S. Jayaraman vs The Engineer-in-Chief WRO and Chief Engineer (General) Public Works Department and Others

V. Dhanapalan, J.—Petitioner has filed this writ petition praying for issuance of a writ of certiorari calling for the records of the 1st

Respondent pertaining to the impugned circular issued in Circular No: CI (2)/ 935 / 2001 dated 08.04.2002 and the records of the 2nd

Respondent herein pertaining to the impugned proceedings in No: AG ( A & E )/PEN/ P15/1/J79-1714/RTD/2003-2004/550 dated 08.02.2004

and quash the same.

The brief facts of the Petitioner''s case is that Petitioner is a B.E.Degree holder and joined Government Service as Assistant Engineer with effect

from 26.05.1978. After putting up a service of 18 years and 2 months in the Post of Assistant Engineer (Selection Grade), Petitioner was

promoted as Assistant Executive Engineer and joined the post on 22.07.1996. He retired from service as Assistant Executive Engineer on

31.07.2003 a.n. on attaining the age of superannuation. By his letter dated 29.08.2003, the 4th Respondent herein submitted Petitioner''s pension

proposals to the 2nd Respondent. The 2nd Respondent, in his letter dated 13.10.2003, informed the 4th Respondent that re-fixation of

Petitioner''s pay as per the 1st Respondent''s circular dated 03.09.1999 is wrong and has directed the 4th Respondent to re-fix the same as per

the revised circular of the 1st Respondent dated 08.04.2002. Thereafter, based on Petitioner''s written representation dated 22.10.2003, the 4th

Respondent re-submitted the pension proposals by substantiating the re-fixation with relevant rules and regulations in his letter dated 23.12.2003.

Again, the 2nd Respondent, in his Lr. No: P15/1/J79-1714/RTD/2003-2004/550 dated 08.03.2004, informed the 4th Respondent about the

reduction of Petitioner''s last drawn pay and pension besides directing the 4th Respondent to recover the alleged excess from Petitioner''s

D.C.R.G. The Petitioner represented his case before the Tamil Nadu P.W.D.Senior Engineers Association, the 5th Respondent herein, which in

turn presented a memorandum to the 1st Respondent herein with facts and rules and requested the 1st Respondent to revise his 2nd circular dated

08.04.2002.Since the 1st Respondent has not replied to the said memorandum, Petitioner is before this Court challenging both the circular issued

by the 1st Respondent dated 08.04.2002 as well as the proceedings of the 2nd Respondent dated 08.03.2004 requesting the 4th Respondent to

re-fix Petitioner''s pay as on 16.06.1998 as per the impugned circular of the 1st Respondent dated 08.04.2002 and to recover the alleged excess

payment made to the Petitioner from the D.C.R.G. payable to him.

Learned Counsel for the Petitioner would contend that the impugned circular of the 1st Respondent dated 08.04.2002 and the consequential

proceedings of the 2nd Respondent dated 08.03.2004 are contrary to law and was violated by material irregularity. The Respondents ought to

have appreciated the fact that G.O. Ms. No: 57, Finance dated 28.01.1991 was issued only with a view to compensate a person subsequently

promoted and drawing lesser pay when compared to his lower post. The Government had issued orders directing that, if any point of time on or

after 01.06.1998, a Government servant would have drawn more pay in the revised pay scale in the substantive post had he continued in it than in

the officiating post in which he is actually working. He would also submit that Petitioner''s pay was re-fixed only based on G.O. Ms. No: 57 dated

28.01.1991 and that in the case of one Mr. v. Murugesan A.E.E., the 2nd Respondent had, in his letter No: PEN -15/ 5/M-48-457/AR/2000 -

01/CPR.450 dated 21.06.2001, held that no downward revision and recovery is necessary and as such there is no reason on the part of the 2nd

Respondent for deviating from its earlier stand and there is no reason for passing the impugned proceedings which is in total contradiction with

G.O. Ms. No: 57 dated 28.01.1991.

