Gujarat High Court
S B Kareliya & 2 vs Executive Engineer & 3 on 3 March, 2016
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/438/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 438 of 2013
With
SPECIAL CIVIL APPLICATION NO. 439 of 2013
TO
SPECIAL CIVIL APPLICATION NO. 458 of 2013
With
CIVIL APPLICATION NO. 9933 of 2013
In
SPECIAL CIVIL APPLICATION NO. 447 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ?
NO
3 Whether their Lordships wish to see the fair copy of the
judgment ? NO
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or NO any order made thereunder ?
========================================================== S B KARELIYA & 20....Petitioner(s) Versus EXECUTIVE ENGINEER & 3....Respondent(s) ========================================================== Appearance:
MS URVI A RAVAL, ADVOCATE for the Petitioner(s) No. 1 - 21 MR UTKARSH SHARMA AGP for the Respondent(s) No. 3 MR HS MUNSHAW, ADVOCATE for the Respondent(s) No. 1 - 2 NOTICE SERVED BY DS for the Respondent(s) No. 3 - 4 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA Page 1 of 20 HC-NIC Page 1 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT Date : 03/03/2016 ORAL COMMON JUDGMENT 1 Since the issues raised in the above captioned the writ applications are more or less the same, those were heard analogously and are being disposed of by this common judgment and order.
2 The Special Civil Application No.438 of 2013 is treated as the lead matter for the sake of convenience.
3 The facts of this may be summarized as under:
3.1 The writ applicants before me are serving as the 'Work Assistants' with the Surendranagar District Panchayat and some of those have retired. They have prayed for the following reliefs:
"7(A) Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction for quashing and setting aside the impugned orders dated 26.11.2012 and 17/18.12.2012 passed by respondent no.1. Further prays that in future on this ground further recovery may not be done.
(B) Pending hearing and final disposal of this petition, Your Lordship may be pleased to stay implementation and operation of the order passed by the respondent no.1 (Executive Engineer) Surendranagar, dated 26.11.2012 and 17/18.12.2012 and recovery of any amount may be stayed from salary/pension of the petitioners till final disposal of this matter on basis of said order and further prays that in view of this (above mentioned) recovery is started therefore lordship may be pleased to direct them to refund the recovery amount with in a period of two weeks from date of order of this hon'ble court and lordship may be direct to the respondents that further recovery may not be made.
(c) Since second time this recovery proceedings has been done by the respondents authority against the retired persons and continue in service persons under this circumstances lordships may be pleased to imposed cost of this matter.
(D) To pass any other and further orders as may be deemed, fit and proper in the interest of justice."
3.2 The writ applicants were serving as the 'Work Charged Clerks' at Page 2 of 20 HC-NIC Page 2 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT various places in the District of Surendranagar. It appears that the State Government issued a Government Resolution dated 7th January 1984, by which, it decided to constitute altogether a new cadre of 'Work Assistant'. The writ applicants, who were serving as a clerk / Mistry / Technical Assistant, were given the benefits of the said resolution, and were made 'Work Assistant'. Their pay scale was, accordingly, fixed. All the benefits flowing from the said resolution were given to the writ applicants.
3.3 It appears that there are 21 (twenty one) writ applicants before me. So far as the benefits which were extended pursuant to the Government Resolution of 1984, about 39 (thirty nine) persons received the same. Many of the writ applicants have retired from service.
3.4 In the year 2009, the audit department, for the first time, raised an objection as regards the benefits which were extended to the writ applicants pursuant to the Government Resolution of 1984 are concerned, by which, the Government created a new cadre of the 'Work Assistant'. The audit department took the view that the Government Resolution of 1984 was not applicable to the panchayat employees and the same was applicable only to the government employees. The audit department observed that in such circumstances, the benefits could not have been extended to the writ applicants.
3.5 In view of such objection raised by the audit department, the respondents thought fit to immediately take action and order recovery of benefits already extended to the writ applicants.
3.6 It appears that the writ applicants had to come before this Court in the past challenging the action of the respondents by way of filing Page 3 of 20 HC-NIC Page 3 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT Special Civil Application No.6632 of 2011 and allied matters. The bunch of writ applications were disposed of vide order dated 24th June, 2011 in the following terms:
1. Rule. Mr H. S Munshaw learned advocate for respondent No. 1 is permitted to file his vakalatnama in the registry and waives service of Notice of Rule for respondent No.1 in each of these petitions. Mr Maulik G. Nanavati learned Assistant Government Pleader waives service of notice of Rule for respondent Nos. 2 and 3.
