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Case Number

O.A No. 1081/2007

Advocates

Mrs. Nidhi Bisaria
Shri V.S.R Krishna

Judges

Meera Chhibber, Member (J)
Chitra Chopra, Member (A)

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Smart Summary

Structured Summary of the Tribunal Opinion

Factual and Procedural Background

The applicants (four medical officers) employed at Safdarjung Hospital, New Delhi (serving as Chief Medical Officer and Senior Medical Officers), challenged the respondents' order dated 23.10.2006 which rejected their representations against withdrawal of pay benefits originally fixed under FR 22(1)(a)(i). The applicants' pay had initially been fixed under FR 22(1)(a)(i) (with one advance increment granted in respect of Applicant No.2 by an OM dated 5.11.1997), but after about eight years the respondents refixed their pay under FR 22(1)(a)(ii) retrospectively and withdrew the advance increment.

The applicants earlier filed OA-2282/2004 challenging an earlier refixation; this Tribunal allowed that OA by order dated 16.5.2005 on the ground that no show-cause notice had been issued before retrospective reduction of salary, and directed that principles of natural justice be observed. Pursuant to that direction, respondents issued a show-cause notice by Memo dated 09.09.2005, the applicants submitted representations (Applicant No.2 on 28.09.2005 citing Shyam Babu Verma), and respondents ultimately rejected the representations by order dated 23.10.2006 (the impugned order). The present OA seeks quashing of the 23.10.2006 order and relief against recovery of alleged overpayments.

Legal Issues Presented

Whether the respondents were justified in retrospectively refixing the applicants' pay from FR 22(1)(a)(i) to FR 22(1)(a)(ii) as a correction of an inadvertent error.
Whether the respondents' order dated 23.10.2006 rejecting the applicants' representations was non-speaking or violative of the principles of natural justice.
Whether recovery of the alleged overpayments (resulting from the erroneous fixation) could be lawfully effected, having regard to the Supreme Court's ratio in Shyam Babu Verma and the factual circumstances (i.e., non-attribution of fault to the applicants).

Arguments of the Parties

Applicants' Arguments

The impugned order dated 23.10.2006 is non-speaking and fails to assign reasons for rejection of their representations, thereby violating principles of natural justice.
Recovery of alleged overpayments is contrary to the law laid down by the Hon'ble Supreme Court in Shyam Babu Verma v. Union of India ((1994) 2 SCC 521) and by Tribunal precedents; recovery would cause hardship as the amounts have been spent and there was no fault or misrepresentation by applicants.
Once pay fixation had been made under FR 22(1)(a)(i), respondents could not arbitrarily refix pay; the appointment to Specialist Grade II entailed higher responsibilities and should not be subject to retrospective reduction.

Respondents' Arguments

The pay had been erroneously fixed due to an inadvertent mistake in the Ministry's Circular dated 12.3.1997 (which mentioned "Chief Medical Officer" where it should have been "Senior Medical Officer"); a corrigendum dated 7.4.1998 corrected this error.
The pay refixation under FR 22(1)(a)(ii) was required by the corrigendum and therefore lawful; the applicants' appointments to Specialist Grade II were fresh recruitments (not promotions) and thus the corrigendum applied.
Safdarjung Hospital did not receive the corrigendum until much later (2003), which explains the initial wrong fixation; respondents issued show-cause notice and followed procedure before refixation.
Recovery of overpayments is consistent with Government policy and DFPRs Rule 17 (Government Decision No.1) which requires enforcement of recovery where the government servant is not clearly entitled to the money even if drawn in good faith; execution of recoveries in instalments was proposed to avoid hardship.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Shyam Babu Verma v. Union of India ((1994) 2 SCC 521)	Principle that recovery of overpayments may be inappropriate where the overpayment is not attributable to the fault of the employee and the employee has spent the money; equitable protection in such circumstances.	The Tribunal relied on the ratio in Shyam Babu Verma to hold that it would not be proper to recover the excess amounts already paid to the applicants since the erroneous fixation was due to administrative lapses and not the applicants' fault; accordingly recovery was not ordered.
P.H. Reddy v. National Institute of Rural Development (Hon'ble Supreme Court order dated 14.8.1998)	Referenced by applicants in support of their contention against recovery (applicants relied on this order to argue against recovery).	The applicants cited the decision; the Tribunal's order record notes that applicants relied on it, but the Tribunal's final disposition regarding recovery rested on Shyam Babu Verma rather than treating P.H. Reddy as the controlling basis for the decision.
OA-2282/2004 — Tribunal order dated 16.5.2005	Procedural principle: requirement to issue show-cause notice before retrospectively reducing salary (observance of natural justice).	The earlier Tribunal order quashed prior impugned orders because no show-cause notice had been issued; that order led respondents to issue a show-cause notice (Memo dated 09.09.2005) before finalizing refixation. The earlier order is part of the procedural history and influenced respondents' further action.

