Overpaid Salary cannot be recovered after 5 years, says Himachal Pradesh High Court

The Himachal Pradesh High Court has recently given an important decision protecting the rights of government employees. The High Court has dismissed 36 appeals (Letter Patent Appeals or LPAs) filed by the State of Himachal Pradesh, which sought to recover salaries that had been allegedly overpaid to Class-III employees more than five years ago.

The health workers in Shimla district were mistakenly fixed at ₹1410 instead of ₹1365 with effect from January 1, 1993. The state claimed this pay discrepancy created anomalies in the pay structure and caused financial loss to the exchequer. As a result, the Chief Medical Officer (CMO) of Shimla instructed all local health officials to revise the pay fixation and initiate recovery proceedings against the employees.

The employees challenged this decision by filing writ petitions before the High Court. A Single Judge of the High Court ruled in their favor. The judge allowed the state to correct the pay scale moving forward but barred any recovery of the excess salary already paid. If any recovery had already been made, the state was directed to refund that amount.

Unhappy with the verdict, the state government filed 36 LPAs. However, the Division Bench upheld the original ruling, stating that recovery after more than five years is not legally permissible, especially when the employees had made no misrepresentation or fraud. The court also pointed out that the employees were not even served prior notice before the re-fixation and recovery process was initiated. This was a clear violation of natural justice.

The court said that since the petitioners were Class-III employees, and the overpayments were due to administrative errors made over five years ago, they should not be penalized.