Union of India v. Suresh Kumar

2024 SCC OnLine SC 1909 Footnote: 1. Substituted by G.I., Dept. of P. & P. W., Notification No. 2/18/87-P. & P.W. (PIC), dated the 20th July, 1988, published as S.O. No. 2388 in the Gazette of India, dated the 6th August, 1988. • Substituted vide D/o. P&PW Notification No.20/16/1998- P&PWO dated the 7th April 2010 published in Gazette of India under SO 829(E) date the 12th April 2010.”

15. A bare perusal of the rule reveals that the recovery pertains to government accommodation dues and does not apply strictly to all dues. Therefore, the argument advanced by the respondents is fallacious. It is undisputed that the direction for the overpayment of wages was issued just two months prior to the applicant's superannuation.

16. The reliance on the undertakings of the two employees mentioned in the impugned order dated 06.01.2015 does not hold much weight. Even if we accept the respondents' argument, there is no evidence to show that the impugned order was based on a reference to the screening committee, which had earlier accorded the applicant the benefit of MACP. It would have been appropriate for the respondents to place the case. before the screening committee and grant the applicant an opportunity to be heard.

17. We also note that an Office Memorandum (OM) dated 02.03.2016, issued by the Government of India, Ministry of Personnel, Public Grievances & Pensions, Department of Personnel and Training, stipulates in clause 5 as follows:

18. Moreover, there is nothing on record to show that any inquiry or departmental action was initiated against any delinquent employee responsible for the wrongful recovery. We are also fortified by the recent decision passed by the Hon'ble Apex Court in the matter of Jagdish Prasad Singh v. State Of Bihar on 8 August, 2024, which supports the applicant's case.

19. Based on the above, we quash and set aside the impugned order dated 06.01.2015. The pay fixation made prior to the impugned order is restored. The applicant is entitled to a refund of ₹ 3.10 lakh, already deducted from the gratuity. We also make it clear that any consequential relief pursuant to the restoration of the order shall follow. This exercise shall be completed within three months from today, failing which the applicant shall be entitled to interest at GPF rates.”

6. Aggrieved by the decision of the Tribunal, the petitioner has approached this Court by means of the present writ petition.

7. We have heard Ms. Mittal, learned Counsel for the petitioner at some length.

8. The issue in controversy is squarely covered by the judgment of the Supreme Court in Jagdish Prasad Singh which, inter alia, relies on the earlier decisions of the Supreme Court in Syed Abdul Qadir v State of Bihar[6], Rafiq Masih and Thomas Daniel v State of Kerala[7].

9. We deem it appropriate to reproduce paras 20 to 24, 27 and 28 of the decision in Jagdish Prasad Singh, thus:

2022 SCC OnLine SC 536 violation of the principles of natural justice. Pursuant to the order dated 20th July, 2009 passed in the Writ Petition No. 6714 of 2009 filed by the appellant, he submitted a representation to the Secretary, Food and Consumer Protection Department, Government of Bihar, which vide order dated 8th October, 2009 was rejected, preceded by a personal hearing. A perusal of the said order would indicate that the Secretary took a view that as per paragraph 11 (supra) of the Government Resolution, the first/second time bound promotion of the appellant had come to an end automatically w.e.f. on 1st January, 1996 and thus, the appellant was required to be redesignated to the post of Marketing Officer and would be entitled to the revised pay of Rs. 5500-9000 w.e.f. 1st January, 1996 as recommended by the Fitment Committee. Thus, even in this order, the promotion conferred to the appellant to the post of ADSO on 10th March, 1991 is not doubted.

21. We firmly believe that any decision taken by the State Government to reduce an employee's pay scale and recover the excess amount cannot be applied retrospectively and that too after a long time gap. In the case of Syed Abdul Qadir (supra), this Court held that when the excess unauthorised payment is detected within a short period of time, it would be open for the employer to recover the same. Conversely, if the payment had been made for a long duration of time, it would be iniquitous to make any recovery. The relevant paras of the Syed Abdul Qadir (supra) are extracted hereinbelow: -

recovery of the amount paid in excess.

59. Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counteraffidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made.” (emphasis supplied)

22. Similarly, this Court in ITC Limited v. State of Uttar Pradesh, held as under: - “108. We may give an example from service jurisprudence, where a principle of equity is frequently invoked to give relief to an employee in somewhat similar circumstances. Where the pay or other emoluments due to an employee is determined and paid by the employer, and subsequently the employer finds, (usually on audit verification) that on account of wrong understanding of the applicable rules by the officers implementing the rules, excess payment is made, courts have recognised the need to give limited relief in regard to recovery of past excess payments, to reduce hardship to the innocent employees, who benefited from such wrong interpretation.”

23. In the case of State of Punjab v. Rafiq Masih (White Washer), this Court held as under: -

recoveries by the employers, would be impermissible in law:

(i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).

(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.

(iii) Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.

(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.

(v) In any other case, where the court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover.”

