Board of Trustees, Hindustan Steel Ltd. Vs. Union of India & Ors. - Thus considering that the petitioner's said members herein stand on the same footing as the petitioners in WPA 15459 of 2025 and ors. writs, it is directed that the order dated 28.02.2025 passed by the respondent no.4, is hereby quashed and set aside.

HC Calcutta (2026.01.29) in  Board of Trustees, Hindustan Steel Ltd. Vs. Union of India & Ors. [2026:CHC-OS:31, WPO 721 of 2025 ] held that;

• Thus considering that the petitioner's said members herein stand on the same footing as the petitioners in WPA 15459 of 2025 and ors. writs, it is directed that the order dated 28.02.2025 passed by the respondent no.4, is hereby quashed and set aside.

Blogger’s Comments; Hon’ble HC Calcutta (2025.11.14) in Anuradha Roy & Ors.Vs. The Union of India & Ors. [WPA 15459 of 2025] held that; 

• Hon‟ble Supreme Court passed in Vijay Kumar vs. Central Bank of India dated 15th July, 2025 also mandates that right to pension can be denied only under the Authority of Law. Authority of Law is derived from EPF Act, EPF Scheme, EPS 1995 and mandates of the Apex Court which do not stipulate determination of PoHW based on internal Trust Rules. Appropriation of judicial powers by executive action of EPFO in rejecting the applications on Trust Rules grounds is, therefore, beyond the Authority of Law.

• If both the employer and the employee opt for depositing against the actual salary and not the ceiling amount, exercise of option under para 26 of the EPF Scheme is ineligible. The deposit and acceptance of contributions on actual salary in the PF Scheme without any documentation of exercise of option has been construed to be a deemed exercise of option.

• In para 35 of the same judgment it has been held that the Trust Rules framed under the EPF Scheme cannot be cited to deny the benefits under the EPS 1995, since the establishment has not been exempted under the EPS 1995 in terms of para 39 thereof the conditions while granting exemption to one Scheme cannot be kaleidoscoped into another for which no exemption had been granted under the statute.

• Thus, the contention of the EPFO that without amendment of trust rules, the benefit is not applicable to the petitioners is not maintainable, in view of the fact that the Supreme Court did not observe or direct that the trust rules of an exempted establishment had to be amended in order to extend the benefit to its employee.

Excerpts of the Order; 

# 1. The writ petition has been preferred praying for directing the respondents no. 2 to 4 to accept and process the applications and joint options for payment of pension on higher wages along with payment of regular and arrears of higher pension to the eligible beneficiaries of the petitioner trust whose applications have been rejected vide order dated 28.02.2025 by the respondent no.4.

# 2. The petitioner herein being the Board of Trustees, The Indian Iron & Steel Company Limited Works Provident Fund Trust have filed the writ application on behalf of eligible members (both retired and in service) whose joint option application for higher pension as per the judgment of the Hon'ble Supreme Court in EPFO & Anr. Sunil Kumar B. & Ors., 2022 SCC OnLine SC 1521 has been rejected by the respondent no.4 vide order dated 28.02.2025.

# 3. The respondents/EPF has challenged the maintainability of the writ application on the ground that the Board of Trustees as petitioner herein, cannot raise or espouse the cause of the employees who claim higher pension by way of putting in joint option form with their establishment.

# 4. It is their further contention that the petitioner Trust has no locus standi to represent the employees as they are not its employees. The trust only maintains the trust fund and its function solely relates to everything to be done in respect of the said fund.

# 5. In the present case, its the EPF who has the authority to consider the joint option exercised by the establishment and its employee and its only they (the establishment and its employee) who have the locus standi to pray for such relief by maintaining a writ application.

# 6. Relying upon the judgment of the Calcutta High Court in Kelvin Jute Company Limited vs Krishna Kumar Agarwal and Ors., 2006 SCC OnLine Cal 82, the petitioner states that all affected individuals are either current or former members of the Petitioner Trust and as such the Petitioner Trust has a direct and substantial interest in the subject matter of the present proceedings.

