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Judgment
The present Original Application has been filed by the applicant under section 19 of the Administrative Tribunal Act, 1985 seeking following reliefs:-
“(i)Issue an order or direction in the nature of certiorari calling for records pursuant to which, the impugned recovery order dated 10.10.2022 including the pay fixation order dated 22.05.2022 (Annexure A-1 & A-2 to the OA) has been issued by the respondent No. 3 and quash the same.
(ii)Issue an order or directions, in the nature of mandamus commanding the respondents to refix the basic pay of the applicant on his promotion to the post of OS w.e.f 05.02.2018 due granting him pay protection on his existing basic pay, and pay the arrears along with interests.
(iii)Issue an order or directions, in the nature of mandamus commanding the respondents to refund the amount so recovered from salary of the applicant in response to the impugned recovery order dated 10.10.2022 along with interest
(iv)Issue any other and further orders or directions, which this Hon'ble court may deem fit and proper in the facts and circumstances of the case.
(v)Award the cost of the Original Application in favour of the Applicant”.
The brief facts of the case are as follows:-The applicant was appointed as Office Clerk-cum-Typist on 28.12.1999 in the pay scale of Rs. 3050-4590/- and was promoted as Senior Clerk on 29.04.2002 in the pay scale of Rs. 4500-7000. He was subsequently transferred to CORE, Prayagraj. He was promoted as Office Superintendent with effect from 05.02.2018. At the time of promotion, he was drawing basic pay of Rs.45,400/-, which was higher than the basic pay of Rs.35,400/- attached to the promotional post. However, the respondents fixed his pay at Rs.35,400/- with the grade pay of Rs. 4200/- vide order dated 01.03.2018, without protecting his existing basic pay. The applicant raised an objection dated 16.03.2018, and thereafter continued to receive salary his salary on the basis of the protected pay i.e. basic pay of Rs. 45400/-. However, vide pay fixation order dated 25.05.2022, the respondents reduced his basic pay from Rs.45,400/- to Rs.35,400/- with effect from 02.05.2018. Consequently, a recovery order dated 10.10.2022 was issued for recovery of Rs.93,729/- from his salary. The applicant contends that the reduction of his pay and the consequential recovery are illegal and arbitrary, as his existing basic pay was liable to be protected on promotion. Hence, the present Original Application.
Per contra, the official respondents have filed their counter affidavit contending therein that the applicant was initially appointed as Clerk-cum-Typist on 28.12.1999 in the Railway Electrification Project, Surat, against a work-charged post, while retaining his lien and seniority in the Western Railway. He was thereafter promoted as Senior Clerk on ad-hoc basis in the Railway Electrification Project, while retaining his lien and seniority in his parent railway. Subsequently, on the basis of the regular promotion order issued by Western Railway, the applicant was regularly promoted to the post of Senior Clerk in the Railway Electrification Project. The applicant was thereafter promoted to the post of Office Superintendent carrying Grade Pay of Rs.4,200/-. He accepted the promotion and took charge of the higher post on 05.02.2018. Since the applicant continued to hold his lien in his parent railway, his pay was required to be fixed with reference to his cadre post, with due protection of his pay, in terms of Paras 8 and 11.03 of Master Circular No. 56. Accordingly, the respondents correctly protected and fixed his pay and issued the pay fixation order dated 25.05.2022. Consequently, the recovery order dated 10.10.2022 was also issued in accordance with the applicable rules. Therefore, the present Original Application is liable to be dismissed.
No rejoinder affidavit has been filed by the applicant.
I have heard Shri L. M Singh as well as Shri M.K Yadav, learned counsel for the applicant and Shri Bablu Singh, learned counsel for the respondents and perused the records.
