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Judgment
R.V Raveendran, C.J.
These Writ Petitions are filed against the common order dated 6.2.2004 of the Central Administrative Tribunal, Jabalpur Bench in 0. A Nos. 865, 393 and 560 of 2003. As common questions of fact and law is involved in these petitions, they are heard and disposed of together by this common order.
The Extra Departmental Agents (also known as Gramin Dak Sewaks, EDAs'' for short) of postal Department were earlier being paid consolidated basic allowance on the basis of foot beat formula which varied with reference to hours of work put in. There was a change in policy as per Government of India letter dated 1.10.1987 and from 1.11.1987, they were paid allowance on the basis of cycle beat formula. With effect from 1.3.1998, Time Rated Continuity Allowance (TRCA) for EDAs was fixed by Government of India official memorandum dated 17.12.1998 on the basis of workload. A lower allowance (Rs. 1220-20-1600) was fixed for those whose workload was upto 3 hours and 45 minutes and a higher rate (Rs. 1545-25-2020) for those whose workload was more than the said period. The introduction of TRCA resulted in reduction of the emoluments of some EDAs appointed prior to 1.11.1987. Some of the aggrieved EDAs approached The Central Administrative Tribunal, Chennai Bench in O.A. No. 1011/2001. The challenge to the change was rejected by the Chennai Bench, by order dated 22.7.2002. But it held that excess payments made due to wrongly construing the relevant orders were not recoverable where there was no misrepresentation by the employees concerned
Thereafter, by circular dated 6.9.2002, the Government directed all Chief Post Master Generals to ensure that the TRCA paid to EDAs are calculated on the bass of actual workload/as per cycle beat except for those in hilly areas and areas where beats are not cycle able. In pursuance of the said order, different Division of Madhya Pradesh circle calculated TRCA on the basis of actual workload/cycle beat and as a consequence the allowance payable to the EDAs was reduced vide orders dated 25.10.2002, 28.5.2003, 27.11.2003 etc. By those orders, the payment made in excess were also sought to be recovered.
The Postal Extra Departmental Agents working in various Divisions, through their Unions, approached the Central Administrative Tribunal, Jabalpur Bench in O.A. Nos. 622/2002, 74/2003, 393/2003, 560/2003 and 865/ 2003 challenging the orders dated 6.9.2002 and 25.10.2002 as also the consequential orders dated 28.5.2003 etc. They contended that the reduction of allowance was arbitrary. They contented that they ought to have been heard before reducing the allowance. Lastly, it was contented that even if any excess amount was paid, it was not recoverable as such payment was not on account of any misrepresentation by the employees.
The Tribunal by a common order dated 6.2.2004 allowed the application in part. It held that the decision of Chennai Bench was applicable to the facts of the case. In other words, it upheld the basis for revision. However, as the revision was made without hearing the affected parties, the Tribunal quashed the order dated 28.5.2003 (and similar orders passed by the other divisions) on the ground that they were passed without providing any opportunity of hearing to the petitioners. The Tribunal directed the respondents to issue notice to the applicants and take a final decision in the matter, after hearing. The Tribunal further directed the Department (petitioners herein) not to make any recovery of any excess payment to the EDAs. It also directed that if any recovery has been made on the ground of excess payment, the same shall be refunded to the employees. The said order is challenged by the department in these petitions.
It is submitted by the petitioners that the Chennai Bench having already upheld the direction for calculation of TRCA as per actual workload, and the orders dated 25.10.2002,28.5.2003 etc. refixing the allowance were passed in terms of the policy, there was no need to quash the order or give any opportunity to show cause.
The EDAs were being paid consolidated basic allowance with reference to a particular policy for several years. Though change of policy does not call for any opportunity to show cause or hearing, if the consequential refixation has the effect of reducing the emoluments (allowance), to the detriment of the EDAs, principle of natural justice require that an opportunity should be given to them put forth their objections if any, in regard to the revision. In Bhagwan Shukla vs. Union of India (AIR SC 2480), the Supreme Court held that where the pay was sought to be refixed resulting in a reduction, the order amounts to visiting the employee with civil consequences and that in such an event, the employee should be given an opportunity to show cause against the reduction. The Supreme Court observed
The 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 a hearing in the matter.
In the circumstances, the decision of the Tribunal upholding the policy, on the reasoning assigned by the Chennai Bench, but directing the department to give an opportunity of hearing to the applicants in regard to the calculation (resulting in reduction), cannot be said to suffer from any infirmity.