The denial of higher pension benefits by the Respondents is predicated solely because of the cap mentioned in the Petitioner Trust's governing rules. This misplaced reliance on the trust rules in an attempt to blame the Petitioner Trust for denial of higher pension to its members, renders the Petitioner Trust a directly aggrieved party as the applications have been rejected on the pretext of non-amendment of the trust Rules.

# 7. The petitioner relies upon Para 7 of the judgment of the Supreme Court in Union of India vs Jyoti Chit Fund and Finance & Ors., (1976) 3 SCC 607, Where in the Court held:-

• "7. Processual law is neither petrified nor purblind but has a simple mission -- the promotion of justice. The court cannot content itself with playing umpire in a technical game of legal skills but must be activist in the cause of deciding the real issues between the parties. And one guiding principle is not to exaggerate the efficacy of procedural defects where issues of public concern are involved and a public authority vitally interested in the correct principle alerts the attention of the court to the problem. A broadened view of locus standi leads to the futility of technical flaws where larger issues are involved -- and that is the trend of modern processual jurisprudence. These general considerations were trite, yet too often ignored, and so need reiteration. Further, the consumers of justice can have scant respect for a procedural policy which is obsessed more with who sparks the plugs of the court system than with what the merits of the rights or wrongs of the relief are. A shift on the emphasis, away from technical legalistics, is overdue if the Judicature is not to aid its gravediggers. We express the view strongly so that hopefuls may be dissuaded from taking up court time by playing up technicalities."

# 8. The petitioner also relies upon the judgment in:-

i. Krishna Kumar Agarwala & Ors. vs Kelvin Jute Company Limited Workers Provident Fund Trust & Ors., 2002 SCC OnLine Cal 901, wherein the Court held:-

• "17. With regard to the question of locus standi of the petitioners on the ground that they are not persons aggrieved, it appears that the said contention is deviod of merit. The individual member workman or workmen, may have right as against the Trust and could have complained to the Provident Fund Commissioner and may approach the Court on account of his or their claim. But that will not preclude the Trustees, in the facts and circumstances of the case, to approach the Court. Inasmuch as, the Trustees of the fund, though a private trust, are discharging statutory liability in respect of the statutory fund, since exempted but recognized by the statute. It is the responsibility of the Trustees to discharge their statutory liability in respect of the fund, exempted under Section 17 of the 1952 Act according to the scheme approved. The accumulation of the provident fund dues of each individual member till 30th June, 1986, was, admittedly, maintained by Kelvin Trust. With the transfer of the members of Kelvin Trust to Waverly Trust, such accumulation is liable to be transferred to the Waverly Trust from Kelvin Trust. Therefore, as trustees of the Waverly Trust, the petitioners, have every right to demand such transfer, without which they are unable to discharge their statutory liability viz : to pay the dues payable to the members of the Waverly Trust. That apart, the letter dated 24th January, 2000 though issued during the pendency of the writ petition, yet it related to the position as it stood before the writ petition was moved. As such, in the facts and circumstances of the case, the petitioners are persons aggrieved.

• 18. The ground that the transferee is not the beneficiary is also untenable, in view of the fact that as such Trustees of the Waverly Trust, the petitioners are responsible for the purpose of administering the fund and discharging their statutory liability. The question that the beneficiary is paid by the employer, therefore, the Trustees could not claim transfer, is also equally untenable. Inasmuch as, there is nothing to show that the entire amount Was paid. It might be an inept drafting; but still then the statement made in Para-6 of the writ petition, on which Mr. Mitra had relied upon, does not bear out the meaning as was sought to be imputed by Mr. Mitra. Relying on the statement, Mr. Mitra sought to contend that Hooghly Mills Company had deposited the entire amount. In order to appreciate the said question, it would be beneficial to quote para-6 as hereafter:

• "6. Petitioner states that the dues in re spect of provident fund arrears liability taken by Hooghly Mills Ltd. till 29th June, 1986 has already been deposited by the Hooghly Mills Company Limited with the new Provi dent Fund Trust.""

ii. Gadde Venkateswara Rao vs State of A.P., 1965 SCC OnLine SC 25, (Para 8).

iii. Fertilizer Corporation Kamgar Union vs Union of India, (1981) 1 SCC 568, (Para 48).

