Allahabad High Court
Vijay Prakash Sharma (Kanoongo) vs State Of U.P.& Others on 11 January, 2018
Author: Sudhir Agarwal
Bench: Sudhir Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 34 Case :- WRIT - A No. - 37932 of 2000 Petitioner :- Vijay Prakash Sharma (Kanoongo) Respondent :- State Of U.P.& Others Counsel for Petitioner :- Ayub Khan Counsel for Respondent :- C.S.C. Hon'ble Sudhir Agarwal,J.
1. Heard Sri Ayub Khan, learned counsel for petitioner and learned Standing Counsel for respondents.
2. Writ petition is directed against order dated 28.04.2000 whereby Settlement Officer (Consolidation), Bulandshahar has passed order for recovery of Rs. 15147/- alongwith 14% interest from petitioner pursuant to an audit objection.
3. It is contended that aforesaid payment was made to petitioner after accepting his leave travelling concession and represent the expenses incurred under the said head. Neither any inquiry was conducted nor any show cause notice was issued and even otherwise there was no provision for demanding any interest also but straightway on the basis of audit objection, impugned order has been passed which is patently illegal.
4. This Court time and again held that an order for recovery passed against an employee results in civil consequences and without complying principle of natural justice such an order cannot be passed.
5. It is stressed that impugned recovery has been initiated without issuing any show cause notice or giving opportunity to petitioner and, therefore, it is in utter violation of principles of natural justice. Learned counsel for petitioner further urged that had the petitioner been afforded opportunity, he would show to the authorities concerned itself, that, there is no error as alleged, and, no amount has been wrongly or excessively paid, and, therefore, no recovery is permissible or desirable. It is lastly contended that in any case, the amount received by petitioner, allegedly in excess, cannot be recovered since there is no element of fraud or misrepresentation on his part and, therefore, in view of various authorities of this Court and the Apex Court, no recovery can be given effect.
6. In substance, there are two submissions, which have to be considered by this Court:
(1) Whether recovery of an amount, alleged to have been paid in excess, to an employee can not be affected by the employer, unless the (the employer) can show that there is an element of fraud or misrepresentation on the part of employees concerned. In other words, if there is no allegation of fraud or misrepresentation on the part of employee, whether an amount, paid in excess to an employee, can be recovered?
(2) Where the order of recovery has been passed, without issuing any show cause notice or giving opportunity, can it sustain?
7. I propose to consider question no. 1 first. Petitioner has sought to fortify his submissions that unless there is an element of fraud or misrepresentation on the part of concerned employee, a recovery of alleged excess paid amount cannot be effected, placed reliance on certain authorities of this Court as also the Apex Court which are a Division Bench decision of this Court in B.N. Singh Vs. State of U.P. and another 1979 ALJ 1184, a Full Bench judgment in Surya Deo Mishra Vs. State of U.P. 2006 (1) UPLBEC 399 and Apex Court's decisions in Shyam Babu Verma & Anr. Vs. Union of India & Ors. 1994(2) SCC 521, Gabriel Saver Fernandes & Ors. Vs. State of Karnataka & Ors 1995 Suppl.(1) SCC 149, Mahmood Hasan Vs. State of U.P. JT 1997(1) SC 353, State of Karnataka & Anr. Vs. Mangalore University Non-Teaching Employees' Association & Ors. 2002(3) SCC 302, Purushottam Lal Das & Ors. Vs. State of Bihar & Ors. 2006 (10) SCALE 1999. There are some other judgments of this Court which have followed the above authorities.
8. However, I find that there are certain direct authorities of Apex Court looking into this very question and taking a view otherwise and in the light of those binding authorities of Apex Court, which are of recent period also, I find it difficult to follow the authorities cited by the petitioner and, in my view, the later decisions of the Apex Court dealing with this question directly is a law binding on this Court under Article 141 of the Constitution of India and, therefore, I have no option but to follow the same, particularly, when most of the authorities of Apex Court cited at the bar on behalf petitioner has also been considered, discussed and distinguished or explained in the later authorities of the Apex Court. I propose to refer the decisions of the Apex Court which have taken a view otherwise holding that an amount, if has been wrongly paid to an employee and he is not entitled for the same, recovery of such amount cannot be said to be bad except of certain very limited exceptions which have also been described therein.
