Kerala High Court
The Assistant General Manager vs S. Saradamani on 25 May, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE ALEXANDER THOMAS
&
THE HONOURABLE MR.JUSTICE K. BABU
TUESDAY, THE 25TH DAY OF MAY 2021 / 4TH JYAISHTA, 1943
OP (CAT) NO.110 OF 2020
ARISING OUT OF THE JUDGMENT IN O.A.NO.180/00122/2019 OF CENTRAL
ADMINISTRATIVE TRIBUNAL, ERNAKULAM BENCH
PETITIONERS/RESPONDENT NOS.3 & 4:
1 THE ASSISTANT GENERAL MANAGER
STATE BANK OF INDIA, CENTRALIZED PENSION PROCESSING
CENTRE (CPPC), LMS COMPOUND,
THIRUVANANTHAPURAM - 695 033.
2 BRANCH MANAGER
STATE BANK OF INDIA, KADAVOOR BRANCH,
KOLLAM DISTRICT - 691 601.
BY ADVS.
BINDUMOL JOSEPH
SRI.B.S.SYAMANTHAK
RESPONDENTS/APPLICANT & RESPONDENTS 1 & 2:
1 S.SARADAMANI
AGED 60 YEARS
W/O.LATE K.SATHYASEELAN, PATTARAZHIYATH HOUSE,
KANJAVELI P.O., PERINAD, KOLLAM - 691 602.
2 FINANCIAL ADVISOR AND CHIEF ACCOUNTS OFFICER (PENSION)
SOUTHERN RAILWAYS, CHENNAI - 600 001.
3 SENIOR DIVISIONAL MANAGER
SOUTHERN RAILWAYS, THIRUVANANTHAPURAM - 695 014.
BY ADV SRI.A.DINESH RAO, SC, RAILWAYS
THIS OP (CAT) HAVING BEEN FINALLY HEARD ON 10.03.2021, THE COURT
ON 25.05.2021 DELIVERED THE FOLLOWING:
O.P.(CAT) No.110/2020 2
'C.R.'
ALEXANDER THOMAS & K.BABU, JJ.
--------------------------------------------------
O.P.(CAT) No.110 of 2020
(Arising out of the order in O.A.No.180/122/2019 dated 5.9.2019
of CAT, Ernakulam Bench)
--------------------------------------------------------------
Dated this the 25th day of May, 2021
JUDGMENT
K.Babu, J.
The order dated 5.9.2019 in O.A.No.122 of 2019, passed by
the Central Administrative Tribunal, Ernakulam Bench, is under
challenge in this Original Petition filed under Article 227 of the
Constitution of India. Respondents 3 and 4 in the O.A., the State
Bank of India, Centralised Pension Processing Centre,
Thiruvananthapuram and its Branch Manager of Kadavoor Branch
respectively are the petitioners. The original applicant and
respondents 1 and 2 in the O.A. are the respondents herein.
2. The prayers in the Original Petition are as follows :
" To issue appropriate order or direction setting aside Exhibit P4
order of the Central Administrative Tribunal, Ernakulam dated
5.9.2019 in O.A.No.180/00122/2019 to the extent it limits the
right of the Bank to recover the excess payment made to the
applicant three years prior to the date when the Bank had
informed the applicant i.e., 8.2.2019 and to declare that the
Bank is entitled to recover the amount paid in excess during the
period November 2013 to January 2016."
3. Heard Smt.Bindumol Joseph, learned counsel
appearing for the petitioners, Sri.A.Dinesh Rao, the learned
Standing Counsel for Railways and Sri.C.S.Gopalakrishnan Nair,
learned counsel for the original applicant.
4. The original applicant is the wife of late K.Sathyaseelan,
who retired as headwaiter in the pantry car from
Thiruvananthapuram Division of Southern Railway on 30.11.2006.
Sathyaseelan died on 12.7.2007. The original applicant has been
receiving family pension. She received letter No.CPPC/TVM dated
8.2.2019 issued by petitioner No.2/respondent No.4 in the O.A.
informing that an amount of Rs.1,49,366/- was paid to her in
excess from November, 2013 to January, 2019. She was further
informed that the excess amount so paid will be recovered in
instalments at the rate of Rs.3,200/- per month from 1.2.2019 till
31.12.2022. She was also informed that the family pension entitled
to her has been reset at Rs.9,000/- with effect from 1.1.2016. The
original applicant pleaded that no amount is recoverable from her.
The applicant contended that recovery cannot be effected for the
period from November 2013 to January 2016, a period prior to the
span of three years from the date of notice of recovery, as it is
barred by limitation.