24. Recently, this Court in Thomas Daniel v. State of Kerala, held that the State cannot recover excess amount paid to the exemployee after the delay of 10 years. *****

27. The order dated 8th October, 2009 passed by the State Government directing reduction in the pay scale of the appellant from Rs. 6500-10500 to Rs. 5500-9000 w.e.f. 1st January, 1996 and directing recovery of the excess amount from him is grossly illegal and arbitrary and is hereby quashed and set aside. The impugned order dated 27th August, 2012 passed by the Division Bench of the High Court does not stand to scrutiny and is hereby quashed. Therefore, the appellant shall continue to receive the pension in accordance with the pay scale of Rs. 6500-10500.

28. In case, if any reduction in pension and consequential recovery was effected on account of the impugned orders, the appellant shall be entitled to the restoration/reimbursement thereof with interest as applicable.” (Emphasis as contained in the original judgement)

10. Though Ms. Mittal sought to contend that this was a case of erroneous fixation by fraud and misrepresentation, as the respondent was a member of the Committee which has determined the fixation of pay, there is no such allegation against the respondent.

11. The order by which the respondent’s pay was downwardly refixed merely notes that there was a mistake in refixation. Even if the respondent was a member of the Committee which refixed the pay, that does not ipso facto indicate that there was a fraud or misrepresentation.

12. From the time of Commissioner of Police v Gordhandas Bhanji[8], the law is that an order has to stand or fall on the basis of what is contained therein and cannot be sought to be improved by arguments made in Court or even by an affidavit. Mohinder Singh Gill v The Chief Election Commissioner[9], while relying on Gordhandas Bhanji, held, classically, thus:

AIR 1952 SC 16 of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” Orders are not like old wine becoming better as they grow older.” It is not permissible, therefore, for the petitioner to urge fraud or misrepresentation, when no such allegation is contained in the order dated 18 February 2016 whereby the respondent’s pay was downwardly refixed.

13. Ms. Mittal also seeks to rely on para 9 of Thomas Daniel to submit that, if the employee had knowledge of the fact that there was an excess payment made to him, the Court could, in its discretion, uphold the decision to effect recovery. The passage reads thus:

14. We are of the opinion that the manner in which Ms. Mittal is interpreting para 9 of the judgment in Thomas Daniel is erroneous. The paragraph has to be interpreted holistically. The Supreme Court has clearly held in the said paragraph that, where the excess payment is made on the ground of fraud or misrepresentation, recovery would be justified. No doubt, it has gone on to say that if the employee had knowledge of the fact that excess payment was being made to him, even in that case, recovery could be justified. The knowledge on the part of the employee, as would justify recovery of the overpayment, has to be that the payment made was in excess of his entitlement. It goes without saying that, if an employee knowingly and consciously receives payment in excess of what, to his knowledge, is due to him, he cannot later plead equities when such extra payment is sought to be recovered.

15. There is, however, no material on record to indicate that, at the time when the respondent’s pay was fixed under the MACP, he knew that he was being paid more than his entitlement. Admittedly, it was only later, at the time of internal audit in 2011, that this fact became known.

16. Such knowledge, which comes later, cannot be a basis to justify recovery. In this context, one may refer, profitably, to para 9 of the judgment of the Supreme Court in High Court of Punjab & Haryana v Jagdev Singh10 which contains the most oft-cited relaxation from the rigour of para 18 of Rafiq Masih:

furnished by the officer at the time when his pay was initially revised accepting that any payment found to have been made in excess would be liable to be adjusted. While opting for the benefit of the revised pay scale, the respondent was clearly on notice of the fact that a future refixation or revision may warrant an adjustment of the excess payment, if any, made.” (Emphasis supplied)

17. The proscriptions against recovery, as contained in para 18 of Rafiq Masih, in any case apply to cases where, in fact, there has been a mistaken overpayment. Clearly, therefore, the mere fact of a mistaken overpayment cannot ipso facto justify recovery of the overpaid amount. If the case falls within one or more of the contingencies envisaged in clauses (i) to (v) of para 18 of Rafiq Masih, the overpayment cannot be recovered.

18. In cases falling withing clause (ii) in para 18 of Rafiq Masih, where recovery is being sought to be effected from retired employees, of within a year prior to their retirement, Jagdev Singh permits such recovery if the employee, at the time of receiving the payment, undertakes to refund any excess if subsequently noticed, or is put on notice regarding such recovery. The relevant date, whether it is for “knowledge” as envisaged in Thomas Daniel, or undertaking or “notice” as envisaged in Jagdev Singh, is, therefore, the date when the alleged overpayment is made. If, on that date and at that time, the employee knows that he is being overpaid, or undertakes to refund any overpayment if subsequently noticed, or is put on notice to that effect, recovery can be made later, uninhibited by Rafiq Masih.

19. There is nothing to indicate that, at the time when the respondent was granted grade pay of ₹ 5,400/-, he was aware of the fact that the fixation was erroneous. It is clearly only thereafter that the Audit Report found the fixation to be erroneous.

20. If that was the case, it was incumbent on the petitioner to place the respondent on notice before downwardly refixing the pay, following the law laid down by the Supreme Court in Jagdish Prasad Singh. Recovery of overpayment would, in any case, stand proscribed.

21. We find no ground to interfere with the judgment of the Tribunal which is upheld in its entirety.

22. The writ petition is dismissed.

C. HARI SHANKAR, J.