The Jammu & Kashmir High Court recently ruled that employees, including retirees, do not possess a vested right to perpetually retain benefits derived from employer errors. The court emphasized that while recovery of overpaid amounts from retired employees is impermissible, employers are entitled to correct future pay or pension based on the original, accurate pay fixation.
Case Background
The respondents were Class-IV employees in the Jal Shakti Department of Jammu & Kashmir. They had been erroneously granted a higher pay scale under SRO 59 of 1990, which had been withdrawn by the government effective January 15, 1996. Upon discovering this mistake, the authorities issued orders to recover the overpaid amounts and correct the pay fixation. For retired employees, the recovery was sought from their pensionary benefits.
The employees challenged these recovery orders before the Central Administrative Tribunal (CAT), Jammu Bench, which quashed the recovery orders and directed the restoration of their original pay and pension, including the refund of any amounts already recovered. The Union Territory of Jammu & Kashmir appealed this decision before the High Court.
Court's Findings
The High Court upheld the CAT's decision to disallow recovery from retired employees, aligning with the precedent set in State of Punjab v. Rafiq Masih (2015), which prohibits recovery from retired employees in certain circumstances. However, the court disagreed with the CAT's directive to restore the erroneously granted higher pay and compute pension on that basis. The court clarified that no employee, including retirees, has a vested right to continue receiving benefits based on an employer's mistake. It emphasized that while past overpayments may not be recoverable, future pay and pension must be based on correct pay fixation.
Conclusion
This ruling underscores the principle that employees are not entitled to retain benefits arising from employer errors indefinitely. Employers are obligated to correct such mistakes prospectively, ensuring that future pay and pension are aligned with accurate pay scales. The judgment balances the protection of employees' rights with the need to uphold financial and administrative integrity within public institutions.
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