HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 34 Case :- WRIT - A No. - 27960 of 2010 Petitioner :- [ENTITY] And Others Respondent :- [ENTITY] And Others Counsel for Petitioner :- [ENTITY] Counsel for Respondent :- C.S.C. Hon'ble [ENTITY],J.
1. Since pleadings are complete, as requested by learned counsel for the parties, I proceed to hear and decide this matter finally at this stage under the Rules of this Court.
2. Heard Sri [ENTITY], learned counsel for the petitioners and learned Standing Counsel for the respondents.
3. The petitioners are enrolled in Police Force of State of Uttar Pradesh having been recruited as Constable in Civil Police and then have been posted in the Local Intelligence Unit of Civil Police. They are the police officers of subordinate rank and governed by various provisions of [ACT] (hereinafter referred to as the "[ACT]") read with statutory orders issued under [SECTION] thereof and Rules framed under [SECTION], read with [SECTION] of [ACT].
4. The State Government issued a Government Order (hereinafter referred to as the "G.O.") dated 28.11.2007 providing that police officers working in Intelligence Department, up to the pay scale at the level of Deputy Superintendent of Police shall be provided incentive allowance. This incentive allowance is at the rate of 25% of basic pay and dearness allowance, subject to maximum of Rs. 2500/- to those working in the pay scale at the level of Deputy Superintendent of Police; Rs. 2000/- working in pay scale at the level of Inspector and Sub-Inspector; and, Rs. 1000/- to those working in pay scale at the level of Head Constable, Constable and Constable Driver. It is further said that incentive allowance shall be payable only for the period the concerned official remain posted in Intelligence Wing. On his transfer to any other branch the incentive allowance shall stand ceased. Further, if a police official remain posted in Intelligence Department for a period of 10 days or less in a month, he shall be paid incentive allowance proportionately.
5. It is said that the aforesaid G.O. has not been revoked, cancelled or modified till date so as to disallow payment of incentive allowance ([ENTITY]) as per aforesaid G.O. dated 28.11.2007.
6. The petitioners have further said that at the time of issuance of aforesaid G.O., they having already been given benefit of time bound promotional scale, receiving basic pay equivalent to pay scale of Sub-Inspector, i.e., Rs. 5500-9000/- and, therefore, were paid incentive allowance at the rate of Rs. 2000/- per month in terms of the aforesaid G.O.
7. Subsequently, it appears that, an audit objection was raised that incentive allowance admissible to petitioners working as Constable was minimum to Rs. 1000/- per month and they were wrongly paid incentive allowance at the rate of Rs. 2000/- per month, hence excess amount of Rs. 1000/- per month should be recovered from them. It is pursuant thereto, the impugned order has been passed which is in respect of petitioners and similarly placed other officials who are/were working in Intelligence Wing/Branch and paid incentive allowance at the rate of Rs. 2000/- per month based on the level of pay scale in which they are/were working.
8. It is contended that aforesaid recovery is totally illegal and erroneous. In the alternative, it is said that amount of incentive allowance paid in excess to petitioners is not on account of any fraud or misrepresentation on their part, therefore, ought not to have been recovered and to fortify this submission reliance is placed on [PRECEDENT] and a Division Bench decision of this Court in [PRECEDENT]. Lastly, it is contended that in any case the impugned order of recovery having been issued without affording any opportunity to petitioners, therefore, it is in violation of principle of natural justice and liable to be set aside for aforesaid reason.
9. The respondents have contested this matter by filing a counter affidavit and the central theme of defence therein is that petitioners are all "Constables" in Intelligence Branch, therefore, entitled for incentive allowance at the maximum of Rs. 1000/- per month but the have been paid the same at the rate of Rs. 2000/- per month, hence excess amount of Rs. 1000/- per month has been paid to them, which is liable to be recovered.
10. The defence shows that the respondents have read the G.O. dated 28.11.2007 as if it provides incentive allowance at the rate of 25% of basic pay and dearness allowance with reference to rank/position, i.e., subject to maximum of Rs. 2500/- to Deputy Superintendent of Police; Rs. 2000/- to Inspector and Sub-Inspector; and, Rs. 1000/- to Head Constable, Constable and Constable Driver.
11. Learned Standing Counsel contended that on account of specialized kind of duties exercised by police officers posted in Intelligence Branch, the Government decided to provide a special allowance, called as "Incentive Allowance", so that more efficient and competent officials from Civil Police be attracted to have their posting in the Intelligence. The amount of "Incentive Allowance" having been determined by G.O. Dated 28.11.2007, anything beyond that was wholly unauthorised and illegal and, therefore, the same is liable to be recovered. He submitted that if an amount has wrongly been paid in excess to an employee, it is liable to be recovered and in this regard he placed reliance on a decision of this Court in [CASE NUMBER], [PRECEDENT], decided on 19.07.2013.
