IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 1. CWP. No. 3520 of 2008 Date of Decision: 16.7.2009. Swaran Kaur --Petitioner Versus State of Punjab and another --Respondents 2. CWP. No. 6421 of 2008 Subhash Chander Grover --Petitioner Versus State of Punjab and another --Respondents CORAM:- HON'BLE MR.JUSTICE PERMOD KOHLI. Present:- Mr. D.D. Bansal, Advocate for the petitioners. Mr. P.C. Goyal, Addl. A.G., Punjab. *** Permod Kohli, J. (Oral) Common question of law with similarity of facts and circumstances being involved, these petitions were heard and are being disposed of by common order. Petitioners are the retired employees of the State of Punjab but were in service at the time of filing these petitions. They are aggrieved of action of the respondents in re-fixation of their salary and consequential recovery on the basis of the audit report. The issue involved is re-fixation of the salary, consequential recovery and even reduction in the pensionary benefits. Since on the basis of the legal issues, the controversy involved in all these petitions can be conveniently sorted out/settled, factual back-ground in each case is not being addressed to. CWP. No. 3520 of 2008 -2- The question of re-fixation and recovery had been considered by the Hon’ble Apex Court in the case of Sahib Ram vs. State of Haryana, 1994 (5) SLR 753 which was later on followed in the case of Purshotam Lal and others vs. State of Bihar and others, 2007 (1) RSJ 150 wherein it has been held that where any benefit has been granted to an employee without any misrepresentation or fraud attributed to him, the employer has the right to re-fix the salary/emoluments, but without right to recover such benefits already granted to the employee. However, other version of the issue came to be opined in some of the judgments passed in the cases of Union of India vs. Smt. Sujata Vedachalam and others, JT 2000 (6) SC 217, Comptroller and Auditor General of India and others vs. Farid Sattar, JT 2000 (4) SC 374 and Mafatlal Industries Ltd. and others vs. Union of India and others, 1997 (5) SCC 536. Since the judgment passed in the case of Sahib Ram (supra) held the field for a number of years, various judgments came to be delivered by this Court following the dictum therein. A Division Bench of this Court, however, noticing both sets of judgments referred the matter to a larger Bench for an authoritative pronouncement and following question of law was referred to the larger Bench:- “Whether the Government is entitled to recover from an employee any payment made in excess of what he was otherwise entitled to, on account of any mistake or bonafide but erroneous interpretation or belief regarding any Rule, Regulation or Government instructions whatsoever especially in cases where the employee concerned is not guilty of any fraud or misrepresentation in claiming or receiving such monetary benefits.” CWP. No. 3520 of 2008 -3- The Hon’ble Full Bench of this Court presided over by Hon’ble the Chief Justice heard and answered the reference vide judgment dated 22.5.2009 passed in CWP No.2799/2008 etc. (Budh Ram and others vs. State of Haryana and others). On consideration of the controversy, Hon’ble Full Bench formulated following three issues to answer the reference:- i)Cases in which the benefits sought to be recovered from the employees were granted to them on the basis of any fraud, misrepresentation or any other act of deception; ii)Cases in which the benefits sought to be recovered were granted on the basis of a bonafide mistake committed by the authority granting the same while applying or interpreting a provision contained in the service rule, regulation or any other memo or circular authorizing such grant regardless whether or not grant of benefits involved the performance of higher or more onerous duties by the employee concerned; iii)Cases that do not fall in either one of the above two categories but where the nature of the benefit and extent is so unconnected with his service conditions that the employee must be presumed to have known that the benefit was flowing to him undeservedly because of a mistake by the authority granting the same.” On consideration of various judgments, issue no.i) was answered as follows:- “…….It follows that a person, who has committed a fraud, misrepresentation or any other act of deception cannot possibly qualify for any relief in equity. A priori, it must be held, that any benefit received or obtained by an employee by reasons of fraud, misrepresentation or any other act of deception would disentitle him to retain the benefit, which he has obtained as a result of such acts or any one of them.” Issue No. ii) has been answered with the following observations:- “It is in the light of the above pronouncement, no longer open to the authorities granting the benefits, no matter erroneously, to contend that even when the employee concerned was not at fault and was not in any way responsible for the mistake committed by the authorities, they are entitled to recover the benefit that has been received by the employee on the basis of any such erroneous grant. We say so primarily because if the employee is not CWP. No. 3520 of 2008 -4- responsible for the erroneous grant of benefit to him/her, it would induce in him the belief that the same was indeed due and payable. Acting on that belief the employee would, as any other person placed in his position arrange his affairs accordingly which he may not have done if he had known that the benefit being granted to him is likely to be withdrawn at any subsequent point of time on what may be then said to be the correct interpretation and application of rules. Having induced that belief in the employee and made him change his position and arrange his affairs in a manner that he would not otherwise have done, it would be unfair, inequitable and harsh for the Government to direct recovery of the excess amount simply because on a true and correct interpretation of the rules, such a benefit was not due…… We have, therefore, no hesitation in holding that in case the employees who are recipient of the benefits extended to them on an erroneous interpretation or application of any rule, regulation, circular and instructions have not in any way contributed to such erroneous interpretation nor have they committed any fraud, misrepresentation, deception to obtain the grant of such benefit, the benefit so extended may be stopped for the future, but the amount already paid to the employees cannot be recovered from them….” While considering Issue No. iii), Hon’ble Full Bench perceived certain situations and made following observations:- “It is a case where by reason of sheer neglect of a functionary of the State Government, a payment that is undeserved and wholly uncalled for is made to the employee…..” We cannot for obvious reasons exhaustively enumerate situations where such payments are received and can be lawfully recovered. All that we propose to point out is that while generality of the cases would fall in category (i) and (ii), some freak cases like the one in category (iii) that we have been able to conceive, may need to be dealt with independently depending upon whether the employee can be attributed the knowledge that the payment was undeserved and whether the duty to verify the factual position and refund the amount CWP. No. 3520 of 2008 -5- when the same came to his notice could be read into his duty as an employee of the State or its instrumentalities. The reference is answered accordingly. These petitions shall now be placed before the appropriate Bench for disposal in the light of what we have said above.” The claims of the petitioners in the present petitions have been considered in the light of the aforesaid judgment of the Full Bench and the issues decided therein. I have perused the orders impugned whereby the recoveries have been ordered on re-fixation during the service. In none of the cases, the State has attributed mis-representation or fraud to the employee(s). These cases thus fall in Category (ii) noticed by the Hon’ble Full Bench. In these cases, the benefit was passed on to the employees without mis- representation/fraud on the basis of either bona fide mistake or misinterpretation of any rule, Circular or order of the employer. In view of the answer to Issue No. ii), no recovery can be effected from these petitioners. In the above cases no fraud or misrepresentation has been attributed to the petitioners and thus, the respondents cannot be permitted to effect recovery. If any amount has been recovered in part or in whole, the same shall be refunded to the petitioners within a period of two months from the date a certified copy of this order is served upon the competent authority. In view of the above, these petitions are thus allowed. The action of the respondents and the impugned orders passed for CWP. No. 3520 of 2008 -6- recovery are hereby quashed while upholding the re-fixation of their salaries etc. A copy of this judgment be placed on record on each concerned file. (PERMOD KOHLI) JUDGE 16.7.2009 lucky