No Recovery Without Fault: Punjab & Haryana HC Protects Employee from Pay Recovery Despite Wrong ACP Fixation

Case Name: Subhash Chand v. State of Haryana & Another

Date of Judgment: 27.03.2026

Citation: CWP-11053-2024

Bench: Hon’ble Mr. Justice Kuldeep Tiwari

Held: The High Court held that while erroneous grant of ACP benefits and increments can be corrected, recovery of excess payments is impermissible where the employee is not at fault and belongs to a lower cadre. Relief against recovery is grounded in equity.

Summary: The petitioner challenged an order directing re-fixation of his pay and initiation of recovery proceedings after he was granted the benefit of 3rd ACP. The dispute arose due to earlier grant of 2nd ACP and an additional increment, which were later found to be wrongly extended.

The petitioner had initially joined as Daftri in 1999 and was later promoted as Clerk. While granting the 2nd ACP, his pay was incorrectly fixed by taking into account the pay scale of the promotional post (Clerk) instead of the feeder post (Daftri), which was contrary to the applicable rules .

The Court held that ACP benefits must be calculated with reference to the feeder post and not the promotional post. Accordingly, the re-fixation of pay was upheld as valid.

On the issue of additional increment, the Court observed that such increment under the Shetty Commission recommendations was admissible only to employees holding the relevant post as on the cut-off date. Since the petitioner was not working as Clerk on the relevant date, he was not entitled to the increment.

However, the crucial issue before the Court was whether recovery of excess payments could be made.

Relying on settled Supreme Court precedents, including Rafiq Masih and B.J. Akkara, the Court held that recovery is impermissible where the employee has not committed any fraud or misrepresentation and the excess payment was due to employer’s mistake. The Court emphasized that employees in lower cadres typically rely on their salary for sustenance and recovery after a long period would cause undue hardship.

In the present case, the petitioner had no role in pay fixation, nor had he misrepresented any facts. The Court further noted that he belonged to a lower cadre (Daftri), making recovery inequitable and harsh.

Decision: The High Court partly allowed the petition and held that:

• Re-fixation of pay based on correct rules is valid.
• Grant of additional increment was rightly withdrawn.
• Recovery of excess amount from the petitioner is impermissible.

The direction for recovery was accordingly set aside.