Mr. TPS Walia, AAG, Punjab. SANDEEP MOUDGIL, J Prayer & Ors. v. Rafiq Masih (White Washer) & Ors.

Mr. TPS Walia, AAG, Punjab. SANDEEP MOUDGIL, J Prayer:

#1. The jurisdiction of this Court under Article 226 of the Constitution of India has been invoked by the petitioner seeking issuance of a writ in the nature of Certiorari for quashing the impugned retrospective re-fixation of her pay with effect from 10.12.2000, as recorded at Page No. 43 of her Service Book (Annexure P-10), to the extent it is prejudicial to her. The petitioner contends that her pay was re-fixed and reduced after her retirement in the year 2021, resulting in a reduction of her last drawn pay as well as her pensionary benefits. The petitioner further seeks quashing of Order No. Training School/24/101 dated 16.04.2024 (Annexure P-8), issued by the Assistant Controller (Finance & Accounts), Office of the Civil Surgeon, Gurdaspur, whereby recovery of an amount of Rs. 6,27,907/- from her leave encashment has been ordered. A further direction has also been CWP-30638-2024 -2- sought for release of the withheld amount of leave encashment along with applicable interest. Brief facts:

#2. The petitioner joined the respondent-Department as an ANM on

08.07.1983, was promoted as Staff Nurse on 29.10.2007 and thereafter as Sister Tutor on 20.01.2020. She retired on attaining the age of superannuation on

29.02.2020. Her pension and gratuity were sanctioned on 06.07.2020 taking into consideration her last drawn pay. Subsequently, while processing her leave encashment, the respondents raised an objection that one increment granted on

10.12.2000 had been wrongly allowed and, on that basis, re-fixed her pay retrospectively from 10.12.2000. The said re-fixation resulted in reduction of the petitioner's last drawn pay, revision of her pension and withholding of leave encashment. Ultimately, vide order dated 16.04.2024, recovery of Rs.6,27,907/- was ordered from the leave encashment on the ground that excess salary and retiral benefits had been paid due to erroneous pay fixation.

#3. Aggrieved thereof, the present writ petition has been filed. Contentions On behalf of the petitioner:

#4. Learned counsel for the petitioner submits that the impugned action is wholly arbitrary and illegal. It is contended that the petitioner retired on

29.02.2020 and her pension and gratuity had already attained finality. The respondents could not have reopened the pay fixation after retirement by retrospectively re-fixing the pay from the year 2000 without any allegation of fraud or misrepresentation.

#5. It is further argued that the alleged excess payment pertains to a period more than two decades prior to retirement and the petitioner had never CWP-30638-2024 -3- played any role in fixation of her pay. The entire exercise has been undertaken solely on the basis of an audit objection.

#6. Reliance has been placed upon the judgments of the Hon'ble Supreme Court in “State of Punjab and others v. Rafiq Masih (White Washer),” (2015) 4 SCC 334, “Thomas Daniel v. State of Kerala,” (2022) 5 SCC 545, and “Jagdish Prasad Singh v. State of Bihar,” 2024 AIR SC 3950, to contend that recovery from a retired employee on account of erroneous pay fixation, particularly after lapse of several years, is impermissible in law. Reliance has also been placed upon the judgment of this Court in “A.S. Randhawa v. State of Punjab”, 1997 (3) SCT 468, for grant of interest on delayed payment of leave encashment. On behalf of respondents

#7. Per contra, learned State counsel submits that during scrutiny of the petitioner's service record at the time of processing leave encashment, it was noticed that one increment had wrongly been granted on 10.12.2000. Consequently, the petitioner's pay was correctly re-fixed from that date and all consequential increments were revised. It is submitted that the petitioner herself admitted in her representation that there may have been a wrong implementation of one increment.

