Shri Shankar Singh vs Managing Director, H.P. State Forest Corporation and Another

Surinder Singh, J.—The Petitioner served in the Indian Army and was discharged with effect from 21st June, 1982. Thereafter he got enrolled himself with the Ex-servicemen Cell, who sponsored his name in the civil services under the Respondents. The Petitioner was offered the post of Clerk vide letter dated 13th July, 1987 (Annexure PA) by giving him the relevant relaxation with regard to the age and qualification etc. which were at that time available to the ex-servicemen. Pursuant to it he joined the post of Clerk in the office of Forest Corporation, Hamirpur on 24th July, 1987.

Vide letter No. HPSFC/Dir(M)/E-PF-1/2342-45 dated 2nd June, 1989, Annexure PB, his pay was fixed after giving him benefit of approved military service. Accordingly, he was also given seniority. He was shown at serial No. 3 of the seniority list circulated in the year 1994. Thereafter he was promoted as Junior Assistant in the pay scale of Rs. 4400-7000. Later in the year 1999 Respondent No. 1 issued letter Annexure PD to the Director (North) HP State Forest Corporation, Dharamshala. The said letter is reproduced herebelow:

HIMACHAL PRADESH STATE FOREST CORPORATION LIMITED SHIMLA.

No. HPSFC/(1)B(15)-76-86/Vol-IV/21924-25 Dated 16.10.99.

The Director (North), H.P. State Forest Corporation, Dharamshala.

Subject: Information regarding number of ex-servicemen given civil employment against reserved post under the second preference.

Memo:

Please refer to your letter No. NZ/E-20-/6568 dated 16.8.99.

As per Govt. instructions issued vide Secretary (Personnel) to H.P. Govt''s letter No. Per(AB-II)A(3)-11/82/III dated 25.4.98 and Clause 3 & 5 of Demobilized Armed Forces Personnel (Reservation of vacancies in Himachal State Non-Technical Services) Rules 1972 the benefit of seniority and pay fixation to the following ex-servicemen who joined military service or were commissioned before 2.11.62 and were released any time thereafter was not permissible:

Sh. Achint Ram Office Ranger (Jr.) FSD, Dhanotu.

Sh. Mani Chand, Sr. Asstt. PWD Haroli.

Sh. Shankar Singh, Jr. Asstt. FWD, Hamirpur.

Sh. Bali Ram, Chowkidar/Peon, FWD, Dharamshala. All the above cases may now be recorrected and their pay/seniority may be refixed and recoveries of excess payment due to advance increments given to them be effected. A compliance report may be sent to this office within 14 days positively.

Sd/- Managing Director

The name of Petitioner, herein figures at Sr. No. 3 above. The main grouse of the Petitioner is that the aforesaid letter was issued without affording an opportunity of hearing to him, which is against the principle of natural justice and further that the Respondents could not have refixed and recovered the alleged excess amount due to the advance increments etc. because he did not make any misrepresentation to the Department. It was the Respondents who had fixed his pay without any misrepresentation or fraud played by the Petitioner.

The Respondents took up the stand that the Petitioner had made the representation against the said impugned letter quoted above which was rejected as he was not found entitled to any fixation of pay on his reemployment in the civil service since he did not fall within the parameters fixed for the pay fixation meant for the ex-servicemen because he had joined the military service before 1st November, 1962, as such his pay was required to be fixed under formula "B" of Chapter-3 of "the Demobilized Armed Forces Personnel (Reservation of Vacancies in Himachal Pradesh State non-Technical Service) Rules, 1972" copy whereof is Annexure R-1 appended to the reply.

Shri Bhupinder Thakur, learned Counsel for the Respondents vehemently argued that the Petitioner has no right to retain the excess amount and that the benefit which was wrongly acquired by the Petitioner for which he was not entitled, could be recovered by the Department.

Having considered the rival contentions of the parties in the light of judicial pronouncements rendered by the Apex Court from time to time, in my opinion, the Respondents are not entitled to recover the amount alleged to have been paid in excess to the Petitioner on account of fixation of the pay granted to him after a lapse of more than decade that too when he was at the fag end of his retirement.

