FEDERATION OF NATIONAL POSTAL ORGANISATIONS

Recovery of wrongful/excess payment made to Government Servants- DOP& T

Recovery of wrongful/excess payments made to Government Servants – DoP&T instructs for audit of pay fixation i.r.o. employee due to retire within next 4 years vide OM dated 03.10.2022

No. 18/03/2015-Estt (Pay-l)
Government of India
Ministry of Personnel, Public Grievances and Pensions
Department of Personnel & Training

North Block, New Delhi
Dated 3rd October, 2022

OFFICE MEMORANDUM

Subject: Recovery of wrongful/excess payments made to Government Servants.

The undersigned is directed to invite attention to the D/o Personnel & Training (DoPT)’s OM No 18/03/2015-Estt (Pay-I) dated 02.03.2016 on the subject mentioned above (copy enclosed).

2. Recently, the Hon’ble Central Administrative Tribunal (CAT), Lucknow Bench, while hearing the OA No. 302/2022 (Atul Chandra Srivastava Vs UoI & Ors.) and OA No. 303/2022 (Mohammad Irshad Vs UoI & Ors.) has passed an interim Order dated 20.07.2022 expressing concern over the mistakes/clerical faults on the part of Ministries Departments / Offices leading to incorrect fixation of pay etc., which result in excess payments being made to the Government Servants.

3. The Hon’ble Tribunal in its Order dated 20.07.2022 referred to the judgment dated 18.12.2014 of the Hon’ble Supreme Court in CA No. 11527 of 2017 (arising out of SLP C No.11684 of 2012) State of Punjab & Ors Vs Rafiq Masih (White Washer) etc. and instructions issued vide DoPT’s OM no 18/03/2015-Estt.(Pay-I) dated 02.03.2016 in light thereof. In its judgment, the Hon’ble Supreme Court identified five situations wherein recovery of excess payment made would be impermissible in Law. One of the situations where recovery of excess payment has been decided to be impermissible relates to the employees belonging to Class-III and Class-IV Service (or Group ‘C’ and Group ‘D’ services). The Hon’ble Tribunal has noted that the applicants in both the cases under consideration are Group ‘C’ employees and the law in this regard has already been laid down in the judgement dated 18.12.2014 of the Hon’ble Supreme Court and subsequent instructions issued vide DoPT’s OM dated 02.03.2016.

4. In this context, it is observed that the time taken’ by the Ministries/Departments/Offices to discover mistakes/clerical faults in pay fixation of their employees is highly avoidable. The situation of overpayments occurs on account of erroneous calculation of payments due to an employee. If not detected in time, amount becoming due for recovery due to these excess payments keep accruing. In many cases, these overpayments come to notice of the administrative authority at a very late stage resulting in substantial amounts becoming due for recovery. However, in the wake of the Order dated 18.12.2014 of the Hon’ble Supreme Court referred above, these recoveries are to be considered for waiver in the types of cases identified therein. As a result, the administrative authorities concerned are compelled to explore other alternatives available to recover the amount involved or seek approval of the D/o Expenditure to waive off the same in accordance with the procedure prescribed in this Department’s OM dated 02.03.2016 read with the instructions contained in DoPT’s OM No 18/26/2011-Estt (Pay-I) dated 06.02.2014.

5. The matter has been examined in consultation with the D/o Expenditure. It is advised that —

Ministries / Departments / Offices may exercise extreme caution and take suitable measures while handling pay fixation of their employees as also in other cases involving payments so as to ensure that such lapses/mistakes do not occur;
Pay fixation orders issued due to grant of MACP/ACP/financial upgradation/ increment/ promotion etc. may necessarily be audited by the internal audit and/or the Pay & Accounts Office concerned within 3 months of issuing such orders; and
In cases where the employee is due to retire within next 4 years, audit of previous pay fixation orders shall be done on priority.

6. Hindi Version will follow.

(Shukdeo Sah)
Under Secretary to the Government of India
Tel. No.011-23090489

Recovery / waiver of the wrongful /excess payments made to Government servants: DoP&T OM for guidance and better understanding

Government of India
Ministry of Personnel, Public Grievances & Pensions
Department of Personnel & Training
Estt. (Pay-l) Section

Recovery / waiver of the wrongful /excess payments made to Government servants.

