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Judgment
Sandeep Moudgil, J
The jurisdiction of this court has been invoked under Articles 226/227 of the Constitution of India for the issuance of a writ in the nature of Certiorari quashing the letter dated 20.06.2022(Annexure P-4) and the letter dated 01.06.2022(Annexure P-6) issued by the office of Respondent no.1 whereby the respondent department had ordered for refixing the pension of the petitioner and further directed to recover the amount of Rs.1,71,403/- from the arrears/retirement arrears of the petitioner which is wrong, illegal and against the principle of natural justice and is liable to be quashed.
It is further prayed for issuance of writ in the nature of mandamus for directing the respondents to pay interest @9% on delayed payment of GPF, Leave encashment, GIS and gratuity.
Briefly putforth, the petitioner is a retired Government Servant who has been dismayed by the order dated 17.06.2022 and 20.06.2022 whereby an order has been issued and recovery has been made from the retirement funds of petitioner. The petitioner was employed as Driver in Government of Punjab in the year 1992 and had retired as Additional Supervisor on 30.06.2021. During the service of the petitioner, one special increment was erroneously granted to the petitioner on 01.12.2011 without any misrepresentation or fraud played by him. However, after gap of 10 years, subsequent to his retirement in the year 2022 when the petitioner was struggling to get release his retirement funds then he received a letter from the respondent department whereby the amount of Rs.1,71,403/- was ordered to be recovered from the retirement funds and arrears of 6th pay commission of the petitioner. Hence the present petition.
Counsel for the petitioner contends that the petitioner during the course of his service had availed Government accomodation at Sector 46, Chandigarh and the department at the time of payment of retrial benefit has withheld an amount of Rs.1,00,000/- which was to be paid after issuance of NOC from the office of the Assistant Controller (Finance and Accounts) Rent, Chandigarh and the same was issued by the Chandigarh Administration stating that nothing is outstanding against the petitioner.
It is further contended that the respondent department had issued letter dated 28.04.2022 whereby an order for release of withheld amount of Rs.1,00,000/- was directed to the concerned authorities but to utter shock of the petitioner, a letter dated 20.06.2022 was issued to him wherein it was mentioned that the amount of Rs.1,00,000/- has been adjusted towards the recovery pending towards the petitioner for the reason that the petitioner was erroneously granted a special increment on 01.12.2011.
It is urged by counsel for the petitioner that the department has wrongly assessed and demanded the recovery of Rs.1,71,403/- because there was no misrepresentation or any fraud played by the petitioner for excess payment. Also, the department was well versed with the fact that the post held by petitioner was under Group C and the amount had been paid in excess of 5 years therefore the act of the department was illegal and arbitrary.
Notice of motion issued on 27.01.2023 and reply of respondents no.1 to 4 are on record.
Per contra, the state counsel submits that at the time of pay fixation under 6th Pay Commission, the petitioner was given benefit of extra annual increment wrongly on 01.04.2011 and after correcting the entries, it was found that amount of Rs.1,71,403/- was to be recovered from the petitioner which was paid in excess mistakenly. He contends that the petitioner has submitted his consent as well as no objection vide letter dated 06.06.2022 stating that an amount of Rs.1,00,000/- may be adjusted from the due leave encashment and the rest of the amount i.e. Rs.71,403/- may be adjusted from the arrears of pay fixation as per the 6th Pay Commission.
Heard counsels for both the parties at length.
It is argued that the petitioner, being a Class-III employee, did not commit any fraud, misrepresentation, or concealment of facts at any stage, and therefore any alleged excess payment, if made, was solely on account of an error attributable to the respondent-department, while further submitting that in the absence of any misconduct or pending disciplinary proceedings, the respondents have no authority in law to recover the amount paid erroneously.
It is further contended that recovery from a retired employee is impermissible in law, especially where the alleged excess payment pertains to a period long prior to retirement and was not obtained by any wrongful act of the employee. Learned counsel relies on settled judicial precedents to argue that recovery from retired employees or employees nearing retirement is inequitable and legally unsustainable, particularly when such recovery would cause undue hardship.
On a careful consideration of the record and the rival submissions, this Court finds that the action of the respondents, in seeking recovery from the petitioner, cannot be sustained either in law or on equitable considerations. The foundation of the respondents’ case is an admitted position that the alleged excess payment arose on account of an error in pay fixation by the department itself.
