Karnataka HC Revives BMTC’s ₹90,825 Recovery Suit Against Employee’s Widow, Remanding It For A Merits Hearing

Late Abdul Shakeel, a BMTC employee, died on 28 October 2002.

BMTC deducted ₹90,825 from the gratuity payable to his widow, Akhila Begum, toward alleged salary overpayment, bank loans, income tax and other dues.

The Controlling Authority under the Payment of Gratuity Act, 1972, directed BMTC to pay an additional ₹1,15,728 with interest, and the appellate authority, High Court, Division Bench and Supreme Court proceedings brought by BMTC were unsuccessful; the Special Leave Petition was dismissed on 19 February 2010.

BMTC filed a recovery suit on 6 January 2012.

The Trial Court dismissed it as time-barred, although it had answered Issues 1 and 2 in BMTC’s favour.

BMTC appealed under Section 96 CPC.

The appeal was brought under Section 96 of the Code of Civil Procedure.

The Court relied on The Sales Tax Officer, Banaras v. Kanhaiya Lal Makund Lal Saraf, AIR 1959 SC 135, for the principle that money paid under a mistake of law may be recoverable, subject to considerations including limitation.

It also followed the Karnataka High Court’s decision in CRP No. 73/2014, disposed of on 12 September 2017, which treated the relevant cause of action as arising after the repayment obligation was established through the appellate process.

Applying a three-year limitation period, the Court held that time ran from the Supreme Court’s dismissal of BMTC’s SLP on 19 February 2010.

Section 66 of the Karnataka Court Fees and Suits Valuation Act, 1958, was cited as the basis for refunding the court fee following remand.

The Court considered the sequence of proceedings challenging the gratuity determination and held that the Trial Court had incorrectly measured limitation from the Controlling Authority’s order of 7 August 2007.

Relying on the Supreme Court’s decision concerning recovery of payments made under a mistake of law and the Karnataka High Court’s subsequent application of that principle, it concluded that limitation began when the SLP was dismissed on 19 February 2010.

Since the suit was filed on 6 January 2012, the Trial Court’s limitation-based dismissal could not stand.

The Court did not determine the underlying recovery claim on its merits and remitted the matter for fresh consideration.

The Trial Court was directed to reconsider the matter afresh on its merits; the dismissal for default concerning Akhila Begum was also set aside, and notice was ordered so she could appear and contest the suit.

The Registry was directed to refund BMTC’s court fee, subject to verification.