Delhi High Court
Madan Mohan Sharma And Ors. vs The State Trading Corporation Of ... on 25 April, 2023
Neutral Citation Number: 2023:DHC:2749
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 25th April, 2023
+ W.P.(C) 1564/2019 & CM APPL. 7230/2019 & 9738/2021
MADAN MOHAN SHARMA AND ORS. ..... Petitioners
Through: Mr. Dhruv Malik, Advocate.
versus
THE STATE TRADING CORPORATION OF INDIA
LTD. AND ANR. ..... Respondents
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.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGEMENT
JYOTI SINGH, J.
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:-
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)
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By:KAMAL KUMAR
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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
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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
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pay the amounts within three weeks from the date of receipt of the
demand letters. Faced with the demands, Petitioners filed the present
writ petition and by order dated 15.02.2019, this Court directed that
till further orders, no coercive steps shall be taken against the
Petitioners to recover the amounts in question and the interim order
has continued till date.
Contentions on behalf of the Petitioners:-
(A). Action of STC to issue the show-cause notices followed by
demand letters impugned herein, at the instance of Respondent No. 2,
is illegal and arbitrary as there is no plausible reason to allege that
payments made towards perks/allowances towards maintaining
residential offices were in excess or wrongful and/or in contravention
of DPE Guidelines. These payments were legitimate reimbursements
made by STC to the Petitioners who were all Board Level senior
officers for functional purpose of carrying out their official work from
residence. This is fortified by the show-cause notices itself wherein
STC refers to the decision taken by the Board of Directors of STC in
their 534th Meeting held on 29.07.2005, whereby certain facilities and
allowances were approved w.e.f. 01.04.2005, after due deliberations.
After the decision of the Board, the payments were commenced in
2005 and continued till retirements. While Respondents are repeatedly
asserting that the excess/wrongful payments were made in
contravention of DPE Guidelines, however, there is no mention of
what are those guidelines and which part of the guidelines has been
allegedly contravened or violated.
(B). The show-cause notices reflect that the genesis of the recovery
is the decision to introduce Cafeteria-based perks and allowances vide
O.M. dated 26.11.2008 pegging them at a ceiling of 50% of the Basic
Pay. However, Respondents are unable to explain the connection
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between this O.M. which relates to allowances meant for managerial
level positions and the payments sought to be recovered from the
Petitioners on account of benefits introduced pursuant to a board
meeting held on 29.07.2005. It is totally denied that Petitioners have
been paid any excess or wrongful payments as sought to be claimed
by the Respondents as an afterthought.
(C). It is undisputed that the alleged excess/wrongful payments were
made by STC to the Petitioners of its own accord and pursuant to a
Board decision and was not a result of any fraud or misrepresentation
by the Petitioners. Payments were introduced from 01.04.2005 and
were discontinued from 01.02.2016 and as a matter of record each of
the Petitioners received the money in excess of five years till the show
cause notices/demand letters were issued. The case of the Petitioners
is squarely covered by the judgment of the Supreme Court in State of
Punjab and Others v. Rafiq Masih (White Washer) and Others,
(2015) 4 SCC 334 and on both counts i.e. recovery post-retirement
and with respect to amounts paid in excess of 5 years, Respondents are
debarred from effecting the recoveries. In response to the demand
letters, Petitioners categorically brought to the notice of the STC that
no recoveries can be made in view of the judgment in Rafiq Masih
(supra), however, the demand letters were not withdrawn.
(D). Impugned action of the Respondents is not only against the
judgment of the Supreme Court in Rafiq Masih (supra) but also
violates the DoPT O.M. dated 02.03.2016, whereby after referring to
the said judgment and after consulting the Department of Expenditure
and Department of Legal Affairs, all Ministries/Departments have
been advised to deal with the issue of wrongful/excess payments in
accordance with the binding dictum of the Supreme Court. The
rationale behind the Supreme Court judgment is that where an
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By:KAMAL KUMAR
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employee receives any amount which is not attributable to any fraud
or misrepresentation on his part and was paid due to an error of the
employer, it would be iniquitous and unjust to recover the amount
from the employee, especially in a case where hardship will be caused
to the employee, if the recovery is ordered. Reliance was placed on the
judgments in Rajendra Singh v. Union of India and Ors., 2017 SCC
OnLine Del 10235, Mahanagar Telephone Nigam Ltd. v. Ramdhan
Gupta and Another, 2019 SCC OnLine Del 7125 and Mahanagar
Telephone Nigam Ltd. v. Sh. Satnam Singh and Anr., 2018 SCC
OnLine Del 7323, for the same proposition.