5. The original applicant/respondent No.1 raising the
above challenges, inter alia, filed the aforementioned O.A. with the
following prayers :
"(i) To call for the records leading upto the issue of Annexure A2
and quash the same.
(ii) To declare that no amount is to be recovered from the applicant
towards the alleged excess payment.
(iii) To direct the 4th and 5th respondents not to effect any recovery
from the family pension on the ground of alleged excess
payment.
(iv) To direct the respondents to credit the arrears of pension etc.,
as ordered in Annexure A3 within a time frame.
(v) Grant such other relief or reliefs that may be prayed for or that
are found to be just and proper in the nature and circumstances
of the case.
(vi) Grant costs of this O.A."
6. The petitioners/respondents 3 and 4 in the O.A.
resisted the claim of the original applicant and contended that the
challenge of the original applicant raising the plea of limitation is
not tenable as the matter falls within the ambit of Section 17 of the
Limitation Act. The pensioner died on 12.7.2007 and the family
pension at the enhanced rate was sanctioned to the applicant till
29.11.2013. According to the petitioners, enhanced rate of family
pension was to be paid till the deceased pensioner would have
reached the age of 67 years or 7 years from the date of his death
whichever is earlier. The pensioner would have reached 67 years
on 29.11.2013 and his date of birth is 30.11.1946. Inadvertently, the
Bank continued to pay enhanced rate of pension up to January,
2019. The mistake was found during verification conducted in the
month of January, 2019. The total excess payment made to the
original applicant is Rs.1,49,366/-. The original applicant had
executed a letter of undertaking while accepting the family pension.
So she is bound by the undertaking and the Bank is entitled to
recover the amount. The Bank is only a pension disbursing agency
as per the orders of the competent sanctioning authority.
7. After appreciating the rival contentions, the Tribunal
held that the petitioners are entitled to recover the excess payment
made to the original applicant three years prior to 8.2.2019, the
date when the Bank informed the applicant regarding the excess
payment made by mistake. The Tribunal held that the petitioners
are not entitled to recover the payment made by mistake to the
original applicant for the period prior to the span of three years
from the date on which the mistake was found.
8. The learned counsel for the petitioners/the Bank
contended that the excess amount happened to be disbursed to the
account of the original applicant by way of a bonafide mistake. It is
submitted that Section 17 of the Limitation Act will defeat her
claim. It is contended that the period of limitation will not begin to
run until the mistake was discovered. The learned counsel for the
Bank further contended that the rules of limitation are not meant
to destroy the rights of the parties and that limitation bars only the
remedy.
9. The learned counsel for the original applicant
contended that the transaction involved is covered by Section 72 of
the Contract Act and recovery of any amount from the original
applicant for the period prior to the span of three years from the
date when the alleged mistake was discovered, is barred by
limitation.
10. The learned counsel for the original applicant placed
heavy reliance on State of Punjab v. Rafiq Masih (White
Washer) [(2015) 4 SCC 334] to challenge the claim of the
petitioners/Bank and to contend that it is impermissible to realise
the amount sought to be recovered.
11. The learned counsel for the petitioners/Bank, per
contra, contended that the original applicant is not entitled to the
benefit of the principles declared by the Apex Court in Rafiq Masih
(supra) as she had executed an agreement to repay any excess
amount received by her. The petitioners relied on the decision of
the Apex Court in High Court of Punjab and Haryana and
others v. Jagdev Singh (AIR 2016 Supreme Court 3523) to
defeat the claim of the original applicant placing reliance on Rafiq
Masih (supra). It is also contended that there is no employee-
employer relationship between the original applicant and the
petitioners/Bank insofar as the disbursement of the pension is
concerned.
12. It is common ground that the amount in excess was
paid to the original applicant by the petitioners and the mistake
was found out by the petitioners/Bank during verification
conducted in the month of January, 2019. The total excess payment
made by mistake to the original applicant is Rs.1,49,366/-.
13. The first contention of the petitioners/Bank is that the
transaction involved is covered by Section 72 of the Contract Act
which says that a person to whom money has been paid or anything
delivered, by mistake or under coercion must repay or return it.
The challenge of the applicant is that her liability under Section 72
cannot be enforced in respect of an amount which was paid, in
excess, for the period prior to the span of three years from the date
when the Bank discovered the mistake.
14. The learned counsel for the petitioners/Bank, per
contra, submitted that in the case of any application for the relief
from the consequences of a mistake the period of limitation
prescribed shall not begin to run until the applicant has discovered
the mistake and hence in the given case, the limitation starts to run
only from January, 2019 and hence the Bank is entitled to recover
the amount from the original applicant.