Mr. S.K. Gangele, learned counsel for the petitioners next contended that when a wrong payment is made and the error is subsequently noticed, it is open to the Government to recover the excess wrong payment. He submitted that the direction of the Tribunal was not to recover the excess payment.
In a series of decision, reported in Sahib Ram Vs. State of Haryana and Others, , Shyam Babu Verma and Others Vs. Union of India (UOI) and Others, , Union of India (UOI) and Another Vs. M. Bhaskar and Others, and V. Gangaram Vs. Regional Joint Director and others, , the Supreme Court has held that any excess wrong payment of pay shall not be recovered 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 has applying a wrong principle for calculating the pay or on the basis of a particular interpretation of rule, which is subsequently found to be erroneous.
(c) The recovery of such excess payment will cause undue hardship to the employee concerned.
The reason behind the principle that erroneous excess payment should not be recovered is obvious. A Government servant, particularly one who is in the lower rungs of service, would spend whatever he receives as pay, for his up-keep. If he received any excess payment for a long period, without knowing that it is an excess payment, and spends the same thinking that he is entitled to it, and the State thereafter realizes that it is an excess payment and attempts to recover it, such recovery will cause financial hardship to the employee. This is so where the excess amount has been paid every month continuously for several years or where the excess payment was made a long time ago. But where the employee had knowledge that the payment he is receiving is more than what is due or where the error in payment is corrected immediately or within a short time, then the recovery cannot be resisted by the employee.
In these cases, the three conditions evolved in Sahib Ram and other cases are fulfilled and, therefore, the Tribunal was justified in directing that the excess payment should not be recovered.
The learned counsel for the petitioners relied on the decision in Union of India and Others Vs. Smt. Sujatha Vedachalam and Another, , wherein the Supreme Court held that wrong payment made, could be recovered from the employee in easy installments. Relying on the said decision, it is contended that recovery of excess payment is justified and legal. The said decision is clearly distinguishable. A direction to recover the excess payment in installments, or a direction not to recover the excess payment, are normally made as consequential orders, after deciding the main matter relating to the validity of the order refixing or reducing the pay/allowance. In some cases, the employee may merely seek quashing of the order refixing the pay/allowance and may not seek any consequential relief at all. In some cases the employee may seek installments to refund the excess payment, if the validity of the order refixing the pay, is upheld. In other cases, the employee may pray that excess payment should not be recovered. The grant of consequential relief by courts would therefore depend on the consequential prayer made. If, for example, the consequential prayer was not for waiving the excess payment, but only for installments, the Court will obviously consider only the prayer for installments. That is what happened in Sujatha Vedachalam. In that case, the request was apparently not for waiver of recovery of excess payment, but for installments. Therefore, if any decision which upholds the refixation of pay/allowance, does not contain any consequential direction either not to recover the excess payment already made or contains a consequential direction to recover the excess payment in installments, it is not laying down any proposition of law, but is merely issuing consequential directions depending on the prayer for consequential relief or absence of any prayer for consequential relief, as the case may be. Many a time, the prayer for installments or waiver of recovery, is made not in the pleading, but during arguments or when the order is dictated upholding the order revising the refixation. Therefore, the decision in Sujatha Vedachalam does not assist petitioners.
Learned counsel for the petitioners lastly contented that if the refixation is to be made after giving a hearing, it may be clarified that such refixation would be with effect from 28.5.2003 and not from the date of the order to be made after hearing. Learned counsel for the respondents, on the other hand, submitted that if the allowance is to be refixed, the refixation will have to be effective only from the date of the fresh order passed in accordance with law. The direction that excess wrong payment should not be recovered from the employer is a direction in equity. The bar regarding recovery can only be in regard to the period when the employee was unaware that what was paid was a wrong excess payment. Once the employee is put on notice that a particular payment is an excess payment and thereafter the employee receives such excess payment on account of any procedural requirements or any order of Courts necessarily the employee will have to refund the excess amount received from the date on which he was put on such notice that the payment is in excess. In this case, the employees were put on notice that the payment was in excess on 28.5.2003. Therefore, even if the order dated 28.5.2003 is quashed on the ground that it is opposed to principles of natural justice, any subsequent order that may refix the allowance will be effective from 28.5.2003. The equitable principle evolved by the Supreme court in SAHIB RAM and other cases will not apply in respect of any excess payment received by the employee after he is put on notice that the payment made is in excess of what is due.
Subject to the said clarification, these petitions are disposed of with disturbing the directions issued by the Tribunal.