Court's Reasoning and Analysis

The Tribunal considered the pleadings, representations and replies and proceeded in two analytical strands: (1) legality and propriety of the revised pay fixation, and (2) legality of recovery of alleged overpayments.

On the revised pay fixation, the Tribunal accepted the respondents' factual account that an inadvertent error in the Ministry's Circular dated 12.3.1997 (incorrectly using the word "Chief Medical Officer" instead of "Senior Medical Officer") led to incorrect pay fixation under FR 22(1)(a)(i). A corrigendum dated 7.4.1998 corrected that instruction and specified that officers who were CMOs immediately before joining as Specialist Grade II should have pay fixed under FR 22(1)(a)(ii), while those who were SMOs should be fixed under FR 22(1)(a)(i).

The Tribunal observed that such administrative errors in pay fixation are not uncommon and that a wrong fixation does not create an indefeasible right in the employee to retain an erroneous pay that is inconsistent with the rules for the post. The Tribunal referenced the offer of appointment (OM dated 2.3.1995, Annexure P-2) which stated pay would be fixed according to government rules or instructions. On this basis, the Tribunal held that correcting an erroneous pay fixation in accordance with government instructions is neither mala fide nor arbitrary where the correction follows proper procedure (including issuance of show-cause as previously directed by the Tribunal).

Turning to recovery of overpayments, the Tribunal accepted that the erroneous fixation resulted from administrative lapses (non-receipt of corrigendum by Safdarjung Hospital) and was not attributable to any fault or misrepresentation by the applicants. Applying the ratio in Shyam Babu Verma, the Tribunal concluded that it would not be proper to recover the excess amounts already paid to the applicants in the circumstances of this case. Thus, while the revision of pay was validated as a lawful correction of error, recovery of past overpayments was declined on equitable grounds.

The Tribunal therefore split relief: it declined to interfere with the respondents' correction of pay fixation (upholding the refixation under FR 22(1)(a)(ii) as lawful), but it ordered that recovery of amounts already paid should not be effected.

Holding and Implications

CORE RULING: The Tribunal PARTLY ALLOWED the Original Application.

Holding (direct effect):

The Tribunal upheld the respondents' revised pay fixation as a lawful correction of an earlier erroneous fixation in accordance with government instructions (i.e., the corrigendum dated 7.4.1998) and refused to set aside the refixation under FR 22(1)(a)(ii).
The Tribunal held that recovery of the alleged overpayments already made to the applicants should not be effected, applying the ratio in Shyam Babu Verma because the overpayment resulted from administrative lapses and was not due to the applicants' fault; therefore no recovery was ordered.
The Tribunal awarded no costs.

Implications:

For the parties: Respondents are permitted to maintain the corrected pay fixation under FR 22(1)(a)(ii); however, they are not permitted to recover the amounts already paid to the applicants in respect of the earlier erroneous fixation.
Broader precedent: The opinion applies established principles (including the Shyam Babu Verma ratio) to refuse recovery in circumstances where overpayment arose from administrative error and not from employee fault. The Tribunal did not purport to create new law; it applied existing authorities and government instructions to the facts before it. No other broader legal principle or novel precedent was announced beyond the application described above.

Disposition:

The OA is partly allowed: the correction of erroneous pay fixation is sustained; recovery of previously paid excess amounts is not ordered. No costs.

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Ajay Kumar Gupta (Dr.) v. Union Of India

Chitra Chopra, Member (A):— By this OA, applicants are challenging order dated 23.10.2006 (Annexure P-1) passed by Respondents rejecting the representation made by applicants against withdrawal of pay in pursuance of their pay fixation according to FR 22(1)(a)(i).

2. By way of relief, applicants, who are four in number, are working as Chief Medical Officer (CMO) and Senior Medical Officers (SMOs) in Safdarjung Hospital, New Delhi, and have sought setting aside of the order dated 23.10.2006 issued by the respondents.