9. The first is State of Haryana and others Vs. O.P. Shrama and others AIR 1993 SC 1903. There an ad hoc interim relief was granted in 1972 by the Government on slab basis pending fixation of additional dearness allowance. No formula with reference to cost of living was adopted while granting ad hoc relief. When the formula for grant of additional dearness allowance of the cycle of increase by 8 points in the Consumer Price Index was adopted by the State Government, it realised that the ad-hoc interim relief was in excess by Rs. 9.40 to Rs. 45 per month depending on the pay-slab of a Government servant. It then decided to adjust increase rather than order lump sum recovery of the excess amount, in subsequent emoluments, payable to the employees, instead of recovering entire amount. Such order was passed in March 1974. The Court did not find order bad, illegal, arbitrary, unreasonable or unfair. It held that the Government has rightly chosen to recover excess amount in a phased manner.
10. In Union of India Vs. Smt. Sujatha Vedachalam and another AIR 2000 SC 2709, an employee was working as Senior Clerk (Accounts) in the pay scale of Rs.1400-2600. On his personal request, he was transferred from Nagpur to Bangalore. One of the conditions of transfer was that the employee shall technically resign from the post held at Nagpur and join as Direct Recruit on the post of Clerk at Bangalore. At the time of transfer, basic pay drawn by the employee at Nagpur in the cadre of Senior Accountant, was Rs. 1260/-. When the employee joined on the lower post of clerk, by mistake, her salary was fixed at basic pay of Rs.1250/- per month instead of Rs. 1070/-. On detection of mistake, pay was refixed at the stage of Rs. 1070/- by order dated 1.12.1995. The order(s) of recovery and refixation were challenged before Central Administrative Tribunal. Employee's claim was allowed by the Tribunal and Government's Writ Petition was dismissed by High Court. The Apex Court relying on its earlier decision in Comptroller & Auditor General of India Vs. Farid Sattar, AIR 2000 SC 1557, set aside both the judgments and upheld G.O. of refixation and recovery, with the only indulgence that excess pay may be recovered in easy instalments. The Court herein upheld recovery and permitted instalments.
11. Next is Col. (Retd.) B.J. Akkara Vs. Government of India (2006) 11 SCC 709 wherein the law relating to recovery of excess payment from employees was considered. The Court held that cases wherein excess payment has not been allowed to be recovered from employees' are not founded because of any right in the employees but in equity and in exercise of judicial discretion to relieve employees from the hardship that may be caused, if recovery is implemented. Such a discretion is exercised by the Court and one of the reasons therefore, has been, as that the employee was receiving excess payment for a long period and utilising the same, genuinely believing that he is entitled to it, but where the employee had knowledge that the payment so received was in excess of what was due and the error was detected within a short period of wrong payment, Court would not give relief against such recovery. It is said that these matters lie in the realm of judicial discretion of the Court.
12. Then comes Registrar Cooperative Societies Vs. Israil Khan and others 2010(1) SCC 440 wherein recovery of excess amount paid to employees of cooperative society was challenged relying on Apex Court's decision in Sahib Ram Vs. State of Haryana 1995 Supp.(1) SCC 18 and Shyam Babu Verma Vs. Union of India (Supra). A two Judges Bench of Apex Court, consisting of Hon'ble R.V. Raveendran and Hon'ble P. Sathasivam said in para 6 of the judgment that there is no principle that any excess payment to an employee should not be recovered back by the employer. The Court observed that in certain cases merely a judicial discretion has been exercised by Apex Court to refuse recovery of excess wrong payments of emoluments/allowances from employees on the ground of hardship where the following conditions were fulfilled:
(a) The excess payment was not made on account of any misrepresentation or fraud on the part of employee; and
(b) such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous.
13. Now the Apex Court in Chandi Prasad Uniyal and others vs. State of Uttarakhand and others, 2012(3) UPLBEC 2057 has said that there is no such principle of law that wrong payment made to an employee can be recovered only in those cases where he is guilty of fraud and misrepresentation, and not otherwise. The Court has distinguished all its earlier decisions in Shyam Babu Verma Vs. Union of India (Supra), Sahib Ram v. State of Haryana (Supra), State of Bihar v. Pandey Jagdishwar Prasad [(2009) 2 SCC 117] and Yogeshwar Prasad and Ors v. National Institute of Education Planning and Administration and Ors. [(2010) 14 SCC 323]. In paragraphs 9, 15, 16 and 18 of the judgment the Court has said:
"9. We are of the considered view, after going through various judgements cited at the bar,hat this court has not laid down any principle of law that only if there is misrepresentation or fraud on the part of the recipients of the money in getting the excess pay, the amount paid due to irregular /wrong fixation of pay be recovered."
