Delhi High Court Rules Against Retrospective Pay Reduction and Recovery of Excess Payments
A division bench of the Delhi High Court, consisting of Justice Rekha Palli and Justice Manoj Jain, ruled that reducing an employee’s pay retrospectively without prior notice and recovering excess payments made over 19 years is not allowed. The court emphasized that the principle of natural justice must be followed, and no retrospective pay changes or recoveries can be made without providing the employee an opportunity to defend themselves.
The case involved a petitioner who had joined the Border Security Force (BSF) as a Constable in November 1978. He was later deputed to the Delhi Police in February 1986 and was absorbed into the Delhi Police in December 1988. His pay was correctly fixed at Rs. 960, along with a 10% deputation allowance. Over the years, he continued to receive due increments and salary adjustments based on this pay fixation.
However, after 19 years, on November 17, 2017, the Delhi Police issued an order reducing the petitioner’s pay without any prior notice. The order also demanded that Rs. 2,97,879 be recovered from him. The petitioner challenged the order before the Central Administrative Tribunal (CAT) in March 2018, by which time Rs. 45,778 had already been deducted from his salary, and the remaining amount of Rs. 2,52,101 was deducted from his gratuity after his superannuation in January 2018. The CAT rejected the petitioner’s claim, stating that he was not entitled to the deputation allowance as he was no longer on deputation.
The petitioner then filed a writ petition in the Delhi High Court, arguing that the retrospective reduction of his pay and the recovery of excess payments over the past 19 years were unjust. He contended that the respondents failed to issue any notice before making these decisions.
The respondents argued that since the petitioner had been absorbed into the Delhi Police in December 1988, he was no longer entitled to the deputation allowance, and therefore, the pay reduction and recovery were justified.
The High Court observed that the respondents had not issued a show-cause notice to the petitioner before making these retrospective decisions. Referring to the Supreme Court’s decision in Bhagwan Shukla vs. Union of India, the court ruled that the pay of an employee cannot be reduced retrospectively without offering the employee a chance to explain. The court also cited the case of State of Punjab vs. Rafiq Masih, which ruled that excess payments to employees, particularly retirees or those nearing retirement, should not be recovered after a long period of time, especially if the recovery is harsh or unfair.
The court found that while the petitioner had incorrectly received a deputation allowance after his absorption, he should have been given a chance to explain before any action was taken. The court directed that the amounts already recovered from the petitioner be refunded within six weeks. Furthermore, the respondents were asked to review the petitioner’s pay fixation with a show-cause notice.
The court ultimately set aside both the Tribunal’s and the respondents’ order, protecting the petitioner’s rights and ensuring that he was treated fairly according to the principles of natural justice.
