Full Text
HIGH COURT OF DELHI
Date of Decision: 25th April, 2023
MADAN MOHAN SHARMA AND ORS. ..... Petitioners
Through: Mr. Dhruv Malik, Advocate.
Through: Mr. Tarkeshwar Nath, Mr. Lalit Mohan, Mr. Virat Saharan and Mr. Harshit Singh, Advocates for R-1.
Mr. Bhagvan Swarup Shukla, Central Government Standing Counsel for R-2/UOI.
JUDGMENT
1. By this writ petition, Petitioners seek a writ of certiorari quashing the demand letters, all dated 25.04.2018, issued to them for recovery of amounts paid to them prior to their retirements as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices.
2. There are four Petitioners in the present writ petition and their respective dates of appointments and retirements as well as dates of demand letters and amounts sought to be recovered thereunder are given hereinbelow, in a tabular form:-
┌───────────────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ given hereinbelow, in a tabular form:- │ │ Sl. Petitioner’s Date of Date of Date and numbers Amounts │ │ name Appointment Retirement of Demand │ │ No. │ │ Letters │ ├───────────────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 1. Madan 30.07.2008 30.06.2014 25.04.2018 Rs.8,76,611/- │ │ Mohan (STC/CO/PER/IR │ │ Sharma /02500(VOL-III)/ │ │ 2017/21/2018) │ │ Signature Not Verified │ │ Digitally Signed W.P.(C) 1564/2019 Page 1 of 17 │ │ By:KAMAL KUMAR │ │ Neutral Citation Number: 2023:DHC:2749 │ │ 2. Naresh 22.07.2005 30.11.2012 25.04.2018 Rs.6,59,029/- │ │ Kumar (STC/CO/PER/IR │ │ Mathur /02500(VOL-III)/ │ │ 2017/23/2018) │ │ 3. Nirmal 01.08.2006 11.12.2011 25.04.2018 Rs.4,30,704/- │ │ Narendra (STC/CO/PER/IR │ │ Kumar /02500(VOL-III)/ │ │ 2017/20/2018) │ │ 4. Sujoy 01.05.2007 30.04.2012 25.04.2018 Rs.4,79,311/- │ │ Sonkar Roy (STC/CO/PER/IR │ │ Burman /02500(VOL-III)/ │ │ 2017/19/2018) │ │ 3. Petitioners were working at Board Level positions with │ │ Respondent No.1/The State Trading Corporation of India Ltd. │ │ (hereinafter referred to as ‘STC’). Petitioner No.1 worked as Director │ │ (Personnel) from 30.07.2008 to 30.06.2014, Petitioner No.2 as │ │ Director (Marketing) from 22.07.2005 to 08.02.2009 and as Chairman │ │ and Managing Director from 09.02.2009 till 30.11.2012, Petitioner │ │ No.3 as Director (Finance) from 01.08.2006 to 11.12.2011 and │ │ Petitioner No.4 worked as Director (Marketing) from 01.05.2007 to │ │ 30.04.2012. STC is a Company wholly owned by the Government of │ │ India and under the administrative control of Respondent No.2 i.e. │ │ Department of Commerce, Ministry of Commerce and Industry, │ │ Government of India. │ │ 4. Shorn of unnecessary details, the facts necessary and relevant │ │ are that STC approved certain facilities and allowances to Senior │ │ Officials such as CMD/Directors/CVO/CGMs for maintaining │ │ residential offices w.e.f. 01.04.2005 after the decision was taken in │ │ a Board Meeting. These included reimbursements of: (a) electricity │ │ charges; (b) attendant charges; (c) gardener allowance; and │ │ (d) entertainment expenses. │ │ 5. Petitioners being senior officials and holding Board level │ │ positions, received the above benefits in the form of allowances, for │ │ maintaining the offices at their residences. An Office Memorandum │ │ Signature Not Verified │ │ Digitally Signed W.P.(C) 1564/2019 Page 2 of 17 │ │ By:KAMAL KUMAR │ │ Neutral Citation Number: 2023:DHC:2749 │ │ was issued by Department of Public Enterprises (DPE) on 26.11.2008 │ │ for revision of pay scales of Board Level and below Board Level │ │ executives and non-unionised Supervisors in Central Public Sector │ │ Enterprises (CPSEs) w.e.f. 01.01.2007. The O.M. specifically │ │ provided that the allowances and perks admissible to different │ │ categories of executives were subject to maximum ceiling of 50% of │ │ the Basic Pay. │ │ 6. On 23.12.2010, a circular was issued by STC in respect of │ │ Cafeteria-based perks and allowances for Board Level and below │ │ Board Level executive posts and as per the