15. Section 17 of the Limitation Act reads thus :
"17. Effect of fraud or mistake.--(1) Where, in the
case of any suit or application for which a period of
limitation is prescribed by this Act,--
(a) the suit or application is based upon the fraud of the
defendant or respondent or his agent; or
(b) the knowledge of the right or title on which a suit or
application is founded is concealed by the fraud of any
such person as aforesaid; or
(c) the suit or application is for relief from the
consequences of a mistake; or
(d) where any document necessary to establish the right of
the plaintiff or applicant has been fraudulently concealed
from him,
the period of limitation shall not begin to run until
plaintiff or applicant has discovered the fraud or the
mistake or could, with reasonable diligence, have
discovered it; or in the case of a concealed document,
until the plaintiff or the applicant first had the means of
producing the concealed document or compelling its
production:
..................................."
16. Section 17 stipulates that limitation runs, in the case of
mistake, from the date when the mistake was discovered or with
due diligence could have been discovered. In Sales Tax Officer
v. M.D.Abraham (1974 KLT 244), this Court held that if the
applicant could have discovered the mistake with reasonable
diligence that will suffice to start the running of the time against
him. Where a plaint or application is prima facie time barred the
initial burden lies on the plaintiff or applicant to make out the
circumstances which would prevent the statute from having its
normal effect. The plaintiff/applicant shall have to aver in the
plaint/application, the date on which he discovered the fraud or
mistake, as the case may be, and shall also have to aver that with
reasonable diligence, he could not have discovered it prior to that
date.
17. On diligence in discovery of mistake the learned author,
in Halsbury's Laws of England, fifth edition, Volume 68, para 1223,
writes thus :
"1223. Diligence in discovery of fraud,
deliberate concealment or mistake. The standard of
diligence which the claimant needs to prove is high-,
except where he is entitled to rely on the other person;
however, the meaning of 'reasonable diligence' varies
according to the particular context. In order to prove that
a person might have discovered a fraud, deliberate
concealment or mistake with reasonable diligence at a
particular time, it is not, it seems, sufficient to show that
he might have discovered the fraud by pursuing an
inquiry in some collateral matter; it must be shown that
there has been something to put him on inquiry in respect
of the matter itself and that if inquiry had been made it
would have led to the discovery of the real facts. If,
however, a considerable interval of time has elapsed
between the alleged fraud, concealment or mistake and
its discovery, that of itself may be a reason for inferring
that it might with reasonable diligence have been
discovered much earlier."
18. In the given case, the mistake initially occurred in
November 2013 ; and it continued and the same was discovered
only in February 2019. A considerable interval of time has elapsed
between the alleged mistake and its discovery. If the petitioners or
the Southern Railway had conducted timely audit they could have
discovered the mistake earlier. Hence it is to be inferred that it
might with reasonable diligence have been discovered much
earlier.
19. The petitioners/Bank also failed to plead that with
reasonable diligence, they could not have discovered the mistake
prior to the date on which it was discovered. The resultant
conclusion is that they are not entitled to the benefit of Section 17
of the Limitation Act.
20. Secondly, it is contended by the petitioners/Bank that
even if it is found that a portion of their claim is barred by
limitation, it will not destroy their substantive right to recover the
amount paid in excess by way of mistake. The learned author
U.N.Mitra, in his Law of Limitation and Prescription, 15 th Edition,
Lexis Nexis, in page No.11, comments thus :
"9. Limitation generally bars remedy only :- The
law of limitation is in fact a kind of imperfect prescription as it
does not in all cases destroy the primary or substantive right
itself but puts an end only to the accessory right of action. The
judicial remedy is barred but the substantive right itself
survives and continues to be available in other ways. The rules
of limitation are not meant to destroy the rights of parties.
Section 3 of the Act only bars the remedy, but does not destroy
the right which the remedy relates to. Though the right to
enforce the debt by judicial process is barred under S.3 read
with relevant article in the schedule, the right to debt remains.
The time barred debt does not cease to exist by reason of S.3.
Only exception in which the remedy also becomes barred by
limitation is that the right itself is destroyed. For example
under S.27 of the Act a suit for possession of any property
becoming barred by limitation leads to the right to property
itself to be destroyed. Except in such cases, which are
specifically provided under the right to which the remedy
relates, in other cases the right subsist so long as the debt is not
paid. That right can be unraised in any manner than by
means of a suit. It is not obligatory to file a suit to recover the
debt. Rules of limitation are not meant to destroy the rights."