# 9. The point of maintainability has been raised by respondent/EPF for the first time here.

# 10. The petitioner's contention that the writ petition is maintainable is on the following grounds:-

• a) That the employees whose interest is being espoused here are/were members of the petitioner trust, which has substantial interest in the subject matter (higher pension).

• b) As the denial of higher pension relates to the cap mentioned in the petitioner's un amended trust rules, the petitioner trust being an aggrieved party has the locus standi to maintain the writ application.

# 11. The respondent/EPF's contention on the writ petition not being maintainable is that the petitioner trust not being an aggrieved party has no locus standi.

# 12. The respondent/EPF in their affidavit-in-opposition are raising the point of maintainability of the writ application by the petitioner/trust, that it is not an aggrieved party has gone on to state grounds, which are to be grounds in appeal against the judgment dated 14.11.2025 passed in WPA 15459 of 2025 and other writ applications.

# 13. On hearing the parties and considering the grounds challenging the maintainability of the writ application and the petitioner trust's case that it is maintainable, and also the status of the petitioner trust herein, it appears that:-

i. Admittedly the petitioner/trust maintains the trust fund of the employees of the establishment.

ii. Admittedly the joint option is exercised by the employee and the establishment. Thus the trust has no role in the said exercise of option for higher pension.

iii. As to the stand taken by the petitioner trust that it has the locus standi to maintain this writ, as the refusal and rejection of the joint option application is:-

• (a) The un amended trust rules.

• (b) The prayer for amendment after the judgment in Sunil B. (Supra) .

• (c) The (limit) cap in the existing trust rules.

iv. Admittedly the rejection of joint option for higher pension is on quoting existing trust rules, and not allowing prayer for amendment/modification of the trust rules after the Supreme Court's judgment in Sunil Kumar B. (Supra), even though admittedly there is not a single word in the judgment in Sunil Kumar B. (Supra) about internal trust rules of an establishment.

# 14. Thus the petitioner trust is an aggrieved party and has the locus standi to maintain a writ application for the relief as prayed.

# 15. The writ application has been preferred praying for directing the respondents nos. 2 to 4 to accept and process the applications and joint options for payment of pension on higher wages along with payment of regular and arrears of higher pension to the members of the petitioner trust whose joint option form has been rejected vide order dated 28.02.2025.

# 16. The petitioner further prays for a direction upon the respondent nos. 2 to 4 to disburse pension on higher wages and/or accept contribution for higher wages on the basis of the exercise of joint option made by the petitioner along with his employer as per Employees' Pension Scheme, 1995, on setting aside/quashing the order dated 28.02.2025 passed by the respondent no.4.

# 17. The petitioner relying upon the order passed by this Court in WPA 15459 of 2025 and Ors. have prayed for similar relief on the ground that the petitioner's employees (whose applications have been rejected vide order dated 28.02.2025) herein are all similarly placed with the petitioners in WPA 15459 of 2025 and ors. writ applications (14).

# 18. The petitioner's members application for higher pension has been rejected by an order passed by the respondent no.4 on 28.02.2025, citing the trust rules of the exempted establishment.

# 19. The establishment in this case enjoys exemption under Section 17(1) of the said PF Act of 1952 from the operation of Employees' Provident Funds Scheme, 1952.

# 20. It is submitted that all employees of both exempted and unexempted establishments are considered to be the same as far as pension under EPS' 1995 is concerned and EPFO directly deals with pension matters for both classes of establishments. For the purpose of contribution to pension fund, employers only forward the requisite contribution every month to EPFO and they have no further role as employer under the EPS, 1995.