The learned Counsel for the Petitioner would further submit that the impugned order of direction to recover from the DCRG payable to the

Petitioner is totally illegal inasmuch as it is passed behind the back of the Petitioner without even giving a notice to the Petitioner and that the

Respondents had failed to follow the law laid down by the Hon''ble Supreme Court and this Court regarding recovery. Counsel would also

contend that the Respondents failed to appreciate the fact that the terminal benefits are a meager compensation for the long years of service

rendered by the Petitioner and it is extremely cruel for an employer to tell his employee that he will not be paid his terminal benefits due to him that

too without giving an opportunity of notice, hearing him, etc. and hence, the impugned order is one which is issued in clear violation of the

principles of natural justice and hence, it is liable to be set aside.

In support of his aforesaid contentions learned Counsel for the Petitioner would rely on the following decisions, viz.

(i) Bhagwan Shukla Vs. Union of India and others, .

(ii) Sahib Ram Vs. State of Haryana and Others, .

(iii) The State of Karnataka and Another Vs. Mangalore University Non-Teaching Employees Association and Others, .

(iv) R. Premakumari Vs. State of Tamilnadu,

(v) State of Bihar and Others Vs. Pandey Jagdishwar Prasad,

The 1st Respondent herein had filed counter affidavit stating that the Petitioner S. Jayaraman, Assistant Executive Engineer, Public Works

Department, was working in the Hydrology Division of Ground Water Division, Trichy, and he retired from service on the afternoon of

31.07.2003 on attaining the age of superannuation. It is submitted that while fixing the pay of the Petitioner on movement to selection grade in the

scale of pay of Rs. 9100-275-14050 by combining the services rendered as Assistant Engineer selection grade and Assistant Executive Engineer

ordinary grade in the identical scale as per G.O. Ms. No: 210 Personnel and Administrative Reforms (Per S) Department dated 11.3.1987 the

provisions under Rule 4 (3) of the Tamil Nadu Revised Scales of Pay Rules 1989 as ordered in G.O. Ms.No: 57, Finance (Pay Cell II)

Department dated 28.01.1991 was given effect to before fixing in the Selection Grade Scale. This method of fixation was objected to by the

Accountant General (Audit) and all the benefits accruing in the officiating post has to be availed before fixing the pay as per G.O. Ms. No:57

Finance (Pay Cell II) Department dated 28.01.1991. This is because the presumptive move to Special Grade in the lower substantive post

(Assistant Engineer) is permissible only after ordering actual move to selection grade in the higher officiating post (Assistant Executive Engineer) as

the period of ten years have to be cleared by satisfying conditions for promotions. Thus, the pay in the officiating post of Assistant Executive

Engineer has to be fixed first on movement of Selection Grade and then compared with the pay on presumptive move to special grade in the

substantive post of Assistant Engineer. Consequently, revised illustration was issued vide Chief Engineer (General)''s Office Circular No: CI

(2)/935/2001 dated 08.04.2002 based on Government Public Work Department clarification issued in Letter no: 7528 ''A''/A1/2002-2 dated

01.04.2002 confirming the procedure instructed by the Accountant - General (Audit), Tamil Nadu. The earlier illustration issued on 03.09.1999 by

the then Chief Engineer (General) is without the order of competent authority and so it is to be treated as not valid. The competent authority to

issue clarifications on such matters involving financial implication is the Government. Hence, based on the Government Orders the over paid

amount was directed to be recovered from the individuals whose pay were not fixed in accordance with the rules and clarifications.

It is also submitted that the amount over paid to the Petitioner was ordered to be recovered from his pay and allowances. Similar recovery

orders were issued on several others are being implemented by recovering the amount from their pay in installments in respect of those in service

and from their Death cum Retirement Gratuity for those who have retired. The Petitioner, on movement to Selection Grade, has to avail all the

benefits including the fixation on moving to Selection / Special Grade accruing in the officiating post i.e. before fixing the pay with reference to Rule

4 (3) of the said Rules which is the basis of audit objection made by the Accountant - General (Audit) which was also confirmed by the

Government, Public Works Department in Letter No: 7528A/ A1 / 2002-2 dated 1.4.2002. As per rule 4 (3) of the said Rules as ordered in