Although, in State of Himachal Pradesh and Anr. v. Piara Singh 2002 (6) SLR 24 (SC) , the Apex Court held that the prescribing cut off date of 1.11.1962 for granting benefit to ex-servicemen recruited to civil posts was not arbitrary, but in Syed Abdul Qadir and Others Vs. State of Bihar and Others, Supreme Court laid down the following principles governing the circumstances in which the excess amount cannot be recovered by the employer:

That apart, it also appears from the record produced before us that while the Finance Department of the Government of Bihar was in favour of making the amended provisions of FR. 22-C applicable to the Appellants-teachers after having come to know that the said rule did not exist and had been substituted, the Department of Human Resource Development, Government of Bihar, wanted to apply the unamended provision to the Appellants-teachers so as to make available the benefit of additional increment provided for under FR.22-C to its teachers, unaware of the fact that even under FR.22-C they were not entitled to the additional increment as they were not discharging duties and responsibilities of greater importance on the promoted post.

This further goes on to show that the authorities in the State of Bihar were not even aware of the basic requirement for grant of additional increment and the decision appears to have been taken without proper application of mind. Otherwise, there was no reason for the Finance Department to state in the counter affidavit filed before the High Court that any affidavit filed on behalf of the Education Department may be ignored as Finance Department was the competent authority. In this very affidavit, the Finance Department while admitting that the pay fixation by the Education Department was wrong, stated as under:

...the fixation of pay under Fundamental Rule 22-C has wrongly been made as it was not in existence. Pay fixation on the basis of a nonexistent rule is a bona fide mistake.

This Court, in a catena of decisions, has granted relief against recovery of excess payment of emoluments/allowances if (a) the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee and (b) 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.

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 Vs. State of Haryana and Others, , Shyam Babu Verma and Others Vs. Union of India (UOI) and Others, ; Union of India (UOI) and Another Vs. M. Bhaskar and Others, ; V. Gangaram Vs. Regional Joint Director and others, ; Col. (Retd.) B.J. Akkara Vs. The Govt. of India and Others, ; Purshottam Lal Das and Others Vs. The State of Bihar and Others, ; Punjab National Bank and Others Vs. Manjeet Singh and Another, ; and Bihar State Electricity Board and Anr. v. Bijay Bahadur and Anr. .

Undoubtedly, the excess amount that has been paid to the Appellants - 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 Appellants-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 Appellants-teachers, we are of the view that no recovery of the amount that has been paid in excess to the Appellants-teachers should be made.

Learned Counsel also submitted that prior to the interim order passed by this Court on 7.4.2003 in the special leave petitions, whereby the order of recovery passed by the Division Bench of the High Court was stayed, some installments/amount had already been recovered from some of the teachers. Since we have directed that no recovery of the excess amount be made from the Appellant- teachers and in order to maintain parity, it would be in the fitness of things that the amount that has been recovered from the teachers should be refunded to them.

It is now settled law that there is no "principle" that any excess payment to the employees should not be recovered back by the employer. The Apex Court in certain cases has merely used its judicial discretion to refuse recovery of excess wrong payments of emoluments/allowance 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. (Retd.) B.J. Akkara Vs. The Govt. of India and Others, the Apex Court also explained the reason for extending such concession thus:

Such relief, restraining recovery back 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 received 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.

In Registrar, Cooperative Societies Haryana and Ors. v. Israil Khan and Ors. (2010) 1 SCC 44, the Supreme Court observed that 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 mis-presentation, fraud or collusion, Courts will not use their discretion to deny the right to recover the excess payment.

In the case in hand, there is no allegation that the Petitioner was made excess payment as a result of his misrepresentation, fraud or collusion. Thus the recovery of the excess amount at the fag end of his career when he was likely to retire would cause undue hardship to him, more specifically when he was found eligible for fixation of pay. Accordingly, impugned Annexure PD and subsequent letters/orders Annexures PF to PJ are hereby quashed. Consequently, the writ petition is allowed and the Respondents are directed to fix his pension and release the same within a period of three months from today, failing which it shall carry a simple interest @ 6% per annum from the date it fell due.