21. In Punjab National Bank and others v.
Surendra Prasad Sinha (AIR 1992 Supreme Court 1815), the
Apex Court upheld the above mentioned principle and held that
Section 3 of the Limitation Act only bars the remedy, but does not
destroy the right which the remedy relates to.
22. In so far as the claim of the petitioners is concerned
only the judicial remedy is barred, but the substantive right itself
survives and continues to be available in other ways. In other
words, the rules of limitation are not meant to destroy the rights of
parties.
23. By applying the afore principle, the right of the
petitioners to recover the money paid in excess to the original
applicant is to be treated as subsisting.
24. The Tribunal held that the payment made by bonafide
mistake for a period of three years prior to the date when the
petitioners/Bank informed the applicant regarding the excess
payment can be recovered. Hence the Tribunal ordered that the
petitioners are entitled to recover the excess payment made to the
applicant three years prior to 8.2.2019.
25. The finding of the Tribunal based on the rules of
limitation is not legally sustainable. Where a suit or application is
for relief from the consequences of a mistake, under Section 17 of
the Limitation Act, the period of limitation shall not begin to run
until the mistake is discovered or the mistake could, with
reasonable diligence, have been discovered. In the instant case, we
have recorded a finding above that the petitioners are not entitled
to the benefit of Section 17 of the Limitation Act on the ground that
they could have with reasonable diligence discovered the mistake
much earlier. The finding of the Tribunal relying on the rules of
limitation is not sustainable in view of the principle that the Law of
Limitation only bars judicial remedy, but the substantive right
itself survives and continues to be available in other ways. We
make it clear that the substantive right of the petitioners/Bank to
recover the money paid in excess to the original applicant in ways
other than judicial remedy is not destroyed by reason of the rules of
limitation.
26. We now turn to the question whether the original
applicant is entitled to resist recovery of the excess amount
allegedly paid to her by mistake for the period prior to the span of
three years from the date of discovery of the mistake, relying on the
principles declared by the Apex Court in Rafiq Masih (supra).
27. The learned counsel for the original applicant
contended that the principles laid down in Rafiq Masih (supra) are
squarely applicable to the facts of this case. Per contra, the learned
counsel for the petitioners contended that the original applicant is
not entitled to the benefit of Rafiq Masih (supra) in view of the
subsequent decision of the Apex Court in Jagdev Singh's case
(supra). The learned counsel for the original applicant pointed out
that in Jagdev Singh (supra), the Apex Court did not hold that the
judgment in Rafiq Masih (supra) was wrong and had only carved
out a distinction in cases coming out of the second criterion of
employees noted in paragraph 18 of the judgment in Rafiq Masih
(supra).
28. In State of Punjab v. Rafiq Masih (White Washer)
(supra), in paragraph 18, the Apex Court held as follows :
"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 herein above, we may, as a ready
reference, summarise the following few situations, wherein
recoveries by the employers, would be impermissible in law:
(i) Recovery from employees belonging to Class-III and Class-
IV service (or Group 'C' and Group 'D' service).
(ii) Recovery from retired employees, or employees who are
due to retire within one year, of the order of recovery.
(iii) Recovery from 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, eventhough 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 extent, as would
far outweigh the equitable balance of the employer's right to
recover."
29. In the subsequent decision in Jagdev Singh (supra), in
paragraph 9, the Apex Court held as follows :
"9. The submission of the respondent, which found
favour with the High Court, was that a payment which has
been made in excess cannot be recovered from an employee
who has retired from the service of the State. This, in our
view, will have no application to a situation such as the
present where an undertaking was specifically furnished by
the officer at the time when his pay was initially revised
accepting that any payment found to have been made in
excess would be liable to be adjusted. While opting for the
benefit of the revised pay scale, the respondent was clearly on
notice of the fact that a future refixation or revision may
warrant an adjustment of the excess payment, if any, made."
30. The effect of the judgment in Jagdev Singh (supra) on
the judgment in Rafiq Masih (supra) was considered by the
Division Bench of this Court in State of Kerala and others v.
Vinod Kumar C.R. [2020 (4) KLT 230] and State of Kerala
and others v. Abraham P.Joseph [2021 (2) KLT 288] and
held that the Apex Court in Jagdev Singh (supra) has not
interfered with the directions contained in paragraph 18 of the
judgment in Rafiq Masih (supra) regarding Clauses (i), (iii), (iv)
and (v).