Contentions on behalf of the Respondents:-
(A). Petitioners were extended certain facilities and reimbursements
to maintain residential offices being Board Level officers as per
functional requirements, keeping in view prevalent practices in other
PSUs, with the approval of Board of Directors of STC w.e.f.
01.04.2005. Facilities were continued even after introduction of
Cafeteria-based perks and allowances from 01.12.2008 pursuant to
DPE Guidelines, which was subject to a maximum ceiling of 50% of
Basic Pay. However, these expenses were discontinued w.e.f.
01.02.2016 in compliance of O.M. issued by Respondent No.2 on
21.01.2016, whereby Board of STC was directed to review and
recover the said amounts.
(B). Respondent No.2 vide its letter dated 09.05.2017 conveyed its
decision to recover excess/wrongful payments made towards perks
and allowances to Senior Executives/Officers, both serving and retired
of MMTC, STC and PEC as also to issue show-cause notices to
enable them to make representations. It was in compliance with this
direction of Respondent No. 2 that STC issued show-cause notices to
the Petitioners and after representations were made, they were
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By:KAMAL KUMAR
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forwarded to Respondent No.2 along with their comments requesting
for waiver. However, DPE did not agree for waiver and STC, in
furtherance of the direction issued by Respondent No. 2, vide letter
dated 06.03.2018, issued demand notices dated 25.04.2018 to the
Petitioners and thus no infirmity can be found with the action of STC.
The writ petition is pre-mature since no final decision has been taken
on the show-cause notices.
(C). Reliance by the Petitioners on the judgment in Rafiq Masih
(supra) to the extent that no recoveries can be made is misplaced and
overlooks that in the same very judgment, the Supreme Court has held
that an action of a State ordering a recovery from an employee would
be in order so long as it is not rendered iniquitous, unfair, improper or
unwarranted or has a harsh and arbitrary effect on the employee.
(D). Petitioners cannot claim the benefit of the judgment also for the
reason that being Board Level senior officers, they were aware of the
proposals that were being moved from time to time for discontinuing
the allowances and were also privy to the correspondence exchanged
with Respondent No.2 from time to time, pointing out that excess
payments were being made to these officials and yet they chose to
receive these amounts over the years till their retirement.
Analysis:
8. It is an undisputed fact that the Respondents are seeking to
recover, by the impugned demand letters, amounts paid towards
monthly expenses on reimbursement of electricity/attendant charges,
gardener allowance and entertainment expenses paid to the Petitioners
for maintenance of their residence offices, introduced from 01.04.2005
and discontinued from 01.02.2016. Indisputably, the recoveries have
been initiated post their retirements and the amounts have been
received for a period in excess of 5 years.
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By:KAMAL KUMAR
Signing Date:28.04.2023
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9. In order to understand the genesis of the allowances and/or
facilities/perks in question, the chronology of dates and events in the
additional affidavit filed by STC on 17.04.2023 is useful, as this
would also shed light on the decisions taken by the Board of Directors,
from time to time. Board of Directors in the 534th Meeting held on
29.07.2005, approved certain facilities/allowances for senior officials
of STC for maintaining offices at their residence from 01.04.2005.
