[CASE NUMBER] IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 16758 of 2007 TO SPECIAL CIVIL APPLICATION NO. 16761 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE [ENTITY] 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the [ACT] or any order made thereunder ? [ENTITY] Petitioner(s) Versus [ENTITY] & 3 Respondent(s) Appearance: MR. [ENTITY], ADVOCATE for the Petitioner(s) No. 1 MS [ENTITY], AGP for the Respondent(s) No. 1 - 3 MR [ENTITY], ADVOCATE for the Respondent(s) No. 4 CORAM: HONOURABLE MR.JUSTICE [ENTITY] Date : 20/02/2017 COMMON ORAL JUDGMENT
1. A common question of law and facts arises in this group of matters and as they arise out of the common judgment and order, all these matters are disposed of by this common judgment and order.
2. The petitioner, by way of the present petition, has prayed for HC-NIC Page 1 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] issuance of a writ of mandamus or any other appropriate writ, order or direction, directing the respondents not to effect any recovery as per the Office Order No.11/2006 dated 27.09.2006 issued by the Deputy Executive Engineer, Public Health Works Department.
3. The brief facts leading to the filing of the present petition are as under:
3.1 The present petitioner's name was recommended by Employment Exchange Office, Palanpur pursuant to requisition of respondents for appointment as a work charge lineman in the pay-
scale of Rs.100-3-130 at Rs.100/- per month plus usual dearness allowance. The petitioner was appointed and posted in the Office of Deputy Executive Engineer, Public Health Works Department Sub Division, Radhanpur, subject to the terms and conditions mentioned in the Office Order issued by the Executive Engineer, Public Health Works Department, Radhanpur.
3.2 As per the Government of Gujarat Resolution dated 20.03.1974, the pay scale of the work charge employees was revised as per the schedule annexed to that resolution. As per the Resolution, the Government was also pleased to resolve that the work charge employee under Public Health Engineering HC-NIC Page 2 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] Establishment on the date of issuance of those orders should be treated at par with the persons of temporary establishment under Public Health Engineering Wing in the matter of pensionary benefits and general provident fund scheme. As per the said resolution, pay scale of work charge lineman was revised from Rs.100-130 to 200-250.
3.3 In the year 1987, the pay scale of present petitioner was revised from 200-250 to 775-1025, and thereafter in the year 1998, the pay scale of present petitioner was revised from Rs.775-1025 to 2610-3540.
3.4 The petitioner's service was allotted and placed under Gujarat Water Supply and Sewerage Board. On 31.08.1998, the Board has issued a letter to the effect that the employees working with the Board in the cadre of work charge employees be given the benefits of 5th Pay Commission, and their pay scale be fixed on scale to scale basis. As per that letter, the work charge employees were given benefits of the said pay scale.
3.5 On 02.01.2004, the Office of the Gujarat Water Supply and Sewerage Board decided to initiate the proceedings for recovery HC-NIC Page 3 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] on the ground that the pay scale of the lineman as per [CASE NUMBER] was to be fixed at Rs.750-12-870-EB-14-940, and as per ROP-
1998 was to be fixed at Rs.2550-55-2660-60-3200.
3.6 Against the said order of recovery, the present petitioner made a representation to the Chief Administrative Officer, Gujarat Water Supply Sewerage Board. In the said representation, the petitioner mentioned about the revision of pay which has taken place from time to time and pay fixation done by the respondents in accordance with revised pay scale.
3.7 Inspite of above stated reply, the Deputy Executive Engineer, on 02.09.2006 has ordered the recovery on the ground that in the year 1998, the pay scale of lineman was fixed at Rs.750- 940 and not at Rs.775-1025. Therefore, it was decided to recover an amount of Rs.20,821/- from the present petitioner. Accordingly Rs.1,061/- per month was ordered to be deducted towards the recovery from September-2006.
3.8 Therefore, the petitioner herein has approached this Court by way of filing a petition being [CASE NUMBER]. This Court vide order dated 19.12.2006 has HC-NIC Page 4 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] disposed of that petition asking the petitioner to make a representation.