31. As a challenge to the applicability of the principles laid
down in Rafiq Masih (supra), it is contended by the
petitioners/Bank that there is no employer-employee relationship
between the petitioners and the original applicant.
32. The original applicant is claiming under her husband
who was admittedly a Class IV employee.
33. The petitioners/Bank and respondents 1 and 2 (the
Railways) filed separate affidavits explaining the nature of
arrangement between them in the matter of pension disbursement
of Central Government employees. It is submitted that by virtue of
Section 6(1)(b) of the Banking Regulation Act, a Bank can act as an
agent for any Government or local authority or carry on agency
business of any description including the clearing and forwarding
of business. It is further submitted that as per Section 33 of the
State Bank of India Act, the State Bank may engage in one or more
or other forms of business specified in Section 6(1) of the Banking
Regulation Act and further the State Bank of India is authorised to
act as an agent for any Government or any other local authority
including Railways in addition to the banking and other business.
34. The petitioners submitted that in the light of the
aforesaid provisions, the State Bank of India is acting as a pension
disbursing agency of the Southern Railway. It is also submitted
that the Reserve Bank of India has authorised various Banks to
make payments of pension to central civil pensioners. The Reserve
Bank of India has issued guidelines to all agency banks regarding
refund of over payment of pension to the Government employees
and recovery of excess payments made to the pensioners. It is
submitted that the Reserve Bank of India has issued circulars
on recovery of excess payment made to the pensioners. Circular
No.Ref.Co.DGBA(NBS) No.44/GA.64(11-CVL)90/91 dated
18/04/91, circular No.Ref.Co.DGBA(NBS) No.50/GA.64(11-
CVL)90/91 dated 06/05/91 and circular No.RBI/2015-16/340:
DGBA.GAD.No.296/0/ 45.1.001/2015-16 dated 17/03/16 issued
by the Reserve Bank of India deal with recovery of excess
payments made to the pensioners.
35. It is further submitted that the Reserve Bank of India
has issued another Circular No.RBI/2020-2021/84 (DGBA.GBD
No.SUO 546/45.01.001/2020-21) dated 21.1.2021 withdrawing the
above mentioned circulars and instructed that agency Banks are
requested to seek guidance from respective Pension Sanctioning
Authorities regarding the process to be followed for recovery of
excess pension paid to the pensioners, if any.
36. It is submitted from the part of the original applicant
that the arrangement between the petitioners/Bank and
respondents 1 and 2 (the Southern Railway) in the matter of
pension disbursement creates a Principal - Agent relationship
resulting to the consequence that the acts of the Agent (petitioners)
bind the Principal (Southern Railway). Agency in its broadest
sense includes every relation in which one person acts for or
represents another by his authority. In the more restricted sense in
which the term is used in the law of principal and agent, agency is
the fiduciary relation which results from the manifestation of
consent by one person to another that the other shall act on his
behalf and subject to his control, and consent by the other so to act.
37. On an analysis of the arrangement, stated to have been
made, regarding pension disbursement in respect of pensioners of
respondents 1 and 2 (the Southern Railway), it is revealed that the
petitioners are engaged in the business of disbursal of pension as
the agent of Southern Railway. As is evident from the circular
dated 21.1.2021 of the RBI, the petitioners are effecting recovery
after seeking guidance from the respective Pension Sanctioning
Authority. It appears that the arrangement between them was in
terms of an agreement for which the Bank was authorised to
become a party by virtue of Section 6(1)(b) of the Banking
Regulation Act, 1949 and Section 33 of the State Bank of India Act,
1955. Though the Reserve Bank of India has issued guidelines to
all agency Banks regarding refund of over payment of pension, the
circular dated 21.1.2021 shows that the agency Banks are required
to seek guidance from the respective Pension Sanctioning
Authorities. While dealing with an arrangement in which insurance
premium was to be deducted by the employer from the salary of the
employee and for forwarding it to the insurer, and the arrangement
was in terms of an agreement, in LIC of India and others v.
Smt.Mukesh Devi (AIR 2002 Raj. 404) and in LIC v. K.Rama Iyer
(ILR (2004) Kant.), it was held that the employer had become an
agent of the insurer for this purpose. The arrangement for the
disbursal of pension to the employees of the Southern Railway in
the instant case is almost similar to the above referred facts. The
resultant conclusion is that the petitioners have become agents of
respondents 1 and 2 (the Southern Railway) for the purpose of
pension disbursement.