2. On the facts and in the circumstances of the case, and with the consent of learned advocate for the respective parties these petitions are being heard and finally decided by a common judgment.
3. For the sake of brevity and convenience, reference is made to the memorandum of Special Civil Application No. 6633 of 2011 only.
4. This petition, under Article 226 of the Constitution of India, has been filed with the following reliefs :
(A) Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction quashing and setting aside the impugned orders dated 16th December 2010 and 18th February 2011 passed by respondent No. 1.
(B) Pending hearing and final disposal of this petition, your Lordship may be pleased to stay implementation and operation of the orders dated 16th December 2010 and 18th February 2011 and recovery of any amount fro salary/pension of the petitioners.
(C ) To pass any other and further orders as may be deemed, fit and proper in the interest of justice.
5. The brief facts of the case are as under :
The petitioners were initially working as Work Charge Clerk and were later absorbed as Work Assistants, pursuant to the Resolution dated 9th July 1987, and subsequent Resolutions dated 7th January 1984, 9th July 1987 and 15th July 1990. On being made Work Assistants the petitioners were given the pay scale of Rs 12001800 from 1st July 1987, which was revised from time to time. Subsequently, by Resolution dated 6thNovember 1996, certain conditions were laid down, one of which was that the concerned employee will have to undergo training and clear the departmental examination before being given promotions. The petitioners were promoted as Work Assistants vide order dated 4th November 1997, Page 4 of 20 HC-NIC Page 4 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT with effect from 1st July 1987, or after completion of ten years service as Work Charge Clerks, as the case may be. As the petitioners had not fulfilled the conditions laid down in Government Resolution dated 6th November 1996 before being promoted as Work Assistants, the respondents passed the impugned orders dated 16th December 2010 and 18th February 2011, whereby the financial benefits granted to the petitioners are sought to be recovered. Pursuant to the abovementioned orders certain recoveries have taken place from all the petitioners, through monthly installments. Aggrieved by the action of the respondent No. 1 the petitioners have approached this Court by filing the present petitions.
6. Ms Urvi A. Raval learned advocate for the petitioners has submitted that the impugned orders dated 16th December 2010 and 18th February 2011 have been passed without issuance of show cause notices and without affording an opportunity of hearing to the petitioners, which is against the settled principles of law. It is further submitted that the said orders are in violation of the principles of natural justice, and on this ground alone, they are liable to be quashed and set aside.
7. An affidavitinreply has been filed by respondent No. 1, District Development Officer, wherein the stand taken is that the petitioners have wrongly been given the benefit of the pay scale of Work Charge Assistants without undergoing the departmental training or clearing the departmental examination, after ten years of service as Work Charged Clerks; therefore, the benefit that has wrongly been given to the petitioners, is sought to be recovered, as per the directions of respondent Nos 2 and 3. However, there is no denial in the affidavit in reply filed by respondent No.1, to the averments made in the petitions that no opportunity of hearing has been given to the petitioners before passing the impugned order.
8. When the matter is taken up, Mr H. S Munshaw learned advocate for respondent No.1 states, upon instructions from Mr K.K Nirala, District Development Officer, District Panchayat, that as the petitioners have not been granted an opportunity of hearing before passing the impugned orders dated 6th November 1996 and 18th February 2011 the respondent No.1 shall grant an opportunity of hearing to the petitioners, and thereafter pass fresh orders.
9. In view of the above statement of the learned advocate for respondent No.1, the Court does not find it necessary to go into the merits of the case. However, the settled position of law cannot be ignored, which is that no order resulting in infliction of civil consequences should be passed against any person without affording a reasonable opportunity of hearing. In the present case, admittedly, the petitioners have not been heard before passing the impugned order. Moreover, it is not the case of respondent Page 5 of 20 HC-NIC Page 5 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT No.1 that the petitioners are guilty of fraud or misrepresentation, which may have led the respondents to pass the impugned orders. As such, the impugned orders dated 16th December 2010 and 18th February 2011 passed by respondent No.1 deserve to be quashed and and set aside, being violative of the principles of natural justice.