Submission of the learned counsel for the applicant is that the recovery was ordered without issuing any show-cause notice to the applicant or affording him an opportunity of hearing. In the absence of such notice and a reasonable opportunity of being heard, the recovery from the applicant’s salary is not permissible. Learned counsel for the applicant further submitted that immediately after receiving the recovery notice, the applicant submitted a representation dated 13.10.2022, requesting the respondents to stop the recovery and to grant him proper pay protection. However, the said representation was not decided by the respondents. It is submitted that the failure to consider the representation has also caused violation of the principles of natural justice. It is further submitted that the applicant was a class III (Group 'C') employee and the alleged excess payment was not made on account of any fraud, misrepresentation or concealment of facts on his part. The excess payment, if any, was made due to an error on the part of the respondents while fixing his pay. The applicant had no role in calculating or fixing his salary and had received the amount in good faith. Learned counsel has placed reliance upon the judgment of the Hon'ble Supreme Court in State of Punjab and Others v. Rafiq Masih (White Washer) and Others, (2015) 4 SCC 334, wherein it has been observed that recovery of excess payment from employees belonging to Group 'C' and Group 'D' is generally impermissible, particularly where the excess payment was not made due to any fraud or misrepresentation on the part of the employee. According to learned Central Administrative Tribunalcounsel, the case of the applicant is covered by the principles laid down in Rafiq Masih (supra), as the applicant is a class III (Group 'C') employee and there is no allegation of fraud or misrepresentation against him. Learned counsel for the applicant has also relied upon the judgment of the Hon'ble Supreme Court in Thomas Daniel v. State of Kerala and Others, (2022) 5 SCC 470, and submitted that where excess payment has been made due to a mistake on the part of the department and there is no fraud or misrepresentation by the employee, recovery of such amount, particularly where it causes hardship to the employee, should not ordinarily be made. Learned counsel for the applicant further submitted that the respondents have not placed any material on record to show that the applicant was responsible for the alleged excess payment or he had knowledge that the amount being paid to him was in excess of his entitlement. He further submitted that the applicant was not given a proper opportunity to explain his case before the recovery was ordered. Therefore, the impugned recovery order is also violative of the principles of natural justice. In regard to the question of pay fixation, learned counsel for the applicant submitted that the applicant's existing pay was liable to be protected on his promotion. However, the respondents initially fixed his pay at Rs.35,400/- vide order dated 01.03.2018, without granting him the benefit of pay protection. The applicant immediately raised his objection vide representation dated 16.03.2018. It is further submitted that thereafter the respondents themselves permitted the applicant to draw salary on the protected basic pay. Thus, the applicant continued to receive salary on that basis and there was no fraud, misrepresentation or concealment of facts on his part. He next submitted that after a considerable lapse of time, the respondents issued the pay fixation order dated 25.05.2022, reducing the applicant's basic pay from Rs.45,400/-to Rs.35,400/- with retrospective effect from 02.05.2018. On the basis of the said order, the respondents issued the recovery order dated 10.10.2022 for recovery of Rs.93,729/- from the applicant's salary. It is, therefore, submitted that the impugned orders dated 25.05.2022 and 10.10.2022 are illegal, arbitrary and contrary to the settled principles of law. Thus, learned counsel for the applicant prayed that the said orders Central Administrative Tribunalbe quashed and the respondents be directed to protect the applicant's pay and refund the amount, if already recovered, in accordance with law.
In rebuttal, learned counsel for the respondents submitted that the applicant’s pay was fixed strictly in accordance with the applicable rules and the relevant provisions of Master Circular No. 56. He submitted that the applicant was initially appointed against a work-charged post in the Railway Electrification Project, while retaining his lien and seniority in his parent railway. He was thereafter regularly promoted as Senior Clerk and subsequently promoted to the post of Office Superintendent carrying Grade Pay of Rs.4,200/-. The applicant accepted the promotion and joined the higher post on 05.02.2018. It was further submitted that since the applicant continued to retain his lien in his parent railway, his pay was required to be fixed with reference to his substantive cadre post. His pay was accordingly protected in terms of Paras 8 and 11.03 of Master Circular No. 56. Therefore, the pay fixation order dated 25.05.2022 was issued correctly and in accordance with the applicable rules. The consequential recovery of Rs.93,729/- was also made on account of the excess payment of salary and was legally recoverable from the applicant. Learned counsel for the respondents further submitted that the applicant had no vested right to continue drawing salary on the basis of an incorrect pay fixation. Any excess payment made to him could not confer a right to retain the same merely because it had continued for some time. The respondents were entitled to correct the mistake in pay fixation and recover the excess amount paid to the applicant. He further submitted that the applicant’s relied upon the judgment in Rafiq Masih (supra) is misplaced, as the said judgment cannot be applied mechanically to every case of recovery. The respondents had acted in accordance with the applicable service rules while correcting the applicant’s pay fixation. There was no illegality in the impugned orders dated 25.05.2022 and 10.10.2022. It was next submitted that the applicant had accepted the promotion to the post of Office Superintendent and the pay fixation was made in accordance with the rules applicable to him. The mere fact that the applicant had earlier raised an objection or had Central Administrative Tribunalcontinued to receive salary on a particular basis would not prevent the respondents from correcting the pay fixation when the mistake came to their notice. Thus Learned counsel for the respondents submitted that the impugned pay fixation and recovery orders do not suffer from any illegality or arbitrariness. The Original Application is devoid of merit and is liable to be dismissed.
