Kerala High Court
United India Insurance Co. Ltd. vs Roy on 22 February, 2005
Equivalent citations: 2005(2)KLT63
Author: K.S. Radhakrishnan
Bench: K.S. Radhakrishnan, M.N. Krishnan
JUDGMENT K.S. Radhakrishnan, J.
1. To err is human; to correct an error is also human. Due to an error in the Divisional Office, respondent was paid cash incentive contrary to the guidelines issued by the General Insurance Company of India. Provisions of the guidelines stipulated that extension of notional credit cannot be taken into account for computation of development incentive. Relevant provision of the guidelines issued by the General Insurance Corporation of India is extracted below.
"It should be abundantly clear that extension of aforesaid notional business credit shall not be taken into account for computation of development incentive at the servicing Do".
Due to mistake in the office of the United India Insurance Company, benefit was extended to the writ petitioner for the years 1994-95 and 1995-96. When the mistake was noticed at the Head Office, Head Office instructed the Divisional Office to recover the excess amount paid to the respondent herein. Petitioner was then served with the following notice, "Our RO vide letter No. CNRO: MKTG:03:97 dt. 2.1.1998 has communicated to us that our HO has confirmed that the incentives for 1994-95 and 1995-96 are to be calculated without the notional credit. Since we have paid the amount taking into account also the notional credit the difference has to be recovered from you with immediate effect. We are checking the details of amount paid to you and shall intimate to you the details of actual recovery to be made from you. This is for your information".
Later the petitioner was served with letter dated 18.5.1998 demanding Rs. 1,38,240/- which was given to him by mistake. Challenging the order petitioner approached this Court. Learned Single Judge allowed the Writ Petition and held as follows:
"In spite of the existence of Ext.R1(a), respondents paid mistakenly the petitioner incentive during the year 1995-96. The petitioner was paid, he made use of it, No wit cannot be, when the respondents realised the mistake, asked to be refunded".
2. We find it difficult to accept the reasoning of the learned Single Judge. Facts would evidently show that payment was made by mistake contrary to the direction given by the General Insurance Company of India, which all the Insurance Companies are bound to follow. Mistake evidently has been crept in the Divisional Office. Divisional Offices and other offices are under the control of the United India Insurance Company transacting large volume of business all over the country. It is a large organization where several employees are working and large volume of work is being transacted. In such a situation, human error at times cannot be avoided. Nobody could expect an ideal situation without any error or mistake in the matter of administration. Due to inadvertence or otherwise a mistake has been committed which can always be corrected. Duty is cast not only on the administrators but on the beneficiary of the mistake to correct the error. The beneficiary is also part of the administration like the person who has committed the mistake. Writ petitioner cannot make a capital out of a mistake committed by his colleague in the office. Circular issued by the General Insurance Corporation of India is applicable not only to the administrators but to the beneficiary of the mistake also. So mistake can be corrected not only by the administrators but also by the beneficiaries.
3. On facts we find that notional business credit was extended to the respondent due to an inadvertent mistake. Appellant is entitled to correct the said mistake. On correction of the mistake necessarily excess amount paid has to be recovered especially when the respondent is a Development Officer. If the employee is a Class IV employee occupying lowest post in the establishment, some sympathetic consideration can be shown. There is no such consideration in the case of a person holding an officer post. We therefore set aside the judgment of the learned Single Judge and allow this appeal. However, we are inclined to permit the respondent to pay off the amount in six equal monthly instalment; first instalment is to be paid on 1st April 2005 failing which it is open to the Insurance Company to recover the amount in accordance with law.