3.9 In view of the order passed by this Court (Coram: H.K. Rathod, J.), the petitioner made a representation, but the same was rejected by the respondents vide order dated 20.04.2007.
3.10 Therefore, being aggrieved and dissatisfied with the same, the petitioner has approached this Court by way of filing the present petition.
4. Heard learned advocate appearing for the petitioner, learned advocate appearing for the respondent no.4 as well as learned Assistant Government Pleader for respondent nos.1 to 3, and perused the material placed on record.
5. Learned advocate appearing for the petitioners has made the following submissions:
(i) That the action of the respondents of effecting recovery from monthly salary of the present petitioner is illegal, erroneous and against the provisions of law and violative of the constitutional HC-NIC Page 5 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] rights.
(ii) That the respondents have decided to effect the recovery from 01.01.1986, that too after a lapse of 20 years . The delay of 20 years itself dis-entitles the respondents from effecting the recovery.
(iii) That the issue involved in this case is squarely covered by the decision given in the case of State of Punjab and others V/s.
Rafiq Masih (White Washer) etc. reported in AIR 2015 SC 696.
(iv) That the impugned order is passed without affording any opportunity of being heard. The impugned order is passed without issuance of any notice or giving any opportunity to the petitioner.
Thus, according to learned advocate for the petitioner, the said order is in clear contravention of principle of natural justice.
(v) That the present petitioner has made a representation to the respondents pointing out all these facts. The said representation was sent after the decision was taken by the respondents to put the petitioner in lower time pay scale and sought recovery of the excess amount paid to the petitioner. It is submitted that the said representation was rejected and therefore, the petitioner has approached this Court. It is also submitted that by way of interim HC-NIC Page 6 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] order, recovery is stayed by this Court.
6. Learned advocate for respondent no.4 while opposing present petition tried to justify the decision of the respondents and submitted that the order of recovery passed by the respondent-authorities is just and proper and in accordance with law. It is submitted that since wrong pay fixation was made by mistake, it was ordered to be recovered. It is further submitted that there is no illegality or infirmity in the said decision.
Hence, the present petition may be ordered to be dismissed.
7. Regard being had to the above submissions and looking to the facts and circumstances of the present case, it appears that the action of the respondents seeking recovery of differential excess amount paid towards salary after 20 years of service in not at all justifiable. It also appears that neither any show cause notice was ever given nor any opportunity for hearing was ever given to the petitioner before taking such adverse decision. Thus, the action of the respondents is in clear contravention of principles of natural justice and therefore, on this ground the impugned order of recovery is required to be set aside. Moreover, the decision given by the Hon'ble Apex Court in the case of [PRECEDENT] etc. (supra) is applicable to the facts and circumstances of the present case. The relevant abstract of the said HC-NIC Page 7 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] judgment is reproduced hereinbelow:
"11. For the above determination, we shall refer to some precedents of this Court wherein the question of recovery of the excess amount paid to employees, came up for consideration, and this Court disallowed the same. These are situations, in which High Courts all over the country, repeatedly and regularly set aside orders of recovery made on the expressed parameters.
(i). Reference may first of all be made to the decision in [PRECEDENT], wherein this Court recorded the following observation in paragraph 58:
"58. The relief against recovery 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 if recovery is ordered. 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 the amount paid in excess. [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT] and [PRECEDENT]."