10. In this regard, the observations of the Supreme Court in Bhagwan Shukla Vs Union of India and Ors reported in (1994)6 SCC 154 are relevant and are reproduced hereinbelow :
"3. We have heard learned counsel for the parties. That the petitioner's basic pay had been fixed since 1970 at Rs 190 p.m is not disputed. There is also no dispute that the basic pay of the appellant was reduced to Rs 181 p.m from Rs 190 p.m in 1991 retrospectively w.e.f. 18th December 1970. The appellant has obviously been visited with civil consequences but he had been granted no opportunity to show cause against the reduction of his basic pay. He was not even put on notice before his pay was reduced by the department and the order came to be made behind his back without following any procedure known to law. There has, thus, been a flagrant violation of the principles of natural justice and the appellant has been made to suffer huge financial loss without being heard. Fair play in action warrants that no such order which has the effect of any employee suffering civil consequences should be passed without putting the (sic employee) concerned to notice and giving him a hearing in the matter. Since, that was not done, the order (memorandum) dated 25 th July 1991, which was impugned before the Tribunal could not certainly be sustained and the Central Administrative Tribunal fell in error in dismissing the petition of the appellant. The order of the Tribunal deserves to be set aside. We, accordingly, accept this Appeal and set aside the order of the Central Administrative Tribunal dated 17th September 1993 as well as the order (memorandum) impugned before the Tribunal dated 25th July 1991 reducing the basic pay of the appellant from Rs 190 to Rs 181 w.e.f. 18th December 1970.
11. The principles of law enunciated by the Supreme Court in the above quoted judgment are squarely applicable to the cases of the petitioners. As it is an admitted position that orders dated 16th December 2010 and 18th February 2011 have been passed without prior show cause notice and without affording the petitioners an opportunity of hearing, the said orders are unsustainable in law and are hereby quashed and set aside. Any consequential action taken by the respondents No. 1 such as recoveries, cannot be sustained and is quashed and set aside.
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C/SCA/438/2013 JUDGMENT
12. Respondent No.1 shall refund the amounts recovered from the petitioners so far, within a period of six weeks from the date of receipt of a copy of this order. After refund of the amounts, respondent No. 1 shall grant a reasonable and adequate opportunity of hearing to the petitioners and thereafter pass fresh orders, in accordance with law.
13. The petition is partlyallowed to the above extent. Rule is made absolute, accordingly. It is clarified that while passing this order. this Court has not entered into the merits of the matters. Direct service is permitted.
14. In view of the order passed in the petitions, Civil Application No. 6633 of 2011 does not survive, and is disposed of accordingly."
3.7 It appears that the District Development Officer thought fit to challenge the order referred to above by way of filing the Letters Patent Appeal No.1566 of 2011 and allied appeals. Those appeals were permitted to be withdrawn vide order dated 17th October, 2011.
3.8 Hence these petitions.
4 Mr. Munshaw, the learned counsel has appeared on behalf of the respondents Nos.1 and 2. Mr. Utkarsh Sharma, the learned Assistant Government Pleader has appeared on behalf of the respondents Nos.3 and 4.
5 Mr. Munshaw submitted that at the relevant point of time, the Executive Engineer of the Surendranagar District panchayat committed a blunder by wrongly interpreting the Government Resolution of 1984 and granting benefits of the same to the writ applicants. Mr. Munshaw submitted that it is only when the audit department raised an objection in that regard, the panchayat came to learn about the mistake. Mr. Munshaw has filed an affidavitinreply on behalf of the respondent No.1 duly affirmed by the Executive Engineer inter alia stating as under:
Page 7 of 20HC-NIC Page 7 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT "2. It is stated that the State of Gujarat through Road & Bldg. Dept. issued a resolution dated 7.1.84 for establishing a cadre of work Asstt.
And a copy thereof is annexed at AnnexureA. The respnt. No.1 submits that subsequently another resolution dated 9.7.87 was issued by the said authority laying down certain requirements for appointment as work Asstt and a copy thereof is annexed as AnnexureB. From a kind perusal thereof it would be clear to the Hon'ble Court that the foremost conditions wre completion of 10 years of service as Work Charge Clerk and successful training meant for the post of Work Assistant. It is submitted that subsequent to the Govt. Resolutions referred to hereinabove the respndt. No.3 issued a Govt. Resolution dated 25.7.90 for the cadre of Work Assistant laying down that no new recruitment to the cadre of Work Assistant be made and the arrangement for training be made by the District Panchayat and a copy thereof is annexed as AnnexureC. It is submitted that the respndt. No.3 issued a resolution dated 6.11.96 laying down certain conditions and one of the vital conditions was that the concerned employee will have to undergo training and clear the examination and a copy thereof is annexed as AnnexureD.