3. The facts as set out in the OA are that applicants are the members of the Central Health Services (CHS) and were initially appointed as Medical Officers/Specialist Grade II of non-teaching Specialist, sub-cadre of CHS. They were subsequently promoted as SMOs and thereafter as CMO. Their pay was fixed under FR 22(1)(a)(i) and were given the benefit of one advance increment at the time of pay fixation vide OM dated 5.11.1997 (Annexure P-4) is in respect of Applicant No. 2 Dr. M.K Mittal.

4. It is submitted that after a lapse of 8 years, respondents arbitrarily withdrew the benefit of pay fixation granted to Applicant No. 2 under FR 22(1)(a)(i) retrospectively and refixed the pay of applicants under FR 22(1)(a)(ii) (Annexure P-7 Page-32) and the benefit of one advance increment granted to them under the same Rule was withdrawn retrospectively as a result of the said refixation.

5. Applicants being aggrieved by the refixed pay fixation order, filed OA-2282/2004 challenging the refixation order. Vide order dated 16.5.2005 (Annexure P-8), this Tribunal allowed the said OA on the ground that no notice to show cause had been issued to the applicants and with the following direction:—

“7. In the present case, the salary had been reduced retrospectively and there is precious little on the record for us to see that before doing so, no notice to show cause was issued to the applicant.

8. Resultantly, we allow the present application and quash the impugned orders. It is directed that before passing any such order, the principles of natural justice should be adhered to.”

6. In compliance of the aforesaid order, Respondents, vide Memo dated 09.09.2005 (Annexure P-9), issued show cause notice stating therein to withdraw the over—payment made to the applicants due to wrong fixation of their pay and directing them to make representation, if any, within a period of 15 days as under:—

“The officers whose names are mentioned below are hereby informed that due to non receipt of MOHFW Corrigendum No. A.12025/9/96 CHS.IV dated 7.4.98 to MOHFW their letter dated 12.3.97 their pays have been fixed wrongly from time to time, resultant of which some overpayments have been made to them. The overpayments made are liable to be recovered from their salaries. If they wish to make any representation in the matter, the same should be reached in this Section within Fifteen days from the date of receipt of this Notice.

1. Dr. Ajay Kumar Gupta, Sr. Specialist in Radiotherapy.

2. Dr. J.N Mohapatra, Sr. Specialist in Paediatries

3. Dr. M.K Mittal, Sr. Specialist in Radiology

4. Dr. Shib Das Chakraborti, Sr. Specialist in Chest & Respiratory.”

7. Applicant No. 2 immediately made representation (Annexure P-10) dated 28.09.2005 stating therein that such reduction/revision of pay tentamounts to alteration/change in the basic conditions of the service which is in flagrant violation of the basic tenets of service jurisprudence. Moreover, the so-called excess payment drawn by him has already been spent to meet the family day-to-day expenses and at this belated stage, the recovery will cause great hardship and mental agony to the undersigned and his family members. It was further submitted that recovery should not be effected as it is not due to the fault or misrepresentation on his part and as it has been held by the Hon'ble Supreme Court in Shyam Babu Verma v. Union of India ((1994) 2 SCC 521) and has also been ruled by the Tribunal in a number of cases. Thus, the recovery of over payment is against the law laid down by the Hon'ble Apex Court.

8. It is further submitted that respondents vide order dated 23.10.2006 (impugned) without proper application of mind and without assigning any reason rejected the representation made by the applicants in violation of the principle of natural justice. Further, respondents vide letter dated 15.2.2002 (read 15.6.2002) issued direction that after the implementation of recommendations of V Pay Commission, the pay of SMO on their joining the post of Specialist Grade II on or after 1.1.1996 will be fixed under FR 22(1)(a)(i).

9. Applicants have sought the relief on the grounds, firstly that the impugned order is non-speaking and does not assign any reason for rejection of their representations and secondly, the recovery as ordered by respondents vide impugned order dated 23.10.2006 is in violation of law laid down by the Hon'ble Supreme Court in Shyam Babu Verma's case (Supra) and, therefore, the same is liable to be quashed. Further, the appointment of applicants to the post of Specialist Grade II entails higher responsibilities and the respondents cannot arbitrarily refix the pay of the applicants once it is fixed under FR 22(1)(a)(i).

10. OA has been opposed by the respondents. In the counter reply filed on behalf of respondents by Shri V.S.R Krishna, at the outset brief facts have been given explaining the background as to how erroneous pay fixation had been made and the reasons to recover the over-payment. It is submitted that for the purpose of fixation of pay of CHS Officers of General Duty Medical Officer, Sub Cadre joining as Specialist in the non-teaching specialist Sub-cadre as fresh recruitee through UPSC, following instructions were issued by the Ministry of Health & Family Welfare vide Circular dated 12.3.1997 which reads as under:—

“The pay of Chief Medical Officers (CMOs) (Rs. 12000-16500) of GDMO sub-cadre of Central Health Service will be fixed under FR 22(1)(a)(i) on joining the post of Specialist Gr. II (Rs. 10000-15200) (Junior Scale) in the Non-Teaching Specialist Sub-Cadre of Central Health Service”.

