Kishan Lal vs State And Ors

Sharad Kumar Sharma, J

Brief facts of the case are that the petitioner has been appointed as a driver, by way of direct recruitment in the office of Distrtict Development

Office Moradabad, as back as on 27.11.1987. Admittedly the services of the petitioner were transferred from Moradaabad Division, to the office of

District Development Officer, Almora and he was posted in the Extension Training Centre w.e.f. 1991. The State Government has issued a

Government Order dated 03.07.2006, by virtue of which the grade Pay as payable to the driver was classified into 4 wider categories. On the basis of

the stipulations provided therein in the Government Order dated 03.07.2006, the post of the driver would be falling in the category of grade 1, which

was based, on the basis of their seniority and those to the drivers belong to grade 2, and was on the basis of completion of three years of satisfactory

service of the department on the post of the driver.

On 01.04.2011, in pursuance to the Government Order dated 03.07.2006, and after an approval being granted by the office of respondent no.3, the

petitioner was promoted and adjusted on the post of the driver grade 3 w.e.f 03.07.2006. The Government Order of 03.07.2006, was later on amended

by the subsequent Government Order of 01.07.2013, whereby there was a marginal amendment which was brought about, only with regards to the

revision of the grades for the drivers belonging to the category under which they have been appointed with the respondents.

As a consequence thereto the petitioner’s case is that the respondents had granted the petitioner the grade pay of Rs. 2400 w.e.f. 27.11.2002,

on completion of 15 years of satisfactory service and thereafter the petitioner was also granted with the grade pay of Rs. 4200 on satisfactory

completion of 18 years of satisfactory services as on 22.08.2007. Later on the grade pay of the petitioner was once again revised and he was granted

the grade pay of Rs. 4600 on completion of 20 years of services i.e. w.e.f. 31.01.2014. Hence the contention of the petitioner is that on the date of

attainment of his age of superannuation in pursuance to the decision taken by the respondents and particularly in the context of his completing 20 years

of service he was already being granted and reckoned with the grade pay of Rs.4600 as was made payable to him w.e.f. 31.01.2014.

The grievance of the petitioner in the writ petition is that subsequent to the grant of the aforesaid grade pays on the basis of the Government Order

dated 03.07.2006; to be read with the Government Order dated 01.07.2013. Once he was already granted the grade pay on the basis of the executive

decision taken by the respondent they couldn’t have proceeded to pass the impugned order dated 11.05.2018, as it has been passed by respondent

no.7 and the consequential order of 24.03.2014, passed by respondent no.4 by virtue of which the respondent have reduced the grade pay and

simultaneously a direction has been issued for recovering of the alleged excess amount, which is said to have been paid to the petitioner to the tune of

Rs. 2,35,914/-. The petitioner’s contention, is that if the entire facts and the exercise resorted to for the grant of grade pay, are taken into

consideration the dates of granting of the grade pays of Rs. 2800, Rs. 4200 and Rs.4600 are i.e. on 27.11.2002, 22.08.2007 and 31.01.2014 whereas

the consequences of applications of the Government Order fixing the grade pays payable to the drivers as they were working on the respective grades

which was assigned to them while they were in services and having completed the required tenure of service.

The petitioner’s contention is that so far as the act of the grant of the grade pay as detailed above. The petitioner didn’t had any role to play

in the executive process adopted to for the fixation of the grade pay because the petitioner was otherwise also covered by covenants of the

Government Order of 03.07.2006 and move of reduction of the same could not have been made by the respondent by the impugned order of

24.03.2014 and the consequential order of 11.05.2018, as it happens to be contrary to the ratio which had laid down by the judgment of the

Hon’ble Apex Court as rendered in Rafik Masih’s case as reported in AIR 2015 SC page 696, the State of Punjab and others etc. vs. Rafiq

Masih and particularly the reference may be have to para 6, 7 and 11 of the said judgment which is extracted hereunder:

“6. In view of the conclusions extracted hereinabove, it will be our endeavour, to lay down the parameters of fact situations, wherein employees,

who are beneficiaries of wrongful monetary gains at the hands of the employer, may not be compelled to refund the same. In our considered view, the

instant benefit cannot extend to an employee merely on account of the fact, that he was not an accessory to the mistake committed by the employer;

or merely because the employee did not furnish any factually incorrect information, on the basis whereof the employer committed the mistake of

paying the employee more than what was rightfully due to him; or for that matter, merely because the excessive payment was made to the employee,

in absence of any fraud or misrepresentation at the behest of the employee.