38. Where it is found that there is a principal-agent
relationship between the Southern Railway and the Bank, under
Section 226 of the Contract Act, any contracts entered into through
an agent and obligations arising from acts done by agent, may be
enforced in the same manner, and will have the same legal
consequences as if the contracts had been entered into and the acts
done by the principal in person.
39. It is contended from the part of the original applicant
that even if the acts of the agent are the result of the agent's
mistake or the agent acted unauthorisedly the principal will be still
bound by the transaction made with the third party, if the third
party dealing with the agent has acted in good faith.
40. On principal's liability for acts of agent the learned
author, in the book, The Indian Contract Act, 1872 [Pollock and
Mulla, 14th Edition, pages 1775 and 1776], writes thus :
"Transaction within the authority of the agent is valid,
irrespective of whether beneficial to the principal. Even
where the agent defrauds the principal, or the transaction
is to the detriment of the principal, the principal will still be
bound by the transaction made with the third party, only if
the third party dealing with the agent has acted in good
faith, and the act is within the apparent scope of authority
of the agent. The principal's liability is not affected by the
fact that the agent is personally liable, and that the other
contracting party had given credit to the agent."
41. The Judicial Committee of the Privy Council in Ram
Pertab v. Marshall (ILR (1898) 26 Cal. 701) had ruled that the right
of a third party against the principal on the contract of his agent
though made in excess of the agent's actual authority was
nevertheless to be enforced when the evidence showed that the
contracting party had been led into an honest belief in the existence
of the authority to the extent apparent to him.
42. On the liability of the principal to third parties for the
acts of an agent, in Corpus Juris Secundum, Volume 3, paragraph
391, pages 220 to 222, the learned authors comment thus :
"Ordinarily the principal is bound by the act of his agent when
he has placed the agent in such position that persons of
ordinary prudence, reasonably conversant with business
usages and customs, are thereby led to believe and assume that
the agent is possessed of certain authority, and to deal with
him in reliance on such assumption. Whether or not a
principal is bound by acts of his agent in dealing with a third
person who does not know the extent of his authority depends
not alone on the actual authority given, or intended by the
principal, but rather on what authority the third person, as a
result of the acts of the principal, believes and has a right to
believe, is possessed by the agent. However, if the agent has
authority from the principal to do the particular act in
question, the principal is bound irrespective of the third
person's knowledge of existence of the authority. The
responsibility of a principal for his agent's act is not essentially
a matter of consent to the express act, or of an estoppel to deny
that consent, but it is a survival from ideas of status, and the
imputed responsibility congenial to earlier times, preserved
now from motives of policy. While the courts have substituted
for the archaic status a test based upon consent, that is, the
general scope of the business, within that sphere the principal
is held by principles quite independent of his actual consent,
and indeed in the face of his own instructions. Such liability
will be present even though the acts are the result of the agent's
fraud or dishonesty neglect, or mistake, and are performed in
disobedience to positive but private instructions. Also the
principal is not relieved of liability because the acts of the
agent constitute an unauthorised method of accomplishing the
business entrusted to him."
43. The petitioners have no case that excess payment of
pension happened to be paid on account of any incorrect
information furnished by the original applicant. Admittedly it
happened as a result of the mistake on the part of the petitioners.
She was not accessory to the mistake committed by the petitioners.
The excess payment was detected not within a short period of time.
44. It is established that the Southern Railway
(respondents 2 and 3) and the petitioners (The State Bank of India)
have created a Principal - Agent relationship for the purpose of
disbursal of pension to the employees of the former. It is also
evident that the original applicant has always acted in good faith in
the transactions. The liability in question resulted from the
mistake of the petitioners.
45. The upshot of the above discussion is that the
contention of the petitioners that the guidelines issued by the Apex
Court in Rafiq Masih (supra) cannot be pressed into service for
the reason that there is no employer-employee relationship
between the petitioners and the original applicant is not tenable.
46. The Tribunal has held that the petitioners are only
entitled to recover the excess payment made to the original
applicant for the period of three years immediately prior to
8.2.2019, that is, from 8.2.2016 to 8.2.2019. The petitioners are
interdicted from recovering the amount for the period prior to
8.2.2016. The husband of the original applicant was admittedly a
Class IV employee.