However, it was noticed that the work “Chief Medical Officer” in above mentioned Circular was inadvertently mentioned in place of “Senior Medical Officer”. Subsequently, a corrigendum was issued on 7.4.1998 to rectify the error and all participating units were advised to effect the same in the light of abovementioned instructions. This means that the pay of officers who were CMOs in the pay scale of Rs. 12000-16500/- immediately before joining the post of Specialist Gr. II (Junior Scale Rs. 10000-15200/- was to be fixed under FR 22(1)(a)(ii) and those who were SMOs in the pay scale of Rs. 10000-15200/- under FR 22(1)(a)(i). But in the instant case, once the pay of applicants who were earlier working as CMOs in the pay scale of Rs. 12000-16500/- was wrongly fixed under FR 22(1)(a)(i) on their joining as Specialist Gr. II (Junior Scale) in CHS as per instructions in the above Circular/Corrigendum dated 12.03.1997, the same was not refixed as per the instructions in the above mentioned corrigendum dated 7.4.1998 i.e under FR 22(1)(a)(ii).

11. Accordingly, vide letter dated 12.01.2004 Safdarjung Hospital authorities were requested to explain circumstances under which the instructions dated 7.4.1998 were not complied with and they were also requested to explain the amount of over-payment made to each officer by wrong fixation of pay. In response Safdarjung Hospital informed that the pay of these officers was fixed under FR 22(1)(a)(i) in accordance with Ministry's letter dated 12.3.1997 and that the corrigendum dated 7.4.1998 was not received in the Hospital until January, 2003 when the copy of the same was enclosed with the Ministry's letter dated 15.1.2003 and accordingly the pay of all these officers was refixed under FR 22(1)(a)(ii) as per the instructions contained in the corrigendum dated 7.4.1998 Safdarjung Hospital authorities intimated refixation of pay of these officers and they have also forwarded their representations. Applicants had requested not to make any recovery as there was no error on their part for wrong fixation of pay under FR 22(1)(a)(i). They have also quoted the order of Hon'ble Supreme Court dated 14.8.1998 in the case of P.H Reddy v. National Institute of Rural Development. It is submitted that the request of these officers not to make any recovery was considered sympathetically in consultation with Integrated Finance Division, who advised that according to the Government of India Decision No. 1 under Rule 17 of DFPRs “The policy of the Government will be to enforce recovery in all cases where it is possible and where Government servant concerned is not clearly entitled to the money in question, even after it has been drawn in good faith. Over-payment made to Gazetted Govt. servant on account of salary due to wrong fixation of pay have to be recovered and cannot be waived off.” In view of these instructions, Safdarjung Hospital authorities were asked to make recoveries of over-payment from these officers in convenient instalments so that this does not result in any undue hardship to them.

12. It is further submitted that the appointment in Specialist Gr. II posts was a fresh appointment and cannot be termed as ‘Promotion’ and hence their pay was to be fixed in pursuance of corrigendum dated 7.4.1998 to the Circular dated 12.03.1997 Respondents have clearly submitted that this is a case of erroneous pay fixation and now that applicants” representation has been rejected after giving them proper show cause notice, the revised pay order is entirely in accordance with the rules. The grounds taken do not merit their case and the OA deserves to be dismissed.

13. We have heard the submission of both the learned counsel and have perused the pleadings available on record.

14. Applicants are aggrieved on two main grounds; firstly revised pay fixation and secondly, recovery of over-payment made to them due to erroneous fixation of pay.

15. In regard to first ground viz. revised pay fixation, learned counsel Mrs. Bisaria vehemently submitted that once the pay fixation has been made in respect of applicants, there was no valid grounds for changing the same and that too retrospectively. Applicants have been affected adversely by this action of the respondents and hence their prayer should be allowed.

16. On the other hand, learned counsel Shri Krishna pressed the argument that as has already been submitted by the respondents in the written reply, there was no mala fide in the revised pay fixation which was necessitated due to an inadvertent error and as the corrigendum dated 7.4.1998 had not been received by the Safdarjang Hospital authorities. Learned counsel has submitted that the revised pay fixation is entirely in accordance with the rules and respondent authorities were well within their rights to rectify their error, particularly when it was inadvertent. He reiterated that the applicants” appointments to the post of Specialist Gr. II were a fresh recruitment, and not a promotion. This has not been controverted by the applicants, and is clear from the OM dated 2.3.1995 (Annexure P-2) which is the offer of appointment in respect of Applicant No. 2.