(emphasis is ours) First and foremost, it is pertinent to note, that this Court in its judgment in [PRECEDENT]'s case (supra) recognized, that the issue of recovery HC-NIC Page 8 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] revolved on the action being iniquitous. Dealing with the subject of the action being iniquitous, it was sought to be concluded, that when the excess unauthorised payment is detected within a short period of time, it would be open for the employer to recover the same. Conversely, if the payment had been made for a long duration of time, it would be iniquitous to make any recovery. Interference because an action is iniquitous, must really be perceived as, interference because the action is arbitrary. All arbitrary actions are truly, actions in violation of [SECTION] of the [ACT]. The logic of the action in the instant situation, is iniquitous, or arbitrary, or violative of [SECTION] of the [ACT], because it would be almost impossible for an employee to bear the financial burden, of a refund of payment received wrongfully for a long span of time. It is apparent, that a government employee is primarily dependent on his wages, and if a deduction is to be made from his/her wages, it should not be a deduction which would make it difficult for the employee to provide for the needs of his family. Besides food, clothing and shelter, an employee has to cater, not only to the education needs of those dependent upon him, but also their medical requirements, and a variety of sundry expenses. Based on the above consideration, we are of the view, that if the mistake of making a wrongful payment is detected within five years, it would be open to the employer to recover the same. However, if the payment is made for a period in excess of five years, even though it would be open to the employer to correct the mistake, it would be extremely iniquitous and arbitrary to seek a refund of the payments mistakenly made to the employee. In this context, reference may also be made to the decision rendered by this Court in [PRECEDENT], wherein this Court observed as under:
"11. 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 HC-NIC Page 9 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] 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."
(emphasis is ours) It is apparent, that in [PRECEDENT]'s case (supra), the higher pay- scale commenced to be paid erroneously in 1973. The same was sought to be recovered in 1984, i.e., after a period of 11 years. In the aforesaid circumstances, this Court felt that the recovery after several years of the implementation of the pay-scale would not be just and proper. We therefore hereby hold, recovery of excess payments discovered after five years would be iniquitous and arbitrary, and as such, violative of [SECTION] of the [ACT].
(ii). Examining a similar proposition, this Court in [PRECEDENT] observed as under:
"28. Such relief, restraining back recovery of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion to relieve the employees from the hardship that will be caused if recovery is implemented. A government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it, genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or HC-NIC Page 10 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] wrongly paid, or where the error is detected or corrected within a short time of wrong payment, courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery."
(emphasis is ours) A perusal of the aforesaid observations made by this Court in Col. [PRECEDENT]'s case (supra) reveals a reiteration of the legal position recorded in the earlier judgments rendered by this Court, inasmuch as, it was again affirmed, that the right to recover would be sustainable so long as the same was not iniquitous or arbitrary. In the observation extracted above, this Court also recorded, that recovery from employees in lower rung of service, would result in extreme hardship to them. The apparent explanation for the aforesaid conclusion is, that employees in lower rung of service would spend their entire earnings in the upkeep and welfare of their family, and if such excess payment is allowed to be recovered from them, it would cause them far more hardship, than the reciprocal gains to the employer. We are therefore satisfied in concluding, that such recovery from employees belonging to the lower rungs (i.e., Class-III and Class-IV - sometimes denoted as Group 'C' and Group 'D') of service, should not be subjected to the ordeal of any recovery, even though they were beneficiaries of receiving higher emoluments, than were due to them. Such recovery would be iniquitous and arbitrary and therefore would also breach the mandate contained in [SECTION] of the [ACT].
(iii). This Court in [PRECEDENT] (supra) held as follows:
"59. Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out HC-NIC Page 11 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] of place to mention here that the Finance Department had, in its counter- affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made."
(emphasis is ours) Premised on the legal proposition considered above, namely, whether on the touchstone of equity and arbitrariness, the extract of the judgment reproduced above, culls out yet another consideration, which would make the process of recovery iniquitous and arbitrary. It is apparent from the conclusions drawn in [PRECEDENT]'s case (supra), that recovery of excess payments, made from employees who have retired from service, or are close to their retirement, would entail extremely harsh consequences outweighing the monetary gains by the employer. It cannot be forgotten, that a retired employee or an employee about to retire, is a class apart from those who have sufficient service to their credit, before their retirement. Needless to mention, that at retirement, an employee is past his youth, his needs are far in excess of what they were when he was younger. Despite that, his earnings have substantially dwindled (or would substantially be reduced on his retirement). Keeping the aforesaid circumstances in mind, we are satisfied that recovery would be iniquitous and arbitrary, if it is sought to be made after the date of retirement, or soon before retirement. A period within one year from the date of superannuation, in our considered view, should be accepted as the period during which the recovery should be treated as iniquitous. Therefore, it HC-NIC Page 12 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] would be justified to treat an order of recovery, on account of wrongful payment made to an employee, as arbitrary, if the recovery is sought to be made after the employee's retirement, or within one year of the date of his retirement on superannuation.