# 21. The petitioner states that the said employees are all in service since/after 01.09.2014, which is the cut off date as decided by the Supreme Court in The Employees Provident Fund Organisation & Anr. ETC. vs Sunil Kumar B. & Ors. ETC., in Civil Appeal Nos. ......... of 2022 (arising out of the SLP (C) Nos. 8658-8659 of 2019), decided on November 04, 2022 and have contributed towards provident fund on the basis of actual wages.

# 22. Thus considering that the petitioner's said members herein stand on the same footing as the petitioners in WPA 15459 of 2025 and ors. writs, it is directed that the order dated 28.02.2025 passed by the respondent no.4, is hereby quashed and set aside.

# 23. It is further directed that:-

• a) Any joint option application presented on or before 31.01.2025, or before any other further extension of time by the authority considered, if any shall be accepted by the respondents.

• b) On remittance of the differential contribution amount to the pension scheme, to the Employees' Provident Fund Organisation, by the employees, along with applicable interest, higher pension shall be disbursed to them from the succeeding month of their remittance.

# 24. WPO 721 of 2025 is allowed.

# 25. Connected application, if any, stands disposed of.

# 26. Interim order, if any, stands vacated.

# 27. Urgent Photostat certified copy of this Judgment, if applied for, be supplied to the parties, expeditiously after complying with all necessary legal formalities.

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Employees’ Pension Scheme, 2026

 Employees’ Pension Scheme, 2026: Key Changes in Pension Benefits, Family Pension, Withdrawal Benefits and Employer Compliance

The Ministry of Labour and Employment has notified the Employees’ Pension Scheme, 2026, superseding the Employees’ Pension Scheme, 1995 and Employees’ Family Pension Scheme, 1971, while preserving accrued rights and ongoing pension payments under the earlier schemes.

On 29 June 2026, the Ministry of Labour and Employment notified the Employees’ Pension Scheme, 2026 (EPS 2026) under Section 15(1)(b) of the Social Security Code, 2020 (Social Security Code). The Scheme consolidates and modernises the statutory pension framework under Chapter III of the Code on Social Security while preserving the contributory pension structure administered through the Employees’ Provident Fund Organization (EPFO).

The Scheme came into force from 29 June 2026.

Key Highlights:

The Scheme replaces the Employees’ Pension Scheme 1995 (EPS 1995) and the Employees’ Family Pension Scheme, 1971. Nonetheless, all pensions that have been sanctioned and rights that have been accrued through the previous schemes continue to be governed and protected under the new scheme, ensuring continuity of social security benefits.

The Scheme applies to:

1. employees who become members of the Employees’ Provident Fund Scheme, 2026 and satisfy the eligibility conditions, including the notified wage ceiling applicable for new membership, and

2. existing members of EPS, 1995 and the Employees’ Family Pension Scheme, 1971.

Membership continues until attainment of superannuation age, death of a member, receipt of withdrawal of benefits, or commencement of pension, whichever occurs earlier.

The existing Employees’ Pension Fund of EPS 1995 becomes the Pension Fund under EPS 2026. All assets, liabilities, and balances get transferred to the new Scheme without affecting pension disbursal.

The employer’s share remains unchanged at 8.33% of the wages till the notified wage ceiling. The share of the Central Government also remains the same at 1.16% of the wages, subject to certain statutory ceilings.

For members who have exercised the joint option under the earlier Employees’ Pension Scheme, 1995, the employer continues to contribute an additional 1.16% on wages exceeding Rs 15,000, making the effective pension contribution 9.49% on such wages, subject to the conditions governing higher pension already applicable under the earlier Scheme.

The Scheme formally defines service classification:

• Contributory service – Service in respect of which contributions have been paid or would be payable.

• Eligible service — Contributory service determined in accordance with the Scheme, including prescribed rounding-off rules for pension eligibility.

• Pensionable service — Service recognised for pension computation on the basis of contributions received or receivable in the Pension Fund.

For existing members,service rendered prior to 16 November 1995, continues to be included for determination of pension entitlement.