12. I have learned counsel for the parties and perused the record.
13. The rival submissions, giving rise, in my view, to the following questions:
(i) Whether the amount of incentive allowance is payable with reference to the post/position/rank held by a police officer in Intelligence or with reference to the pay scale applicable to the rank/status/position;
(ii) Whether the recovery in question is bad on account of violation of principle of natural justice; and,
(iii) Whether an amount paid in excess to an employee cannot be recovered if there is no element of fraud of misrepresentation on his part.
14. I proceed to consider the aforesaid issues by discussing in the manner the same have been framed, above.
15. The question No. 1 involves interpretation of G.O. dated 28.11.2007. The phrase which is relevant to determine maximum amount of "Incentive Allowance", reads as under:
vfHklwpuk foHkkx esa dk;Zjr mik/kh{kd Lrj rd ds osrueku esa dk;Zjr vf/kdkfj;ksa o deZpkfj;ksa dks muds ewy osru o eagxkbZ osru dh 25 izfr'kr /kujkf'k vf/kdre /kujkf'k dh nj iqfyl mik/kh{kd ds osrueku rd :i;k 2]500@&] fujh{kd @ mifujh0 ds osrueku rd :i;k 2]000@& rFkk eq[; vkj{kh @ vkj{kh @ vkj{kh M~kbZoj ds osrueku rd :i;k 1]000@& izksRlkgu HkRrk ds :i esa izfrekg fuEufyf[kr 'krksZa ds v/khu vuqeU; fd;s tkus dh Jh jkT;iky lg"kZ Lohd`r iznku djrs gSaA "His excellency the Governor is pleased to give assent to the sanction of incentive @ 25% of the basic pay and dearness allowance (subject to maximum of Rs. 2500/- upto the pay scale of Deputy Superintendent of Police, Rs. 2000/- upto the pay scale of Inspector/Sub-Inspector and Rs. 1000/- upto the pay scale of Head-Constable/Constable/ Constable Driver) to officers and officials working in the pay scale upto Deputy Superintendent of Police in the Intelligence Department, however, subject to following condition." (English translation by the Court) (emphasis added)
16. A bare reading of aforesaid makes it very clear that it is with reference to pay scale applicable to an officer at a particular level. The very initial clause which provides the rate of incentive allowance says that the officers and employees working in Intelligence in the pay scale up to the level of Deputy Superintendent of Police shall be paid 25% of their basic pay and dearness allowance as incentive allowance. The next clause restrict the maximum amount payable and says that aforesaid amount shall be subject to the maximum of Rs. 2500/- to those who are in the pay scale of Deputy Superintendent of Police; Rs. 2000/- to whose who are in the pay scale of Inspector/ Sub-Inspector; and, Rs. 1000/- to those who are in the pay scale of Head Constable, Constable and Constable Driver. Had the intention of Government been to provide "Incentive Allowance" to the officers of a particular rank, there was no occasion to mention that those who are working in the scale of particular rank shall be paid such allowance. The reason behind is self explanatory. Judicial notice may be taken to the fact that Government employees including those of Police Department, have been provided benefit of time bound higher pay scale with reference to and in promotional scales, called as First Promotional Scale, Second Promotional Scale and Third Promotional Scale, as the case may be. Before introduction of [ACT] (hereinafter referred to as the "ACP Scheme") vide G.O. dated 04.05.2010, the aforesaid promotional scales were applicable and actually given to eligible persons, as and when fell due, after finding them suitable and entitled for the same. It is in this view of the matter, those who were getting salary in promotional scale, have been given higher maxima of "Incentive Allowance" vide G.O. dated 28.11.2007. For example, if a Constable has been given promotional pay scale, which is equal to the pay scale prescribed for an officer in the rank of sub-Inspector or Inspector, he would be entitled for Incentive Allowance at the rate of 25% of basic pay and dearness allowance subject to maximum of Rs. 2000/-. It is for this reason the language of G.O. makes the admissibility with reference to pay scale of a particular level and not use level/rank/position. Here reference to pay scale is not equivalent to the status of officer concerned that he must be working in that rank with all attending position of status, rank etc.
