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Whether government employees/ beneficiaries of an unauthorized higher pay scale scheme are liable to repay the excess benefits along with interest?

Judgement Name – M.P. Medical Officers Association vs State of Madhya Pradesh and Ors.

Judgement Date – August 26, 2022

Judges/ Bench – J. M.R. Shah; J. B.V. Nagarathna



Government doctors, specialists, dentists and medical officers are recruited by each state government having separate procedures and examinations for this sake. The central government institutions like AIIMS conduct their own all India examinations to recruit doctors. Usually, the Public Service Commission of every state conducts these exams for MBBS, BDS graduates who have passed the licensure examination. Their salaries, perks & other benefits, terms of work are also decided by the state government.  


According to the recommendations of the 7th Pay Commission, the average pay for a doctor is 5, 33,932 per year.  On the other hand, the pay scale of every doctor varies according to experiences and expertise in their profession. The Grade Pay concept introduced by 6th pay commission includes basic pay and grade pay helping to calculate allowances. However, the current healthcare system is highly short of delivering quality healthcare as India is ranked 112th among 190 countries having a doctor-patient ratio of 1:1700 while the recommended ratio is 1:1000. In this light, this article deals with a case of government doctors unfairly bearing the burden of an administrative error on the part of the government highlighting the need to improve the healthcare system and its working.


Why was the higher pay scale offered and to whom?

The appellant association members were Specialists and Dental Specialists governed by the M.P. Public Health and Family Welfare (Gazetted) Service Recruitment Rules,1988 which got repealed in 2007. The MP government published a circular (dated 27/03/2008) granting a four-tier pay scale to Medical officers, dental surgeons and officers in the specialist cadre provided they complete 6 years of service. However, the benefits shall become due only from the date of circular, even if the 6 year period was crossed before the date of circular according to another circular (dates 23/05/2009).


Why did the state government withdraw the circular?

The government found the circular was issued without the approval of the Finance department as the higher pay had a financial burden. Also, the authority which issued the circular was incompetent. So, by another circular (dated 30/05/2012) , the earlier circular was withdrawn and orders were passed to recover the excess pay along with interest.


What was decided in the lower court?

The MP Medical Officers Association filed a writ petition before a single judge bench of the MP High Court. Along with it, other individual writ petitions were also filed. The single judge took the matters together and allowed their petitions. By a common judgement, the communication through the 2012 circular  and the order for recovering excess amount with interest were quashed in 2017.


The State aggrieved by this decision filed an appeal in 2018 before a Division Bench of the same High Court. The Division Bench allowed the appeal and set aside the single judge bench’s judgement thus having the effect of upholding the 2012 circular and enforcing the order of the government for recovery of excess amount along with interest. The MP Medical Officers Association along with several other individual appellants approached the Apex court.


Issues Considered by the Apex Court – 

Was the circular (dated 30/05/2012) withdrawing the earlier circular valid?

The Apex court held that the government was right in issuing a subsequent circular to rectify a mistake caused in order to avoid major financial implications. And therefore, the Division bench of the High court was justified in quashing the order of single judge quashing the circular dated 30/05/2012 withdrawing the circular dated 23/05/2009. 


Are the employee recipients of excess benefit liable to repay the excess amount along with the interest?

The court observed that the state government had issued the circular by mistake and without any proper sanction. Therefore, it cannot make the employees pay the excess amount with interest for its own mistake. Moreover, the employees and the members of the association who received the benefit have not committed any misrepresentation or derived any unlawful  benefits. If they are made to pay, retired employees may have to use their pensions and other retirement benefits. Therefore, it is not fair and just. The Division bench was not justified in upholding the order of the government to recover the excess amount.



The court partly allowed all the appeals thus upholding the validity of the circular (dated 30/05/2012) and quashed the High Court’s judgement upholding  the government’s order to recover excess benefit along with interest. The court also held that pay fixation and pension shall be calculated according to the circular dated 26/08/2008 disregarding the circular dated 23/05/2009. The appeals were allowed with no costs. 


Written By: Sneha M.

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