Recovery of Excess Salary Paid Due to Employer's Mistake from Retired Employees is Iniquitous: Gauhati High Court - 2025-07-11

Gauhati High Court Bars Recovery of Excess Salary from Retired APDCL Employees, Cites Employer's Error

Guwahati , Assam – In a significant ruling providing relief to retired employees, a Division Bench of the Gauhati High Court has held that recovering excess salary paid due to the employer's mistake is "iniquitous," especially after the employees have superannuated. While upholding the re-fixation of pay, the court directed the Assam Power Distribution Company Limited (APDCL) to refund the amount already recovered from the pensions of two former Senior Meter Readers.

The judgment was delivered by a bench comprising the Honourable Chief Justice and Honourable Mr. Justice N. Unni Krishnan Nair in a pair of writ appeals filed by Surendra Nath Dihingia and L. Ibochow Singha .

Case Background

The appellants, Surendra Nath Dihingia and L. Ibochow Singha , were long-serving employees of the erstwhile Assam State Electricity Board (ASEB) and were later absorbed into the APDCL. During their service, they received two financial upgrades under a 1990 scheme.

In 2006, the ASEB introduced a new financial up-gradation scheme, which explicitly stated in its Para-6 that employees who had already received two similar benefits under the 1990 scheme were not eligible. However, due to an administrative error, the APDCL granted the appellants benefits under the new scheme via an order dated October 24, 2008.

Years later, after the appellants had retired in 2017 and 2019 respectively, the APDCL discovered the mistake. It proceeded to re-fix their pay retrospectively and initiated the recovery of the "excess" payments from their pension and retiral benefits. The appellants challenged this action, leading to the present appeals after a Single Judge had earlier dismissed their plea.

Court's Analysis and Key Arguments

The Division Bench meticulously examined the arguments from both sides.

Appellants' Stance : Senior Counsel Mr. K. N. Choudhury fairly conceded that the re-fixation of pay was legally correct, as the appellants were indeed ineligible for the 2006 scheme's benefits. However, he forcefully argued against the recovery, contending that the overpayment was a result of the employer's error, with no misrepresentation or fraud on the part of the employees. He relied heavily on the landmark Supreme Court decision in State of Punjab Vs Rafiq Masih (White Washer) , which lays down principles against such recoveries from retired or lower-grade employees.

Respondents' Stance : Advocate General Mr. P. N. Goswami, appearing for APDCL, defended the recovery, stating that the appellants were never entitled to the money and were therefore not justified in retaining it. He also argued against the appellants' claim for a third financial upgrade, noting that the scheme providing for it came into effect on January 1, 2018, after both appellants had already retired.

Legal Precedents and Court's Reasoning

The High Court concurred with the appellants on the issue of recovery, citing a wealth of Supreme Court precedents, including Rafiq Masih (supra) , Sahib Ram Vs State of Haryana , and Syed Abdul Qadir Vs State of Bihar . The bench reiterated the established legal principle that recovery of excess payments from an employee is impermissible when: - The payment was not due to any misrepresentation or fraud by the employee. - The employer made the payment based on a wrong interpretation of rules. - The recovery would cause undue hardship, particularly to retired employees.

The court made a crucial observation in its judgment:

"The appellants, not being in any manner responsible for the grant of two financial up-gradations in their case by the respondent authorities and it not being alleged that such financial up-gradation...was on account of any misrepresentation or fraud played by the appellants, the recovery of the excess amount of pay so drawn by the appellants being iniquitous, would mandate an interference."

The court further noted that the appellants had already retired when the recovery orders were issued, placing them in one of the specific categories exempted from recovery as outlined in the Rafiq Masih case.

However, the Court rejected the appellants' plea for a third financial up-gradation, agreeing with the respondents that the relevant scheme was implemented after their superannuation, making them ineligible.

Final Verdict and Directions

The Gauhati High Court set aside the earlier order of the learned Single Judge, deeming its conclusions "factually incorrect." The final directions issued by the court are as follows:

1. Upholding Re-fixation : The withdrawal of the erroneous financial benefits and the consequent re-fixation of the appellants' pay are upheld as legally valid.

2. Barring Recovery : The recovery of the excess amount paid is quashed.

3. Refund Ordered : The APDCL is directed to refund the amounts already recovered from the appellants' pension and pensionary benefits within three months .

This judgment reinforces the equitable principles in service jurisprudence, protecting retired employees from the financial hardship of recovering payments made due to the employer's own mistake years prior.