3. The respnt. No.1 submits that the petitioner and similarly situated other work charge clerks were thereafter granted benefit of the cadre of Work Assistant. With retrospective effect from 1.7.87 or depending upon the completion of period of 10 years as work charge clerks and the monetary benefits were also released in their favour. It is most respectfully stated that the said action was taken through order dated ___398 and a copy thereof is annexed as AnnexureE. The respnt No.1 passed another order on 25.9.01/11001 subsequently and a copy of the said order is annexed as AnnexureF. In view of this the petitioners and the similarly situated other work Assistants were getting the benefits on the basis of completion of 10 years of service as Work Clerk Clerk irrespective of undergoing training and clearing the examination meant for the post of Work Assistant. The respnt. No.1 craves leave to add that in the instant case as mentioned hereinabove the petitioners and others who cleared the examination on 4.11.97 and thereafter but were were absorbed and granted all monetary benefits on the basis of completion of 10 years service as Work Charge Clerks. It is most respectfully stated that later on respnt. No.3 issued a Govt. Resolution dated 23.3.05 laying down that compliance with the requirement is a must. The respnt. No.1 most respectfully states that the Director of Local Fund Audit, Gandhinagar addressed a letter dated 20.5.09 on the issue of training,clearance of examination within one year from competition of training, stoppage of increments etc and a copy thereof is annexed as AnnexureG.
4. The respnt. No.1 submits that in the case of Mr. J.C. Valand it was found that the said benefits were given wrongfully ignoring the basic requirement of training and passing of the examination and, therefore, the respnt. No.3 took a definite stand that from the date of clearance of Page 8 of 20 HC-NIC Page 8 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT examination subsequent to training is the relevant date for appointment as Work Charge Assistant and a copy of the letter dated 5.11.09 is annexed as AnnexureH. Immediately thereafter the District Examiner of Local Fund Audit, Surendranagar addressed a letter dated 16/18.1.10 to the respnt.l No.1 for review of the cases of the Work Assistants. In light of a letter dated 5.11.09 addressed by the respnt. No.3 and a copy thereof is annexed as AnnexureI. It is submitted that thereafter the respnt. No.3 addressed another letter dated 2.3.10 to the Director of Local Fund Audit at Gandhinagar making its stand clear on the same issue about training and clearance of the requisite cases within a period of one year from the date of completion of training. It is further submitted that the respnt. No.3 also clarified that if an employee fails to clear the examination within a period of one year then increments be stopped and a copy of the said letter is annexed as AnnexureJ.
5. In view of the above mentioned facts it is most respectfully stated that the respnt. No.1 herein passed an order dated 16.12.10 ordering that necessary modifications be made in case of in all 39 employees as undergoing of training, clearance of examination within a period of one year of completion of training, sanction of posts were vitally important for fixing of pay scale. It was also ordered that the pay fixation be verified from the office of Local Fund Audit and if necessary recovery be made and a copy of the order dated 16.12.10 along with the Statement showing the full details about all the 39 employees is annexed as AnnexureK. The respnt. No.1 submits that subsequently another order dated 18.2.11 was passed by the respnt. No.2 for further modification and a copy thereof along with Statement giving details is annexed as AnnexureL.
6. The respondent No.1 submits that considering the facts and circumstances it was found that petitioner herein and similarly situated work charge employee were wrongfully given the benefits ignoring th policy of the respondent No.3 as well as the facts on record. It is stated that the petitioner and others were wrongfully given the benefits due to misinterpretation of the policy declared by the State Government through its Roads and Building Department. It is stated that in view of this as mentioned hereinabove, the impugned orders for recovery were passed. It is pertinent to note that the petitioner and others are liable to repay an approximate amount of Rs.1,41,000/ and there are in all 39 such employees.
The respondent no.1 craves leave to submit that the said orders for recovery were challenged by the petitioner by way of filing a Special Civil Application No.6632 of 2011. It is stated that 34 other employees either in service or retired also filed petitions before this Hon'ble Court varying No.6633 of 2001 to No.6666 of 2011. The Ld. Single Judge of the Hon'ble High Court of Gujarat heard all the matters and disposed of the same through order dated 24/06/2011 holding that the same were required to Page 9 of 20 HC-NIC Page 9 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT be partly allowed as the concerned petitioners were not given adequate opportunities of hearing prior to passing of the said orders. It is submitted that thereafter the Hon'ble Division Bench of the Hon'ble High Court of Gujarat was approached by the District Development Officer, Surendranagar District Panchayat by way of filing Letters Patent Appeal No.1231 of 2011 and others, but ultimately the same were dismissed.
