consider the case of the appellants therein in light of the law laid down by the Apex Court in the case of Rafiq Masih (supra). Therefore, by referring the aforesaid judgment, learned counsel for the applicant submits that the undertaking relied upon by the

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respondents cannot override the legal protections available to a retired Group „C‟ & „D‟ employees.

6. Heard learned counsel for the parties and perused the material available on record.

7. Considering the aforesaid submissions, we are of the view that the core issue which requires adjudication by this Tribunal are as under:-

(i) Whether Rule 15 of the Pension Manual, 1993, by itself justifies the recovery in the manner adopted by the respondents in the present case.

(ii) Whether the undertaking relied upon by the respondents conclusively validates the impugned recovery.

(iii) Whether recovery of the alleged excess payment from the retiral benefits and pension of the applicant, a retired Group „C‟ employee, is sustainable in view of the principles laid down by the Hon‟ble Supreme Court.

8. As noted herein above, the respondents have relied upon Rule 15 of the Pension Manual, 1993, for justifying the recovery and adjustment of Government or railway dues from pensionary benefits of the applicant. 8.1 The extract of Rule 15 placed on record recognises that certain outstanding Government or railway dues, including overpayments of pay and allowances, may be adjusted against retirement gratuity, subject to the applicable provisions and conditions. The rule also contains provisions concerning the

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assessment of dues, the treatment of unassessed or unrealised dues at the time of retirement, and the need to ensure that amounts withheld are not disproportionately large. It contemplates appropriate steps for determining and adjusting the dues within the prescribed period. However, the existence of a provision permitting recovery of certain dues does not mean that every amount described by the administration as an overpayment becomes recoverable automatically. The respondents must first establish the employee‟s actual entitlement, identify the precise amount alleged to have been paid in excess, explain the legal basis for its recovery and demonstrate compliance with the applicable procedural requirements. 8.2 In the present case, the respondents have referred to the statement prepared by the pay bill section, a note dated 14.04.2017 and an earlier financial note dated 29.11.2016. These documents may form part of the administrative record supporting the respondents‟ calculation. They do not, by themselves, answer the applicant‟s objection that the adverse revision and recovery were effected without a prior opportunity of hearing/show cause. 8.3 Hence, the respondents‟ reliance upon Rule 15 must, therefore, be considered along with the principles of natural justice and the judicial safeguards applicable to recovery of excess payments from retired employees. The rule cannot be read as authorising an arbitrary or procedurally unfair recovery

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merely because the administration has subsequently identified a possible error in the calculation of pay. 8.4 We accordingly hold that Rule 15 does not, by itself, validate the impugned recovery in the circumstances of the present case.

9. The respondents have also relied upon an undertaking allegedly furnished by the applicant, agreeing to refund or permit recovery of any excess payment subsequently detected. 9.1 An undertaking is a relevant document and cannot be ignored. Nevertheless, it cannot be treated as a complete answer to every objection concerning the legality of a recovery. The existence of an undertaking does not relieve the administration of its obligation to establish the amount actually recoverable, the legal authority for recovery and compliance with the applicable rules. Nor can an undertaking, by itself, dispense with the principles laid down by the Hon‟ble Supreme Court governing inequitable recovery from retired employees. Its effect must be assessed in the context of the governing service rules, the circumstances in which it was furnished and the nature of the proposed recovery. 9.2 In this regard, learned counsel for the applicant has rightly relied upon the judgment passed by the Hon‟ble High Court of Madhya Pradesh in Rajendra Prasad Pandey v. State of Madhya Pradesh and Others and Mohd. Shahid v. State of Madhya Pradesh and Others, Writ Petition Nos. 5937/2016 and 13828/2016 (Supra) wherein the Hon‟ble High Court observed

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that the undertaking is a part of proforma and it is well known that the persons belonging to lower posts put signatures on such undertaking without application of mind and directed the respondents therein to consider the case of the appellants therein in light of the law laid down by the Apex Court in the case of Rafiq Masih (supra). 9.3 We, therefore, hold that the undertaking relied upon by the respondents does not independently validates the impugned recovery.

10. As noted above, undisputedly, the applicant herein retired from the service on 31.05.2016 from the post of Pointsman (Group-C) and the respondents after his retirement has done a pay fixation (revised) retrospectively and without issuing any show-cause notice or affording any opportunity to the applicant recovered an amount of Rs. 63,736/- from the retiral dues payable to the applicant and recovery from his pension for overpayment of Rs. 1,66,454/- as stated by the applicant in the rejoinder. The said conduct/action of the respondents in our considered view is contrary to the law laid down by the Hon‟ble Supreme Court in case of Rafiq Masih (White Washer) (supra). 10.1 At this stage it is apt to refer the judgment passed by the Hon‟ble Apex Court in case of State of Punjab & Ors. Vs. Rafiq Masih (White Washer) & Ors., dated 18.12.2014, reported in (2015) 4 SCC 334 which covers the issues regarding monetary recoveries from employees (Class-III and

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Class-IV service (or Group 'C' and Group 'D') due to mistaken excess payments by employers, wherein in paragraph 12, the Apex Court summarized specific situations where recoveries are ex-facie impermissible in law: “12. 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, summarize 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

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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.” 10.2 In the present case, it can be seen that the applicant retired as a Pointsman (Group-C) on 31.05.2016 and the the impugned revision of pay was made on 28.02.2017 for the fixation done in the year 2006 i.e. more than ten years before his retirement that too without affording any opportunity of hearing to the applicant, which is not tenable in light of the judgment passed by the Hon‟ble Supreme Court in case of Rafiq Masih (supra).

11. In the facts and circumstances of the present case, we are of the considered view that the impugned recovery cannot be sustained and that the consequential deductions from the applicant‟s pension must cease. The applicant is, therefore, entitled to relief in respect of the recovery and the consequential adverse financial action challenged in this Original Application.

12. For the reasons recorded above, the Original Application is allowed, in the following terms:

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(i) The impugned memorandum No. ET/ZA/81 dated 28.02.2017 (Annexure A/1) and the consequential revised Pension Payment Order dated 26.05.2017 (Annexure A/2) are set aside to the extent that they form the basis of the impugned recovery and consequential deductions from the applicant‟s retiral benefits and pension.

(ii) The respondents are directed to refund the amount of recovered from the retiral dues and pension of the applicant and stop further recovery, if any.

(iii) The respondents shall restore the applicant‟s pensionary payments without deductions attributable to the recovery set aside by this order and shall release any consequential pension arrears arising from the cessation of such deductions.

(iv) The aforesaid exercise shall be completed within 90 days from the date of receipt of a certified copy of this order.

13. In view of what is stated herein above, the OA is allowed. Pending Miscellaneous Applications, if any, shall stand disposed of accordingly. No order as to costs.

(Sanjiv Kumar) (Jayesh V Bhairavia)

Member (A) Member (J)

/pv/

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