Having examined a number of judgments rendered by this Court, we are of the view, that orders passed by the employer seeking recovery of

monetary benefits wrongly extended to employees, can only be interfered with, in cases where such recovery would result in a hardship of a nature,

which would far outweigh, the equitable balance of the employer's right to recover. In other words, interference would be called for, only in such

cases where, it would be iniquitous to recover the payment made. In order to ascertain the parameters of the above consideration, and the test to be

applied, reference needs to be made to situations when this Court exempted employees from such recovery, even in exercise of its jurisdiction under

Article 142 of the Constitution of India. Repeated exercise of such power, ""for doing complete justice in any cause"" would establish that the recovery

being effected was iniquitous, and therefore, arbitrary. And accordingly, the interference at the hands of this Court.

For the above determination, we shall refer to some precedents of this Court wherein the question of recovery of the excess amount paid to

employees, came up for consideration, and this Court disallowed the same. These are situations, in which High Courts all over the country, repeatedly

and regularly set aside orders of recovery made on the expressed parameters.

(i). Reference may first of all be made to the decision in Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475,(2009 AIR SCW 1871), wherein this

Court recorded the following observation in paragraph 58:

The relief against recovery is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to relieve the

employees from the hardship that will be caused if recovery is ordered. But, if in a given case, it is proved that the employee had knowledge that the

payment received was in excess of what was due or wrongly paid, or in cases where the error is detected or corrected within a short time of wrong

payment, the matter being in the realm of judicial discretion, courts may, on the facts and circumstances of any particular case, order for recovery of

the amount paid in excess. See Sahib Ram v. State of Haryana, 1995 Supp. (1) SCC 18 : (1995 air scw 1780), Shyam Babu Verma v. Union of India,

(1994) 2 SCC 521, Union of India v. M. Bhaskar, (1996) 4 SCC 416, V. Ganga Ram v. Director, (1997) 6 SCC 139, Col. B.J. Akkara (Retd.) v. Govt.

of India, (2006) 11 SCC 709, Purshottam Lal Das v. State of Bihar, (2006) 11 SCC 492, Punjab National Bank v. Manjeet Singh, (2006) 8 SCC 647

and Bihar SEB v. Bijay Bahadur, (2000) 10 SCC 99.

(Emphasis is ours)

First and foremost, it is pertinent to note, that this Court in its judgment in Syed Abdul Qadir's case (supra) recognized, that the issue of recovery

revolved on the action being iniquitous. Dealing with the subject of the action being iniquitous, it was sought to be concluded, 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. Interference because an action is iniquitous, must really be

perceived as, interference because the action is arbitrary. All arbitrary actions are truly, actions in violation of Article 14 of the Constitution of India.

The logic of the action in the instant situation, is iniquitous, or arbitrary, or violative of Article 14 of the Constitution of India, because it would be

almost impossible for an employee to bear the financial burden, of a refund of payment received wrongfully for a long span of time. It is apparent, that

a government employee is primarily dependent on his wages, and if a deduction is to be made from his/her wages, it should not be a deduction which

would make it difficult for the employee to provide for the needs of his family. Besides food, clothing and shelter, an employee has to cater, not only to

the education needs of those dependent upon him, but also their medical requirements, and a variety of sundry expenses. Based on the above

consideration, we are of the view, that if the mistake of making a wrongful payment is detected within five years, it would be open to the employer to

recover the same. However, if the payment is made for a period in excess of five years, even though it would be open to the employer to correct the

mistake, it would be extremely iniquitous and arbitrary to seek a refund of the payments mistakenly made to the employee. In this context, reference

may also be made to the decision rendered by this Court in Shyam Babu Verma v. Union of India (1994) 2 SCC 521, wherein this Court observed as

under:

Although we have held that the petitioners were entitled only to the pay scale of Rs 330-480 in terms of the recommendations of the Third Pay

Commission w.e.f. January 1, 1973 and only after the period of 10 years, they became entitled to the pay scale of Rs 330-560 but as they have

received the scale of Rs 330-560 since 1973 due to no fault of theirs and that scale is being reduced in the year 1984 with effect from January 1, 1973,

it shall only be just and proper not to recover any excess amount which has already been paid to them. Accordingly, we direct that no steps should be

taken to recover or to adjust any excess amount paid to the petitioners due to the fault of the respondents, the petitioners being in no way responsible

for the same.

(Emphasis is ours)

It is apparent, that in Shyam Babu Verma's case (supra), 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.

(ii). Examining a similar proposition, this Court in Col. B.J. Akkara v.Government of India, (2006) 11 SCC 709, observed as under:

Such relief, restraining back recovery of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise

of judicial discretion to relieve the employees from the hardship that will be caused if recovery is implemented. A government servant, particularly one

in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long

period, he would spend it, genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue

hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or

wrongly paid, or where the error is detected or corrected within a short time of wrong payment, courts will not grant relief against recovery. The

matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against

recovery.

(Emphasis is ours)

A perusal of the aforesaid observations made by this Court in Col. B.J. Akkara's case (supra) reveals a reiteration of the legal position recorded in the

earlier judgments rendered by this Court, inasmuch as, it was again affirmed, that the right to recover would be sustainable so long as the same was

not iniquitous or arbitrary. In the observation extracted above, this Court also recorded, that recovery from employees in lower rung of service, would

result in extreme hardship to them. The apparent explanation for the aforesaid conclusion is, that employees in lower rung of service would spend their

entire earnings in the upkeep and welfare of their family, and if such excess payment is allowed to be recovered from them, it would cause them far

more hardship, than the reciprocal gains to the employer. We are therefore satisfied in concluding, that such recovery from employees belonging to the

lower rungs (i.e., Class -III and Class- IV - sometimes denoted as Group 'C' and Group 'D') of service, should not be subjected to the ordeal of any

recovery, even though they were beneficiaries of receiving higher emoluments, than were due to them. Such recovery would be iniquitous and

arbitrary and therefore would also breach the mandate contained in Article 14 of the Constitution of India.

(iii). This Court in Syed Abdul Qadir v. State of Bihar (supra) held as follows:

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.

(Emphasis is ours)

Premised on the legal proposition considered above, namely, whether on the touchstone of equity and arbitrariness, the extract of the judgment

reproduced above, culls out yet another consideration, which would make the process of recovery iniquitous and arbitrary. It is apparent from the

conclusions drawn in Syed Abdul Qadir's case (supra), that recovery of excess payments, made from employees who have retired from service, or

are close to their retirement, would entail extremely harsh consequences outweighing the monetary gains by the employer. It cannot be forgotten, that

a retired employee or an employee about to retire, is a class apart from those who have sufficient service to their credit, before their retirement.

Needless to mention, that at retirement, an employee is past his youth, his needs are far in excess of what they were when he was younger. Despite

that, his earnings have substantially dwindled (or would substantially be reduced on his retirement). Keeping the aforesaid circumstances in mind, we

are satisfied that recovery would be iniquitous and arbitrary, if it is sought to be made after the date of retirement, or soon before retirement. A period

within one year from the date of superannuation, in our considered view, should be accepted as the period during which the recovery should be treated

as iniquitous. Therefore, it would be justified to treat an order of recovery, on account of wrongful payment made to an employee, as arbitrary, if the

recovery is sought to be made after the employee's retirement, or within one year of the date of his retirement on superannuation.

