The Central Administrative Tribunal, Cuttack, has reaffirmed a critical protection for Group-C employees: even when pay has been erroneously fixed due to departmental oversight, recovery of excess amounts is legally impermissible if the employee belongs to a non-gazetted cadre. This judgment clarifies the boundaries of administrative rectification and reinforces the principle that procedural fairness and equitable treatment must prevail over fiscal recovery in certain categories of service.
Background & Facts
The Dispute
The applicant, Pradip Kumar Mallick, a Sorting Assistant in the HRO, RMS 'N' Division, Cuttack, was appointed on 17.01.1996 and served continuously in the same cadre. He received two financial upgradations under the Modified Assured Career Progression (MACP) scheme: first w.e.f. 01.09.2008 and second w.e.f. 23.01.2016, which elevated his Grade Pay from Rs. 2,800 to Rs. 4,200. Following the implementation of the 7th Central Pay Commission, his Basic Pay was progressively fixed at increasing levels: Rs. 52,000 as of 01.01.2019, Rs. 53,600 as of 01.01.2020, and Rs. 56,900 as of 01.01.2021.
Key Facts
- Applicant joined as Sorting Assistant on 17.01.1996
- First MACP granted w.e.f. 01.09.2008
- Second MACP granted w.e.f. 23.01.2016 (Grade Pay increased to Rs. 4,200)
- Pay fixed at Rs. 56,900 w.e.f. 01.01.2021
- Salary paid at this rate from January 2021 to July 2021
- In August 2021, Basic Pay was unilaterally reduced to Rs. 55,200 without notice
- Rs. 5,000 was deducted from salary for August and September 2021
- Applicant submitted representation on 06.10.2021
- Appeal filed on 30.04.2022 for refund of deducted amounts
- Respondent No. 2 rejected appeal via memo dated 27.06.2022
- Respondent No. 3 communicated rejection via memo dated 26.09.2022
- Applicant filed OA No. 260/00481/2021 before CAT Cuttack
Procedural History
- 17.01.1996: Appointment as Sorting Assistant
- 01.09.2008: First MACP granted
- 23.01.2016: Second MACP granted; pay fixed at Rs. 49,000 (as per 7th CPC norms)
- 01.01.2017 to 01.01.2021: Pay progressively increased to Rs. 56,900
- August 2021: Pay reduced to Rs. 55,200; Rs. 5,000 deducted for Aug & Sep 2021
- 06.10.2021: Representation submitted to Respondent No. 3
- 30.04.2022: Appeal filed for refund of deductions
- 27.06.2022: Appeal rejected by Chief Post Master General, Odisha Circle
- 26.09.2022: Rejection communicated by Senior Superintendent of Post Offices
- 2021: OA filed before Central Administrative Tribunal, Cuttack
- 13.05.2026: Case reserved
- 21.05.2026: Judgment pronounced
The Parties' Positions
Applicant: Argued that the reduction in pay and deduction of Rs. 5,000 were arbitrary, violative of Articles 14 and 16, and contrary to natural justice. He had no role in the erroneous fixation and was a Group-C employee entitled to protection under State of Punjab v. Rafiq Masih and DoP&T OMs.
Respondents: Contended that the pay fixation was incorrect under Rule 5, Explanation-I of CCS (Revised Pay) Rules, 2016, due to retention of pre-7th CPC pay structure. Internal audit revealed excess payment of Rs. 1,42,947 over five years. Recovery was made under Note 11 of Para 86, Chapter IV, Financial Handbook Vol-I.
Relief Sought
- Fix Basic Pay at Rs. 56,900 w.e.f. 01.01.2021
- Refund Rs. 10,000 (Rs. 5,000 each for August and September 2021)
- Quash memos dated 26.09.2022 and 27.06.2022
- Grant any further relief deemed just
The Legal Issue
The central question was whether recovery of excess pay from a Group-C employee, despite the department’s own error in pay fixation, is permissible under law, particularly in light of the Supreme Court’s ruling in Jogeswar Sahoo v. Dist. Judge Cuttack.
