Writ Petition No.4661 of 2007

8th March, 2011

Petitioner Counsel: Shri. F. T. MIRZA
Respondent Counsel: Shri. N. W. SAMBRE,P. V. BHOYAR

Cases Cited:
Syed Abdul Qadir Vs. State of Bihar, (2009)3 SCC 475 [Para 13]
Yogeshwar Prasad Vs. National Institute, Edu. Planning & Admn., 2010 AIR SCW 7136 [Para 14]
Shyam Babu Verma Vs. Union of India, (1994)2 SCC 521 [Para 15]
Sahib Ram Vs. State of Haryana, (1995) Suppl. 1 SCC 18 [Para 16]
P. H. Reddy Vs. N.T.R.D., JT 2002(2) SC 483 [Para 17]
Chandrarao Balkrishna Sawant Sawant Vs. State of Maharashtra, W.P. No.430/2005 Dt.23-06-2005 [Para 18]
Sadanand Vs. Reserve Bank of India, 2011(1) Mh.L.J. 207 [Para 19]

JUDGMENT

Mrs. V. K. TAHILRAMANI, J. :- Heard Shri. Mirza, learned counsel for the petitioners and Shri. Sambre, GP & Shri. Bhoyar, learned AGP for the respondents.

2. Petitioner No.1 is a recognized association of Government employees working at Nagpur Bench of the High Court. Petitioner No.1 - association has been formed for the welfare of its members who are class I to class IV employees and to safeguard their rights through constitutional measures. Petitioner No. 2 is the General Secretary of Petitioner No.1 - Association.

3. Respondent No.1 is a Department of State responsible for financial matters, respondent No.2 has overall supervisory authority on the petitioners, respondent No.3 is the Collector and Respondent No. 4 is the responsible officer for control over the release of funds on various counts to the employees of the State including members of Petitioner No.1. All the respondents are represented by the learned AGP.

4. The petitioners are before this Court with a grievance regarding the impugned letter dated 14.08.2007 issued by Respondent No. 2 for recovery of amounts already given to members of petitioner No. 1 for the period from October, 1998 to December, 2003 on the alleged ground of excess payment in contravention of the Government Resolution dated 11.12.1998 relating to Compensatory Local Allowance i.e. Transport Allowance (hereinafter referred to as TA).

5. The learned counsel for the petitioners submitted that petitioner No.1 is a registered association and members thereof being employees of the State were given TA with effect from 1st October, 1998 to December, 2003 which is admissible to the government employees staying in "A" class city. He submitted that the members of the petitioner association were not in any way either connected with or responsible to secure these excess benefits. He submitted that on the other hand these benefits were extended to the members of the association by the respondents on their own and therefore, the respondents were not entitled to recover the said amount on the ground that Nagpur city for the first time was enlisted in "A" class with effect from 1st April, 2005.

6. Shri. Bhoyar, learned AGP submitted that only in the year 2005, Nagpur is shown in the category of "A" class city and prior to that it fell in the category of "B1" city. Therefore, the Transport Allowance admissible to the employees ought to have been given on the basis of city of B1 category and not city of "A" category. In the reply filed by the respondents, it is stated that the Finance Department vide their letter dated 16.07.2007 has invited attention to the report of the Comptroller and Auditor General of India for the year 2005-06 in which in para 4.1, Comptroller and Auditor General has observed that TA was paid in excess to the employees of petitioner No.1 - association. The Finance Department further reported that since 01.04.2005, Nagpur city has been classified as "A" class city whereas up to 31.03.2005, Nagpur city was classified as B1 and based on this report, allowances were made admissible to the employees of petitioner No.1 - association. In the said reply, it is stated that the concerned officers have paid TA to petitioner No.1 as per Government Resolution dated 01.04.2005. This fact was brought to the notice of Law & Judiciary Department by the Finance department and hence the respondent instructed that the excess TA amount paid to the employees should be immediately recovered from those who have been paid in excess. It is further stated that as the employees were not entitled to the amount, therefore, the respondents were right in issuing the order to recover the said amount.