#8. It is further argued that the petitioner had furnished an undertaking at the time of release of pensionary benefits agreeing to refund any excess payment found subsequently and, therefore, the respondents are entitled to recover the excess amount. It is also contended that since all other retiral dues had already been released, withholding leave encashment was the only effective mode available for recovery. CWP-30638-2024 Analysis: -4-

#9. I have heard learned counsel for the parties and also perused the record with their able assistance.

#10. The foundational facts are undisputed. The petitioner retired from service on 29.02.2020. Her pension and gratuity were sanctioned shortly thereafter. The respondents subsequently re-opened the pay fixation by retrospectively correcting an alleged mistake committed on 10.12.2000 and, on that basis, reduced the petitioner's last drawn pay and pension besides directing recovery of Rs.6,27,907/- from leave encashment.

#11. The respondents do not allege that the petitioner obtained any benefit by fraud, concealment or misrepresentation. The excess payment, if any, resulted entirely from an error committed by the Department while fixing the petitioner's pay. The issue is no longer res integra.

#12. In Rafiq Masih’s case (Supra), the Supreme Court authoritatively held that recovery from retired employees or employees who are due to retire shortly is impermissible where excess payment has been made due to a mistake of the employer and the employee is not guilty of any fraud or misrepresentation. The present case squarely falls within the categories carved out therein.

#13. The principle was reiterated in Thomas Daniel’s case (Supra), wherein the Supreme Court held that recovery after an inordinate lapse of time on account of wrong pay fixation is arbitrary and inequitable, particularly when the employee had no role in the mistake.

#14. Recently, in Jagdish Prasad Singh’s case (Supra) the Apex Court observed that reduction of pay and consequential recovery after retirement has drastic civil consequences and cannot be sustained in the absence of adherence to the principles of natural justice and other legally sustainable grounds. CWP-30638-2024 -5-

#15. The attempt of the respondents in the present case is even more drastic. The respondents have sought to unsettle a pay fixation which remained operative for nearly twenty years and has already culminated into retirement, pension and gratuity. Such retrospective reopening of pay fixation after retirement destroys the finality attached to pensionary benefits and cannot be countenanced.

#16. The reliance placed by the respondents upon the undertaking furnished by the petitioner is equally misconceived. An undertaking cannot override the law declared by the Supreme Court under Article 141 of the Constitution. Once the recovery itself is barred in law under the principles laid down in Rafiq Masih cas Supra and Thomas Daniel case Supra, the respondents cannot justify the same merely on the basis of a general undertaking obtained at the time of release of retiral benefits.

#17. Equally unsustainable is the withholding of leave encashment. Leave encashment is a retiral benefit earned by an employee during service. Its payment could not have been withheld for effecting an otherwise impermissible recovery.

#18. Consequently, both the retrospective re-fixation of pay insofar as it adversely affects the petitioner after retirement and the consequential recovery are liable to be set aside. Conclusion:

#19. Accordingly, the writ petition is allowed. The retrospective re-fixation of the petitioner's pay with effect from 10.12.2000, as recorded in the Service Book (Annexure P-10), insofar as it results in reduction of her last drawn pay and pension after retirement, is quashed as well as the order dated 16.04.2024 (Annexure P-8), directing recovery of Rs.6,27,907/- from the petitioner's leave encashment, is also quashed. The respondents are directed to restore the petitioner's pension on the basis of the pay and pension originally sanctioned vide CWP-30638-2024 -6- orders dated 06.07.2020 and to pay all consequential arrears within a period of three months from the date of receipt of a certified copy of this judgment. The respondents are also directed to release the entire amount of leave encashment withheld from the petitioner within the aforesaid period.

#20. However, it is made clear that in the peculiar facts and circumstances of the present case, the petitioner shall not be entitled to any interest thereon, as the relief granted is founded solely on the equitable principles enunciated by the Supreme Court in the Rafiq Masih and Jagdish Prasad Singh’s case (Supra).

#21. Pending miscellaneous application(s), if any, also stand disposed of.

06.07.2026 (SANDEEP MOUDGIL) JUDGE Whether speaking/reasoned Whether reportable : : Yes/No Yes/No