IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No.9014/2008 Decided on: 3.8.2009 Beli Ram. …Petitioner. Versus Himachal Road Transport Corporation and others. …Respondents. Coram The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting ?1. yes. For the Petitioner : Mr. Onkar Jairath, Advocate vice Mr. R.L. Kaith, Advocate. For the Respondents : Mr. Adarsh Sharma, Advocate. Rajiv Sharma, J. The petitioner sought volunteer retirement from the respondent- corporation with effect from 31.12.1999. Mr. Onkar Jairath, Advocate appearing on behalf of the petitioner has strenuously argued that a sum of Rs. 24,867-00 has been deducted from the retiral benefits of the petitioner without any show cause notice. 1 Whether the reporters of Local Papers may be allowed to see the judgment? yes. 2 Mr. Adarsh Sharma, Advocate appearing on behalf of the respondents has vehemently argued that the deductions have been made from the retiral benefits of the petitioner on the basis of audit para. I have heard the learned counsel for the parties and have perused the pleadings carefully. The petitioner joined his duties as a Driver in the respondent- corporation initially on daily wage basis in July, 1972 and was regularized on 2.10.1974. He sought volunteer retirement with effect from 31.12.1999. However, surprisingly, a deduction has been made from the retiral benefits of the petitioner vide office order dated 16.11.2000 amounting to Rs. 24,867-00. The explanation assigned for effecting recovery of this amount is that the penalty orders dated 26.8.1981 for withholding one increment have been over looked by the department while fixing his pay. This was done on the basis of audit para. His pay was refixed vide office order dated 27.7.2000. Mr. Onkar Jairath has submitted that no notice was issued to his client before the issuance of letter dated 27.7.2000. According to him, the petitioner has been visited with severe civil and evil consequences. In fact, the salary of the petitioner stood reduced on the basis of letter dated 27.7.2000. The Court is of the considered opinion that before refixing the salary of the petitioner, he was required to be heard. Their Lordships of the Hon’ble Supreme Court have held in Rajesh Kumar and others versus Dy. CIT and others, 2007 (2) SCC 181 that when by reason of an action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice are required to be followed. Their Lordships have held as under: 3 “26. Effect of civil consequences arising out of determination of lis under a statute is stated in State of Orissa v. Dr. (Miss) Binapani Dei and Ors. (1967 (2) SCR 625). It is an authority for the proposition when by reason of an action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice are required to be followed. In such an event, although no express provision is laid down in this behalf compliance of principles of natural justice would be implicit. In case of denial of principles of natural justice in a statute, the same may also be held ultra vires Article 14 of the Constitution.” The petitioner has neither misrepresented nor misled the facts to the respondents at the time of fixation of his salary. The decision has been taken by the respondent-corporation at its own level. In these circumstances it will be very harsh and oppressive to order the recovery on the basis of audit para. The penalty was imposed upon the petitioner on 26.8.1981. The pay of the petitioner has been re-fixed on 27.7.2000 after his retirement that too without hearing him. Their Lordships of the Hon’ble Supreme Court in Syed Abdul Qadir and others versus State of Bihar and others, (2009) 3 SCC 475 have culled out the following principles governing the circumstances in which the excess amount cannot be recovered by the employer: “55. That apart, it also appears from the record produced before us that while the Finance Department of the Government of Bihar was in favour of making the amended provisions of FR. 22-C applicable to the appellants-teachers after having come to know that the said rule did not exist and had been substituted, the Department of Human Resource Development, Government of Bihar, wanted to apply the unamended 4 provision to the appellants-teachers so as to make available the benefit of additional increment provided for under FR.22-C to its teachers, unaware of the fact that even under FR.22-C they were not entitled to the additional increment as they were not discharging duties and responsibilities of greater importance on the promoted post. 56. This further goes on to show that the authorities in the State of Bihar were not even aware of the basic requirement for grant of additional increment and the decision appears to have been taken without proper application of mind. Otherwise, there was no reason for the Finance Department to state in the counter affidavit filed before the High Court that any affidavit filed on behalf of the Education Department may be ignored as Finance Department was the competent authority. In this very affidavit, the Finance Department while admitting that the pay fixation by the Education Department was wrong, stated as under:- "...the fixation of pay under Fundamental Rule 22- C has wrongly been made as it was not in existence. Pay fixation on the basis of a non- existent rule is a bona fide mistake." 57. 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. 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 5 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. See Sahib Ram vs. State of Haryana, 1995 Supp. (1) SCC 18, Shyam Babu Verma vs. Union of India, [1994] 2 SCC 521; Union of India vs. M. Bhaskar, [1996] 4 SCC 416; V. Ganga Ram vs. Regional Jt., Director, [1997] 6 SCC 139; Col. B.J. Akkara [Retd.] vs. Government of India & Ors. (2006) 11 SCC 709; Purshottam Lal Das & Ors.,vs. State of Bihar, [2006] 11 SCC 492; Punjab National Bank & Ors. Vs. Manjeet Singh & Anr., [2006] 8 SCC 647; and Bihar State Electricity Board & Anr. Vs. Bijay Bahadur & Anr., [2000] 10 SCC 99. 59. 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 6 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. 