THOMAS DANIEL vs. STATE OF KERALA .

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7115 OF 2010 THOMAS DANIEL … APPELLANT(S)  VERSUS STATE OF KERALA & ORS.         … RESPONDENT(S) J U D G M E N T S. ABDUL NAZEER, J. (1) This appeal raises an issue as to whether increments granted to the appellant, while he was in service, can be recovered from him almost 10 years after his retirement on the ground that the said increments were granted on account of an error?  (2) The brief facts of the case, in nutshell, are as under: In the year 1966, the appellant herein joined services as a Signature Not Verified Digitally signed by Anita Malhotra Date: 2022.05.02 16:46:23 IST Reason: High   School   Assistant/Teacher   at   Craven   High   School,   Kollam which   is   an   aided   school.   During   his   tenure,   he   availed   leave 2 without   allowance   starting   from   20.10.1972   to   31.03.1973   and again from 02.07.1973 to 28.03.1974, for pursuing post­graduation i.e.,   M.Sc.   (Chemistry)   Course.   Thereafter   on   1.06.1989,   the appellant was promoted as Headmaster of the school and he was granted   senior   grade   promotion   and   his   pay   scale   was   revised accordingly.  (3) In the year 1997, a notice dated 09.10.1997 accompanied with an audit report of the respondent no.5­ Account General of Kerala was   served   on   the   appellant   by   the   respondent   no.4­   District Educational Officer, Kollam with an objection that the period of leave obtained by the appellant for undergoing higher education should   not   be   included   while   determining   his   total   qualifying service. Therefore, the pay and subsequent increments granted to the   appellant   should   be   recovered   from   him.   Meanwhile,   the appellant had retired from service on 31.03.1999 and since then he was   neither   paid   pensionary   benefits   nor   death­cum­retirement gratuity (D.C.R.G.). The appellant filed various representations but he received no response. 3 (4) Ultimately   on   25.05.2000,   the   appellant   challenged   the proposal  to   initiate   recovery   proceedings  against   him  by   way  of filing a complaint before the Public Redressal Complaint Cell, Chief Minister of Kerala, for recovering the increments granted to the appellant during the year 1989 and 1991. The respondent herein­ State   of   Kerala   rejected   the   said   complaint   by   order   dated 26.06.2000 stating that post­graduation degree­M.Sc. (Chemistry) was not useful as per the Rule 91A Part I of the Kerala Service Rules in any manner to the public service, therefore, leave without allowance cannot be counted for service benefits. In the meantime, on an application filed by the appellant under Rule 116, Part III of the   Kerala   Service   Rules,   the   respondent   no.3­Deputy   Director Education, Kollam on 6.10.2000 sanctioned the release of 90% of the D.C.R.G. amount after withholding 10% of the said amount and subsequently   on   15.01.2001   the   amount   was   released   to   the appellant. (5) Being aggrieved, the appellant filed a writ petition before the High Court. During the pendency of the writ petition, the remaining amount of D.C.R.G was also released to the appellant. However, the 4 respondent­ State of Kerala in their counter affidavit took a stand that the period during which the appellant was on leave without allowance for undertaking post­graduation cannot be counted for the purpose of grant of increments and, therefore, the demand for recovery made by them was justified. The learned Single Judge vide order dated 05.01.2006 upheld the reasoning given by the State of Kerala and dismissed the writ petition holding that the mistake committed by the department concerned while granting the service benefits can be rectified subsequently by way of proposed recovery to be effected from appellant’s D.C.R.G. amount. Thereagainst, the appellant filed a writ appeal before the High Court. The Division Bench of the High Court vide impugned order dated 02.03.2009 dismissed   the   appeal,   affirming   the   order   of   the   learned   Single Judge. (6) Learned   counsel   for   the   appellant   would   contend   that   the excess payment made to the appellant was not on account of any misrepresentation or fraud on his part.   The excess payment was made due to a mistake in interpreting the Kerala Service Rules.  It is further submitted that the appellant has retired on 31.03.1999. 5 The appellant had to undergo a bypass surgery and he is in huge debts.  After repeated request, D.C.R.G. benefit was released in his favour.  He prays for setting aside the impugned judgment and also the   order   dated   26.06.2000   passed   by   the   Public   Redressal Complaint Cell, Chief Minister of Kerala. (7) On   the   other   hand,   learned   counsel   appearing   for   the respondents­State of Kerala has supported the impugned judgment of the High Court.  (8) We have carefully considered the submission made at the Bar by learned counsel for the parties and perused the materials placed on the record. (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 6 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. 1 (10) In   this Court Sahib Ram v. State of Haryana and Others   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 : “  Admittedly the appellant does not possess the 5. 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 1 1995 Supp (1) SCC 18 7 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.” (11) In   Col.  B.J.   Akkara  (Retd.)   v.   Government  of  India   and 2 Others   this Court considered an identical question as under:

2 (2006) 11 SCC 709 8

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(12) In   Syed   Abdul   Qadir   and   Others   v.   State   of   Bihar   and 3 Others   excess   payment  was   sought  to  be   recovered  which was made to the appellants­teachers on account of mistake and wrong interpretation   of   prevailing   Bihar   Nationalised   Secondary   School (Service Conditions) Rules, 1983. The appellants therein contended that even if it were to be held that the appellants were not entitled to the benefit of additional increment on promotion, the excess amount should not be recovered from them, it having been paid without any misrepresentation or fraud on their part. The Court held that the appellants   cannot   be   held   responsible   in   such   a   situation   and recovery of the excess payment should not be ordered, especially when the employee has subsequently retired.   The court observed that in general parlance, recovery is prohibited by courts where there   exists   no   misrepresentation   or   fraud   on   the   part   of   the employee and when the excess payment has been made by applying a wrong interpretation/ understanding of a Rule or Order.  It was held thus: 3 (2009) 3 SCC 475 10

(13) In   State   of   Punjab   and   Others   v.   Rafiq   Masih   (White 4   wherein this court examined the validity of an Washer) and Others order passed by the State to recover the monetary gains wrongly extended to the beneficiary employees in excess of their entitlements without any fault or misrepresentation at the behest of the recipient. This   Court   considered   situations   of   hardship   caused   to   an employee,   if   recovery   is   directed   to   reimburse   the   employer  and 4 (2015) 4 SCC 334 11 disallowed   the   same,   exempting   the   beneficiary   employees   from such recovery.  It was held thus: “  As between two parties, if a determination is rendered in 8. 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 employee concerned. If the effect of the recovery from the employee concerned   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. xxx xxx xxx  It is not possible to postulate all situations of hardship 18. 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,   summarise   the   following   few   situations, wherein recoveries by the employers, would be impermissible in law: ( ) Recovery from the employees belonging to Class III and i Class IV service (or Group C and Group D service). ( ) Recovery from the retired employees, or the employees ii who   are   due   to   retire   within   one   year,   of   the   order   of recovery. 12

(14) Coming to the facts of the present case, it is not contended before us that on account of the misrepresentation or fraud played by the appellant, the excess amounts have been paid.  The appellant has retired on 31.03.1999.  In fact, the case of the respondents is that excess payment was made due to a mistake in interpreting Kerala Service Rules which was subsequently pointed out by the Accountant General.   (15) Having regard to the above, we are of the view that an attempt to recover the said increments after passage of ten years of his retirement is unjustified.   (16) In the result, the appeal succeeds and is accordingly allowed. The Judgment and order of the Division Bench dated 02.03.2009 13 and   also   of   the   learned   Single   Judge   of   the   High   Court   dated 05.01.2006   impugned   herein,   and   the   order   dated   26.06.2000 passed by the Public Redressal Complaint Cell of the Chief Minister of Kerala and the recovery Notice dated 09.10.1997 are hereby set aside.  There shall be no order as to costs. …….……………………………J.     (S. ABDUL NAZEER) …….……………………………J.     (VIKRAM NATH) New Delhi; May 2, 2022.