I have carefully considered the rival submissions advanced by learned counsel for the parties and have perused the entire material available on record.
The undisputed facts emerging from the record are that the applicant was appointed as Office Clerk-cum-Typist on 28.12.1999 and was subsequently promoted as Senior Clerk. He was thereafter promoted to the post of Office Superintendent with effect from 05.02.2018. At the time of his promotion, the applicant was drawing basic pay of Rs.45,400/-, whereas the basic pay attached to the promotional post was Rs.35,400/-. The respondents initially fixed his pay at Rs.35,400/- vide order dated 01.03.2018. The applicant immediately objected to the said fixation by submitting a representation dated 16.03.2018. These facts have been specifically pleaded by the applicant and have not been effectively controverted by the respondents. It is also an important fact that after the applicant raised his objection, he continued to draw salary on the basis of the higher basic pay of Rs.45,400/-. Thus, the payment was not obtained by the applicant by practising fraud, misrepresentation or concealment of any fact. Therefore, the contention of the respondents that the applicant had no right to retain the amount merely because he continued to receive it cannot, by itself, justify recovery of the amount from his salary.
It is also relevant to mention here that the respondents rely on Paragraphs 8 and 11.03 of Master Circular No.56 to defend the pay fixation. But they have not shown, based on the record, why the applicant's existing pay of Rs.45,400/- had to be brought down to Rs.35,400/- after his promotion. In fact, in their own counter affidavit (paragraph 3), the respondents admitted that the applicant's pay should have been fixed with "pay protection" under these very same Circular provisions. If it is true, they needed to explain why his pay was still reduced and made effective retrospectively from 02.05.2018. No such explanation has been given. It is also important to mention here that after the applicant's representation dated 16.03.2018, the respondents themselves allowed him to keep drawing the higher salary for a long period. Nothing on record shows he hid any fact or gave wrong information to get this benefit. He had objected right after the first pay fixation. So his receiving this salary cannot be called the result of fraud or misrepresentation on his part. The pay fixation order dated 25.05.2022 came after a long delay and cut his pay retrospectively from 02.05.2018. Based on this, a recovery order dated 10.10.2022 was passed, directing recovery of Rs.93,729/- from his salary. Such a retrospective pay cut, followed by recovery has serious consequences for the applicant. Before taking this step, the respondents should have considered his objection and given him a fair chance to explain his case especially since he had already objected to the original pay fixation.
It is also mentioned here that after the recovery order, the applicant again sent a representation dated 13.10.2022 to the respondents on, asking them to stop the recovery and grant him proper pay protection. This representation was never decided. So the respondents not only recovered money without giving him a hearing, but also ignored his objection to the recovery itself. This is a serious lapse, especially since he had clearly disputed both the pay fixation and the recovery. Even assuming there was some error in the original pay fixation, the respondents have not shown that this error happened because of any fraud, misrepresentation, or concealment by the applicant. The record shows the opposite he objected to the fixation from day one and simply continued receiving the pay he was given. So any excess payment happened because of how the respondents handled his case, not because of anything wrong he did.
The Hon’ble Supreme Court in the case of Rafiq Masih (supra) has held as under:-
”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”.