"15. We are not convinced that this Court in various judgments referred to hereinbefore has laid down any proposition of law that only if the State or its officials establish that there was misrepresentation or fraud on the part of the recipients of the excess pay, then only the amount paid could be recovered. On the other hand, most of the cases referred to hereinbefore turned on the peculiar facts and circumstances of those cases either because the recipients had retired or on the verge of retirement or were occupying lower posts in the administrative hierarchy."
"16. We are concerned with the excess payment of public money which is often described as "tax payers money" which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situation. Question to be asked is whether excess money has been paid or not may be due to a bona fide mistake. Possibly, effecting excess payment of public money by Government officers, may be due to various reasons like negligence, carelessness, collusion, favouritism etc. because money in such situation does not belong to the payer of the payee. Situations may also arise where both the payer and the payee are at fault, then the mistake is mutual. Payments are being effected in many situations without any authority of law and payments have been received by the recipients also without any authority of law. Any amount paid /received without authority of law can always be recovered barring few exceptions of extreme hardships but not as a matter of right, in such situations law implies an obligation on the payee to repay the money, otherwise it would amount to unjust enrichment."
"18. Appellants in the appeal will not fall in any of these exceptional categories, over and above, there was a stipulation in the fixation order that in the condition of irregular/wrong pay fixation, the institution in which the appellants were working would be responsible for recovery of the amount received in excess from the salary / pension. In such circumstances, we find no reason to interfere with the judgment of the High Court. However, we order the excess payment made be recovered from the appellant's salary in twelve equal monthly instalments starting form October 2012. The appeal stands dismissed with no order as to costs. IA nos. 2 and 3 are disposed of."
14. The Apex Court further held that decision in Shyam Babu Verma (Supra), Sahib Ram (Supra), Yogeshwar Prasad (Supra), etc. are all decided on their own facts and do not lay down any principle of law, restraining recovery of excess payment of salary from the concerned employee. On the contrary, in para 17 of the judgment the Court said that except few instances pointed out in Syed Abdul Qadir and others vs. State of Bihar and others (2009) 3 SCC 475) and in Col. B.J. Akkara (Supra), excess payment due to wrong/irregular pay fixation can always be recovered.
15. There is a Division Bench judgement of this Court also in State of U.P. & others Vs. Vindeshwari Prasad Singh (Special Appeal No.503 of 2008), decided on 28th July, 2009. The Court formulated two questions, as under:
"(i) Whether any financial benefit given to an employee by mistake without any misrepresentation or fraud on his part can be recovered from him later on after his superannuation from service?
(ii) Whether before directing for recovery of the amount paid in excess, the employee concerned is required to be given notice and opportunity of hearing?"
16. Having said so, the Court said:
"Having given my most anxious consideration, neither on first principle nor precedent, I am prepared to accept the broad submission that excess amount paid to an employee by mistake cannot be recovered after his superannuation only on the ground that while obtaining monetary benefit, it has not made false representation or played fraud."
