Calcutta High Court: Employers Cannot Deduct Excess Payments from Retiral Benefits Due to Erroneous Pay Fixation

In a landmark ruling, the Calcutta High Court has declared that employers cannot deduct excess amounts from an employee’s retirement benefits if the overpayments were caused by errors in pay scale fixation made by the employer.

Background of the Case

• The case concerned an employee who started as a lecturer at Ramkrishna Mission Shilpapitha, Kolkata, on March 26, 1996, and retired on December 21, 2013.
• During his tenure, he was granted benefits under the Career Advancement Scheme (CAS) at two stages:
  • First CAS on March 26, 2001
  • Second CAS on March 26, 2006
• Post-retirement, the employer discovered a discrepancy: the employee had obtained his M.Tech. degree on March 25, 1996, just one day before joining the institute.
• A government order (dated October 24, 2007) required employees to serve six years post-degree to qualify for CAS benefits. This meant the employee was prematurely granted CAS benefits.

When this error was identified, the employer attempted to recover the overpaid amount by deducting it from the employee’s retirement benefits.

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Legal Proceedings and Key Judgment

• The employee challenged the recovery action by filing a writ petition.
• A single judge ruled in favor of the employee, stating the employer could not reclaim the excess amount.
• The employer appealed, but the division bench, consisting of Justice Harish Tandon and Justice Prasenjit Biswas, upheld the previous ruling.

Court’s Key Observations:

1. The overpayment resulted solely from the employer’s miscalculation.
2. There was no evidence of fraud or misrepresentation by the employee.
3. Employers cannot penalize employees for administrative errors.

The court ruled that deducting excess amounts from retiral benefits was unjust and prohibited the employer from doing so.

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Implications of the Ruling

This judgment sends a strong message to employers, emphasizing that:

• Employees should not be held accountable for administrative mistakes beyond their control.
• Retirement benefits are sacrosanct and must not be tampered with unfairly.

The verdict reinforces employee rights and ensures that they receive their full entitled benefits without undue deductions caused by employer errors.

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Key Highlights

• Case pertains to Ramkrishna Mission Shilpapitha Lecturer.
• Overpayment caused by employer’s erroneous application of CAS rules.
• Calcutta High Court ruled recovery from retiral benefits is unjust.

Read the original order below: