Delhi High Court
P. K. Das And Anr vs Mmtc Ltd. And Anr. on 22 July, 2024
Author: Jyoti Singh
Bench: Jyoti Singh
$~31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 22nd July, 2024
+ W.P.(C) 12237/2022
P. K. DAS AND ANR .....Petitioners
Through: Mr. Kumar Sudeep, Advocate
versus
MMTC LTD. AND ANR. .....Respondents
Through: Mr. Abhishek Bhardwaj and Mr.
Souresh Nagar, Advocates for R1.
Mr. Subhash Tanwar, CGSC with Mr. Sandeep
Mishra, Mr. Ashish Chaudhary and Ms. Nandita
Vyas, Advocates for R2.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGEMENT
JYOTI SINGH, J. (ORAL)
1. This petition has been preferred on behalf of the Petitioners under Article 226 of the Constitution of India seeking the following reliefs:
"a. Issue an appropriate Writ, Order or direction in the nature of mandamus to quash and set aside to OM No. 4/2/2014-FT(ST)(Pt.II) dated 21.01.2016 issued by Respondent No.2;
b. Issue an appropriate Writ, Order or direction in the nature of mandamus to quash and set aside Letter No.21/17/2013-FT(M&O) dated 09.05.2017 issued by Respondent No.2; and c. Issue an appropriate Writ, Order or direction in the nature of mandamus to quash and set aside the two Recovery Letter(s) both dated 26.06.2020 issued by the Respondent No. 1 to the Petitioners respectively; and d. During pendency of the present Writ Petition, direct Respondent No.1 to deposit with this Hon'ble Court Rs.16,15,878/-, and the said amount may be released in accordance with the final decision in the present matter; and e. Pass an Order directing Respondent No.1 to pay a simple interest of Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 1 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 15% per annum to Petitioners, from the date of recovery till date of final payment; and d. Pass any such further orders or directions as it may deem fit in the facts and circumstances of the case."
2. Petitioners were working at Board Level/Senior Level positions with Respondent No.1/Minerals and Metals Trading Corporation Limited (hereinafter referred to as 'MMTC'). Petitioner No.1 resigned from the post of Executive Director on 18.02.2016 on being appointed to the Board of State Trading Corporation of India Limited, where he joined on 19.02.2016 and wherefrom he retired on 31.03.2019. Petitioner No.2 retired as Director on 31.12.2016. MMTC 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.
3. Shorn of unnecessary details, the facts necessary and relevant are that in terms of Minutes of Meeting of the Executive Committee held on 01.03.1995 and Circular dated 11.09.1995, Board of MMTC approved certain facilities and allowances to Board Level/Senior Level Executives of MMTC for maintaining residential offices which included reimbursements of: (a) electricity charges; and (b) attendant's wages. In accordance with the Board approval, Executives would incur functional costs necessary to carry out their official duties and MMTC would in turn pay back/reimburse on an "actual-cost-basis". On 05.10.2004, MMTC issued a Circular pursuant to the decision of the Board of Directors approving certain facilities for Senior Executives at their residences/offices at residences which included various items such as furniture, AC, curtains, etc. and hiring of one attendant, on reimbursement basis.
Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 2 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:294. It is averred that as per the Circular, electricity charges were reimbursed to the extent of a fixed number of units of electricity consumed. An Executives was permitted to hire an attendant, whose wages were fixed at minimum rates of wages under the Notifications issued by the Labour Department, Delhi Government, from time to time. On 26.11.2008, Department of Public Enterprises ('DPE') issued an O.M., inter alia, revising the pay scales for 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 will be decided by the Board of Directors, subject to maximum ceiling of 50% of the Basic Pay and further that instead of having a fixed set of allowances, the CPSEs may follow "Cafeteria Approach" allowing the Executives to choose from a set of perks and allowances. According to the Petitioners, the Board approved reimbursements to Executives of MMTC were not withdrawn by this O.M. and Petitioners availed their perks and allowances within the 50% permissible ceiling and no excess payments were made to them.
5. On 02.04.2009, Respondent No.2 revised the pay scales of Board Level and below Board Level Executives and non-unionised Supervisors in CPSEs w.e.f. 01.01.2007. On 25.06.2010, MMTC held the 366th meeting of Committee of Directors and adopted the Cafeteria-based perks and allowances w.e.f. 26.11.2008, subject to perks and allowances to the extent of 45% of revised Basic Pay in case of officers of level of Deputy Manager and Managers and 47% in respect of other Executives. On 09.07.2010, in terms of DPE Guidelines, MMTC issued Office Order and introduced Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 3 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 'Cafeteria' based perks and allowances, subject to 47% ceiling of Basic Pay for Senior Managers and above upto Board Level Executives and 45% ceiling of Basic Pay for Managers and Deputy Managers.
