High Court Bars Recovery Of Excess Pay From Class‑IV Daily Wagers While Upholding Corrected Pay‑scale

A single‑judge bench of Justice Maulik J. Shelat heard a writ petition under Article 226 challenging an order dated 04/02/2013 by State authorities that sought recovery of excess salary paid to several daily‑wage Class‑IV employees. The petitioners, who had earlier received a higher pay fixation, contended that recovery was impermissible and that they were entitled to parity with other employees who received the higher scale.

The Court held that the State could not recover the excess payments from the petitioners who were Class‑IV employees, quashed the recovery direction to that extent, and declined to disturb the corrected fixation of pay at Rs.750‑940. The Court applied settled Supreme Court precedent that exercised equitable discretion to deny recovery where excess payments arose from employer error and where there was no fraud or misrepresentation by employees. The Court, in its reasoning, observed: "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 herein above, we may, as a ready reference, summarise 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". The Court further described the impugned recovery direction as "arbitrary and in violation of Article 14 of the Constitution of India" and directed that amounts already paid under the higher scale should not be recovered.

Background The petitioners were daily‑wage Class‑IV employees who had earlier been paid on a scale of Rs.950‑1500 and later were recorded by the State as being entitled to Rs.750‑940 pursuant to a Government Resolution dated 17/10/1988. The State issued order No.113 of 2013 dated 04/02/2013 seeking recovery of the excess amounts paid after it discovered an error in pay fixation. The petitioners relied on parity with other similarly placed employees and on precedents that restricted recovery absent mala fide or fraud; the State countered that the petitioners had not completed five years’ service by 17/10/1988 and were therefore governed by the 1988 resolution which prescribed the lower scale.

The Court reviewed Supreme Court authorities including Rafiq Masih (White Washer), Jogeswar Sahoo and related decisions that set out conditions where recovery would be impermissible. Applying those principles, the Court found no evidence of fraud or misrepresentation by the petitioners and held that equitable relief against recovery was warranted for Class‑IV employees. However, because none of the petitioners had completed five years’ service by 17/10/1988, the Court rejected their claim to parity with employees governed by an earlier 1973 resolution and upheld the corrected pay fixation at Rs.750‑940. The Court directed that retirement dues be fixed within three months where applicable, quashed the recovery portion of the impugned order, and partly allowed the petition. There was no order as to costs.

Case Details: Case No.: C/SCA/3368/2013 Case Title: Shankarbhai G. Nayi & Ors. v. State of Gujarat through Secretary & Ors. Appearances: For the Petitioner(s): Mr. Tejas P. Satta, Advocate For the Respondent(s): Ms. Dhruti Pandya, Additional Government Pleader (AGP)