Members who have completed 20 or more years of pensionable service will continue to receive a two extra years of weightage, increasing the final pensionable service used for computation.

The pensionable wages are calculated by taking the average of the wages earned during the last 60 months prior to exit, based on the wage ceiling applicable during the respective periods.

Where full wages have not been drawn throughout the relevant 60 month period, pensionable wages will be computed in accordance with the averaging methodology prescribed under the Scheme.

Monthly pension continues to be computed as:

[Pension = (Pensionable Wages × Pensionable Service) ÷ 70]

When different wage ceilings have operated during the period of employment, the pension will be computed proportionally for each of the periods during which the wage ceiling has been in operation.

The Scheme provides structured pension benefits depending on the cause and timing of exit:

• Superannuation Pension – Payable to members completing at least 10 years of eligible service upon attaining the age of superannuation.

• Early Pension – Payable on 10 years of service if retirement is done before superannuation, but not prior to 50 years, with a deduction of 4% per annum in case of early drawal.

• Disablement Pension — Payable on permanent and total disablement during service, even if minimum qualifying service is not completed, provided at least one month’s contribution exists.

• Widow/Widower Pension — Payable to the surviving spouse from the date of death of the member, continuing until death or remarriage.

• Children’s Pension — Payable in addition to widow/widower pension, limited to two children at a time, up to 25 years of age, with lifelong entitlement for permanently disabled children.

• Orphan Pension — Payable where no surviving spouse exists, at a higher rate than children’s pension, subject to maximum two eligible orphans.

• Nominee Pension — Payable where no eligible family exists and a valid nomination is made; otherwise, benefits pass to dependent parents.

• Dependent Parents’ Pension — Payable to dependent father or mother where no spouse, children or nominee exists.

Members are allowed to defer pension beyond superannuation until 60 years of age, whereby the pension is increased by 4% per completed year of deferment. This encourages delayed retirement and enhances lifetime pension benefits.

The Scheme provides for early exit and withdrawal framework, according to which, employees exiting before completion of 10 years of eligible service may:

1. opt for withdrawal benefit under revised tables; or

2. obtain a Scheme Certificate enabling continuity of pensionable service upon future re-employment covered under the Scheme.

Withdrawal a member leaves employment before becoming eligible for pension and does not join another covered establishment, withdrawal benefits become payable after expiry of 36-month waiting period, from the date the last contribution became due or superannuation, whichever occurs earlier.

Where a member becomes permanently and totally disabled during service, he/she will be entitled to a pension even though the member has not completed the prescribed period of pensionable service, provided at least one month’s contribution has been received in the Pension Fund.

The pension will be payable from the date immediately following the date of disablement till his/her death. Medical examination may be required for determining permanent and total disablement.

The Scheme continues the minimum pension of Rs 1,000 per month, after permissible deductions such as early retirement pension and prior commutation benefits as applicable under the existing Scheme.

The Scheme expands family protection by ensuring structured priority among beneficiaries:

1. spouse first;

2. children (including disabled children with lifelong benefit);

3. orphans in specified cases;

4. nominees in absence of eligible family member; and

5. dependent parents as residual beneficiaries.

It also regulates cases of multiple widows, remarriage, and orphan succession.

A member or beneficiary cannot be denied pension merely because the employer failed to deposit contributions.

The scheme provides for time bound claim settlement, according to which, all pension claims must be settled within 20 days of receipt of complete application. Delay without sufficient cause attracts 12% annual interest, recoverable from the concerned officer.

Employers are required to:

1. file electronic monthly returns

2. maintain digital wage and service records

3. ensure timely deposit of contributions

4. facilitate inspections

5. comply with Central Board directions for implementation

6. furnish ownership and establishment particulars to the Commissioner wherever required

7. submit employee, wage and establishment particulars to the Commissioner within the prescribed timelines

The Scheme maintains structured governance for the Pension Fund, such as:

1. annual actuarial valuation of fund ;

2. audit by competent authorities;

3. consolidated accounts maintenance; and

4. investment of Pension Fund in accordance with the investment pattern prescribed under the EPF Scheme, 2026.