Petitioners although there │ │ was a mention of list of allowances to be withdrawn w.e.f. 01.12.2008, │ │ it did not include the earlier allowances payable from 01.04.2005. │ │ Petitioners were in receipt of the allowances till the time of their │ │ respective retirements. However, subsequently, show-cause notices, │ │ all dated 27.06.2017, were issued by STC to the Petitioners, inter alia, │ │ claiming recovery of the alleged wrongful/excess payments made to │ │ them during their service on account of the allowances paid towards │ │ maintenance of residential offices. │ │ 7. Respondent No. 2 issued a letter dated 09.05.2017 directing │ │ STC to recover the alleged excess/wrongful payments stating that the │ │ payments were in contravention of the DPE Guidelines. Petitioners │ │ replied to the show-cause notices between 05.07.2017 and 01.08.2017 │ │ and contested the recoveries. STC did not pay any heed to the replies │ │ and on 25.04.2018 issued demand letters to the Petitioners stating that │ │ the representations of the Petitioners along with their comments had │ │ been forwarded to Respondent No. 2, which in turn forwarded the │ │ same to DPE for its consideration, however, DPE conveyed its │ │ inability to waive the recoveries regarding excess payments towards │ │ perks and allowances. Therefore, STC called upon the Petitioners to │ └───────────────────────────────────────────────────────────────────────────────────────────────────────────────┘
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 counter-affidavit, 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.”
16. Finally, the Supreme Court in Rafiq Masih (supra), delineated a few situations where recoveries would be ‘impermissible in law’ while observing that it is not possible to postulate all situations of hardship which would govern employees on the issue of recovery. Relevant paras are as follows:-
It is apparent, that in Shyam Babu Verma case [Shyam Babu Verma v. Union of India, (1994) 2 SCC 521: 1994 SCC (L&S) 683: (1994) 27 ATC 121], the higher pay scale commenced to be paid erroneously in 1973. The same was sought to be recovered in 1984 i.e. after a period of 11 years. In the aforesaid circumstances, this Court felt that the recovery after several years of the implementation of the pay scale would not be just and proper. We therefore hereby hold, recovery of excess payments discovered after five years would be iniquitous and arbitrary, and as such, violative of Article 14 of the Constitution of India. xxxx xxxx xxxx
18. It is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:
(i) Recovery from the employees belonging to Class III and
(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.” (emphasis supplied)
17. Therefore, under the binding dictum of the Supreme Court, recoveries are impermissible where they are sought to be made from retired employees and when the excess payment has been made for a period in excess of five years, prior to the issue of recovery order and, in my considered view, case of the Petitioners fits under both the heads.
18. The issue cropped up yet again before the Supreme Court in Thomas Daniel v. State of Kerala and Others, 2022 SCC OnLine SC 536 and the Supreme Court held as under:- “9. This Court in a catena of decisions has consistently held that if the excess amount was not paid on account of any misrepresentation or fraud of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order which is subsequently found to be erroneous, such excess payment of emoluments or allowances are not recoverable. This relief against the recovery is granted not because of any right of the employees but in equity, exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered. This Court has further held that if in a given case, it is proved that an employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, the courts may on the facts and circumstances of any particular case order for recovery of amount paid in excess.