17. It would, at the outset, be relevant to cite the impugned order dated 23.10.2006 which reads as follows:—

“(i) For the purpose of fixation of pay of Officers of the Central Health Services of General Duty Medical Officer Sub-Cadre after joining as Specialist in Non-teaching Specialist Sub-Cadre, as direct recruitments through the UPSC, a Circular No. A.12025/9/96-CHS-IV dated 12.3.1997 was issued indicating inadvertently that the pay of Chief Medical Officer (CMO) (Rs. 12000-16500) of GDMO Sub-cadre of CHS will be fixed under FR 22(1)(a)(i), on joining as Specialist Grade—II (Rs. 10000-15200/-) in Non-teaching Specialist Sub-cadre of CHS.

Later on the inadvertent error was identified in the circular dated 12.3.1997 and a corrigendum dated 7.4.98 was issued indicating that the pay of the Officers who were CMOs (Rs. 12000-16000) immediately before joining as Specialist Grade-II (Rs. 10000-15200) as direct recruit shall be fixed under FR 22(1)(a)(ii) and pay of the Officers who were SMOs (Rs. 10000-15200) immediately before joining as Specialist Grade II, shall be fixed under FR 22(1) (a) (i).

All the participating units were requested to take into consideration the corrigendum dated 7.4.1998, while fixing pay of these Officers, But it was identified that in respect of the Officers indicated at para 1 above, the pay was fixed under FR 22(1)(a)(i) instead of FR 22(1)(a)(ii), as directed by corrigendum dated 7.4.1998 and was not modified which …..in over payment to these officers.”

18. As will be clear from the above order, it has been issued after considering the representation of the applicants and has given the reasons for the revised pay fixation which was an inadvertent error. It would be in order to observe that such errors in pay fixation are not uncommon and a Government employee is fully aware of the rules regarding pay fixation, particularly when a wrong fixation has been made that does not give him an indefeasible right to claim the wrong fixation as his entitlement. Not only this, it is a basic rule, and as stated in para (ii) of the OM dated 2.3.1995 (Annexure P-2) vide which offer of appointment was made to Applicant No. 2 Dr. Mahesh Kumar Mittal that:—

(ii) The scale of pay of the post is Rs. 3000-100-3500-125-5000 and his initial pay will be fixed in the scale according to rules or instructions issued by the Government of India as the case may be.”

19. By no stretch of imagination, can it be held that an erroneous pay fixation when rectified in accordance with the Government instructions, is mala fide or arbitrary. It is the settled position that when a person is appointed to a particular post, he is entitled to get the pay and allowances fixed for that post. It is also well established principle of Service Jurisprudence that the pay on the post is fixed as prescribed for that post under the Recruitment Rules and instructions. Just because an erroneous pay fixation has been made, that does not give an enforceable right to a Government Employee. As the pay scale erroneously allowed to the applicants initially has since been rectified after giving them show cause notice, it cannot be said to be mala fide or arbitrary. Applicants can rightly claim only such pay scale as they are entitled to in terms of the rules and as for the post to which they have been appointed.

20. Coming to the next ground of recovery, admittedly the erroneous pay fixation happened on account of administrative lapses viz. non receipt of the relevant instructions by the Safdarjang Hospital and is not attributable to any fault or misrepresentation on the part of the applicants. On the ratio of judgment of Hon'ble Supreme Court in Shyam Babu Verma's case (supra) in the circumstances it would not be proper to recover the excess amount which has already been paid to them.

20. In the light of above discussion, we feel that it would be just and fair to not effect recovery from the applicants and order accordingly. Accordingly, to that extent, OA is partly allowed. However, the revised pay fixation being correction of an erroneous pay fixation, being in accordance with rules, it would be neither appropriate nor justified for us to interfere therein. Respondents are well within their right to fix/revise pay scale in accordance with rules and to rectify an error which is what has happened in the instant case. Hence, the claim of the applicants that they should remain entitled to the erroneous pay fixation is neither justified nor valid. No costs.

Ajay Kumar Gupta (Dr.) v. Union Of India

Structured Summary of the Tribunal Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Applicants' Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Ajay Kumar Gupta (Dr.) v. Union Of India

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