17. Further, the Court referred to Section 72 of Indian Contract Act and thereafter said:
"From a plain reading of the aforesaid provision it is evident that a person to whom money has been paid by mistake is obliged to return the same. In my opinion an employee not entitled to receive monetary benefit gets it, it becomes a case of unjust enrichment and restitution in case of unjust enrichment is an accepted principle for ensuring justice in appropriate cases. In my opinion in a case of mistake clear, plain and simple, excess amount paid to and employee can be recovered after retirement despite the fact that he had not made any misrepresentation or played fraud. There is no legal impediment in ordering for recovery from a retired employee such monetary benefits, which he had received on account of mistake and not entitled to such benefits. However, I would hasten to add that a mistake, pure and simple though justifies recovery of excess amount paid but in a case in which two interpretations are possible and one was consciously approved and benefit given to an employee by the competent authority but such decision in the ultimate analysis and long process of reasoning, later on is found incorrect, it may be possible to correct the same at a latter stage but the amount already paid in the light of the earlier decision is not fit to be recovered. In other wards, excess payment is made upon reasonably possible view taken by competent authority without fraud or misrepresentation, the excess payment cannot be recovered. Excess payment is possible to be made by the order of the employer. It is also possible by interim or final order of the Court, which ultimately is found to be erroneous. In case of former, a recovery is permissible under the condition enumerated above. However, in latter case, it depends upon the facts and circumstances of each case and it is primarily within the discretion of the Court." (emphasis added)
18. The Court also relied upon an earlier Division Bench Judgement in Union of India Vs. Rakesh Chandra Sharma and others 2004 (1) ESC (Allahabad) 455, observing that there is no law of universal application, restraining the employer from recovering the extra amount paid to an employee beyond entitlement. The Court also observed that rectification of mistake is not only permissible but desirable otherwise system/requirement of auditing of accounts would be rendered nugatory.
19. These authorities clearly show that there is no right of petitioner in law or otherwise that admitted excess payment wrongly made cannot be recovered. As a matter of right, petitioner cannot contend that though he had been paid certain amount wrongly in excess to what was due to them, yet it cannot be recovered by the administration.
20. Moreover, the above argument also pre-supposes an admission on the part of petitioner that he was not entitled to the payment made in excess which is now being sought to be recovered. It is not the case that petitioner was not aware or would not have been aware as to what would have been the correct pay scale or the allowance etc., which he would has been entitled to, but he continued to receive salary. If the fixation would have been made in a lower pay scale, it has always been seen that employee concerned immediately raises a protest that he is being paid wrong amount or lesser amount but when an employee receive more than the amount to which he is entitled, he does not inform the authorities concerned or bring this fact to their notice. It shows a tacit acquiescence on the part of employee in the wrong committed by administration to which he was the beneficiary and became part and parcel to the administration in this regard.
21. I may also add at this stage that this entire issue came to be considered by a Larger Bench in State of Punjab and others Vs Rafiq Masih and others, (2014) 8 SCC 883 and therein Court observed that in certain circumstances it would not be equitable or justified to recover the amount if paid in excess to an employee and in this regard Court said:
"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 Class-III and Class-IV 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."
22. In in the present case wrong payment said to be made to petitioner not on account of any wrong fixation etc. but petitioner was admittedly a Class-III employee and was not entitled for claiming expenses by traveling in a private Car or First Class in Railway. Therefore, claim made by petitioner under aforesaid head even if not on account of any fraud or misrepresentation but it is on account of act of petitioner himself which was wrongly accepted and payment was made, hence circumstances which are stated in Larger Bench judgment in Rafiq Masih (supra), are not attracted in the case in hand.
23. There is one more aspect to which this Court would like to consider this matter.
24. The excess money received by petitioner is not anybody's private money but it has come from the coffer of public exchequer. It is a public money contributed by tax payers and hard earned money of public at large. If an excess money is allowed to be retained by a person who is not authorised, that would result in denying user and consumption of that money other than the purpose for which it is meant.
25. Administration, whether in executive or judiciary, holds public funds in trust and with responsibility of spending it strictly in the manner they are required to do so and not to enrich anyone or waste money by its unmindful, unauthorised and illegal acts. If any such thing has happened even if unknowingly and indeliberately, the administration is legally, morally and by any standard of civilised society, is bound to restore back such wasteful expenditure to the public exchequer so that it may thereafter be utilised in the manner and for the purpose, so prescribed. Any attempt on the part of administration to allow an employee to retain certain money, which the Administration has wrongly paid to him, though the employee was not entitled to the same, or, any act on the part of administration, in not realising the said amount from the employee, is liable to be treated as breach of trust. Such decision would amount to not only waste of public money but also an attempt to perpetuate an illegal act. It is not a private property to which one can show any attitude of charity and so called broad heart and magnanimity. This would be against any principle of administrative law. Simultaneously, an employee if retains something which he did not owe, he being also equally responsible to the public and public fund holding an office of trust, is bound to return/refund it.