6. It is averred that outside the purview of 50% ceiling, MMTC reimbursed its Senior Executives for all functional expenses such as electricity, attendant wages, telephone, car. The expenses were not incurred for personal advantage but were imperative for performing the official duties. On 21.01.2016, Respondent No.2 issued the impugned O.M., whereby extension of perks and allowances and other benefits being provided beyond 50% of Basic Pay of Executives of MMTC were discontinued forthwith and MMTC was directed to recover the alleged excess allowances paid.
7. On 19.08.2016, 426th meeting of MMTC's Board of Directors was held and the matter of discontinuation of the perks and allowances was placed as an Agenda. It was discussed that these facilities were made available for more than 3 decades and recovery will be illegal. The Government nominee Directors present in the meeting desired that Independent Directors may discuss and deliberate amongst themselves and revert to the Board for the final decision. In 428th meeting convened on 14.09.2016, it was opined that reimbursement of electricity charges/attendant wages was well within the overall limit of 50% permitted perks and allowances and as such, no recovery should be effected. It was opined that facilities were made available to Senior Executives with the approval of the Board for the past several years and were continued to be extended in other leading CPSUs being outside the 50% ceiling. It was discussed that 20 Senior Officers had since retired after 01.02.2016 and Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 4 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 exempting those who had retired while effecting recovery from serving executives would be inequitable. The unutilized differential amount between permissible limit of perks and actual percentage of perks paid was sufficient to absorb the overall annual cost of electricity charges/attendant wages reimbursed.
8. It is averred that despite these deliberations, impugned letter dated 09.05.2017 was issued by Respondent No.2 directing MMTC to recover the alleged excess/wrongful payments and in furtherance thereto, MMTC issued show-cause notices dated 29.06.2017 to the Petitioners seeking recovery of Rs.7,82,379/- from Petitioner No.1 and Rs.8,51,391/- from Petitioner No.2. MMTC recovered Rs.7,64,487/- from Petitioner No.1 through recovery letter dated 26.06.2020 while from Petitioner No.2, the entire amount was recovered.
9. Contentions on behalf of the Petitioners:-
(A). Action of MMTC to issue the show-cause notices followed by recovery 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 MMTC to the Petitioners who were Board Level/Senior Level Executives for functional purpose of carrying out their official work from residence. The reimbursements were made pursuant to Minutes of Meeting of the Executive Committee held on 01.03.1995 and by virtue of Circular dated 11.09.1995 followed by a Circular dated 05.10.2004 and the decisions were taken after due deliberations. These reimbursements were being made for over 02 Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 5 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 decades and which is why in the 426th meeting of Board of Directors convened on 19.08.2016, it was discussed that these reimbursements were of actual expenditures incurred, a practice followed for decades and it would be wrong and illegal to direct recovery. In the 428th meeting, it was opined that the reimbursements of electricity charges/attendant wages were within the overall limit of 50% permitted perks and allowances and no recovery should be sought as this would be iniquitous.
(B). Reimbursement of electricity charges/attendant wages is not a perk or an allowance. Electricity charges were to be reimbursed to an extent of maximum number of units as specified in the Circular dated 05.10.2004 on actual consumption basis and likewise, the attendant wage was as per the minimum wages payable under the Delhi Government Notification. Being reimbursements of actual expenditure incurred, no personal advantage or profit came to the pockets of the Petitioners. Moreover, it was the understanding of MMTC that the expenses were not covered under 50% ceiling of Cafeteria based allowance and payments were not a result of any misrepresentation or fraud by the Petitioners. The DPE O.M. dated 26.11.2008 is silent on the non-admissibility of expenses based on functional requirements and therefore, even otherwise these expenses are not covered under 50% ceiling of Cafeteria based allowance.
(C). It is undisputed that the alleged excess/wrongful payments were made by MMTC 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. The recovery is erroneous and in the teeth of the judgment of the Supreme Court in State of Punjab and Others v. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334, being in excess of 5 years before Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 6 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 the order of recovery was issued and also on the ground that recovery was made post the retirements of the Petitioners. In response to the show- cause notices dated 29.06.2017, Petitioners categorically brought to the notice of the MMTC that no recoveries can be made in view of the judgment in Rafiq Masih (supra), however, the recovery 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 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. Case of the Petitioners is squarely covered by the judgment of this Court in Madan Mohan Sharma and Others v. State Trading Corporation of India Ltd. and Another, 2023 SCC OnLine Del 2452, with the only difference that in the said case, one of the Respondent was STC instead of MMTC.