Arguments Presented
For the Applicant
The applicant’s counsel relied on State of Punjab v. Rafiq Masih (2015) 4 SCC 34 and DoP&T OMs dated 02.03.2016 and 03.10.2022, which prohibit recovery from Group-C employees where the error was not attributable to them. He emphasized that the applicant had no control over the pay fixation process, which was entirely administrative. The unilateral reduction without hearing violated natural justice, and recovery would be inequitable given the employee’s non-gazetted status.
For the Respondent
The respondents argued that the pay fixation was legally flawed under Rule 5, Explanation-I of CCS (Revised Pay) Rules, 2016, as the applicant retained two pay bands from the 6th CPC, which was impermissible. The excess payment of Rs. 1,42,947 was a clear financial loss to the exchequer. Recovery was justified under the Financial Handbook and was a legitimate exercise of administrative authority to correct an error.
The Court's Analysis
The Tribunal acknowledged the department’s claim that the pay fixation was erroneous under the 7th CPC rules. It accepted that the applicant’s pay should have been fixed at Rs. 55,200 w.e.f. 01.01.2021, not Rs. 56,900, and upheld the refixation as legally correct.
However, the critical issue was not the correctness of the refixation, but the legality of recovery. The Tribunal turned to the Supreme Court’s recent decision in Jogeswar Sahoo v. Dist. Judge Cuttack (2025 INSC 449), which laid down a clear framework for when recovery of excess pay is impermissible.
"18. 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. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law: (i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service)."
The Tribunal noted that the applicant was a Sorting Assistant, a classic Group-C position. This squarely brought the case within exception (i) of Jogeswar Sahoo. The Court held that the department’s internal audit error, however legitimate in intent, could not override the Supreme Court’s categorical protection for non-gazetted employees.
The Tribunal further observed that the applicant had no opportunity to be heard before the reduction - a procedural lapse. However, it declined to set aside the refixation on this ground, citing the well-established principle that if the outcome would remain unchanged, non-compliance with natural justice does not invalidate the decision. The focus, therefore, shifted entirely to the recovery.
The Court emphasized that the Supreme Court’s ruling was not merely procedural but substantive - it recognized the vulnerability of Group-C employees to financial hardship from retrospective deductions. The department’s right to recover must yield to this equitable principle.
The Verdict
The applicant succeeded on the recovery issue. The Tribunal upheld the refixation of Basic Pay at Rs. 55,200 w.e.f. 01.01.2021 but directed the respondents to refund the Rs. 10,000 deducted in August and September 2021. The Tribunal further ordered that all other recoveries made on account of the erroneous fixation be reversed, and full refund be made within 60 days of receipt of the order. The memos dated 26.09.2022 and 27.06.2022 were set aside to the extent they authorized recovery. Costs were waived.
What This Means For Similar Cases
Recovery from Group-C Employees Is Per Se Impermissible
- Practitioners must immediately challenge any recovery of excess pay from Group-C or Group-D employees, regardless of the duration or magnitude of the overpayment
- The Jogeswar Sahoo exception is absolute - no balancing of equities is permitted
- Departmental audits or internal reviews cannot override this statutory protection
Pay Fixation Errors Must Be Corrected, Not Penalized
- Employers may rectify erroneous pay fixation but cannot recover the difference from non-gazetted staff
- The remedy lies in adjusting future pay or administrative review, not in salary deductions
- This applies even if the error persisted for over five years or involved substantial sums
Procedural Lapses Are Secondary to Substantive Rights
- While lack of hearing is a procedural flaw, it does not invalidate the refixation if the outcome is legally correct
- However, recovery remains barred irrespective of procedural compliance
- This reinforces that substantive protections for lower-tier employees trump administrative convenience