47. While summarising the situations wherein recoveries
by the employers would be impermissible in law, the Apex Court in
State of Punjab v. Rafiq Masih (White Washer) (supra) has
considered the relevant constitutional principles in paragraphs 8 to
10, which are extracted below :
"8. As between two parties, if a determination is rendered in
favour of the party, which is the weaker of the two, without
any serious detriment to the other (which is truly a welfare
State), the issue resolved would be in consonance with the
concept of justice, which is assured to the citizens of India,
even in the preamble of the Constitution of India. The right
to recover being pursued by the employer, will have to be
compared, with the effect of the recovery on the employee
concerned. If the effect of the recovery from the employee
concerned would be, more unfair, more wrongful, more
improper, and more unwarranted, than the corresponding
right of the employer to recover the amount, then it would
be iniquitous and arbitrary, to effect the recovery. In such a
situation, the employee's right would outbalance, and
therefore eclipse, the right of the employer to recover.
9. The doctrine of equality is a dynamic and evolving
concept having many dimensions. The embodiment of the
doctrine of equality, can be found in Articles 14 to 18,
contained in Part III of the Constitution of India, dealing
with "Fundamental Rights". These Articles of the
Constitution, besides assuring equality before the law and
equal protection of the laws, also disallow discrimination
with the object of achieving equality, in matters of
employment; abolish untouchability, to upgrade the social
status of an ostracized section of the society; and extinguish
titles, to scale down the status of a section of the society,
with such appellations. The embodiment of the doctrine of
equality, can also be found in Articles 38, 39, 39A, 43 and
46 contained in Part IV of the Constitution of India, dealing
with the "Directive Principles of State Policy". These Articles
of the Constitution of India contain a mandate to the State
requiring it to assure a social order providing justice -
social, economic and political, by inter alia minimizing
monetary inequalities, and by securing the right to
adequate means of livelihood, and by providing for
adequate wages so as to ensure, an appropriate standard of
life, and by promoting economic interests of the weaker
sections.
10. In view of the afore-stated constitutional mandate,
equity and good conscience in the matter of livelihood of the
people of this country has to be the basis of all
governmental actions. An action of the State, ordering a
recovery from an employee, would be in order, so long as it
is not rendered iniquitous to the extent, that the action of
recovery would be more unfair, more wrongful, more
improper, and more unwarranted, than the corresponding
right of the employer, to recover the amount. Or in other
words, till such time as the recovery would have a harsh
and arbitrary effect on the employee, it would be
permissible in law. Orders passed in given situations
repeatedly, even in exercise of the power vested in this Court
under Article 142 of the Constitution of India, will disclose
the parameters of the realm of an action of recovery (of an
excess amount paid to an employee) which would breach
the obligations of the State, to citizens of this country, and
render the action arbitrary, and therefore, violative of the
mandate contained in Article 14 of the Constitution of
India."
48. The original applicant prayed for a declaration that no
amount towards excess payment is recoverable from her. The
Tribunal held that the petitioners are only entitled to recover the
excess payment made to the applicant for the period from 8.2.2016
to 8.2.2019 which is not under challenge. The original applicant is
aged above 60 years. The monthly pension entitled to her with
effect from 1.1.2016 is only Rs.9,000/-. Having considered the
particular facts and circumstances of this case, we arrive at the
conclusion that the recovery of the amount, paid in excess for the
period from November 2013 to February 2016, from the original
applicant would be harsh and iniquitous as the effect of the
recovery will be more unfair and more improper than the
corresponding right of the petitioners to recover the amount.
49. To sum up, we hold as follows :
(1) The substantive right of the petitioners/Bank to recover
the money paid in excess to the original applicant in ways other
than judicial remedy is not destroyed by reason of the rules of
limitation. The finding of the Tribunal that the Bank is only
entitled to recover the excess payment made to the applicant, for a
period of three years prior to the date when the Bank served notice
of recovery on the applicant, by reason of the rules of limitation, is
not sustainable on account of the settled law that Section 3 of the
Limitation Act only bars the remedy, but does not destroy the right
which the remedy relates to. Since the substantive right survives
and continues to be available in other ways the Bank is entitled to
adjust, the excess amount paid to the pensioner, from the amount
in his or her account even if it is time barred. The contra finding of
the Tribunal will stand overruled.
(2) There exists a principal-agent relationship between the
Southern Railway (the employer) and the Bank in the matter of
disbursement of pension to the employees of the former. In the
facts and circumstances of this case, the Southern Railway is bound
by the transactions made by the Bank with the original applicant.
As the public law remedy based on equity and justice deduced in
Rafiq Masih (supra) is enforceable against the Southern Railway
(the employer), the Bank, which stands in the shoes of the
Railways for the purpose of disbursal of pension, is bound by the
guidelines issued by the Apex Court in this case. Since the Apex
Court in Jagdev Singh (supra) has not interfered with the
directions contained in paragraph 18 of the judgment in Rafiq
Masih (supra) regarding clauses (i), (iii), (iv) and (v), those
directions in public law remedy would be invokable in case of this
nature.