7. The fact is that the members of the petitioner were paid T.A. as if they were covered by "A" category. Hence, as a result, recovery of excess TA was directed from the employees for the period from 01.10.1998 to 31.12.2003 and list was prepared accordingly. Thereafter the amount came to be recovered from the employees. Though there are a number of prayers in this petition, however, now that the recovery has already been effected, the learned counsel for the petitioners states that he is only pressing the prayers that the recovery be declared as illegal and that directions be issued to refund the amount recovered from the members of the petitioner - association as per the list at Annexure A.

8. It may be stated that for the purpose of T.A., the cities had been classified into four categories i.e. A1, A, B1 and B2. It is an admitted fact that in 1998 Pune was classified as "A" category whereas according to the learned AGP, Nagpur was classified in B1 category. The learned counsel for the petitioners pointed out that the area and population of Nagpur was in fact more than Pune, in such case no case was made out for classifying Nagpur in B1 category. He pointed out that apparently, this fact was realised by the Government in 2005, hence, in 2005, the Government vide Government Resolution dated 17th June, 2005, classified Nagpur in the same category as Pune. He submitted that thus there was no ground to treat Nagpur on a different level in 1998, hence such a Government Resolution was without any basis and was clearly discriminatory and, therefore, it was prayed that such Government Resolution ought to be set aside. However, it is now not necessary to go into this aspect as by subsequent Government Resolution issued in 2005, Nagpur was put at par with Pune. Therefore, the only issue which remains for consideration is whether recovery could have been ordered.

9. The learned counsel for the petitioners submitted that the excess amount which has been paid to the employees was not because of misrepresentation or fraud on the part of the employees and the employees also had no knowledge that the amount being paid to them was more than what they were entitled to. He reiterated that the members of Petitioner No.1 were not in any way responsible to secure these excess benefits and they were not even remotely connected with securing these benefits. He submitted that in view of the various decisions of the Supreme Court as well as this Court, the respondents could not have recovered the amounts.

10. It is noticed that the excess payment made was a result of a wrong interpretation of the Government Resolution that was made applicable to the employees, for which the employees cannot be held responsible. It is to be noted that it is not the case of the respondents that the excess payment paid to the employees was because of misrepresentation or fraud on their part. It is also not the case of the respondents that the employees had any knowledge that the amount paid to them was in excess to what they were entitled to. Moreover, there is no material to come to such a conclusion. From the facts of this case, it is clear that the whole confusion or error can in no way be attributed to the members of the petitioners.

11. The Supreme Court as well as this Court has granted relief against recovery of excess payment of allowances/emoluments in cases where (a) excess amount was not paid on account of misrepresentation or fraud on the part of the employees; and (b) 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.

12. The relief against recovery or in respect of refund is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to relieve the employees from the hardship that will be caused to them. But if in a given case it is proved that the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where the error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, courts may, on the facts and circumstances of any particular case, order for recovery of amount paid in excess.

13. The Supreme Court in the case of Syed Abdul Qadir Vs. State of Bihar, reported in (2009)3 SCC 475 has observed that when undoubtedly, the excess amount that has been paid to the appellants - Teachers was not because of any misrepresentation or fraud on their part and the employees had no knowledge that the amount that was being paid to them was more than what they were entitled to, in such case no recovery of the excess amount could have been made from the appellants and the amounts recovered from the Teachers should be refunded to them.

14. The learned counsel for the petitioners also placed reliance upon the judgment of the Supreme Court in the case of Yogeshwar Prasad Vs. National Institute, Edu. Planning & Admn., reported in 2010 AIR SCW 7136. In the said decision it is observed as under :

"The question which arose for consideration was whether the respondents can recover the additional amount paid to the appellants. In our considered view, the appellants in this appeal were fully justified in getting the benefit of the revised pay scale. Even otherwise also the additional amount cannot be recovered from them."

Thereafter in paras 40 and 41, it was observed that the amount paid to the employees pursuant to the grant of higher payscale should not be recovered unless it was a case of misrepresentation or fraud. As there was no misrepresentation nor fraud on the part of the appellants, the amount paid to them should not be recovered.

