The Orissa High Court ruled that the government cannot take back extra allowances it mistakenly pays to employees if the payment was based on an incorrect method of calculating their pay.
The petitioner, who worked as a mailman, was supposed to receive financial upgrades under the modified assured career progression scheme (MACP) after 30 years of service. However, he received this sum mistakenly before retiring, as highlighted by an internal audit report. After his retirement, his leave encashment benefits were held back to recover the extra amount paid to him under the MACP scheme.
The employee applied to the Central Administrative Tribunal (Tribunal) to receive the leave encashment. The Tribunal found that proper legal procedures hadn’t been followed to withhold the amount from the employee’s leave-encashment entitlement, and thus, he was awarded interest on the withheld amount.
Referring to Rule 39(3) of the Central Civil Services (Leave) Rules, 1972, the Court noted that the authority can withhold leave encashment for government servants facing suspension or disciplinary or criminal proceedings.
However, as the employee didn’t fall into any of these categories, the HC concluded that the conditions of Rule 39(3) weren’t met and withholding the encashment was unjustified.
A Division Bench, including Chief Justice Chakradhari Sharan Singh and Justice S.K. Sahoo, stated that the government shouldn’t recover excess payments if they were made due to incorrect calculations or misinterpretation of rules.
The Court invalidated the authorities’ action of deducting excess payment from the employee’s leave encashment and upheld the Tribunal’s decision to award interest.