13 The same principle has been reiterated by the Hon’ble Supreme Court in Thomas Daniel (supra). The Hon’ble Supreme Court has held that
“(9)This Court in a catena of decisions has consistently held that if the excess amount was not paid on account of any misrepresentation or fraud of the employee or if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order which is subsequently found to be erroneous, such excess payment of emoluments or allowances are not recoverable. This relief against the recovery is granted not because of any right of the employees but in equity, exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered. This Court has further held that if in a given case, it is proved that an employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, the courts may on the facts and circumstances of any particular case order for recovery of amount paid in excess.
(10)In Sahib Ram v. State of Haryana and Others1 this Court restrained recovery of payment which was given under the upgraded pay scale on account of wrong construction of relevant order by the authority concerned, without any misrepresentation on part of the employees. It was held thus :
“5.Admittedly the appellant does not possess the required educational qualifications. Under the circumstances the appellant would not be entitled to the relaxation. The Principal erred in granting him the relaxation. Since the date of relaxation, the appellant had been paid his salary on the revised scale. However, it is not on account of any Central Administrative Tribunalmisrepresentation 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.”
(11)In Col. B.J. Akkara (Retd.) v. Government of India and Others2 this Court considered an identical question as under:
“27.The last question to be considered is whether relief should be granted against the recovery of the excess payments made on account of the wrong interpretation/understanding of the circular dated 76 1999. This Court has consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee, if the following conditions are fulfilled:
(a)The excess payment was not made on account of any misrepresentation or fraud on the part of the employee.
(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.”
In the aforesaid judgment, Hon’ble Apex Court further observed as under:-
“18.It is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarize the following few situations, wherein recoveries by the employers, would be impermissible in law:
(i)Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).
(ii)Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.
(iii)Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
(iv)Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.
(v)In any other case, where the court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover.”
From the perusal of aforesaid judgments of Hon’ble Supreme Court, it is clear that recovery of excess payment is not permissible when it appears that recovery if permitted it would be iniquitous or harsh or arbitrary. Applicant is Group ‘C’ employee and low paid employee. Excess payment said to have been made to the applicant would have been spent. If recovery is permitted then also applicant will get very less amount till recovery for his expenses which will be detrimental to the applicant. It is also clear that excess payment was Central Administrative Tribunalmade due to a mistake or wrong calculation by the employer and there was no fraud, misrepresentation or concealment on the part of the employee. In the present case, the alleged excess payment was made due to a clerical error of the respondents while calculating the applicant’s pay fixation and there is nothing on record to show that the applicant had played any role in the said error or had knowledge that the payment made to him was in excess. Therefore, the case of the applicant is squarely covered by the ratio laid down by the Hon’ble Supreme Court in Rafiq Masih (supra) and Thomas Daniel (supra) cases. The recovery of Rs.93729/- from the applicant would cause undue hardship and would be inequitable. Accordingly, the respondents cannot recover the said amount from the applicant.
The submission of the respondents that public money cannot be allowed to remain with a person who was not legally entitled to receive it cannot be accepted in isolation. No doubt, the Government has a right and duty to protect public money. However, such right is subject to the law laid down by the Hon’ble Supreme Court regarding recovery of excess payment. The right of recovery has to be balanced with the principles of equity, fairness and undue hardship.
In view of the aforesaid discussion, this Tribunal is of the considered view that recovery of Rs.93729/- from the applicant cannot be sustained. The impugned letters/orders dated 10.10.2022 and 22.05.2022 are, therefore, liable to be quashed.
Accordingly, the Original Application is allowed and the impugned orders dated 10.10.2022 and 22.05.2022 are hereby quashed. The respondents are restrained from recovering the said amount from the salary of the applicant. If any amount has already been recovered from the applicant pursuant to the impugned orders, the respondents shall refund the same within a period of three months. In case the amount is not refunded within the aforesaid period, the applicant shall be entitled to 6 % per annum simple interest on the said amount from the date of expiry of the three month period till the date of actual payment. It is made clear that the respondents shall, however, be at liberty to rectify any clerical error, if any, in accordance with law, provided that due notice and opportunity of hearing are afforded to the employee concerned. No order as to costs. All associated M.As. stand disposed of.