10. Contentions on behalf of the Respondents:-
(A). Petitioners were extended certain facilities and reimbursements to maintain residential offices being Board Level/Senior Level Executives as per functional requirements, keeping in view prevalent practices in other Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 7 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 PSUs. MMTC is under the administrative control of Respondent No.2 and follows guidelines pertaining to wages and allowances issued by DPE, which in turn, is under Ministry of Finance and issues guidelines for governance of CPSEs. Board of Directors of all CPSEs are mandated to adopt guidelines issued by DPE. Government of India set up a pay revision Committee under the Chairmanship of a retired Supreme Court judge to recommend revision of pay and allowances for Board Level and below Board Level executives and non-unionised Supervisors in CPSEs. DPE vide O.M. dated 26.11.2008 decided that Board of Directors of CPSEs shall decide the allowances and perks permissible to different categories of executives, based on DPE guidelines, subject to maximum ceiling of 50% of Basic Pay with liberty to adopt 'Cafeteria Approach'. MMTC in the Board of Directors Meeting held on 23.04.2009 ratified the O.M. dated 26.11.2008 and in particular the 50% ceiling and introduced Cafeteria-based perks and allowances w.e.f. 26.11.2008 with respective ceilings. Petitioners, however, availed allowances in the form of electricity charges/attendant wages in addition to these perks, which were released based on their self-certified documents.
(B). Three CPSEs; MMTC, STC and PEC took up the issue of recovery with DPE but Respondent No.2 vide its letter dated 06.03.2018 confirmed that the directions in the letter dated 09.05.2017 for recovery needed to be strictly enforced and in furtherance thereof, the reimbursement charges stood withdrawn w.e.f. 01.02.2016. Respondent No.2 again issued a letter dated 19.03.2020 directing the Board of Directors of MMTC to effect recoveries and submit a status report and in compliance thereof, the impugned actions were taken for recoveries. The recoveries were effected Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 8 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 after putting the Petitioners to notice and in compliance of directives of Respondent No.2, which bind MMTC.
(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 Level Executives, 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:
11. It is an undisputed fact that the Respondents have recovered, by the impugned letters, amounts paid towards reimbursement of electricity charges/attendant wages to the Petitioners for maintenance of their residential offices. Indisputably, letters of recoveries dated 26.06.2020 were issued post the retirements of the Petitioners albeit the show-cause notices were issued on 29.06.2017. There is, however, no doubt that recoveries were in respect of payments reimbursed to the Petitioners in excess of 5 years prior to the recovery notices.
12. The genesis of the allowances and/or facilities/perks in question lies in the decision taken in the Meeting of the Executive Committee of MMTC Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 9 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 held on 01.03.1995 and Circulars issued on 11.09.1995 and 05.10.2004. Indisputably, the reimbursements to the Senior Executives of MMTC were with the approval of the Board of MMTC and this position, insofar as the Board decision is concerned, never changed. Significantly, by O.M. dated 26.11.2008, pay scales of Board Level and below Board Level Executives and non-unionised Supervisors in CPSEs 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 the allowances or facilities introduced in the year 1995. These allowances were admittedly continued to be paid to the Senior Executives for over 02 decades and which is why the Board of Directors in the 426th and 428th meetings convened on 19.08.2016 and 14.09.2016 respectively, discussed on the Agenda of discontinuation of perks and allowances beyond 50% of Basic Pay of Executives of MMTC and noted as under:
"Extract of Minutes of Item No.2.2 of 426th Meeting of Board of Directors held on 19.8.2016 Item No. 2.2:Payment of perks, allowances and other benefits beyond 50% of basic pay to CMD, Directors and CGM in violation of DPE guidelines - reg. - as per note of Director(P) dtd. 10.8.2016.
Government Nominee Directors on the Board desired that the two Independent Directors may discuss and deliberate amongst themselves and come back to the Board .for final decision in the matter. Functional Directors and CMD being 'interested directors' did not participate in the discussions.
Extract of Minutes of Item No.2.5 of 428th Meeting of Board of Directors held on 14.9.2016 Item No 2.5: Payment of perks, allowances and other benefits beyond 50% of basic pay to CMDs, Directors and CGM in violation of DPE guidelines -as per note of Director(P) dtd.7.9.2016.Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 10 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29
The Note from Director(P) dtd. 7.9.2016 was discussed by the Independent Directors jointly and it was felt proper and fit to waive off the recovery of the perks already paid to the officers prior to 1.2.2016 both in case of present and past employees. However, in view of the specific wordings in the communication dtd. 21.1.2016 of Dept. of Commerce, MOC&I "to review and recover the amount", the Board directed that the matter be represented with Board's view to the Ministry of Commerce & Industry for final decision."
