Gujarat High Court
Nilaben J Shah vs State Of Gujarat & 5 on 8 June, 2016
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/13515/2010 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 13515 of 2010
With
SPECIAL CIVIL APPLICATION NO. 13514 of 2010
With
CIVIL APPLICATION NO. 4236 of 2016
In
SPECIAL CIVIL APPLICATION NO. 13514 of 2010
With
CIVIL APPLICATION NO. 4184 of 2016
In
SPECIAL CIVIL APPLICATION NO. 13515 of 2010
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed to see NO
the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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NILABEN J SHAH....Petitioner(s)
Versus
STATE OF GUJARAT & 5....Respondent(s)
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Appearance:
MS HARSHAL N PANDYA, ADVOCATE for the Petitioner(s) No. 1
NOTICE SERVED for the Petitioner(s) No. 1
MR KM ANTANI, AGP for the Respondent(s) No. 1
MR UM SHASTRI, ADVOCATE for the Respondent(s) No. 6
RULE SERVED BY DS for the Respondent(s) No. 1 6
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C/SCA/13515/2010 JUDGMENT
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 08/06/2016
COMMON ORAL JUDGMENT
1. Instead of hearing the two Civil Applications, the main matters are taken up for final hearing here and now. The two writapplications under Article 226 of the Constitution of India are filed by the teachers serving in a GrantinAid School.
2. The writapplicant of the Special Civil Application No.13514 of 2010 is in service, whereas, the writapplicant of the Special Civil Application No.13515 of 2010 has retired from the service.
3. Both the writapplicants were appointed sometime in the year 1987. At the relevant point of time, they were in the payscale of Rs.12002040/. On completion of nine years of service in the year 1996, the first higher grade scale was sanctioned in the payscale of Rs.1400 2600, which came to be later on revised to Rs.5,0008,000/.
4. After a period of almost 14 years, the authority realized that they had committed a mistake while granting the requisite payscale as a first higher grade scale. Accordingly, the payscale was withdrawn and the salary came to be revised. Both the writapplicants therefore had to come before this Court.
5. Since the recovery was also ordered, this Court restrained the authority from effecting any recovery of the socalled excess salary. Both the writapplications are pending for final hearing past six years. Although the writapplicant of the Special Civil Application No.13515 of 2010 has retired, yet her pension has not been finalized and fixed.
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C/SCA/13515/2010 JUDGMENT
6. Ms. Harshal Pandya, the learned counsel appearing for both the writapplicants submitted that she is confining her case only so far as the recovery part is concerned. If that be so then the issue is squarely covered by the decision of the Supreme Court in the case of 'State of Punjab & Ors. Vs. Rafiq Masih (White Washer) & Ors.' reported in (2015) 4 SCC 334.
7. I may quote the observations made by the Supreme Court as under:
10. In view of the aforestated 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.
11. For the above determination, we shall refer to some precedents of this Court wherein the question of recovery of the excess amount paid to employees, came up for consideration, and this Court disallowed the same. These are situations, in which High Courts all over the country, repeatedly and regularly set aside orders of recovery made on the expressed parameters.
12. Reference may first of all be made to the decision in Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475, wherein this Court recorded the following observation in paragraph 58:
"58. The relief against recovery is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to Page 3 of 9 HC-NIC Page 3 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT 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, Shyam Babu Verma v. Union of India, (1994) 2 SCC 521, Union of India v. M. Bhaskar, (1996) 4 SCC 416, V. Ganga Ram v. Director, (1997) 6 SCC 139, Col. B.J. Akkara (Retd.) v. Govt. of India, (2006) 11 SCC 709, Purshottam Lal Das v. State of Bihar, (2006) 11 SCC 492, Punjab National Bank v. Manjeet Singh, (2006) 8 SCC 647 and Bihar SEB v. Bijay Bahadur, (2000) 10 SCC 99."
(emphasis supplied)
13. First and foremost, it is pertinent to note, that this Court in its judgment in Syed Abdul Qadir's case (supra) recognized, 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 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 (1994) 2 SCC 521, wherein this Court observed as under:
Page 4 of 9HC-NIC Page 4 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT "11. Although we have held that the petitioners were entitled only to the pay scale of Rs 330480 in terms of the recommendations of the Third Pay Commission w.e.f. January 1, 1973 and only after the period of 10 years, they became entitled to the pay scale of Rs 330560 but as they have received the scale of Rs 330560 since 1973 due to no fault of theirs and that scale is being reduced in the year 1984 with effect from January 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's case (supra), the higher payscale 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 payscale 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.
15. Examining a similar proposition, this Court in Col. B.J. Akkara v. Government of India, (2006) 11 SCC 709, observed as under:
"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."
(emphasis supplied) A perusal of the aforesaid observations made by this Court in Col. B.J. Akkara's case (supra) reveals a reiteration of the legal position recorded in the earlier judgments rendered by this Court, inasmuch as, it was again affirmed, that the right to recover would be sustainable so long as the same was not iniquitous or arbitrary. In the Page 5 of 9 HC-NIC Page 5 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT observation extracted above, this Court also recorded, that recovery from employees in lower rung of service, would result in extreme hardship to them. The apparent explanation for the aforesaid conclusion is, that employees in lower rung of service would spend their entire earnings in the upkeep and welfare of their family, and if such excess payment is allowed to be recovered from them, it would cause them far more hardship, than the reciprocal gains to the employer. We are therefore satisfied in concluding, that such recovery from employees belonging to the lower rungs (i.e., ClassIII and Class IV sometimes denoted as Group 'C' and Group 'D') of service, should not be subjected to the ordeal of any recovery, even though they were beneficiaries of receiving higher emoluments, than were due to them. Such recovery would be iniquitous and arbitrary and therefore would also breach the mandate contained in Article 14 of the Constitution of India.