(iv). Last of all, reference may be made to the decision in Sahib Ram Verma v. Union of India, (1995) Supp. 1 SCC 18, wherein it was concluded as

under:

Mr. Prem Malhotra, learned counsel for the appellant, contended that the previous scale of Rs 220-550 to which the appellant was entitled became

Rs 700-1600 since the appellant had been granted that scale of pay in relaxation of the educational qualification. The High Court was, therefore, not

right in dismissing the writ petition. We do not find any force in this contention. It is seen that the Government in consultation with the University

Grants Commission had revised the pay scale of a Librarian working in the colleges to Rs 700-1600 but they insisted upon the minimum educational

qualification of first or second class M.A., M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science. The relaxation

given was only as regards obtaining first or second class in the prescribed educational qualification but not relaxation in the educational qualification

itself.

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.

(Emphasis is ours)

It would be pertinent to mention, that Librarians were equated with Lecturers, for the grant of the pay scale of Rs.700-1600. The above pay parity

would extend to Librarians, subject to the condition that they possessed the prescribed minimum educational qualification (first or second class M.A.,

M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science, the degree of M.Lib. Science being a preferential

qualification). For those Librarians appointed prior to 3.12.1972, the educational qualifications were relaxed. In Sahib Ram Verma's case (supra), a

mistake was committed by wrongly extending to the appellants the revised pay scale, by relaxing the prescribed educational qualifications, even though

the concerned appellants were ineligible for the same. The concerned appellants were held not eligible for the higher scale, by applying the principle of

equal pay for equal work"". This Court, in the above circumstances, did not allow the recovery of the excess payment. This was apparently done

because this Court felt that the employees were entitled to wages, for the post against which they had discharged their duties. In the above view of

the matter, we are of the opinion, that it would be iniquitous and arbitrary for an employer to require an employee to refund the wages of a higher post,

against which he had wrongfully been permitted to work, though he should have rightfully been required to work against an inferior post.â€​

Which had provided that once an amount of an enhanced grade pay has already been paid to the petitioner during the tenure of his services and that

too on a voluntary decision which had been taken by the respondents, even on account of any overt act or a decision taken by the respondents which

has been on a later stage, rectified, no direction could be issued to recover the amount which is alleged to have been bonafidely paid in excess to the

petitioner, hence the recovery and the order passed for it, itself would be in contravention to the aforesaid judgment of Rafiq Masih’s case and

since the respondents have voluntarily ascertained the grade pay of the petitioner at Rs. 4600 w.e.f. 31.01.2014.

The same couldn’t have been reduced at a later stage because even otherwise looking to the tenure of services rendered by the petitioner since

having served with the respondents ever since his initial date of inductment on 27.11.1987, he had completed 20 years of satisfactory services in order

to entitled him for the grant of grade pay of Rs. 4600 as already paid to him w.e.f. 31.01.2014.

There is another aspect, which this Court feels it necessary to be dealt with, apart from the fact that the petitioner was not at all instrumental in the

decision making process while the respondent was fixing the grade pay, which was made payable to the petitioner as per the Government Order

already referred thereto.

There is another aspect of the matter, that even if it is presumed that it was a wrong fixation of the grade pay, that has to be withdrawn and any

reduction was required to be made the respondents were supposed to provide an opportunity of hearing to the petitioner, before taking any action, but

apparently from the perusal of the impugned order it doesn’t show that the petitioner was ever heard hence the impugned order is bad in the eyes

of law, since being violative of principles of natural justice, as the impugned action would have civil consequences, if the grade pay already awarded is

unilaterally reduced. Though the petitioner was legally entitled for upgradation.

Having observed that, it may not be construed by the respondents, that as if this Court is opening a gate for the respondents for conducting a

proceedings de novo, against the petitioner at this stage with regards to the fixation of the pay scale, because looking to the tenure of service rendered

by the petitioner, this Court is of the view that the petitioner’s grant of grade pay would be falling within the ambit of the parameters which had

been laid down in the Government Order dated 03.07.2006, accordingly the writ petition is allowed. The impugned orders are quashed. The

respondents have directed to settle the pensionary benefits based on the last grade pay granted to him of 4600 w.e.f. 31.01.2014.

However, there would be no order as to costs.