RAJDEV RAY vs EAST CENTRAL RAILWAY on 12 November 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:- “(i) That your Lordships may graciously be pleased to direct the respondent authorities to stay the recovery of Rs. 80,000/- (Eighty thousand) from the pension of applicant immediately.

(ii) That your Lordships may further be pleased to direct the respondents to return the recovered amount to the applicant in his bank account.

(iii) That your Lordships may be pleased to award the cost of the litigation, sorrow, suffering and financial hardships to the applicant.

(iv) Any other order/orders as your Lordships may deem fit and proper in the interest of justice.”

2. The applicant has approached this Tribunal under Section 19 of the Administrative Tribunals Act, 1985, seeking intervention against recovery of an amount of ₹80,000/- from his pension on account of alleged excess payment of Fixed Medical Allowance (FMA). He has also sought refund of the amount already recovered and protection against further deductions from his monthly pension.

3. The brief facts, as discussed and delineated in this O.A., are that the applicant initially joined the Railways as a casual labourer on 18.02.1974, was granted temporary status on 24.09.1987 and was subsequently absorbed in regular service with effect from 01.11.1993. He earned promotions during his service and ultimately retired on superannuation on 30.04.2015 while working as Head Trolley Man. 3.1 After retirement, the applicant was receiving pension through the Central Bank of India, Dholi Branch, Muzaffarpur. However, in

KABI SURYAR OOP KABI

-3- OA/050/00538/2023

March 2023, he noticed a reduction in the pension credited to his bank account. Upon making enquiries, he came to know, through the information furnished by the bank on 10.05.2023, that the reduction was attributable to recovery of an alleged excess payment of ₹80,000/- towards Fixed Medical Allowance. 3.2 The applicant submitted a representation before the railway authorities seeking stoppage of the recovery and refund of the amount already deducted. Having received no satisfactory response, he instituted the present O.A. He has placed reliance upon the judgment of the Hon'ble Supreme Court in State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors., (2015) 4 SCC 334, as well as the DoPT Office Memorandum dated 02.03.2016.

4. The respondents, in their written statements, have contested the claim. The railway authorities have submitted that, at the time of retirement, the applicant had furnished a declaration opting to avail indoor and outdoor medical facilities through Railway Hospitals. In terms of the Railway Board's instructions contained in RBE dated 21.04.1999, an employee opting for such medical facilities was not entitled to Fixed Medical Allowance. 4.1 It is their further case that the Pension Payment Order issued in favour of the applicant did not provide for payment of FMA. Nevertheless, the pension-paying bank inadvertently continued to credit the allowance along with his pension. Upon detection of the mistake and verification of the applicant's online application for a

KABI SURYAR OOP KABI

-4- OA/050/00538/2023

medical card, the Assistant Divisional Finance Manager, East Central Railway, vide communication dated 12.01.2023, instructed the bank to discontinue the allowance and recover the amount paid in excess. 4.2 The railway authorities have also alleged that the applicant concealed the fact of his having opted for Railway medical facilities and, therefore, the protection contemplated in Rafiq Masih (supra) would not be available to him. 5 . Respondent No. 6, the Central Bank of India, has submitted that the bank made pension payments in accordance with the PPO received from the railway authorities. It has acknowledged that the applicant was inadvertently paid FMA at the rate of ₹500/- per month from 01.05.2015 to June 2016 and ₹1,000/- per month from July 2016 to February 2023, although the PPO did not provide for such payment. 5.1 The bank has further stated that, acting upon the instructions dated 12.01.2023 issued by the railway authorities; it stopped payment of FMA and commenced recovery of the amount already paid. It has admitted that deductions of ₹4,000/- per month were made from February 2023 to November 2023. It has also stated that, pursuant to the interim order passed by this Tribunal on 28.07.2023, the deductions were discontinued with effect from December 2023, though there was some delay in compliance.

6. The applicant filed rejoinders controverting the allegations made by the respondents. His principal contention is that he neither

KABI SURYAR OOP KABI

-5- OA/050/00538/2023

made any misrepresentation nor practised any fraud for obtaining the alleged excess payment. Being a retired Group-D railway employee, he submits that recovery from his pension is specifically covered by the protective principles laid down by the Hon'ble Supreme Court in Rafiq Masih (supra).

7. I have heard the learned counsel for the parties and carefully perused the pleadings, documents and materials available on record.

8. The controversy involved in the present O.A. gives rise to the following questions:

(i) Whether the applicant was entitled to receive Fixed Medical Allowance in view of his declaration opting for indoor and outdoor medical facilities through Railway Hospitals?