15. Similar is the view taken by a three Judge Bench of the Supreme Court in the case of Shyam Babu Verma & Ors. Vs. Union of India & Ors., reported at (1994)2 SCC 521, which reads as under :

"Although we have held that the petitioners were entitled only to the pay scale of Rs.330-480 in terms of the recommendations of the Third Pay Commission w.e.f. January 1, 1973 and only after the period of 10 years, they became entitled to the pay scale of Rs.330-560 but as they have received the scale of Rs.330-560 since 1973 due to no fault of theirs and that scale is being reduced in the year 1984 with effect from January 1, 1973, it shall only be just and proper not to recover any excess amount which has already been paid to them. Accordingly, we direct that no steps should be taken to recover or to adjust any excess amount paid to the petitioners due to the fault of the respondents, the petitioners being in no way responsible for the same."

16. The Supreme Court in the case of Sahib Ram Vs. State of Haryana & Ors., reported in (1995) Suppl. 1 SCC 18 observed that the employee who had been in receipt of higher amount on account of erroneous fixation by the authority should not be asked to repay the excess pay drawn, observing thus, the order of the authority directing repayment was set aside.

17. In P. H. Reddy & Ors. Vs. N.T.R.D. & Ors., reported in JT 2002(2) SC 483, a Bench of three Judges of the Supreme Court observed that "the order of re-fixation done by the appropriate authority, in the case in hand, does not require any interference, but the employees - appellants who had been in receipt of a higher amount on account of erroneous fixation by the authority, should not be asked to repay the excess pay drawn and therefore, that part of the order is set aside."

18. The learned counsel for the petitioners has also placed reliance upon the decision of Division Bench of this Court dated 23rd June, 2005 (Coram : A.P. Shah & D.Y. Chandrachud, JJ.) in Writ Petition No.430 of 2005 (Chandrarao Balkrishna Sawant & Ors. Vs. State of Maharashtra & Ors.). In this case higher pay scale was fixed and the amount was paid to the employee thereafter subsequently said decision was cancelled and it was directed that the recovery be made from the employee concerned. This Court set aside the order of recovery of excess amount and it was directed that the amount already recovered shall be refunded to the concerned employees.

19. There is not an iota of doubt in our mind that there was no fraud or misrepresentation on the part of members of Petitioner No.1 and that they were not in any way responsible for being given excess payment. The excess payment was made to them on account of a bonafide mistake, which cannot in any way be attributed to the members of petitioner No.1. It is to be noted that it is not even the case of the respondents that the employees have perpetrated any fraud or caused any misrepresentation due to which they were paid excess TA. It is also not anybody's case that the employees had any knowledge that they were being paid excess TA. Looking to all these facts, in our view, no recovery could have been ordered. The learned AGP was also unable to point out any decision wherein it is held that recovery has to be effected even if no fault can be attributed to the employee. Though the learned AGP has placed reliance on a decision of this Court in the case of Sadanand Vs. Reserve Bank of India, reported in 2011(1) Mh. L.J. 207, to which one of us (S. A. Bobde, J.) was a party, we find that this decision does not lay down the proposition canvassed by the learned AGP that even in cases of excess payment where the employee is not at fault, in all such cases recovery should be ordered.

20. Learned counsel for the petitioners at this stage submitted that by now the installments/ amount have already been recovered from the employees. Since we have held that no recovery of the excess amount could have been made from the employees who are members of the petitioner No.1, it would be in the fitness of things that the amount that has already been recovered from the employees should be refunded to them.

21. In the result, the impugned order in so far as it relates to recovery of the amount that has been paid in excess to the employees who are members of petitioner No.1 - Association is set aside. The amounts recovered from them shall be refunded to them within six weeks from today. Rule is made absolute in above terms, however, there shall be no order as to costs.

22. At this stage, Shri. Sambre, learned Government Pleader with Shri. Bhoyar, learned Assistant Government Pleader, appearing for the respondents pray for stay of the judgment as the respondents wish to challenge this judgment before the Hon'ble Apex Court. Hence, the judgment is stayed for a period of six weeks from today, as prayed for.

Ordered accordingly.