There is no allegation, much less any material, to suggest that the petitioner was guilty of misrepresentation, fraud, or concealment. The mistake is entirely attributable to the administrative machinery. To fasten the consequences of such an error upon the petitioner would be manifestly unjust.
The Apex Court while dealing with the issue of recovery of benefits accrued upon employees, in Sahib Ram v. State of Haryana 1994(5) SLR 753 and Purshotam Lal and others v. State of Bihar and others, 2007(1) RSJ 150, answered the question in the negative and held that no recovery could be made if the employee was not himself responsible for any fraud or misrepresentation in the grant of the benefit. Guidance may also be derived from the judgment of this court in Budh Ram v. State of Haryana 2009(3) SCT 333
Having gone through the averments made in the writ petitions, we are of the opinion that we also need not set out in detail the factual matrix in which the question referred to us arises for consideration for determination especially when the facts appear to us to be peculiar to each case forming part of this Bunch. Having said so, the question referred to us can in our opinion be seen from three distinct dimensions. These are :-
i)Cases in which the benefits sought to be recovered from the employees were granted to them on the basis of any fraud, misrepresentation or any other act of deception;
ii) Cases in which the benefits sought to be recovered were granted on the basis of a bonafide mistake committed by the authority granting the same while applying or interpreting a provision contained in the service rule, regulation or any other memo or circular authorising such grant regardless whether or not grant of benefits involved the performance of higher or more onerous duties by the employee concerned;
iii) Cases that do not fall in either one of the above two categories but where the nature of the benefit and extent is so unconnected with his service conditions that the employee must be presumed to have known that the benefit was flowing to him undeservedly because of a mistake by the authority granting the same.
Dealing with category ii, Cases involving recovery of benefits received by the employees on account of misrepresentation or erroneous application of rules, regulations, circulars or instructions issued by the Government have often come up before the Courts including the Apex Court. The consistent view taken as regards the recovery of such benefits erroneously extended to the employees without the employee being, in any way, guilty of any fraud, misrepresentation or deception is that such recovery would be unfair inequitable and against justice and good conscience.
Moreso, this court cannot ignore the fact that the case of the petitioners is squarely covered by the principles laid down in State Of Punjab & Ors vs Rafiq Masih (White Washer) AIR 2015 SUPREME COURT 696, wherein the Supreme Court has held that recovery from retired employees, or employees due to retire within one year, of financial benefits wrongly extended without their fault, would be arbitrary and inequitable. This Court is conscious of the divergence of judicial opinion on the issue of recovery of financial benefits erroneously extended to government servants. One line of authority, as noticed in Syed Abdul Qadir v. State of Bihar (2009) 3 SCC 475 and Rafiq Masih (supra), has consistently answered the question in the negative, holding that no recovery can be made from an employee if he was not himself responsible for any fraud, misrepresentation, or suppression of material fact in the grant of such benefit. The underlying rationale is founded in equity and fairness, recognizing that an employee who has planned his affairs and drawn his subsistence based upon benefits extended by the State for decades ought not to be visited with harsh financial consequences, particularly after retirement, for no fault of his own.
This Court is persuaded by the enunciation in Rafiq Masih (supra) wherein the Supreme Court, carved out a nuanced principle that while the State may, in general, recover wrongful payments, such recovery would be impermissible and inequitable in cases where the employee is not guilty of misrepresentation, has long since retired or is on the verge of retirement, or where the recovery would cause undue hardship. Relevant paragraph of the same is as under:
“12.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.”
The case at hand squarely falls within that protective ambit since the petitioners neither practiced fraud nor misled the authorities and the benefits flowed from regularization orders passed by the competent authority and acted upon for decades and thus, to now fasten liability upon them would be a travesty of justice. This Court also cannot overlook the disproportionate impact that such recovery would have on the petitioner. A retired employee, dependent on fixed pensionary benefits, cannot reasonably be expected to refund a substantial sum after the cessation of service. The financial burden, in such circumstances, would fall far more heavily upon the individual than any corresponding loss to the State. The balance of equities, therefore, clearly leans in favour of the petitioner. The State, as a model employer, is expected to act with fairness and not in a manner that imposes undue hardship.
In the aforesaid terms, the instant petition stands allowed thereby quashing the letter dated 20.06.2022 (Annexure P-4) and the letter dated 01.06.2022 (Annexure P-6) issued by the office of Respondent no.1 and the respondent-Department is further directed to release the retiral benefits with interest @ 9% per annum within a period of 4 weeks from the date of receipt of certified copy of this order.
Pending application(s), if any, stands disposed of.