17. The respondents, in my view, have clearly misconstrued the aforesaid G.O. by reading it as if the "Incentive Allowance" is with reference to individual rank of an officer. Reading in such a manner the respondents have omitted the words, Lrj rd ds osrueku and osrueku used at difference places in the G.O. in question. The use of the words "scale" and "level of scale" is to put stress on the fact that what is relevant is the level of pay scale in which the particular incumbent is getting salary and not his actual rank and status. Judicial cognizance can also be taken of the fact that police officials of lower cadre having been granted the benefit of first, second and third promotional pay scale are getting salary in pay scale applicable to much higher rank of officials but they continue to enjoy actual status of their substantive post. Grant of promotional pay scale does not result in upgrading of their position, rank and status but only financial benefits become available. In the present case, unless the respondents find that the petitioners were actually working in the pay scale equivalent to the scale of Head Constable and Constable and not that of Inspector or Sub-inspector, they could not have said that any excess/extra payment has been made. It could not have been said that they (petitioners) have been paid excess amount of incentive allowance unless a finding is recorded that they are not in the pay scale equivalent to that of a Sub-Inspector/Inspector. In other words without deciding the question, whether petitioners were getting salary in the pay scale equivalent to that of Sub-Inspector or not, it could not have been said that they were not entitled for incentive allowance subject to maximum of Rs. 2000/-. It appears that respondents have proceeded in a mechanical way to determine maximum amount of "Incentive Allowance" with reference to the rank and position, which is not the correct approach on their part. The question No. 1, therefore, is answered accordingly.
18. Now coming to the second question, i.e., opportunity. A specific averment has been made in para 26 of the writ petition that no opportunity of hearing was afforded to petitioners and no show cause notice was issued, therefore, the impugned recovery is in violation of principle of natural justice.
19. The reply is contained in para 7 of the counter affidavit and there is not even a whisper to suggest that any show cause notice was issued to petitioners or they were given any opportunity of hearing before issuing direction for recovery of alleged excess amount of "Incentive Allowance".
20. Regarding application of principles of natural justice, it cannot be doubted that whenever an employer takes a view, or from the record, finds, that certain amount has been paid to an employee, in excess to what he was entitled, before issuing an order of recovery of the same, he must have given an opportunity to the employee concerned to show cause, whether such amount should/can be recovered from him or not. If this opportunity is given to an employee, he can always show that what was paid to him, he was entitled therefor, and, there is neither any excess payment, nor any payment for which he was not entitled. An order passed directly without giving any show cause notice or opportunity to the employee, in my view, would suffer the vice of non observance of principles of natural justice. In a case where there is a dispute as to whether the employee has been paid an amount rightly or not, before passing any order, having civil consequences, the employer must afford an opportunity to the employee, else, such an order would be in violation of principles of natural justice. The Apex Court in [PRECEDENT], is similar circumstances, has held that an order passed in violation of principles of natural justice cannot be sustained. In para 3 of the judgment, the Apex Court observed as under:
"The appellant has obviously been visited with civil consequences but he had been granted no opportunity to show cause 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 hearing in the matter."
21. The second question, as a proposition of law, therefore, is answered in favour of petitioners.
22. Then comes the third question, i.e., whether an amount if admittedly paid in excess, i.e., more than what the incumbent is entitled, still it cannot be recovered unless the employer finds a case of fraud or misrepresentation on the part of employee. On this aspect, I am inclined to answer the question no. 3 in favour of respondents and my reasons are as under.
23. I propose to refer the decisions of Apex Court which have taken a view holding that an amount, if has been wrongly paid to an employee and he is not entitled for the same, recovery of such amount cannot be said to be bad except of certain very limited exceptions which have also been described therein.
24. The first is [PRECEDENT]. There an ad hoc interim relief was granted in 1972 by the Government on slab basis pending fixation of additional dearness allowance. No formula with reference to cost of living was adopted while granting ad hoc relief. When the formula for grant of additional dearness allowance of the cycle of increase by 8 points in the Consumer Price Index was adopted by the State Government, it realised that the ad-hoc interim relief was in excess by Rs. 9.40 to Rs. 45 per month depending on the pay-slab of a Government servant. It then decided to adjust excess amount paid in subsequent emoluments in instalments, rather than lump sum recovery of entire excess amount. Such order was passed in March 1974. The Court did not find order bad, illegal, arbitrary, unreasonable or unfair. It held that the Government has rightly chosen to recover excess amount in a phased manner.