7. The respondent No.1 submits that in view of the directions issued by the Ld. Single Judge through an order dated 24/6/2011 passed in Special Civil Application No.6632 of 2011 and others, it was thought fit to issue notices to all the concerned petitioners on 10/07/2012 calling them for pesonal hearing on 16/07/2012. It is stated that the petitioner herein as well as other were heard by the District Development Officer, Surendranagar District Panchayat i.e. The respondent No.2 herein as well as the Executive Engineer, Irrigation Division, Surendranagar Distrcict Panchayat and thereafter the District Development Officer, Surendranagar instructed the Executive Engineer (Irrigation Division) to pass appropriate orders as he was the appointing authority. It is submitted that accordingly fresh reasoned orders were passed on 26/11/2012 rejecting the submission of the petitioner and others and ordering recovery from in all 39 employees and a copy of one of such orders is annexed herewith and marked as AnneuxreM. It is pertinent to note that each of such employee whether in service or retired is liable to pay an amount of Rs.1,41,000/ approximately to the Public Exchequer as the same is wrongfully paid.
The respondent No.2 most respectfully states that the office of Assistant Examiner of Local Fund Audit at Surendranagar has put adverse comment due to release of undue benefits in favour of the petitioner and others and therefore, the impugned actions are taken.
8. The respondent No.1 humbly submits that the petitioner herein is not right in claiming the benefits on the basis of the Government resolution dated 09/07/1`987 issued by the Roads and Building Department of the State Government. It is humbly stated that as such the said G.R. Dated 09/07/1987 is meant for Hangami employees of State Government and not for the employees of the District Panchayat of the State of Gujarat. It is submitted that so far as the Panchayat & Rural Housing Department of the State Government is concerned,d such notification was issued for the first time on 04/02/1993 and the copies of G.R. dated 09/07/1987 as well as notification dated 04/02/1993 are annexed herewith and marked as AnnexureN & O respectively. It is further stated that through Notification dated 04/02/1993, the respondent No.3 herein has only framed recruitment rules for the cadre of work assistant and there was no reference about any service of work charge clerk. It is submitted that thereafter the respondent No.3 herein for the first time issued a resolution dated 06/11/1996 for training and examination thereafter for the post of work assistant and a copy of thereof Page 10 of 20 HC-NIC Page 10 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT is annexed herewith and marked as AnnexureP. In other words, a training and examination for the post of Work Assistants were provided on 06/11/1996. In view of this, the petitioner and others were sent for training in the year 1997 by the Surendranagar District Panchayat through its Executive Engineer (Irrigation Division). It is stated that the training & examination were arranged by the office of Executive Engineer, Roads and Building Division, Surendranagar District Panchayat, hence in humble submission of the respondent No.1, the petitioner became eligible for the post of Work Assistant and monetary benefits flowing therefrom from the year 1997.
9. The respondent No.1 craves leave to state that the petitioner herein and others cannot equate their cases with the cases of those who were employed by Roads and Building Department or Irrigation Department of the State of Gujarat. It is reiterated that the respondent No.3 herein has made it clear again through a letter dated 05/11/2009 that one should be treated as Work Assistant only from the date of passing of examination held o completion of training. It is submitted that as mentioned hereinabove it was so held in the case of Jayantibhai C. Valand in response to the query raised by the Assistant Examiner of Local Fund Audit at Gandhinagar and a copy of letter dated 05/11/2009 is annexed herewith and marked as AnnexureQ. The respondent No.1 further states that even through a letter dated 30/01/2013 the Assistant Examiner of Local Fund Audit at Surendranagar has instructed the Dy. Executive Engineer (Irrigation Sub Division) at Lakhtar that such employees are entitled to the post of Work Assistant and the monetary benefits flowing therefrom with effect from the date of passing of the examination. It is further held that the monetary benefits including the increments should be paid accordingly and a copy of thereof is annexed herewith and marked as AnnexureR.
10. In view of the above facts & circumstances it is crystal clear that the petitioner and others are entitled for the benefits of the post of Work Assistant with monetary benefits from the date of passing of examination on completion of training meant for the post of Work Assistant. It is again submitted that the benefits cannot be given on the basis of the policy of Roads & Building Department of the State Government and therefore, the recovery ordered by the authority is just and legal.