(3) Since the recovery of the amount, paid in excess for the
period from November 2013 to February 2016, from the original
applicant would be harsh and iniquitous as the effect of the
recovery will be more unfair and more improper than the
corresponding right of the petitioners to recover the amount it is
impermissible in law to permit the petitioners to recover the excess
payment made to the original applicant prior to 8.2.2016. This, we
hold so, as the principles in White Washer's case (supra) as
modified in Jagdev Singh (supra) will apply to the facts and
circumstances of this case.
(4) However, we hold that the petitioners are entitled to
recover the excess payment made to the original applicant for the
period from 8.2.2016 to 8.2.2019. They are at liberty to realise the
amount in 30 instalments.
50. The impugned final order of the Tribunal at Exhibit P4
will stand modified as above.
With these observations and modifications, the Original
Petition will stand disposed of.
Sd/-
ALEXANDER THOMAS, JUDGE
Sd/-
K.BABU, JUDGE
csl
APPENDIX
PETITIONERS' EXHIBITS :
EXHIBIT P1 A TRUE COPY OF THE
O.A.NO.180/00122/2019 DATED 21.02.2019
FILED BY RESPONDENT NO.1/APPLICANT.
EXHIBIT P1(A1) A TRUE COPY OF THE LETTER NO.CPPC/TVM
DATED 08.02.2019 ISSUED BY THE 4TH
RESPONDENT.
EXHIBIT P1(A2) TRUE COPY OF THE DEATH CERTIFICATE
ISSUED BY THE KOLLAM CORPORATION DATED
31.07.2007.
EXHIBIT P1(A3) TRUE COPY OF THE LETTER DATED
28.04.2009 ADDRESSED TO THE MANAGER,
SBI, QUILON ISSUED BY THE 2ND
RESPONDENT.
EXHIBIT P1(A4) TRUE COPY OF THE LETTER NO.V/P.
626/314/06 DATED 21.10.2009.
EXHIBIT P1(A5) TRUE COPY OF THE APPLICATION SUBMITTED
BEFORE THE ADALATH.
EXHIBIT P1(A6) TRUE COPY OF THE OM.F. NO.18/03/2015-
ESTT.(PAY) DATED 02.03.2016.
EXHIBIT P2 A TRUE COPY OF THE REPLY STATEMENT
FILED BY THE RESPONDENTS 3 AND 4 BEFORE
THE TRIBUNAL.
EXHIBIT P2(A1) A TRUE COPY OF THE UNDERTAKING EXECUTED
BY THE APPLICANT.
EXHIBIT P2(A2) A TRUE COPY OF THE CIRCULAR
NO.RBI/2015-16/340 DATED 17.03.2016.
EXHIBIT P3 A TRUE COPY OF THE APPRECIATION MA
NO.533/2019 IN OA NO.122/2019 DATED
24.05.2019.
EXHIBIT P4 A TRUE COPY OF THE ORDER OF THE
HONOURABLE CENTRAL ADMINISTRATIVE
TRIBUNAL IN ORIGINAL APPLICATION
NO.180/00122/2019.
EXHIBIT P5 A TRUE COPY OF THE CIRCULAR
NO.RBI/2020-21/84(DGBA.GBD.NO.SUO
546/45.01.001/2020-21) DATED JANUARY
21, 2021.
EXHIBIT P6 A TRUE COPY OF THE JUDGMENT DATED
27/06/2018 IN OA.NO.333/2017 OF THE
HON'BLE CENTRAL ADMINISTRATIVE
TRIBUNAL, ERNAKULAM.
EXHIBIT P7 A TRUE COPY OF THE JUDGMENT OF THE
HON'BLE HIGH COURT OF KERALA DATED
26/10/2018 IN OP(CAT) NO.169/2018.
RESPONDENTS' EXHIBITS :
EXHIBIT R3(a) A TRUE COPY OF THE SCHEME FOR PAYMENT
OF PENSIONS TO CENTRAL GOVERNMENT CIVIL
PENSIONERS THROUGH AUTHORISED BANKS.
EXHIBIT R3(b) A TRUE COPY OF FORM IN ANNEXURE XI
EXHIBIT R3(c) A TRUE COPY OF THE SCHEME FOR
DISBURSEMENT OF PENSION TO RAILWAY
PENSIONERS.
EXHIBIT R3(d) A TRUE COPY OF GUIDELINES ISSUED BY RBI
DATED 17.3.2016.