Exemption may be granted where establishments provide pension schemes offering benefits equal to or better than EPS 2026, subject to approval under the Code.

The Scheme also provides for transfer of value and migration of pension accumulations in cases of exemption, transfer between exempted establishments and statutory pension funds, subject to prescribed conditions.

International Workers are covered through:

1. totalisation of service under bilateral social security agreements;

2. inclusion of foreign service for eligibility;

3. withdrawal and pension benefit computation as per agreements; and

4. cross-border disbursement of pension.

In case where there are charges of murder or abetment of murder against the claimant of family pension, the payment of pension is withheld until the completion of criminal proceedings, and if he/she is convicted, then the pension is forfeited and paid to other eligible family members.

The EPS 2026 largely continues the existing contributory pension framework while aligning it with the Social Security Code. The Scheme preserves accrued rights under the earlier pension schemes, introduces clearer benefit provisions, strengthens family pension entitlements, improves digital administration, prescribes time-bound claim settlement, enhances protection against employer default, and streamlines governance of the Pension Fund without altering the core structure of the Employees’ Pension Scheme.

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(Courtesy - SCC Online  Link Article)

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Jogeswar Sahoo Vs The District Judge, Cuttack - It is not reflected in the record that such payment was made to the appellants on account of any fraud or misrepresentation by them. It seems, when the financial benefit was extended to the appellants by the District Judge, Cuttack, the same was subsequently not approved by the High Court which resulted in the subsequent order of recovery.

SCI (2025.04.04)  in Jogeswar Sahoo Vs The District Judge, Cuttack . [2025 INSC 449, 2025 SCO.LR 4(1)[5]] held that;-.

• 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).

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

• (iii) Recovery from the 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.”

• It is not reflected in the record that such payment was made to the appellants on account of any fraud or misrepresentation by them. It seems, when the financial benefit was extended to the appellants by the District Judge, Cuttack, the same was subsequently not approved by the High Court which resulted in the subsequent order of recovery.

Excerpts of the Order;

Leave granted.

# 2. This appeal is directed against the final judgment and order dated 09.11.2023 passed by the High Court of Orissa at Cuttack in WP (C) No. 33482 of 2023 whereunder the High Cout dismissed the appellants’ writ petition in which a challenge was made to the orders dated 12.09.2023 and 08.09.2023 passed by the Special Judge, Special Court, Cuttack and Registrar, Civil Courts, Cuttack, as the case may be, directing recovery of Rs 26,034/-, Rs.40713/-, Rs. 26539/-, Rs. 24683/- and Rs. 21,485/-.

# 3. At the relevant time, the appellants were working as Stenographer Grade-I and Personal Assistant in the establishment of District Judiciary, Cuttack, Orissa. They were granted financial benefit for a sum of Rs 26,034/-, Rs. 40713/-, Rs. 26539/-, Rs. 24683/- and Rs. 21,485/- by way of credit to their account vide Office Order No. 63 dated 10.05.2017 passed by the District Judge, Cuttack granting promotion/appointment retrospectively w.e.f 01.04.2003 consequent upon upgradation of the Stenographers in three grades such as Stenographer Grade-I, Stenographer Grade-II and Stenographer Grade-III by relying upon the recommendations of the respondent no. 1 in compliance towards the implementation of the report of the Shetty Commission.

# 4. After grant of such financial benefit, in the year 2017, the appellants have superannuated from their respective posts sometimes in the year 2020. After three years of their retirement and six years of granting the financial benefit, respondent no. 1 ordered for recovery of the said amount on the ground that extension of benefit of Shetty Commission’s recommendations to the appellants were on an erroneous interpretation of such recommendations, therefore, the financial benefit granted to them is liable to be recovered and under orders dated 12.09.2023 and 08.09.2023, the appellants were directed to deposit the excess drawn arrears. Since the orders were passed without affording any opportunity of hearing to the appellants, they preferred a writ petition before the High Court which came to be dismissed under the impugned judgment and order.