25. In [PRECEDENT], an employee was working as Senior Clerk (Accounts) in the pay scale of Rs.1400-2600. On his personal request, he was transferred from Nagpur to Bangalore. One of the conditions of transfer was that the employee shall technically resign from the post held at Nagpur and join as Direct Recruit on the post of Clerk at Bangalore. At the time of transfer, basic pay drawn by the employee at Nagpur in the cadre of Senior Accountant, was Rs. 1260/-. When the employee joined on the lower post of clerk, by mistake, her salary was fixed at basic pay of Rs.1250/- per month instead of Rs. 1070/-. On detection of mistake, pay was refixed at the stage of Rs. 1070/- by order dated 1.12.1995. The order(s) of recovery and refixation were challenged before Central Administrative Tribunal. Employee's claim was allowed by the Tribunal and Government's Writ Petition was dismissed by High Court. The Apex Court relying on its earlier decision in [PRECEDENT], set aside both the judgments and upheld G.O. of refixation and recovery, with the only indulgence that excess pay may be recovered in easy instalments. The Court herein upheld recovery and permitted instalments.
26. Next is [PRECEDENT] wherein the law relating to recovery of excess payment from employees was considered. The Court held that cases wherein excess payment has not been allowed to be recovered from employees' are not founded because of any right in the employees but in equity and in exercise of judicial discretion to relieve employees from the hardship that may be caused, if recovery is implemented. Such a discretion is exercised by the Court and one of the reasons therefore, has been, that the employee was receiving excess payment for a long period and utilising the same, genuinely believing that he is entitled to it, but where the employee had knowledge that the payment so received was in excess of what was due and the error was detected within a short period of wrong payment, Court would not give relief against such recovery. It is said that these matters lie in the realm of judicial discretion of the Court.
27. Then comes [PRECEDENT] wherein recovery of excess amount paid to employees of cooperative society was challenged relying on Apex Court's decision in [ENTITY] Vs. State of Haryana 1995 Supp.(1) SCC 18 and [ENTITY] Vs. Union of India (Supra). A two Judges Bench of Apex Court, consisting of Hon'ble [ENTITY] and Hon'ble [ENTITY] said in para 6 of the judgment that there is no principle that any excess payment to an employee should not be recovered back by the employer. The Court observed that in certain cases merely a judicial discretion has been exercised by Apex Court to refuse recovery of excess wrong payments of emoluments/allowances from employees on the ground of hardship where the following conditions were fulfilled:
(a) The excess payment was not made on account of any misrepresentation or fraud on the part of employee; and
(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.
28. Now very recently, the Apex Court in [PRECEDENT] has said that there is no such principle of law that wrong payment made to an employee can be recovered only in those cases where he is guilty of fraud and misrepresentation, and not otherwise. The Court has distinguished all its earlier decisions in [ENTITY] Vs. Union of India (Supra), [ENTITY] v. State of Haryana (Supra), [PRECEDENT] and [ENTITY] and Ors v. National Institute of Education Planning and Administration and Ors. [(2010) 14 SCC 323]. In paragraphs 9, 15, 16 and 18 of the judgment the Court has said:
"9. We are of the considered view, after going through various judgements cited at the bar,hat this court has not laid down any principle of law that only if there is misrepresentation or fraud on the part of the recipients of the money in getting the excess pay, the amount paid due to irregular /wrong fixation of pay be recovered."
"15. We are not convinced that this Court in various judgments referred to hereinbefore has laid down any proposition of law that only if the State or its officials establish that there was misrepresentation or fraud on the part of the recipients of the excess pay, then only the amount paid could be recovered. On the other hand, most of the cases referred to hereinbefore turned on the peculiar facts and circumstances of those cases either because the recipients had retired or on the verge of retirement or were occupying lower posts in the administrative hierarchy."
"16. We are concerned with the excess payment of public money which is often described as "tax payers money" which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situation. Question to be asked is whether excess money has been paid or not may be due to a bona fide mistake. Possibly, effecting excess payment of public money by Government officers, may be due to various reasons like negligence, carelessness, collusion, favouritism etc. because money in such situation does not belong to the payer of the payee. Situations may also arise where both the payer and the payee are at fault, then the mistake is mutual. Payments are being effected in many situations without any authority of law and payments have been received by the recipients also without any authority of law. Any amount paid /received without authority of law can always be recovered barring few exceptions of extreme hardships but not as a matter of right, in such situations law implies an obligation on the payee to repay the money, otherwise it would amount to unjust enrichment."