11. The respondent No.1 humbly submits that out of 39 such employees, only 21 have approached the Hon'ble High Court of Gujarat against the said orders by way of filing Special Civil Applications and others have not objected to the recovery. It is submitted that as per the latest judgment of the Hon'ble Supreme Court of India reported in 2012 (8) SCC P.417. It is open for the authority to recover undue benefits derived by the employee. It is submitted that recovery is being made through installments from the retired employees as well as in service Page 11 of 20 HC-NIC Page 11 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT employees, so that no hardships is caused to them."
6 According to Mr. Munshaw, in all there are 39 (thirty nine) employees who have been wrongly given the benefits of the Government Resolution of 1984 and now the benefits need to be withdrawn. He submitted that the necessary deduction will be made from the salary of the employees who are still in service and so far as the retired employees are concerned, the necessary deduction will be made from their pension.
7 Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is whether the action of the respondents in effecting the recovery after a lapse of almost twenty two years would be permissible in law.
8 As I have already observed, out of 21 (twenty one ) writ applicants, most of them have retired from service. In my view, the action of recovery now at this stage after almost two decades will cause massive hardships and difficulties for each of the writ applicants.
9 The issue in hand is now squarely covered by the decision of the Supreme Court in the case of State of Punjab and others v. Rafiq masih [2015 (4) SCC 334], wherein the Supreme Court has considered the effect of recovery and the hardship which would be caused to the employees. I may quote the observations of the Supreme Court as contained in paras 7 to 18 as under:
"7. Having examined a number of judgments rendered by this Court, we are of the view, that orders passed by the employer seeking recovery of monetary benefits wrongly extended to employees, can only be interfered with, in cases where such recovery would result in a hardship of a nature, Page 12 of 20 HC-NIC Page 12 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT which would far outweigh, the equitable balance of the employer's right to recover. In other words, interference would be called for, only in such cases where, it would be iniquitous to recover the payment made. In order to ascertain the parameters of the above consideration, and the test to be applied, reference needs to be made to situations when this Court exempted employees from such recovery, even in exercise of its jurisdiction under Article 142 of the Constitution of India. Repeated exercise of such power, "for doing complete justice in any cause" would establish that the recovery being effected was iniquitous, and therefore, arbitrary. And accordingly, the interference at the hands of this Court.
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 concerned employee. If the effect of the recovery from the concerned employee 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 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, Page 13 of 20 HC-NIC Page 13 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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 vs. 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 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 is ours)
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 Page 14 of 20 HC-NIC Page 14 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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 Shram Babu Verma v. Union of India (1994) 2 SCC 521, wherein this Court observed as under:
"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 is ours) It is apparent, that in Shyam Babu Verma's case (supra), 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 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 Page 15 of 20 HC-NIC Page 15 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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 is ours) 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 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 ClassIV 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 Page 16 of 20 HC-NIC Page 16 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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 is ours) 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 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 Page 17 of 20 HC-NIC Page 17 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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 is ours) 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 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 Page 18 of 20 HC-NIC Page 18 of 20 Created On Sun Mar 06 02:20:34 IST 2016 C/SCA/438/2013 JUDGMENT 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."
10 I inquired with Mr. Munshaw as to why it took almost two decades to realize the socalled mistake committed by the panchayat at the relevant point of time in granting the benefits of the Government Resolution of 1984. Mr. Munshaw submitted that at the relevant point of time, the mistake was committed by an Executive Engineer. I also inquired whether the regular audits were being undertaken or not. I am surprised to learn that, for the first time, after almost a period of 22 years, the audit was undertaken. Mr. Munshaw clarified that the benefits of the Government Resolution of 1984 were granted with retrospective effect. Be that as it may, I may only say that even if the writ applicants were not entitled to the benefits of the Government Resolution of 1984, yet the action on the part of the respondents to effect recovery at this stage is not reasonable and fair. Ultimately, the family of the respective writ applicants will have to suffer. To say that the amount would be deducted from the pension would be to kill the pensioners.
11 In such circumstances referred to above, all these writ applications
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are allowed. The impugned action / orders passed by the respondents of effecting recovery is hereby ordered to be quashed. If any amount has been recovered from any of the writ applicants, the same shall be immediately repaid to the writ applicants within a period of four weeks from the date of receipt of the writ of this order. Rule is made absolute to the aforesaid extent. Direct service is permitted.
12 In view of the order passed in the main matters, the connected Civil Application is also disposed of.
(J.B.PARDIWALA, J.) chandresh Page 20 of 20 HC-NIC Page 20 of 20 Created On Sun Mar 06 02:20:34 IST 2016