Unjust to recover excess salary to staff just before retirement: Madras HC

CHENNAI: An organisation or company initiating proceedings to recover the excess salary paid to an employee who is on the verge of retirement was unjust, said the Madras High Court, and rejected the recovery order initiated by the State Bank of India against an employee.

The recovery of overpaid amount just before retirement would undeniably cause undue hardship to the employee, held a division bench of Justice D Krishna Kumar and Justice PB Balaji, adding that it was contrary to the guidelines set by the Supreme Court in the State of Punjab and others vs Rafiq Masih case.

An employee on the verge of retirement should be shielded from the financial burden of recovery, especially when he had no role in the overpayment, held the bench while dismissing the appeal moved by the largest nationalised bank seeking to set aside an order of a single judge.

K Manickam, an ex-serviceman discharged from the Indian Air Force, joined the Coimbatore branch of the SBI as a customer relationship associate in 2006.

In March 2021, one month before Manickam retired from service, the bank revised his pay fixation from Rs 8,400 to Rs 7,000. Aggrieved by the reduction in his salary, Manickam moved a petition. After hearing the case, the court quashed the pay revision order and directed the bank to refund the salary recovered from him back to the petitioner.

Challenging the order of the single judge, SBI moved the appeal.

Appearing for the bank, advocate ML Ganesh submitted that based on the bipartite settlement, SBI was right in recovering the excess payment made to the respondent. His pay fixation was carried out in line with the directions of the Indian Banks' Association (IBA) regarding the re-employment of ex-servicemen, he added, and sought to set aside the single judge order.

But Manickam’s counsel cited the judgment of the Supreme Court in the State of Punjab and others vs Rafiq Masih case and submitted that he was entitled to the relief rendered by the single judge.

Hearing both parties, the division bench not only agreed with him but also held that it was unjust to cause undue hardship to the employee for no fault of his.