# 5. Learned counsel appearing for the appellants argued that the appellants were granted financial benefit without there being any fraud or misrepresentation by them, therefore, recovery of the amount after three years of their retirement is illegal and arbitrary. It is argued that the High Court has failed to consider the settled legal position in catena of decisions of this Court wherein such recovery from a low paid employee after retirement have been held bad in law.

# 6. Per contra, learned counsel appearing for the respondents would support the impugned judgment on submission that the appellants were not entitled to the financial benefit extended to them and the order passed by the District Judge, Cuttack was affirmed by the High Court of Orissa in exercise of an administrative power, therefore, the recovery is justified. It is also argued that such financial benefit upon retrospective promotion was granted with the condition that excess amount, if any, paid shall be refunded by the appellants and the appellants have furnished their respective undertakings to the said effect, therefore, they are estopped from challenging the recovery.

# 7. The issue falling for our consideration is not about the legality of the retrospective promotion and the financial benefit granted to the appellants on 10.05.2017. The issue for consideration is whether recovery of the amount extended to the appellants while they were in service is justified after their retirement and that too without affording any opportunity of hearing.

# 8. The law in this regard has been settled by this Court in catena of judgments rendered time and again; Sahib Ram vs. State of Haryana,1 Shyam Babu Verma vs. Union of India,2 Union of India vs. M. Bhaskar3 and V. Gangaram vs. Regional Jt. Director4 and in a recent decision in the matter of Thomas Daniel vs. State of Kerala & Ors.5

# 9. This Court has consistently taken the view that if the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous, such excess payments of emoluments or allowances are not recoverable. It is held that such relief against the recovery is not because of any right of the employee but in equity, exercising judicial discretion to provide relief to the employee from the hardship that will be caused if the recovery is ordered.

# 10. In Thomas Daniel (supra), this Court has held thus in paras 10, 11, 12 and 13:

• “10. In Sahib Ram v. State of Haryana this Court restrained recovery of payment which was given under the upgraded pay scale on account of wrong construction of relevant order by the authority concerned, without any misrepresentation on part of the employees. It was held thus

• “5. Admittedly the appellant does not possess the required educational qualifications. Under the circumstances the appellant would not be entitled to the relaxation. The Principal erred in granting him the relaxation. Since the date of relaxation, the appellant had been paid his salary on the revised scale. However, it is not on account of any misrepresentation made by the appellant that the benefit of the higher pay scale was given to him but by wrong construction made by the Principal for which the appellant cannot be held to be at fault. Under the circumstances the amount paid till date may not be recovered from the appellant. The principle of equal pay for equal work would not apply to the scales prescribed by the University Grants Commission. The appeal is allowed partly without any order as to costs.”

• 11. In Col. B.J. Akkara (Retd.) v. Government of India this Court considered an identical question as under:

• “27. The last question to be considered is whether relief should be granted against the recovery of the excess payments made on account of the wrong interpretation/understanding of the circular dated 7-6-1999. This Court has consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee, if the following conditions are fulfilled (vide Sahib Ram v. State of Haryana [1995 Supp (1) SCC 18 : 1995 SCC (L&S) 248], Shyam Babu Verma v. Union of India [(1994) 2 SCC 521 : 1994 SCC (L&S) 683 : (1994) 27 ATC 121], Union of India v. M. Bhaskar [(1996) 4 SCC 416 : 1996 SCC (L&S) 967] and V. Gangaram v. Regional Jt. Director [(1997) 6 SCC 139 : 1997 SCC (L&S) 1652]):

• (a) The excess payment was not made on account of any misrepresentation or fraud on the part of the employee.

• (b) Such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous.

• 28. Such relief, restraining back recovery of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion to relieve the employees from the hardship that will be caused if recovery is implemented. A government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it, genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or where the error is detected or corrected within a short time of wrong payment, courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery.

• 29. On the same principle, pensioners can also seek a direction that wrong payments should not be recovered, as pensioners are in a more disadvantageous position when compared to in-service employees. Any attempt to recover excess wrong payment would cause undue hardship to them. The petitioners are not guilty of any misrepresentation or fraud in regard to the excess payment. NPA was added to minimum pay, for purposes of stepping up, due to a wrong understanding by the implementing departments. We are therefore of the view that the respondents shall not recover any excess payments made towards pension in pursuance of the circular dated 7-6-1999 till the issue of the clarificatory circular dated 11-9-2001. Insofar as any excess payment made after the circular dated 11-9-2001, obviously the Union of India will be entitled to recover the excess as the validity of the said circular has been upheld and as pensioners have been put on notice in regard to the wrong calculations earlier made.”

• 12. In Syed Abdul Qadir v. State of Bihar excess payment was sought to be recovered which was made to the appellants-teachers on account of mistake and wrong interpretation of prevailing Bihar Nationalised Secondary School (Service Conditions) Rules, 1983. The appellants therein contended that even if it were to be held that the appellants were not entitled to the benefit of additional increment on promotion, the excess amount should not be recovered from them, it having been paid without any misrepresentation or fraud on their part. The Court held that the appellants cannot be held responsible in such a situation and recovery of the excess payment should not be ordered, especially when the employee has subsequently retired. The court observed that in general parlance, recovery is prohibited by courts where there exists no misrepresentation or fraud on the part of the employee and when the excess payment has been made by applying a wrong interpretation/understanding of a Rule or Order. It was held thus:

• “59. Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counter-affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made.”

• 13. In State of Punjab v. Rafiq Masih (White Washer) wherein this court examined the validity of an order passed by the State to recover the monetary gains wrongly extended to the beneficiary employees in excess of their entitlements without any fault or misrepresentation at the behest of the recipient. This Court considered situations of hardship caused to an employee, if recovery is directed to reimburse the employer and disallowed the same, exempting the beneficiary employees from such recovery. It was held thus:

• “8. As between two parties, if a determination is rendered in favour of the party, which is the weaker of the two, without any serious detriment to the other (which is truly a welfare State), the issue resolved would be in consonance with the concept of justice, which is assured to the citizens of India, even in the Preamble of the Constitution of India. The right to recover being pursued by the employer, will have to be compared, with the effect of the recovery on the employee concerned. If the effect of the recovery from the employee concerned would be, more unfair, more wrongful, more improper, and more unwarranted, than the corresponding right of the employer to recover the amount, then it would be iniquitous and arbitrary, to effect the recovery. In such a situation, the employee’s right would outbalance, and therefore eclipse, the right of the employer to recover.

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• 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).

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

• (iii) Recovery from the 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.”

# 11. In the case at hand, the appellants were working on the post of Stenographers when the subject illegal payment was made to them. It is not reflected in the record that such payment was made to the appellants on account of any fraud or misrepresentation by them. It seems, when the financial benefit was extended to the appellants by the District Judge, Cuttack, the same was subsequently not approved by the High Court which resulted in the subsequent order of recovery. It is also not in dispute that the payment was made in the year 2017 whereas the recovery was directed in the year 2023. However, in the meanwhile, the appellants have retired in the year 2020. It is also an admitted position that the appellants were not afforded any opportunity of hearing before issuing the order of recovery. The appellants having superannuated on a ministerial post of Stenographer were admittedly not holding any gazetted post as such applying the principle enunciated by this Court in the above quoted judgment, the recovery is found unsustainable.

# 12. For the aforestated, we are of the considered view that the appeal deserves to be allowed. Accordingly, we allow the appeal and set aside the order of the High Court and in consequence the orders dated 12.09.2023 and 08.09.2023 by which the appellants were directed to deposit the excess drawn arrears are set aside.

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1. (1995) Supp (1) SCC 18 [↩]

2. (1994) 2 SCC 521 [↩]

3. (1996) 4 SCC 416 [↩]

4. (1997) 6 SCC 139 [↩]

5. (2022) SCC online SC 536 [↩]

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