(ii) Whether the respondents were legally justified in recovering the amount of FMA already paid to the applicant from his pension, particularly when he had retired from service and belonged to Group-D?

(iii) Whether the applicant is entitled to refund of the amount already recovered from his pension?

9. At the outset, it would be appropriate to distinguish between the applicant's entitlement to receive Fixed Medical Allowance and the respondents' right to recover the amount already paid to him.

10. The pleadings and documents indicate that the applicant had opted for indoor and outdoor medical facilities through Railway

KABI SURYAR OOP KABI

-6- OA/050/00538/2023

Hospitals. The PPO also did not provide for payment of FMA. In these circumstances, the applicant cannot claim any continuing entitlement to receive FMA contrary to the applicable Railway instructions. The respondents were, therefore, justified in discontinuing its payment upon detection of the mistake.

11. However, the question whether the applicant was entitled to receive FMA in the first place is not the same as the question whether the amount already paid to him can legally be recovered after his retirement. The latter question has to be examined independently in the light of the principles governing recovery of excess payments.

12. The law relating to recovery of excess payments made by the employer to its employees has been authoritatively settled by the Hon'ble Supreme Court in State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors., (2015) 4 SCC 334. In the said judgment, the Hon'ble Supreme Court, after considering the earlier decisions on the subject, held that although an employer may ordinarily be entitled to recover an amount paid in excess of the employee's entitlement, such recovery may become impermissible where it would result in undue hardship, inequity or arbitrariness. This principle has been reflected in the instructions contained in Office Memorandum dated 02.03.2016 issued by the DoPT Government of India. This has formalized the direction issued by The Hon’ble Supreme Court of India in State of Punjab & Ors. v. Rafiq Masih (White Washer), (2015) 4 SCC 334, wherein it has been

KABI SURYAR OOP KABI

-7- OA/050/00538/2023

observed that 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. But it has summarized the following few situations, wherein recoveries by the employer 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 is harsh or arbitrary to such an extent, as would for outweigh the equitable balance of the employer's right to recover.” The Supreme Court has emphasised that the ultimate test is one of equity and proportionality where recovery would cause undue hardship or operate in an arbitrary or iniquitous manner. The above principles are not merely procedural safeguards but embody the equitable considerations which must guide the exercise of power by an employer while seeking to recover amounts mistakenly paid to its employees.

13. In the present case, the applicant retired from service on 30.04.2015. The respondents initiated the recovery exercise in January

KABI SURYAR OOP KABI

-8- OA/050/00538/2023

2023, nearly eight years after his retirement. The applicant also belonged to Group-D service. Thus, the applicant squarely falls within two of the categories expressly identified by the Hon'ble Supreme Court in Rafiq Masih (supra), namely, recovery from retired employees and recovery from employees belonging to Group-D service. The fact that the payment was made under the head of Fixed Medical Allowance rather than salary or any other service benefit does not, by itself, take the case outside the principles laid down in the aforesaid judgment. The prohibition against inequitable recovery is concerned with the nature and circumstances of the excess payment and the hardship resulting from its recovery, and not merely the nomenclature of the allowance.

14. The respondents have attempted to distinguish the present case by alleging that the applicant deliberately concealed his option to avail indoor and outdoor medical facilities through Railway Hospitals. This allegation, however, requires scrutiny in the light of the material available on record. The written statement of respondent No. 6 specifically records that the office of the Senior Divisional Finance Manager, East Central Railway, received information from the applicant himself vide his letter dated 24.11.2022, which ultimately led to the communication

KABI SURYAR OOP KABI

-9- OA/050/00538/2023

dated 12.01.2023 directing stoppage of FMA and initiation of recovery. This circumstance assumes significance. If the applicant had deliberately concealed his ineligibility, the respondents were required to establish such concealment through cogent material. There is no material placed before this Tribunal demonstrating that the applicant furnished any false declaration specifically claiming entitlement to FMA or that he deliberately suppressed any material fact for the purpose of obtaining the allowance. The declaration relied upon by the railway authorities establishes his option to avail Railway medical facilities. It does not, by itself, establish that the subsequent erroneous credit of FMA by the pension-paying bank was procured through fraud or misrepresentation on his part. In fact, the written statement of Respondent no.6 reveals that the applicant himself pointed out to Railway officials (office of the Senior Divisional Finance Manager, East Central Railway) about such payment leading to the consequential action of stoppage of this payment of medical allowance. This negates the written statement of the Respondents Nos. 1 to 5 (Railway officials) who have stated that the applicant has intentionally concealed the aforesaid fact (as recorded in Para 8 of their written statement). Accordingly, the allegation of deliberate concealment is not established on the materials available on record.