(iv). Last of all, reference may be made to the decision in [PRECEDENT], wherein it was concluded as under:
"4. Mr. [ENTITY], learned counsel for the appellant, contended that the previous scale of Rs 220-550 to which the appellant was entitled became Rs 700-1600 since the appellant had been granted that scale of pay in relaxation of the educational qualification. The High Court was, therefore, not right in dismissing the writ petition. We do not find any force in this contention. It is seen that the Government in consultation with the University Grants Commission had revised the pay scale of a Librarian working in the colleges to Rs 700-1600 but they insisted upon the minimum educational qualification of first or second class M.A., M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science. The relaxation given was only as regards obtaining first or second class in the prescribed educational qualification but not relaxation in the educational qualification itself.
5. Admittedly the appellant does not possess the 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 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 HC-NIC Page 13 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] 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."
(emphasis is ours) It would be pertinent to mention, that Librarians were equated with Lecturers, for the grant of the pay scale of Rs.700-1600. The above pay parity would extend to Librarians, subject to the condition that they possessed the prescribed minimum educational qualification (first or second class M.A., M.Sc., M.Com. plus a first or second class B.Lib. Science or a Diploma in Library Science, the degree of M.Lib. Science being a preferential qualification). For those Librarians appointed prior to 3.12.1972, the educational qualifications were relaxed. In [PRECEDENT]'s case (supra), a mistake was committed by wrongly extending to the appellants the revised pay scale, by relaxing the prescribed educational qualifications, even though the concerned appellants were ineligible for the same. The concerned appellants were held not eligible for the higher scale, by applying the principle of "equal pay for equal work". This Court, in the above circumstances, did not allow the recovery of the excess payment. This was apparently done because this Court felt that the employees were entitled to wages, for the post against which they had discharged their duties. In the above view of the matter, we are of the opinion, that it would be iniquitous and arbitrary for an employer to require an employee to refund the wages of a higher post, against which he had wrongfully been permitted to work, though he should have rightfully been required to work against an inferior post.
12. It is not possible to postulate all situations of hardship, 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 herein above, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:
HC-NIC Page 14 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER]
(i) Recovery from employees belonging to Class-III and Class-IV service (or Group 'C' and Group 'D' service).
(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.
(iii) Recovery from employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.
(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.
(v) In any other case, where the Court arrives at the conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer's right to recover."
8. In view of the aforesaid judgment of the Hon'ble Apex Court, keeping in mind the settled legal proposition, recovery part is required to be set aside. But so far as fixation of pay done by the respondents-
authorities while giving corresponding effect of revised pay scale is concerned, the same appears to be made in accordance with the recommendations of pay commission, and there is no error or infirmity in the said decision. Therefore, the order qua revised pay fixation be maintained, but recovery sought from the present petitioner is hereby ordered to be set aside.
9. In view of the aforesaid discussions, the present petitions stand HC-NIC Page 15 of 16 Created On Sun Aug 13 19:51:46 IST 2017 [CASE NUMBER] partly allowed and Annexure-H i.e. order dated 20.04.2007 passed by the Executive Engineer and the orders dated 27.09.2006 of the Deputy Executive Engineer for effecting recovery are ordered to be quashed and set aside, but the orders regarding refixation of pay made in accordance with Pay Commission Recommendation is maintained. If any amount is recovered by the respondents from the petitioner by now, the same may be refunded to the petitioners-employees. Rule is made absolute to the aforesaid extent.
([ENTITY], J.) [ENTITY] HC-NIC Page 16 of 16 Created On Sun Aug 13 19:51:46 IST 2017