The Supreme Court has observed that excess payment made to employee in form of emoluments or allowances based on particular interpretation of rule/order subsequently found to be erroneous, is not recoverable.
The Division Bench Justice S. Abdul Nazeer and Justice Vikram Nath granted relief to a retired employee and noted that it is not his fault and judiciously, the recovery can't be ordered against hi.
The issue raised in the appeal as to whether increments granted to the appellant, while he was in service, can be recovered from him almost 10 years after his retirement on the ground that the said increments were granted on account of an error?
The brief facts of the case is that the appellant was an Asssitant Teacher in a High School. During his tenure, he availed leave without allowance for pursuing post-graduation. Thereafter, appellant was promoted as Headmaster of the school and he was granted senior grade promotion and his pay scale was revised accordingly.
Later on, in 1999, a Notice accompanied with an audit report of the Account General was served on the appellant by the District Educational Officer with an objection that the period of leave obtained by the appellant for undergoing higher education should not be included while determining his total qualifying service. It was contended that the pay and subsequent increments granted to the appellant should be recovered from him.
The appellant challenged the proposal to initiate recovery proceedings against him by way of filing a complaint which was rejected. In the meantime, the Education Department sanctioned the release of 90% of the D.C.R.G. amount after withholding 10%.
Aggrieved, the appellant filed a writ petition before the High Court. During the pendency of the writ petition, the remaining amount of D.C.R.G was also released to the appellant. However, the respondent- State of Kerala in their counter affidavit took a stand that the period during which the appellant was on leave without allowance for undertaking post-graduation cannot be counted for the purpose of grant of increments and, therefore, the demand for recovery made by them was justified. The single-judge bench upheld the reasoning and dismissed the writ petition. The appeal against the same was dimissed by Division Bench of the High Court affirming the reasoning in the impugned order.
The Counsel for the appellant contended that the excess payment made was not on account of any misrepresentation or fraud on his part rather the excess payment was made due to a mistake in interpreting the Kerala Service Rules. He averred that the appellant is retired and in debt with troubling medical condition and therefore, the recovery order is an unneccessary burdden on him.
The Court mentioned that, it has in catena of decisions reiterated again and again 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."
It further stated 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.
It referred to Sahib Ram Vs. State of Haryana, 1994 Latest Caselaw 474 SC, Col. (Retd.) B.J. Akkara Vs. The Govt. of India & Ors, 2006 Latest Caselaw 636 SC,
Accepting the appellant's contentions, the Court noted that an attempt to recover the said increments after passage of ten years of his retirement is unjustified.
The appeal was accordingly allowed.
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