Perusal of Agenda Note for the Board shows that reimbursement of
expenses for Directors and CMD towards furnishing of residential
offices was approved by the earlier Board in the year 1989 and there
had been no revision since then. In the meantime, MMTC, a sister
concern of STC functioning under the umbrella of Respondent No.2,
had with the approval of its Board of Directors enhanced certain
perks/facilities for its employees. Since Government of India
intimated that STC was out of the list of disinvestment, perks which
were not increased over the years deserved to be revised. It is also
noted that there was a substantial growth in the turnover of the
company and it had attained a turnover of Rs.9,705 crores, posting a
profit of Rs.30 crores. It is in this background and after furnishing the
facts and figures that the matter was placed before the Board of
Directors for approval to increase the perks/facilities of the senior
officials. Beyond a doubt, the Board of Directors approved the
Agenda as placed before the Board.
10. Significantly, by an O.M. dated 26.11.2008, pay scales were
revised from 01.01.2007 and in respect of certain allowances and
perks, it was provided that the Board of Directors will decide their
admissibility to different categories of the Executives, subject to a
maximum ceiling of 50% of the Basic Pay and these allowances were
enumerated in para 10 of the O.M. There was, however, no mention of
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By:KAMAL KUMAR
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the allowances or facilities introduced from 01.04.2005. Board of
Directors in the 556th Meeting held on 28.04.2009 resolved to adopt
pay scales, fitment benefits, etc. on the basis of DPE Guidelines,
issued vide O.M. dated 26.11.2008 read with O.M. dated 02.04.2009,
however, the decision taken on 29.07.2005 remained unchanged.
Committee of Management in its meeting dated 07.12.2010 approved
fixation of perks and allowances for Board Level and below Board
Level Executives, however, status quo on the earlier allowances never
changed.
11. Chronology in the affidavit indicates that the impugned
recoveries were actually triggered by a complaint dated 29.08.2014
made by STC Officer's Association with regard to payment of perks
and allowances beyond the ceiling of 50% of Basic Pay to the Senior
Executives, which was forwarded by Respondent No.2 to STC. STC
furnished its reply dated 18.11.2014 to Respondent No.2 bringing
forth all benefits paid based on functional requirements, etc. beyond
the Cafeteria-based perks and allowances and also mentioned that
these facilities were for improving the working standard and
performance of STC just like other CPSEs. Respondent No.2 did not
accept the stand of STC and directed to discontinue the reimbursement
of expenses w.e.f. 01.02.2016.
12. The crucial points that emerge from this narrative are that:
(a) decision to enhance the perks/facilities provided to the Petitioners
for maintenance of their official residences was a well thought of and
deliberated decision approved by the Board of Directors;
(b) decision was taken after deliberations on the facts and figures
placed before the Board in a detailed Agenda; and (c) when the
decision was taken to restrict the allowances and perks to a ceiling of
50% of the Basic Pay and/or when the circular was issued in 2010, the
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By:KAMAL KUMAR
Signing Date:28.04.2023
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earlier decision taken in the meeting held on 29.07.2005 remained
unchanged. It was only for the first time that Respondent No.2
directed STC to discontinue the perks vide O.M. dated 21.01.2016,
followed by the STC placing the matter before its Board of Directors
in its 605th Meeting held on 28.05.2016. Importantly, the Board did
consider and was of the view that it would be unfair to make
recoveries from employees who had retired and therefore, the
recoveries should be waived. Since DPE did not agree, the Board of
Directors again considered the matter in 610th Meeting on 14.02.2017
and this process continued till finally Respondent No.2 by its letter
dated 09.05.2017 directed STC to effect recoveries and issue the
above show-cause notices/demand letters.
13. Therefore, it is not open to the Respondents to contend that the
Petitioners were wrongfully receiving the alleged excess/wrongful
payments or were privy to the decisions. The amounts were being
reimbursed to the Petitioners pursuant to a conscious decision at the
level of Board of Directors and continued to receive till their
retirement as till then, there was no finality on the decision to recover.
Far from the payments being attributed to any fraud or
misrepresentation, this is a classic case where the STC itself was
supporting the case of disbursement of the facilities/perks since they
had not been revised since the year 1989. It is, thus, not a case where
it can even be said that the payments were made by mistake or on
account of an error and on this ground alone, in my view, the show-
cause notices/demand letters deserve to be quashed.