G.O. Ms. No: 57, Finance dated 28.01.1991, if a Government servant stands to benefit by remaining in the lower and substantive post in spite of

his promotion to the higher and officiating post he can get his pay fixed in the next higher stage in the scale of the officiating post after notionally

fixing his pay in the substantive post on the crucial date. But this provision can be availed only after availing all the benefits in the officiating post as

clarified by the Government. It is submitted that the provisions under Rule 4 (3) of the said Rules as per G.O. Ms. No: 57 Finance (Pay Cell II)

Department dated 28.01.1991 is to be availed only after availing all the monetary benefits in the officiating post as in the case of junior getting more

pay etc. Hence, availing two pay fixation benefits on one and the same date is not in order. The rule 4 (3) of the said Rules and the provision

ordered in G.O. Ms. No: 57, finance (Pay Cell II) Department dated 28.01.1991 was intended to offset the loss if any consequent on promotion

is made good in all these cases on movement to selection grade in the officiating post. It is submitted that G.O. Ms. No: 210 Personnel and

Administrative Reforms (Per S) Department, dated 11.03.1987 provides for counting the identical / higher scale of pay of the lower post in the

Selection Grade / Special Grade while moving to selection grade / special grade in the officiating higher post while in service. This has nothing to do

with the pay fixation on promotion as per Fundamental Rules 22 (B). The reason for not providing Fundamental Rules 22 (B) pay fixation for

Assistant Engineer Selection Grade/Special Grade on promotion as Assistant Executive Engineer is that they have been enjoying the higher scale of

pay applicable to first / second level promotion posts i.e. the scale of pay applicable to the petitioner (Rs. 8000-275-13500) and Executive

Engineer (Rs.10000-325- 15200) on movement to Selection Grade / Special Grade in the lower post (Assistant Engineer) without actually getting

promoted which is not available to those for whom Fundamental Rules 22 (b) pay fixation is permitted. Combination of two services in the

Selection Grade / Special Grade in the lower post (Assistant Engineer) and ordinary grade in the higher officiating post of Assistant Executive

Engineer for the purpose of selection grade in the officiating post (Assistant Executive Engineer) is an additional benefit given to these persons and

not for compensating for the Fundamental Rules 22 (B) pay fixation as presumed by the petitioner.

It is submitted by the Respondents that in this case the individual whose ordinary grade scale of pay is Rs. 6500-200-10500 before completing

30 years of service is moved to selection grade on completion of ten years in the scale applicable to first level promotion i.e. Assistant Executive

Engineer at Rs. 8000-275-13500 and special grade on completion of 20 years of service in the scale of pay as applicable to the second level of

promotion i.e.Executive Engineer at Rs. 1000-325-15200 which is far more beneficial without involving higher responsibilities. Those Assistant

Engineers who get promoted before actually moving to Special grade are allowed to move to selection grade in the promoted post by computing

the services rendered in the selection grade scale of Assistant Engineer as well i.e. before actual completing ten years of service as Assistant

Executive Engineer. Here the Petitioner after moving to selection grade can avail the benefits under Rule 4 (3) of the said Rules as ordered in G.O.

Ms. No: 57, Finance (Pay Cell II) Department date 28.01.1991 by comparing the benefits he would have received on presumptive move to

special grade in the lower post (Assistant Engineer) had he continued without promotion. This presumptive move is permissible only when period

covered up to the date of presumptive move is cleared by the competent authority who orders movement to selection grade in the officiating post

of Assistant Executive Engineer. Hence, only on ordering the movement to selection grade in the officiating post (Assistant Executive Engineer) the

presumptive move to special grade in the substantive post of Assistant Engineer takes place. If the selection grade in the officiating post is

postponed on account of charges, punishments, etc. the presumptive move to special grade in the substantive post also has to be postponed. Thus

it is very clear that the pay fixation also has to be followed by first fixing the pay in the selection grade scale of Assistant Executive Engineer and

then the fixation as per Rule 4 (3) of the said Rules. This is the basis under which the Accountant - General had raised audit objection which was