"18. Appellants in the appeal will not fall in any of these exceptional categories, over and above, there was a stipulation in the fixation order that in the condition of irregular/wrong pay fixation, the institution in which the appellants were working would be responsible for recovery of the amount received in excess from the salary / pension. In such circumstances, we find no reason to interfere with the judgment of the High Court. However, we order the excess payment made be recovered from the appellant's salary in twelve equal monthly instalments starting form October 2012. The appeal stands dismissed with no order as to costs. IA nos. 2 and 3 are disposed of."
29. The Apex Court further held that decision in [ENTITY] (Supra), [ENTITY] (Supra), [ENTITY] (Supra), etc. are all decided on their own facts and do not lay down any principle of law, restraining recovery of excess payment of salary from the concerned employee. On the contrary, in para 17 of the judgment the Court said that except few instances pointed out in [PRECEDENT] and in [ENTITY] (Supra), excess payment due to wrong/irregular pay fixation can always be recovered.
30. There is a Division Bench judgement of this Court also in [PRECEDENT], decided on 28th July, 2009. The Court formulated two questions, as under:
"(i) Whether any financial benefit given to an employee by mistake without any misrepresentation or fraud on his part can be recovered from him later on after his superannuation from service?
(ii) Whether before directing for recovery of the amount paid in excess, the employee concerned is required to be given notice and opportunity of hearing?"
31. Having said so, the Court said:
"Having given my most anxious consideration, neither on first principle nor precedent, I am prepared to accept the broad submission that excess amount paid to an employee by mistake cannot be recovered after his superannuation only on the ground that while obtaining monetary benefit, it has not made false representation or played fraud."
32. Further, the Court referred to [SECTION] of [ACT] and thereafter said:
"From a plain reading of the aforesaid provision it is evident that a person to whom money has been paid by mistake is obliged to return the same. In my opinion an employee not entitled to receive monetary benefit gets it, it becomes a case of unjust enrichment and restitution in case of unjust enrichment is an accepted principle for ensuring justice in appropriate cases. In my opinion in a case of mistake clear, plain and simple, excess amount paid to and employee can be recovered after retirement despite the fact that he had not made any misrepresentation or played fraud. There is no legal impediment in ordering for recovery from a retired employee such monetary benefits, which he had received on account of mistake and not entitled to such benefits. However, I would hasten to add that a mistake, pure and simple though justifies recovery of excess amount paid but in a case in which two interpretations are possible and one was consciously approved and benefit given to an employee by the competent authority but such decision in the ultimate analysis and long process of reasoning, later on is found incorrect, it may be possible to correct the same at a latter stage but the amount already paid in the light of the earlier decision is not fit to be recovered. In other wards, excess payment is made upon reasonably possible view taken by competent authority without fraud or misrepresentation, the excess payment cannot be recovered. Excess payment is possible to be made by the order of the employer. It is also possible by interim or final order of the Court, which ultimately is found to be erroneous. In case of former, a recovery is permissible under the condition enumerated above. However, in latter case, it depends upon the facts and circumstances of each case and it is primarily within the discretion of the Court." (emphasis added)
33. The Court also relied upon an earlier Division Bench Judgement in [PRECEDENT], observing that there is no law of universal application, restraining the employer from recovering the extra amount paid to an employee beyond entitlement. The Court also observed that rectification of mistake is not only permissible but desirable otherwise system/ requirement of auditing of accounts would be rendered nugatory.
34. These authorities clearly show that there is no right of petitioners in law or otherwise that admitted excess payment wrongly made cannot be recovered. As a matter of right, petitioners cannot contend that though they had been paid certain amount wrongly in excess to what was due to them, yet it cannot be recovered by the administration.
35. In view of above and looking to the findings in respect to questions no. 1 and 2, this Court has no doubt that this writ petition deserved to be allowed.
36. In the result, the writ petition is allowed. The impugned recovery is hereby quashed. It is made clear that so long as the G.O. dated 28.11.2007, prescribing "Incentive Allowance" to police officers of subordinate ranks working in Intelligence is not modified, recalled or revoked, or the petitioners are not transferred from Intelligence to other wing, they shall be entitled for the benefit under aforesaid G.O. It is also provided that if the aforesaid benefit is withdrawn or modified, the subsequent entitlement of petitioners shall be governed accordingly.
37. It is, however, made clear that looking to the findings recorded by this Court with respect to question no. 1, it shall be open to respondent-competent authority to examine every individual case in the light of the discussion made above, and if it is found that any person has been paid "Incentive Allowance", over and above what was prescribed in aforesaid G.O., it shall be open to respondents to initiate appropriate proceedings for recovery of that much amount but after giving due opportunity of hearing to concerned persons.
38. No costs.
Order Date :- 25.09.2013 AK