The Kerala High Court recently made a significant ruling stating that an employer cannot recover an overpayment made to an employee due to negligence or carelessness, especially when the employee was unaware that the amount paid exceeded the authorized sum.
A Division Bench comprising Justice Alexander Thomas and Justice C. Jayachandran considered the case of a teacher who received an additional increment based on a government order. The court referred to the position laid down in the State of Punjab and Ors. Washer Case (2015), particularly within the purview of clause (v) of the situations summarized in paragraph 18.
According to that section, the recovery of overpayment by employers is impermissible in law if the recovery from the employee is deemed unjust, harsh, or arbitrary to an extent that it exceeds the right of the employer to recover.
The applicant in this case had applied for leave without allowance under Rule 91 of Part I of the Kerala Service Rules on June 8, 2004, to pursue B.Ed. The applicant completed the course from June 15, 2004, to March 29, 2005. However, the grant of leave without allowance was delayed, and the order for it was issued on September 17, 2004.
Subsequently, the authorities determined that the applicant's date of entry into service should be considered as March 30, 2005, the date of rejoining after completing the B.Ed. course. As a result, the applicant's previous service was forfeited.
When this decision was challenged before the High Court, the court, through its order dated March 7, 2007, directed the State to make a decision on the applicant's representation within two months. The State subsequently rejected the representation, stating that the applicant did not fulfill the prescribed years of service necessary for leave without allowance for the 288-day course.
However, on April 28, 2010, the State Government issued a Government Order stating that officials who had availed leave without allowance for pursuing B.Ed. would be entitled to count the period of leave for the purpose of calculating increments. Accordingly, the applicant should have received the benefit of the increment.
In 2013, an audit objection arose regarding the calculation of the applicant's leave period for the purpose of the increment. The applicant's representation against the objection was rejected by the Deputy Director of Education (DDE), who also initiated proceedings for the recovery of the excess amount paid to the applicant.
The Tribunal supported the respondent's argument regarding the applicant's eligibility for the benefit, stating that the applicant was not eligible for leave without allowance as per the Kerala Service Rules (KSR), Part I, Rule 91/88, since the prescribed years of service had not been completed.
The respondents contended that since the applicant was granted leave without allowance under Appendix XII B Part I of the KSR, the Government Order would not be applicable to him. The Tribunal found this argument to be legally valid.
However, the Tribunal ruled that the excess payment could not be recovered from the applicant. This decision was based on clauses (i) and (v) of the White Washer Case (2015), which state that recovery of overpayment by employers is impermissible in law when the recovery is from Class III and Class IV employees (or Group 'C' and Group 'D' employees), or when the court determines that the recovery would be unjust, burdensome, or arbitrary to an extent far exceeding the equitable balance of the employer's right to recover.
Accordingly, the court emphasized that the applicant was unaware that the amount paid to him exceeded what he was entitled to.
Case Title: State of Kerala vs. The Director General of Education
Case Details: OP(KAT) NO.95 OF 2023
Coram: Hon'ble Mr. Justice Alexander Thomas and Hon'ble Mr. Justice C. Jayachandran
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