confirmed by the Government. The earlier order of the Engineer - in - Chief & Chief Engineer (General) issued on 3.9.1999 is not valid as the

competent authority to clarify on the G.O. is Government. Hence revised illustrations were issued on 8.4.2002 based on the clarification issued by

the Government Public Works Department in letter No: 7528 A/A1/2002-2 dated 1.4.2002. The unintended benefits enjoyed by the individual

ordered to be recovered is in order as per the Government instructions. It is submitted by the Respondents that the Government had introduced

the selection grade / special grade system only to give relief to those who are stagnating without promotions in the same post for more than 10 / 20

years. Even though this is not a promotion involving higher responsibilities, the conditions stipulated for promotions such as pendency of charges,

punishments, adverse remarks in the personal filed, etc. are to be satisfied before moving a person to selection grade and special grade for which

the Chief Engineer (General) is the competent authority to order for such move. When a person is promoted to next level post before completing

10 /20 years of service in the same post i.e.before actual movement to selection grade / special grade, he cannot be moved to selection grade /

special grade in the lower post after joining the promoted post as the intention of the Government for elevation to selection grade / special grade is

meant for those who do not get promotion within 10 /20 years. Thus an Assistant Executive Engineer cannot be moved to special grade in the

lower post if he was promoted before completion of 20 years of service in the lower post if he was promoted before completion of 20 years of

service in the lower post of Assistant Engineer. The presumptive move of special grade in the post of Assistant Executive Engineer is possible only

after elevating the individual to the selection grade in the post of Assistant Executive Engineer by the Chief Engineer (General) as the period to

count for presumptive move the special grade in the lower post of Assistant Engineer is cleared after ordering for movement to selection grade in

the officiating post of Assistant Executive Engineer. Therefore, it is very clear that one has to move to selection grade in the Assistant Executive

Engineer first, get the pay fixed in the selection grade scale of Assistant Executive Engineer in the scale of pay of Rs. 9100-275-14050 and then

compare the pay on presumptive move in the lower post and avail the better of the two as per G.O. Ms. No: 57 Finance (Pay Cell II) Department

dated 28.01.1991. Since the movement to selection grade/special grade is not a promotion, the pay fixation under Fundamental Rules 22 (1) (a)

(1) is not possible as the individual has no option to get his pay fixed at a later date on movement to selection grade/special grade. Hence,

comparing those moving to selection grade / special grade not involving higher responsibilities with those promoted to higher post carrying higher

responsibilities is not correct. It is also submitted by the Respondents that the over payment made to the Petitioner was ordered to be recovered

by the fourth Respondent based on the orders of the Government as explained above and no advance notice is required as the unintended benefit

enjoyed by the Petitioner causing burden on the State Exchequer has to be made good by the Petitioner with least delay and therefore, the

Respondents prayed for dismissal of the writ petition.

In support of their stand that the recovery ordered is correct, the learned Counsel appearing for the Respondents would rely upon the decision

reported in Registrar, Co-operative Societies Haryana Vs. Israil Khan and Others, . wherein it is held that,

There is no ""principle"" that any excess payment to employees should not be recovered back by the employer. This Court, in certain cases has

merely used its judicial discretion to refuse recovery of excess wrong payments of emoluments/allowances from employees on the ground of

hardship, where the following conditions were fulfilled:

(a) The excess payment was not made on account of any misrepresentation or fraud on the part of the employee.

(b) 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.

In Col. B.J. Akkara (Retd.) v. Govt. of India this Court explained the reason for extending such concession thus: (SCC pp. 728-29, para 28)

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 supplied)

What is important is, recovery of excess payments from employees is refused only where the excess payment is made by the employer by

applying a wrong method or principle for calculating the pay/allowance, or on a particular interpretation of the applicable rules which is

subsequently found to be erroneous. But where the excess payment is made as a result of any misrepresentation, fraud or collusion, courts will not

use their discretion to deny the right to recover the excess payment.