14. There is another facet of the matter which is in favour of the
Petitioners. Law on recovery of excess/wrongful payments is no
longer res integra. In Rafiq Masih (supra), the Supreme Court has
held that even where payments have been mistakenly made by the
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By:KAMAL KUMAR
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employer, in excess of the entitlement of the employees, they cannot
be recovered, if made in excess of five years as that would be
iniquitous and arbitrary, violating Article 14 of the Constitution of
India. Reliance was placed on the judgment of the Supreme Court in
Col. B.J. Akkara (Retd.) v. Government of India and Others, (2006)
11 SCC 709, relevant paras of which are as follows:-
"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.
29. On the same principle, pensioners can also seek a direction
that wrong payments should not be recovered, as pensioners are in a
more disadvantageous position when compared to in-service
employees. Any attempt to recover excess wrong payment would
cause undue hardship to them. The petitioners are not guilty of any
misrepresentation or fraud in regard to the excess payment. NPA
was added to minimum pay, for purposes of stepping up, due to a
wrong understanding by the implementing departments. We are
therefore of the view that the respondents shall not recover any
excess payments made towards pension in pursuance of the circular
dated 7-6-1999 till the issue of the clarificatory circular dated 11-9-
2001. Insofar as any excess payment made after the circular dated
11-9-2001, obviously the Union of India will be entitled to recover
the excess as the validity of the said circular has been upheld and as
pensioners have been put on notice in regard to the wrong
calculations earlier made."
15. Reliance was also placed on the judgment of the Supreme Court
in Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475, wherein the
Supreme Court held as follows:-
"58. The relief against recovery is granted by courts not because
Signature Not Verified of any right in the employees, but in equity, exercising judicial
By:KAMAL KUMAR
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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 SCC (L&S) 248] , Shyam Babu Verma v.
Union of India [(1994) 2 SCC 521 : 1994 SCC (L&S) 683 : (1994)
27 ATC 121] , Union of India v. M. Bhaskar [(1996) 4 SCC 416 :
1996 SCC (L&S) 967] , V. Gangaram v. Director [(1997) 6 SCC 139
: 1997 SCC (L&S) 1652] , Col. B.J. Akkara (Retd.) v. Govt. of India
[(2006) 11 SCC 709 : (2007) 1 SCC (L&S) 529] , Purshottam Lal
Das v. State of Bihar [(2006) 11 SCC 492 : (2007) 1 SCC (L&S)
508] , Punjab National Bank v. Manjeet Singh [(2006) 8 SCC 647 :
(2007) 1 SCC (L&S) 16] and Bihar SEB v. Bijay Bhadur [(2000) 10
SCC 99 : 2000 SCC (L&S) 394] .
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:-
"13. First and foremost, it is pertinent to note, that this Court in
its judgment in Syed Abdul Qadir case [Syed Abdul Qadir v. State of
Bihar, (2009) 3 SCC 475 : (2009) 1 SCC (L&S) 744] recognised,
that the issue of recovery revolved on the action being iniquitous.
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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.
14. In this context, reference may also be made to the decision
rendered by this Court in Shyam Babu Verma v. Union of India
[Shyam Babu Verma v. Union of India, (1994) 2 SCC 521 : 1994
SCC (L&S) 683 : (1994) 27 ATC 121] , wherein this Court observed
as under: (SCC pp. 525-26, para 11)
"11. 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. 1-1-1973
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 1-1-1973, 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 supplied)
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
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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
Class IV service (or Group C and Group D service).
(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:-
Signature Not Verified
By:KAMAL KUMAR
Signing Date:28.04.2023
19:23:19
Neutral Citation Number: 2023:DHC:2749
"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."
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By:KAMAL KUMAR
Signing Date:28.04.2023
19:23:19
Neutral Citation Number: 2023:DHC:2749
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.
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By:KAMAL KUMAR
Signing Date:28.04.2023
19:23:19
Neutral Citation Number: 2023:DHC:2749
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.
JYOTI SINGH, J
APRIL 25 , 2023/kks/shivam
Signature Not Verified
By:KAMAL KUMAR
Signing Date:28.04.2023
19:23:19