26. In P.K. Chinnaswamy Vs. Government of Tamilnadu and others AIR 1978 SC 78, the Apex Court said that every public officer is a trustee and in respect of the office he holds and the salary and other benefits which he draws, he is obliged to render appropriate service to the State. Conversely, it would also be true that a Government official would be entitled to payment of only that amount, which he is entitled towards salary etc. under the relevant provisions, applicable to him, in the context of his status, position, rank , etc. If he has received or paid even by mistake, certain amount to which he was not entitled, it would amount to excess drawl of money unauthorisedly from public exchequer to which every Government official is a trustee and, therefore, whether mistaken or otherwise, no one is entitled to retain such unauthorised money belonging to public exchequer but, is under a legal and ethical obligation to return/refund the same, so that, it may be utilized for the purpose, it is made and decided by the competent authorities in budgetary allocation.
27. Every single penny constituting consolidated fund of India/State comes from hard earned money of tax payers and others. It has to be utilized strictly in the manner in which the competent authority i.e., the legislature has resolved and decided. No amount of public exchequer can be allowed to be squandered as a matter of charity or otherwise to be retained by a Government servant who is not entitled to obtain such money but by another Government Servant has been allowed to withdraw from public exchequer, may be, by his mistake or may be collusive mistake or otherwise.
28. This Court also tried to find out as to from which budgetary allocation excess money was paid to the employee and to which it can be adjusted. Since the allocated money is already identified and beyond that nothing could have been paid by anybody, no authority can be allowed to retain any amount which he has received unauthorisedly or on account of mistake of administration. It shall also amount to financial indiscipline and misuse of public fund. In the context of above decisions, I am clearly of the view that various authorities cited by the learned counsel for petitioner would not help him to claim that excess amount paid should not be recovered.
29. In view of above discussion, It cannot be doubted, that, if admittedly some amount has been paid to an employee in excess to what he was entitled or payable to him, it can be recovered from him and the mere fact that the said payment was not due to any fraud or misrepresentation on the part of employee would make no difference. This question, therefore, is answered against the petitioner.
30. Now coming to the second question regarding application of principles of natural justice, it cannot be doubted that whenever an employer takes a view, or from the record, finds, that certain amount has been paid to an employee, in excess to what he was not entitled, before issuing an order of recovery of the same, he must give an opportunity to the employee concerned to show cause, whether such amount should be recovered from him or not. If this opportunity is given to an employee, he can always show that what was paid to him, he was entitled therefor, and, there is neither any excess payment, nor any payment for which he was not entitled. An order passed directly without giving any show cause notice or opportunity to the employee, in my view, would suffer the vice of non observance of principles of natural justice. In a case where there is a dispute as to whether the employee has been paid an amount rightly or not, before passing any order, having civil consequences, the employer must afford an opportunity to the employee, else, such an order would be in violation of principles of natural justice. The Apex Court in Bhagwan Shukla Vs. Union of India & others 1994 (6) SCC 154, is similar circumstances, has held that an order passed in violation of principles of natural justice cannot be sustained. In para 3 of the judgment, the Apex Court observed as under:
"The appellant has obviously been visited with civil consequences but he had been granted no opportunity to show cause ...Fair play in action warrants that no such order which has the effect of an employee suffering civil consequences should be passed without putting the concerned to notice and giving him hearing in the matter."
31. The second question, as a proposition of law, therefore, is answered in favour of petitioner.
32. Now applying the above expositions of law, in the present case, I find from a bare perusal of impugned recovery shows it has been initiated without giving any opportunity of hearing, i.e. without issuing any show cause notice. The impugned recovery, apparently, is in violation of principles of natural justice. Learned Standing Counsel also could not dispute that the impugned recovery has been initiated without any show cause notice or without any opportunity to petitioners to explain their point of view.
33. In view of the aforesaid expositions of law, and the admitted fact, in the case in hand, that, the impugned recovery was initiated without affording any opportunity to the petitioner, this writ petition deserved to be allowed, since the recovery impugned is unsustainable being in violation of the principle of natural justice. Law is well settled long back still respondents have chosen to disregard law and are continuously passing such illegal orders forcing unnecessary litigation upon employee concerned.
34. In the result, writ petition is allowed. Impugned orders dated 28.04.2000 and 06.07.2000 are hereby quashed. Petitioner is also entitled to costs which I quantify by Rs. 10,000/-.
35. However, it is made clear that this judgment shall not preclude respondents from passing an order in accordance with law.
Order Date :- 11.1.2018 AK