13. Chronology in the affidavit filed by MMTC indicates that the Board of Directors of MMTC were not inclined to discontinue the perks and allowances and/or initiate recoveries, but the impugned action of recovery was initiated under the directive of Respondent No.2 inasmuch as the Board Members were conscious of the fact and realized that these benefits had been extended as a practice for the last many years and were based on functional requirements for improving the working standards and performance of the organization as a whole. The crucial points that emerge from the above narrative are that: (a) decision to extend 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 of MMTC; (b) decision was taken after deliberations on the facts and figures placed before the Board in a detailed Agenda; and (c) the Board of MMTC never changed its decision to reimburse the electricity/attendant charges or effect recoveries until a mandate was issued by Respondent No.2. The Board was of the view that it would be unfair to make recoveries from employees who had retired and therefore, recoveries should be waived but as DPE and Respondent No.2 disagreed, a decision was taken by MMTC to discontinue the perks and allowances and effect recoveries after issuing show-cause notices to the Executives including the Petitioners.
Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 11 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:2914. Therefore, it cannot be said Petitioners were wrongfully receiving the alleged excess/wrongful payments or were guilty of fraud. The amounts were reimbursed to the Petitioners pursuant to a conscious decision at the level of Board of Directors and they continued to receive the same till their retirement, post which the recovery letters were issued. Far from the payments being attributed to any fraud or misrepresentation, this is a classic case where the MMTC itself was supporting the case of reimbursement of the facilities/perks since they had not been revised for the past several years. It is, thus, not a case where it can 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/recovery letters deserve to be quashed.
15. 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 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 Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 12 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 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."
16. 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 of any right in the employees, but in equity, exercising judicial 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] .Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 13 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29
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."
17. 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. 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 Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 14 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 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 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).Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 15 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29
(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)
18. Therefore, under the binding dictum of the Supreme Court, recoveries are impermissible where they are sought to be made where the excess payments have been made for a period in excess of five years, prior to the issue of recovery order. Cases of the Petitioners, in my view, squarely fall in the illustration (iii) of paragraph 18 of the judgment in Rafiq Masih (supra). Petitioner No.2 retired on 31.12.2016 and his case also falls under illustration (ii) thereof. If the date of the recovery letters is taken into consideration, i.e., 26.06.2020, then case of Petitioner No.1 also falls in illustration (ii) inasmuch as he resigned from MMTC on 18.12.2016 for appointment as a Board Member in STC wherefrom he retired on 31.03.2019.
19. 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:-
"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 Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 16 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 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."
20. Subsequent thereto, a Division Bench of this Court in Mahanagar Telephone Nigam Ltd. v. Ramdhan Gupta and Another, 2019 SCC Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 17 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 OnLine Del 7125, 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 Mahanagar Telephone Nigam Ltd. v. Sh. Satnam Singh and Anr., 2018 SCC OnLine Del 7323, 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.
21. 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. I am also fortified in my view Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 18 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29 by the decision of this Court in Rajendra Singh v. Union of India and Ors., 2017 SCC OnLine Del 1023. This Court in Madan Mohan Sharma (supra), decided the same issue and quashed the demand/recovery notices albeit Court is apprised that LPA No.483/2023 is pending against the said judgment, but there is no stay.
22. Tested in light of the aforesaid judgements and the law settled by the Supreme Court in Rafiq Masih (supra), payments made to the Petitioners under the heads 'electricity charges' and 'attendant wages' on reimbursement basis for several years in excess of 5 years cannot be recovered. In the absence of allegations of fraud or misrepresentation on the part of the Petitioners, it would be wholly harsh, arbitrary and iniquitous on the Petitioners, if the Respondents are permitted to recover the amounts paid.
23. Accordingly, the writ petition is allowed quashing the show cause notices dated 29.06.2017 and the recovery letters both dated 26.06.2020. Since it is an undisputed position that an amount of Rs.7,64,487/- out of the alleged recovery of Rs.7,82,379/- stands recovered from Petitioner No.1 and the entire amount of Rs.8,51,391/- stands recovered from Petitioner No.2, the said amounts shall be paid back to the Petitioners within a period of 2 months from today with simple interest @ 9% per annum from the date of the recovery letters till the date of actual payments.
24. Writ petition stands disposed of in the aforesaid terms.
JYOTI SINGH, J JULY 22, 2024/DU/kks Signature Not Verified Digitally Signed By:KAUSHAL W.P.(C) 12237/2022 Page 19 of 19 KUMAR SACHDEVA Signing Date:13.08.2024 18:53:29