10. In Sahib Ram v. State of Haryana, this Court restrained recovery of payment which was given under the upgraded pay scale on account of wrong construction of relevant order by the authority concerned, without any misrepresentation on part of the employees. It was held thus: “5. Admittedly the appellant does not possess the required educational qualifications. Under the circumstances the appellant would not be entitled to the relaxation. The Principal erred in granting him the relaxation. Since the date of relaxation, the appellant had been paid his salary on the revised scale. However, it is not on account of any misrepresentation made by the appellant that the benefit of the higher pay scale was given to him but by wrong construction made by the Principal for which the appellant cannot be held to be at fault. Under the circumstances the amount paid till date may not be recovered from the appellant. The principle of equal pay for equal work would not apply to the scales prescribed by the University Grants Commission. The appeal is allowed partly without any order as to costs.” xxxx xxxx xxxx
14. Coming to the facts of the present case, it is not contended before us that on account of the misrepresentation or fraud played by the appellant, the excess amounts have been paid. The appellant has retired on 31.03.1999. In fact, the case of the respondents is that excess payment was made due to a mistake in interpreting Kerala Service Rules which was subsequently pointed out by the Accountant General.
15. Having regard to the above, we are of the view that an attempt to recover the said increments after passage of ten years of his retirement is unjustified.”
19. Subsequent thereto, a Division Bench of this Court in Ramdhan Gupta (supra) dismissed the writ petition filed by MTNL assailing the order passed by Central Administrative Tribunal, whereby the Tribunal had quashed the letter dated 26.12.2014, rejecting the employee’s representation against recovery sought to be made against him four days before his superannuation of an amount alleged to be an over-payment on account of inadvertent grant of two annual increments, nearly 20 years ago. Reliance was placed on the judgment of Rafiq Masih (supra) and the Division Bench also ruled that the dictum of the Supreme Court was not limited to employees belonging to Classes III and IV or Group ‘C’ and ‘D' and since the recovery was made short of the retirement and related to a period well in excess of five years, the action of MTNL was unjustified. To the same effect is the decision of the Division Bench in Satnam Singh (supra) where the issue pertained to recovery from employees post their superannuation from the gratuity payable to them on account of alleged over-payment of pay and allowances.
20. I may also, in this context, allude to another judgment of the Division Bench of this Court in T.N. Veeraraghavan v. Union of India and Another, 2018 SCC OnLine Del 12599, where the Court quashed the recovery notices, initiated on account of grant of stagnation increments consecutively for three years, contrary to the DPE Guidelines. Recovery was sought to be done in the year 2016 in respect of increments granted for the period 2002-05 and the Court held that stagnation increments were granted on a misunderstanding of the relevant Office Memorandum and in absence of any fraud, misrepresentation or error on the part of the Appellants/employees, the recovery would be iniquitous and harsh.
21. From the facts emerging in the present case, it is palpably clear that the allowances sought to be recovered by the impugned demand letters were introduced from 01.04.2005 and were paid to the Petitioners till their respective dates of retirement and there is not even an allegation that Petitioners are responsible for any fraud or misrepresentation. Petitioners retired way back between 2011 to 2014 and are in receipt of retiral benefits. In my view, it would be wholly harsh, arbitrary and iniquitous on the Petitioners if the Respondents are permitted to recover the amounts as sought to be recovered through the demand letters. The recovery is clearly barred in view of the judgment of the Supreme Court in Rafiq Masih (supra).
22. In view of the aforesaid, the impugned demand letters dated 25.04.2018 and the preceding show-cause notices dated 27.06.2017, in respect of the Petitioners are quashed and set aside, with a direction that no recovery shall be effected from the Petitioners. It needs to be noted at this stage that during the pendency of the writ petition and despite the interim order of this Court, it is the case of the Petitioners that some amounts were deducted by the Respondents especially in the case of Petitioners No. 3 and 4. It is, therefore, directed that wherever deductions have been made, the amounts shall be refunded with interest @ 9% per annum from the date of recovery till the date of actual payment.
23. Writ petition is allowed and disposed of in the aforesaid terms. Pending applications are disposed of.