Department of Personnel & Training has issued instructions from time to time regarding recovery of wrongful / excess payments made to Government servants. The essence of these instructions has been summarized in the following paras for guidance and better understanding.

I. Supreme Court Judgments on the matter of recovery of excess payments:

The issue of recovery of wrongful/excess payments made to Government servants was examined by the Department of Personnel & Training in consultation with the Department of Expenditure and the Department of Legal Affairs in the light of the following judgments of the Hon’ble Supreme Court:

(i) Chandi Prasad Uniyal and Ors Vs State Of Uttarakhand And Ors, 2012 AIR SCW 4742, (2012) 8 SCC 417, decided on 17th August, 2012

(ii) State of Punjab & Ors Vs Rafiq Masih (White Washer) etc in CA No.11527 of 2014 (Arising out of SLP(C) No.11684 of 2012) decided on 18th December, 2014.

II Procedure to deal with the issue of wrongful/excess payments:

In view of the law declared by Courts and reiterated by the Hon’ble Supreme Court in the case of Chandi Prasad Uniyal and Ors Vs State of Uttarakhand and Ors, 2012 AIR SCW 4742, (2012) 8 SCC 417, the Ministries/Departments were advised to deal with the issue of wrongful/excess payments as follows:

In all cases where the excess payments on account of wrong pay fixation, grant of scale without due approvals, promotions without following the procedure, or in excess of entitlements etc. come to notice, immediate corrective action must be taken.
In a case where the authorities decide to rectify an incorrect order, a show-Cause notice may be issued to the concerned employee informing him of the decision to rectify the order which has resulted in the overpayment, and intention to recover such excess payments. Reasons for the decision should be clearly conveyed to enable the employee to represent against the same. Speaking orders may thereafter be passed after consideration of the representations, if any, made by the employee.
Whenever any excess payment has been made on account of fraud, misrepresentation, collusion, favoritism, negligence or, carelessness, etc., roles of those responsible for overpayments in such cases, and the employees who benefitted from such actions should be identified, and departmental/criminal action should be considered in appropriate cases.
Recovery should be made in all cases of overpayment barring few exceptions of extreme hardships. No waiver of recovery may be allowed without the approval of Department of Expenditure.
While ordering recovery, all the circumstances of the case should be taken into account. In appropriate cases, the concerned employee may be allowed to refund the money in suitable installments with the approval of Secretary in the Ministry, in consultation with the Financial Adviser (FA).
Wherever the relevant rules provide for payment of interest on amounts retained by the employee beyond the stipulated period etc. as in the case of Travelling Allowance (TA), interest would continue to be recovered from the employee as heretofore.

[Para 3 of DoPT’s OM No 18/26/2011-Estt (Pay-l) dated 06.02.2014]

III. Situations wherein recoveries of wrongful/excess payments by the employers would be impermissible in law

Para II(iv) of the above instructions provides inter-alia that recovery should be made in all cases of overpayment barring few exceptions of extreme hardships. The issue was considered by the Hon’ble Supreme Court in the case of State of Punjab & Ors Vs Rafiq Masih (White Washer) etc. in CA No.11527 of 2014 (arising out of SLP(C) No.11684 of 2012}. In this case, the Hon’ble Supreme Court observed that it is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. The Hon’ble Supreme Court summarized the following few situations, wherein recoveries by the employers would be impermissible in law:-

(i) Recovery from employees belonging to Class-III and Class-IV service (or Group ‘C’ and Group ‘D’ service).

(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.

(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.

(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.

(v) In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer’s right to recover.

IV Procedure to deal with wrongful/excess payments by the Administrative Ministry/ Departments

Ministries / Departments may deal with the issue of wrongful / excess payments made to Government servants accordingly. Wherever waiver of recovery in the above-mentioned situations is considered, administrative Ministries/ Departments may process the same with the express approval of Department of Expenditure in terms of DoPT’s OM No.18/26/2011-Estt (Pay-l) dated 6th February, 2014.

[DoPT’s OM No. 18/03/2015-Estt (Pay-l) dated 02.03.2016]

Note: List of the OMs mentioned in this document is annexed. In case any reference to the relevant OM is required, the same may be accessed from the Archive Section of Department of Personnel and Training’s website.

ANNEXURE

List of OMs mentioned in this Document