KABI SURYAR OOP KABI

-10- OA/050/00538/2023

Applying the above principles, it is evident that the applicant, who retired in 2015, continued to receive the allowance through the pension-paying bank for several years. The payment was made by the bank on the basis of the pension arrangement, notwithstanding the absence of any provision for FMA in the PPO. No fraud or misrepresentation attributable to the applicant has been established. The circumstances, therefore, do not justify visiting the applicant with the burden of refunding the entire amount after such a prolonged period, particularly when he is a retired Group-D employee dependent upon his pension.

15. The decision of the Hon'ble Supreme Court in High Court of Punjab & Haryana & Ors. v. Jagdev Singh, (2016) 14 SCC 267, has also been considered. In that case, the recovery was upheld because the employee had furnished a specific undertaking, while availing the revised pay scale, to refund any excess payment subsequently detected. The principle emerging from the said judgment is that where an employee has specifically undertaken to refund an excess payment, such undertaking may constitute a relevant basis for recovery notwithstanding the general protection available to retired employees. However, the facts of the present case are materially distinguishable. The respondents have not placed on record any specific undertaking furnished by the applicant agreeing to refund any FMA inadvertently credited to his pension. The declaration relied

KABI SURYAR OOP KABI

-11- OA/050/00538/2023

upon by the railway authorities relates to the applicant's choice of medical facilities and cannot be treated as an undertaking to refund an allowance mistakenly credited by the pension-paying bank. Consequently, the ratio of Jagdev Singh (supra) does not assist the respondents in sustaining the impugned recovery.

16. Another relevant aspect is that the applicant had retired nearly eight years before the recovery was initiated. The allowance had been credited to his pension account over a prolonged period, and there is no material to suggest that he was instrumental in the erroneous payment or had obtained it by practising fraud. The applicant's pension constitutes his regular source of livelihood after retirement. A retrospective recovery of the accumulated amount from such pension, in the absence of established fraud or a specific undertaking, would impose a substantial financial burden upon him. The equitable considerations recognised by the Hon'ble Supreme Court in Rafiq Masih (supra) is, therefore, attracted with full force.

17. It is clarified that this Tribunal is not holding that the applicant was legally entitled to FMA despite having opted for indoor and outdoor medical facilities through Railway Hospitals. The respondents' action in discontinuing the further payment of FMA is not interfered with. The finding recorded herein is confined to the

KABI SURYAR OOP KABI

-12- OA/050/00538/2023

impermissibility of retrospective recovery of the amounts already paid, in the peculiar facts and circumstances of this case.

18. In view of the foregoing discussion, this Tribunal holds that the recovery of the alleged excess payment of Fixed Medical Allowance from the applicant's pension is unsustainable in law. The respondents have failed to establish any fraud, misrepresentation or specific undertaking attributable to the applicant which would justify such recovery. The applicant, being a retired Group-D employee, is also covered by the protection recognised in paragraph 18 of the judgment in Rafiq Masih (supra). The impugned action of recovery, therefore, warrants interference by this Tribunal.

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

(i) The action of the respondents in recovering the amount of alleged excess payment of Fixed Medical Allowance from the applicant's pension is hereby declared unsustainable in law. The recovery direction dated 12.01.2023, insofar as it directs retrospective recovery of the amount already paid to the applicant, is accordingly set aside.

(ii) The interim order dated 28.07.2023, whereby the respondents were restrained from making further recovery from the applicant's pension, is hereby made absolute.

KABI SURYAR OOP KABI

-13- OA/050/00538/2023

(iii) The respondents are directed to refund the entire amount actually deducted from the applicant's pension towards recovery of the aforesaid Fixed Medical Allowance. Respondent No. 6 shall furnish the statement of actual deductions, if not already placed on record, to the competent railway authority for reconciliation. The railway authorities shall ensure that the amount so recovered is refunded to the applicant within a period of eight weeks from the date of receipt of a copy of this order.

(iv) It is clarified that the respondents shall remain at liberty to discontinue payment of Fixed Medical Allowance in accordance with the applicable Railway rules and instructions, since the applicant has opted for indoor and outdoor medical facilities through Railway Hospitals. No further payment of FMA is directed by this order.

(v) There shall be no order as to costs. Sd/- (Kumar Rajesh Chandra) Member (A) Srk.

KABI SURYAR OOP KABI