Employer Can Correct Erroneous Pay Fixation During Service Tenure: Gauhati HC

The Gauhati High Court has affirmed that administrative authorities possess the inherent right to rectify errors in pay fixation during an employee's service tenure, even if such corrections occur shortly before retirement. While judicial precedents shield certain employees from the recovery of past overpayments, they do not grant a right to perpetuate an illegality by maintaining an incorrect salary scale for pensionary calculations.

Justice Kaushik Goswami, sitting as a single-judge bench, heard the challenge against an order passed by the Assam Power Distribution Company Ltd. (APDCL) which refixed the pay of two retired employees. The petitioners, who retired as Subordinate Engineers, contended that the retrospective correction of their pay pertaining to a period spanning over two decades was impermissible at the 'fag end' of their careers.

The Distinction Between Recovery of Dues and Correction of Pay

The dispute arose after the APDCL detected an error in increments granted between 1989 and 2013, leading to a refixation that reduced the petitioners' terminal benefits. In an earlier round of litigation in WP(C) No. 7371 of 2013, the High Court had quashed the recovery of Rs.1,72,979/- from the petitioners. This previous intervention was based on the principles established in State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors. ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477), which prohibits recovery from retiring employees when it would be 'harsh and iniquitous.'

However, following that judgment, the APDCL issued a fresh order on September 17, 2015, clarifying that while no recovery of the overdrawn amount would be made, the corrected (lower) pay fixation would remain for the purposes of calculating retirement benefits. The petitioners challenged this, arguing that the pay fixation itself should not have been disturbed.

Court Rejects Reliance on Precedents Concerning Post-Retirement Corrections

The petitioners relied on Sushil Kumar Singhal v. Pramukh Sachiv, Irrigation Department & Ors. ( "(2014) 16 SCC 444": 2014 CaseBase(SC) 19) to argue against the 'fag end' correction. However, the Court distinguished the facts, noting that in the cited case, the correction occurred after the employee had already retired. In the present matter, the APDCL had issued the communication for refixation on September 5, 2013, while the petitioners were still in active service.

The Court, in its reasoning, observed: "Learned counsel for the petitioners has not been able to point out any statutory provision, rule, or legal principle prohibiting the respondents from correcting an erroneous pay fixation during the service tenure of an employee. Moreover, in the earlier round of litigation, while this Court interfered with the recovery orders, it did not interfere with the corrected pay fixation. It is also not in dispute that an error had indeed crept into the pay fixation of the petitioners during the period from 1989 to 2013."

The Court further emphasized that a judgment is only an authority for what it actually decides, citing State of Haryana v. Ranbir alias Rana ( "(2006) 5 SCC 167": 2006 CaseBase(SC) 1004), State of Orissa v. Sudhansu Sekhar Misra ( "AIR 1968 SC 647": 1967 CaseBase(SC) 161), and Anuj Jain v. Axis Bank Ltd. ( "(2020) 8 SCC 401": 2020 CaseBase(SC) 1246).

Final Directions of the Court

Dismissing the writ petition, the Court held that permitting an error to continue would amount to "perpetuating an illegality." The Court has following directions:

"The writ petition stands dismissed. There shall be no order as to costs."

Key Takeaways:

Service Tenure Fixation is Final

Correction of pay scales made while an employee is still in service is legally valid even if it takes place shortly before retirement, provided no recovery of past excess is sought.

Protection from Recovery is Not Protection from Correction

Receiving protection from the recovery of overpaid salary under State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors. ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477) does not entitle an employee to continue receiving a pension based on an admittedly erroneous pay scale.

Precedents are Context-Specific

Legal principles prohibiting pay correction at the 'fag end' of service typically apply when the correction is attempted post-retirement, not when the process began during active employment.

Ratio Decidendi:

There is no legal or statutory bar that prevents an employer from rectifying an erroneous pay fixation during the service tenure of an employee. While equity may prevent the recovery of excess amounts already paid to retiring employees, it does not mandate the continuation of a legally incorrect pay scale for the purpose of determining future retirement benefits.

Background:

The petitioners were employees of APDCL who served as Subordinate Engineers (Grade-II). Upon an audit, it was discovered that they had overdrawn salary due to incorrect increments granted since 1989. While the High Court had previously stopped the APDCL from recovering the overdrawn amount citing the hardship rules in State of Punjab & Ors. v. Rafiq Masih (White Washer) & Ors. ( "(2015) 4 SCC 334": 2014 CaseBase(SC) 477), the current petition focused on whether the APDCL could reduce the petitioners' last drawn pay (and consequently their pension) by correcting the underlying error. The Court held that since the error was detected and communicated before retirement, the correction was lawful under Article 226 of the Constitution of India.

Case Details:
Case No.: WP(C)/7986/2015
Case Title: Dipendra Nath Thakuria And Anr. V. Assam Power Distribution Company Ltd. And 5 Ors.
Appearances:
For the Petitioner(s): Mr. H. Das, Advocate.
For the Respondent(s): Mr. K. P. Pathak, Standing Counsel, APDCL.

Source: 2026 CaseBase(GAU) 10