In these cases, the Rules specifically provided that the employees should be paid a consolidated salary. Therefore without amendment of the

Rules, the Managing Committees could not have passed a resolution for giving the benefit of regular pay scales that too with retrospective effect to

the employees. Further, the Societies did not have the funds to make such payments and illegally diverted the funds made available for disbursal of

loans to farmers, for the purpose of making such excess payment to the employees. When the resolution extending such benefit was passed and

the amounts earmarked for loans for farmers were diverted for making payment to the employees, the Managing Committees as well as the

employees were aware that the resolution and consequential payment was contrary to the Rules. There was no question of any wrong calculation

or erroneous understanding of the legal position. Most of the employees who received similar relief have refunded or have agreed to refund the

excess payment. Making any exception in the case of the Respondents would also lead to discrimination.

Therefore, the appeals are allowed, the impugned orders of the High Court holding that the illegal payments to the Respondents need not be

refunded to them are set aside. However, having regard to the hardship put forth by the employees, the Appellants are directed to calculate and

recover the excess payment in twenty-four monthly instalments.

Heard the learned Counsel appearing for the Petitioner and the respective learned Counsel appearing for the Respondents and perused the

material documents made available on record and the law laid down by this Court as well as the Supreme Court.

The Petitioner''s case is that he is a B.E. Degree holder and joined Government Service as Assistant Engineer with effect from 26.05.1978.

Although the Petitioner challenges the impugned order of the 2nd Respondent dated 08.03.2004 ordering recovery on merits also, his main

contention is that the order directing to recover the alleged excess payment from the D.C.R.G. payable to the Petitioner is passed behind his back

without giving him any notice and as such it is liable to be set aside on the ground of violation of principles of natural justice. On the other hand, the

learned Counsel appearing for the Respondents would submit that the second circular issued by the first Respondent is based on the instructions

given by the Government in Letter No: 7528A/A1/2002-2 dated 1.4.2002 after having pointed out by the Accountant - General. He would also

submit that the competent authority for giving clarification for pay fixation involving additional financial commitment is the Government and that the

reason for modifying the earlier circular dated 3.9.1999 is that the Accountant General has objected to the fixation of pay as per Circular No: CI

(2)/9730/99-2 dated 3.9.1999 because the Accountant General has stated that the benefits accruing in the officiating post has to be availed before

fixing the pay as per Rule 4 (3) of the said Rules as ordered in G.O. Ms. No: 57, Finance (Pay Cell II) Department dated 28.01.1991 which is

also logically and reasonably correct. As regards the contention of the Petitioner that no opportunity was given to him before ordering the

recovery, the learned Counsel appearing for the Respondents would submit that since the over payment made to the Petitioner was ordered to be

recovered by the 4th Respondent based on the orders of the Government, no advance notice is required as the unintended benefit enjoyed by the

Petitioner causing burden on the State exchequer has to be made good by the Petitioner with least delay.

While considering the aforesaid submission of the learned Counsel for the Petitioner it is to be seen that time and again, this Court as well as

the Supreme Court has laid down the law that the principles of natural justice has to be strictly followed and any violation cannot be permitted by

the Courts. In this regard, it would be appropriate to refer to the decision reported in Bhagwan Shukla Vs. Union of India and others, , wherein the

Supreme Court held that,

We have heard learned Counsel for the parties.That the Petitioner''s basic pay had been fixed since 1970 at Rs. 190 p.m. is not disputed. There

is also no dispute that the basic pay of the Appellant was reduced to Rs. 181 p.m. from Rs. 190 p.m. in 1991 retrospectively w.e.f.18-12-1970.

The Appellant has obviously been visited with civil consequences but he had been granted no opportunity to show cause against the reduction of

his basic pay. He was not even put on notice before his pay was reduced by the department and the order came to be made behind his back

without following any procedure known to law. There has, thus, been a flagrant violation of the principles of natural justice and the Appellant has

been made to suffer huge financial loss without being heard. Fair play in action warrants that no such order which has the effect of an employee

suffering civil consequences should be passed without putting the (sic employee) concerned to notice and giving him a hearing in the matter. Since,

that was not done, the order (memorandum) dated 25-7-1991, which was impugned before the Tribunal could not certainly be sustained and the

Central Administrative Tribunal fell in error in dismissing the petition of the Appellant. The order of the Tribunal deserves to be set aside. We,

accordingly, accept this appeal and set aside the order of the Central Administrative Tribunal dated 17-9-1993 as well as the order

(memorandum) impugned before the Tribunal dated 25-7-1991 reducing the basic pay of the Appellant from Rs. 190 to Rs. 181 w.e.f. 18-12-

1970.

