CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 Date of Decision:16.11.2009 Chairman, State Bank of India & another .....Appellants versus Narinder Pal Singh ..... Respondent Coram: HON'BLE MR. JUSTICE AJAY TEWARI Present: Mr. Kapil Kakkar, Advocate for the appellants. **** Ajay Tewari,J.(ORAL) CM No. 12505-C of 2009 For the reasons recorded in the application, the delay of 92 days in refiling the appeal is condoned. CM stands disposed of. RSA No. 4104 of 2009(O&M) This appeal has been filed against the concurrent judgments of the Courts below decreeing the suit of the respondent-plaintiff challenging the order of recovery made by the appellant-bank. An essential fact necessary to be noticed is that the respondent was arrested in criminal case on 27.08.1987 and placed under suspension by the appellant bank, subsequently he was acquitted and was reinstated. After a period of 4 years a CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -2- recovery order was passed on the ground that his entire period of absence could not be treated as suspension period but was treated as 'leave of the kind due'. It is this order that was challenged by him and the challenge thereon was upheld by the Courts below. The following questions have been proposed: i) Whether the employer is entitled to recover the amount wrongly paid to the employee? ii)Whether the respondent was entitled to the amount of subsistence allowance? iii)Whether the respondent is estopped from claiming the benefit after giving undertaking to refund the amount paid to him? iv)Whether the issue raised in the present appeal is covered by the decision of full bench of this Hon'ble Court in matter of Budh Ram vs. State of Haryana reported as 2009 (3) SCT 333? As per learned counsel for the appellant, question No.(iv) encompasses the first three questions also. He has relied upon paragraph No.12 of the above cited judgment since as per him over payment is the main issue in this case. Paragraph No.12 is as follows: Apart from cases that fall in categories (i) and (ii) above, there is one conceivable situation in which an employee may even when he is not guilty of mis- representation, fraud, deception or the like receive, under a mistake of any functionary of the State, an amount which he has no reason to either receive or CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -3- appropriate. For instance and purely on a hypothetical plane, there may be a case where an employee of the State Government or the instrumentality of the State receives an amount with his salary that is wholly disproportionate, unexpected or inexplicable. An employee whose monthly emoluments are, for instance Rs.20000/- receives in a given month, a sum of Rs.30000/- instead of Rs.20000/-. Such a payment may be purely accidental and erroneous arising out of an un-intended mistake. The question is whether the employee has any obligation to verify the reason or the genesis of the windfall that he has received and to refund the same, if he is not lawfully entitled to the same. Our answer to this is in the affirmative. Such a case may not fall in category (i) as the employee has not committed any mistake but it is not a case that would fall in category (ii) either as the benefit is unrelated to any erroneous interpretation or application of rule. 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. Such a case cannot be equated with those falling in category (ii). Such a case may be dealt with independently and the employee concerned called upon to refund to the Government the undeserved payment that he has received. We say so because in our opinion, once the undeserved payment came to his notice, every employee is under an obligation to verify the reason for the same and act in a manner that is fair and equitable. Appropriation of a payment which the employee had no reason to expect or accept would in such a case be dishonest. And one who is dishonest cannot take shelter behind equity. We cannot for CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -4- 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 when the same came to his notice could be read into his duty as an employee of the State or its instrumentalities.” The controversy regarding recovery has been settled by the Hon'ble Supreme Court in Syed Abdul Qadir and others vs. State of Bihar and others, 2009(1) SCT 611, relevant portion of which reads as follows:- “This Court, in a catena of decisions, has granted relief against recovery of excess payment of emoluments/allowances if (a) the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee 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. 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 CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -5- 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. 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 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 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 appellants- 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 appellants-teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellants-teachers should be made.” It would be noticed that this judgment of the Hon'ble Supreme Court was not brought to the notice of the Hon'ble Full Bench. As per this judgment, two conditions which may justify recovery are : firstly, that the employee should know that the CM No.12505-07-C of 2009 & RSA No. 4104 of 2009 -6- payment received by him was in excess of what was due or wrongly paid and secondly in cases where the error is detected or corrected within a short time of wrong payment. In the present case, no such ground has been made out. On the contrary, it is the case that on a wrong interpretation of the rule, payment not due to him was released. In my opinion, the matter would be covered by that portion of the Hon'ble Supreme Court where it was mentioned that protection has to be given if excess payment was made on the basis that a particular interpretation of rule was later found erroneous. Even the second condition enumerated by the Hon'ble Supreme Court viz correction of error within a short time cannot be invoked because admittedly the error was corrected after 4 years. Consequently, this appeal and application for stay are dismissed. No costs. Since the main case has been decided, the Civil Misc. Application, if any, stands disposed of. November 16, 2009 (AJAY TEWARI) sonia JUDGE