A division bench of the Calcutta High Court, comprising Justice Harish Tandon and Justice Prasenjit Biswas, ruled against the recovery of alleged excess payments made to a retired employee, stating that such recovery is impermissible when there is no fraud or misrepresentation involved on the part of the employee.
Background
The case involved a retired headmaster (respondent), who retired from a school on June 30, 2017. The school, which had been upgraded from a 10-class high school to a 10+2 higher secondary school on July 1, 2012, had its employee’s salary fixed post-upgrade by the Additional District Inspector of Schools. The salary was fixed based on a memo issued by the Director of Accounts, School Education Department, Government of West Bengal, with a 3% increment on the basic pay and an additional grade pay of ₹200. This salary structure continued until his retirement.
However, following his retirement, the District Inspector of Schools contended that the increment and additional grade pay were not admissible to headmasters of schools upgraded after February 27, 2009. Consequently, the employee’s retiral benefits were withheld, and the appellant (State of West Bengal) sought to recover the excess payments.
The Legal Battle
The employee challenged this decision by filing a writ petition before the Calcutta High Court. On June 22, 2021, the single judge ruled in favor of the employee, affirming the validity of the increment and the additional grade pay. Dissatisfied with the ruling, the State of West Bengal appealed the decision.
In the appeal, the employee argued that his pay was fixed in accordance with the Director of Accounts’ memo, and there was no fraud or misrepresentation on his part. He also contested the recovery demand, asserting that the increment and additional grade pay had been given to him for over five years without any objections from the authorities. The withholding of his retiral benefits and recovery of excess payments, he claimed, would result in an injustice.
The appellant countered by asserting that the increment and grade pay were not permitted for headmasters of schools upgraded after February 27, 2009. They also pointed to an undertaking signed by the employee, in which he agreed to refund any excess payments due to erroneous pay fixation. The appellant argued that this undertaking justified withholding the retiral benefits until the overpayment was recovered.
Court’s Findings
The court observed that the pay fixation of the employee, including the increment and additional grade pay, had been carried out by the relevant authorities and there was no evidence of misrepresentation or fraud on the employee’s part.
The court referred to the Thomas Denial v. State of Kerala case, where the Supreme Court held that excess payments cannot be recovered from employees if there was no fraud or misrepresentation involved. The court emphasized that relief from such recovery is not a matter of right but an equitable remedy to prevent undue hardship to employees.
The court also cited the State of Punjab v. Rafiq Masih (2015) case, where the Supreme Court had ruled that recovery from retired employees or employees nearing retirement is not permissible if the excess payments were made without any fault or misrepresentation.
In this case, the court noted that the employee had retired, and the payments had been made for over five years. The situation fell under the exceptions outlined in the Rafiq Masih case. Therefore, the court concluded that the objection to the admissibility of the increment and pay was legally unsustainable.
Additionally, the court found that the unilateral withholding of the employee’s retiral benefits violated principles of equity and fairness. The recovery demand, therefore, was declared illegal.
Conclusion
In light of these findings, the division bench of the Calcutta High Court dismissed the appeal and ruled in favor of the employee, affirming that the recovery of excess payments without fraud or misrepresentation is impermissible, particularly when it involves retired employees.
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