In the case of Sahib Ram Vs. State of Haryana and Others, , the Supreme Court held that,

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.

In The State of Karnataka and Another Vs. Mangalore University Non-Teaching Employees Association and Others, , the Supreme Court held

that,

Though the above discussion merits the dismissal of the writ petitions and the denial of relief to the Respondents, we are of the view that on the

special facts of this case, the employees of the University have to be protected against the move to recover the excess payments up to 31-3-1997.

When the employees concerned drew the allowances on the basis of financial sanction accorded by the competent authority i.e. the Government

and they incurred additional expenditure towards house rent, the employees should not be penalized for no fault of theirs. It would be totally unjust

to recover the amounts paid between 1-4-1994 and the date of issuance of GO No. 42 dated 13-2-1996. Even thereafter, it took considerable

time to implement the GO.It is only after 5-3-1997 the Government acted further to implement the decision taken a year earlier. Final orders

regarding recovery were passed on 25-3-1997, as already noticed. The Vice-Chancellor of the University also made out a strong case for waiver

of recovery up to 31-3-1997.

In the case of State of Bihar and Others Vs. Pandey Jagdishwar Prasad, , the Supreme Court held as under:

It is not needed for this Court to verify the veracity of the statements made by the parties. If at all the Respondent entered the second date of

birth at a subsequent period of time, the authorities concerned should have detected it and there should have been a detailed enquiry to determine

whether the Respondent was responsible for the same. It has been held in a catena of judicial pronouncements that even if by mistake, higher pay

scale was given to the employee, without there being misrepresentation or fraud, no recovery can be effected from the retiral dues in the monetary

benefit available to the employee.

The Division Bench of this Court, in the case of R. Premakumari Vs. State of Tamilnadu, held that,

The second ground of attack by the learned Counsel appearing for the Appellant is that the finding of the learned Judge found in paragraph 9 is

erroneous that even if it is a case of wrong fixation, the employee is entitled for notice, and, therefore, this Court must follow the decision of the

Surpeme Court in Sahib Ram Vs. State of Haryana and Others, . In that decision, it is clearly stated by the Supreme Court that even if wrong

fixation has been made by the authorities, when recovery of the same is made, minimum principle of natural justice has to be followed and,

therefore, the employee is entitled for notice. We are bound to follow the said binding ratio.

Under the above circumstances, we hereby direct the second Respondent to give a notice to the Appellant with reference to the recoveries to

be made and justification for the same within a period of four weeks from the date of receipt of a copy of this order and personal hearing may be

granted by the 2nd Respondent. After hearing the objections of the Appellant, the 2nd Respondent is directed to pass a speaking order and

communicate the same to the Appellant. Till decision is taken, the Respondents are restrained from making any recovery of any amount from the

salary of the Appellant.

Thus, it is settled legal position that in cases where recovery is sought to be made from the employee, the minimum principle of natural justice

has to be followed and as such, the employee is entitled for notice. It is seen from the perusal of the documents made available on record that in

the case on hand no notice was given to the Petitioner before ever passing the impugned order of recovery. Therefore, for the foregoing reasons

and discussions made above and noticing the various decisions of the Hon''ble Supreme Court as well as this Court, the impugned proceedings in

so far as recovery of excess amount paid to the Petitioner alone is set aside. However, if the Respondents are of the opinion that the fixation is

otherwise wrong or contrary to the Government Orders or Rules, it is open to them to follow the procedure contemplated under law and pass

appropriate orders if necessary. The writ petition stands disposed of accordingly. Consequently, connected miscellaneous petitions are closed.

There shall be no orders as to the costs.