16. This Court in Syed Abdul Qadir v. State of Bihar (supra) held as follows:
"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."
(emphasis supplied) Premised on the legal proposition considered above, namely, whether on the touchstone of equity and arbitrariness, the extract of the judgment reproduced above, culls out yet another consideration, which would make the process of recovery iniquitous and arbitrary. It is apparent from the conclusions drawn in Syed Abdul Qadir's case (supra), that recovery of excess payments, made from employees who have retired from service, or are close to their retirement, would entail extremely harsh consequences outweighing the monetary gains by the employer. It cannot be forgotten, that a retired employee or an employee about to retire, is a class apart from those who have sufficient service to their credit, before their retirement. Needless to mention, that at retirement, an employee is past his youth, his Page 6 of 9 HC-NIC Page 6 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT needs are far in excess of what they were when he was younger. Despite that, his earnings have substantially dwindled (or would substantially be reduced on his retirement). Keeping the aforesaid circumstances in mind, we are satisfied that recovery would be iniquitous and arbitrary, if it is sought to be made after the date of retirement, or soon before retirement. A period within one year from the date of superannuation, in our considered view, should be accepted as the period during which the recovery should be treated as iniquitous. Therefore, it would be justified to treat an order of recovery, on account of wrongful payment made to an employee, as arbitrary, if the recovery is sought to be made after the employee's retirement, or within one year of the date of his retirement on superannuation.
17. Last of all, reference may be made to the decision in Sahib Ram Verma v. Union of India, (1995) Supp. 1 SCC 18, wherein it was concluded as under:
"4. Mr. Prem Malhotra, learned counsel for the appellant, contended that the previous scale of Rs 220550 to which the appellant was entitled became Rs 7001600 since the appellant had been granted that scale of pay in relaxation of the educational qualification. The High Court was, therefore, not right in dismissing the writ petition. We do not find any force in this contention. It is seen that the Government in consultation with the University Grants Commission had revised the pay scale of a Librarian working in the colleges to Rs 7001600 but they insisted upon the minimum educational qualification of first or second class M.A., M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science. The relaxation given was only as regards obtaining first or second class in the prescribed educational qualification but not relaxation in the educational qualification itself.
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."
(emphasis supplied) It would be pertinent to mention, that Librarians were equated with Lecturers, for the grant of the pay scale of Rs.7001600. The above pay parity would extend to Librarians, subject to the condition Page 7 of 9 HC-NIC Page 7 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT that they possessed the prescribed minimum educational qualification (first or second class M.A., M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science, the degree of M.Lib. Science being a preferential qualification). For those Librarians appointed prior to 3.12.1972, the educational qualifications were relaxed. In Sahib Ram Verma's case (supra), a mistake was committed by wrongly extending to the appellants the revised pay scale, by relaxing the prescribed educational qualifications, even though the concerned appellants were ineligible for the same. The concerned appellants were held not eligible for the higher scale, by applying the principle of "equal pay for equal work". This Court, in the above circumstances, did not allow the recovery of the excess payment. This was apparently done because this Court felt that the employees were entitled to wages, for the post against which they had discharged their duties. In the above view of the matter, we are of the opinion, that it would be iniquitous and arbitrary for an employer to require an employee to refund the wages of a higher post, against which he had wrongfully been permitted to work, though he should have rightfully been required to work against an inferior post.
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 ClassIII and ClassIV 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, 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.
19. We are informed by the learned counsel representing the appellant State of Punjab, that all the cases in this bunch of appeals, Page 8 of 9 HC-NIC Page 8 of 9 Created On Wed Jun 15 00:14:52 IST 2016 C/SCA/13515/2010 JUDGMENT would undisputedly fall within the first four categories delineated hereinabove. In the appeals referred to above, therefore, the impugned orders passed by the High Court of Punjab and Haryana (quashing the order of recovery), shall be deemed to have been upheld, for the reasons recorded above.
20. The appeals are disposed of in the above terms."
8. It is not the case of the respondents that any false representation was made by the two writapplicants at the relevant point of time and on the basis of such false representation, the payscale was fixed. Indisputably, even if the case of the respondents is believed, the same would fall within the realm of a mistake. I could have adjudicated the main issue itself whether the respondents were justified in reviewing the payscale or not. However, since the adjudication is now confined only to the recovery part, I am not going to that issue.
9. In view of the above, both the writapplications are partly allowed. The order of recovery so far as both the writapplicants are concerned, is ordered to be quashed. In the aforesaid view of the matter, now the concerned authority shall process the papers of the pension so far as the writapplicant of the Special Civil Application No.13515 of 2010 is concerned and see to it that she starts receiving pension in accordance with the Rules and Regulations within a period of two months with arrears. Rule made absolute to the aforesaid extent.
ORDER IN CIVIL APPLICATIONS: In view of the orders passed in the main matters, both the Civil Applications are disposed of.
(J.B.PARDIWALA, J.) aruna Page 9 of 9 HC-NIC Page 9 of 9 Created On Wed Jun 15 00:14:52 IST 2016