60. Learned counsel also submitted that prior to the interim order passed by this Court on 7.4.2003 in the special leave petitions, whereby the order of recovery passed by the Division Bench of the High Court was stayed, some installments/amount had already been recovered from some of the teachers. Since we have directed that no recovery of the excess amount be made from the appellant- teachers and in order to maintain parity, it would be in the fitness of things that the amount that has been recovered from the teachers should be refunded to them.” In a recent judgment, their Lordships of the Hon’ble Supreme Court in Prakash Ratan Sinha versus State of Bihar and others, 2009 (9) Scale 529 have held that the administrative decision taken by the respondents was within the realm of public law and, therefore, the decision ought to have been taken in fair and reasonable manner. Their Lordships have further held that if there is a power to decide and decide detrimentally to the prejudice of a person duty to act judicially is implicit in exercise of such a power and that the rule of natural justice operates in areas not covered by any law validly made. It has also been held that if any of its actions or administrative decisions result in civil consequences, the actions or decisions could be judicially reviewed or tested on the anvil of principles of natural justice. Their Lordships have held as under: “6) The respondent is an instrumentality of the State, and therefore, all its administrative decisions would be subject to the doctrine of equality and fair play, as incorporated in Articles 14 and 21 of the Constitution of India. If any of its actions or administrative decisions 7 result in civil consequences, the actions or decisions could be judicially reviewed or tested on the anvil of principles of natural justice. This principle of law has been laid down by this Court in catena of cases. In Canara Bank and Others Vs. Debasis Das and Others reported in (2003) 4 SCC 557, this Court has held in paragraph 19 that even an administrative order which involves civil consequences must be consistent with the rules of natural justice. This Court has elaborated the expression `civil consequence' by observing that it encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. This Court has further stated, that, in its wide umbrella comes everything that affects a citizen in civil life. 7) The decision complained against in the instant case is an administrative decision. The decision is likely to have far reaching civil consequences for the appellant, as it has adversely affected his right to continue in the promotional post. Therefore, in our view, the decision concerning the promotion makes itself available for scrutiny by the Courts on the touchstone of well-established principles of natural justice. 8) The decision that was questioned before the Court was an administrative decision having civil consequences and is alleged to have been taken without affording an opportunity of hearing to the appellant. The argument of the learned Counsel for the appellant, basically is that, the administrative decision taken by the respondents is unfair, unreasonable and in breach of principles of natural justice. The administrative decision taken by the respondents is within the realm of public law and therefore, the decision ought to have been taken in a fair and reasonable manner. This was more necessary because the action cancelling the promotion of the appellant had civil consequences in 8 the sense that it not only puts an end to the right of the appellant and also his further career prospectus. Therefore, the respondents are under an obligation to take all decisions in a fair and lawful manner by adhering to the rules of natural justice. The law in this regard has been settled by several decisions of this Court. The principle that emerge from the decisions of this Court is that, if there is a power to decide and decide detrimentally to the prejudice of a person, duty to act judicially is implicit in exercise of such a power and that the rule of natural justice operates in areas not covered by any law validly made. Corollary principles emanating from these cases are as to what particular rule of natural justice should apply to a given case must depend to an extent on the facts and circumstances of that case and that it is only where there is nothing in the statute to actually prohibit, the giving of an opportunity of being heard and on the other hand, the nature of the statutory duty imposed on the decision maker itself implies an obligation to hear before deciding. These cases have also observed, whenever an action of public body results in civil consequences for the person against whom the action is directed, the duty to act fairly can be presumed and in such a case, the administrative authority must give a proper opportunity of hearing to the affected person. This Court in Canara Bank's case (supra) has stated that "the adherence to principles of natural justice as recognized by all civilized states is of supreme importance or when a quasi judicial body embarks on determining dispute between the parties, or any administrative action involving civil consequences is an issue. Even an administrative order, which involves civil consequence, must be consisted with the rules of natural justice. 9) In the instant, it is not in dispute between the parties that though the appellant was engaged as a daily 9 wage worker, he was directed to discharge the work of Accounts Clerk. The Circle Promotion Committee had recommended the case of the appellant for change of nomenclature from labourer to Accounts Clerk. On the basis of the recommendations made, the Electrical Superintending Engineer, Department of Energy changed his nomenclature from labourer to Accounts Clerk, subject to further approval by Chief Electrical Engineer, Department of Energy. It so happens the incharge Chief Electrical Engineer approves the proposal of the Circle Promotion Committee and issue necessary orders in this regard. Subsequently, the Regular Chief Electrical Engineer takes exception to the action of incharge Chief Electrical Engineer and cancels the earlier order passed by the impugned order dated 11.12.1998. It is the case of the respondents before the High Court that the appellant was not regularly promoted to the post of Accounts Clerk, but only the change of nomenclature from that of labourer to Accounts Clerk. Therefore, we are not expressing any opinion in this regard. In fact, the parties have proceeded before the various forums that though the appellant was promoted as Accounts Clerk from the post of labourers in view of his qualification and experience, the same could not have been disturbed without affording an opportunity of hearing to the appellant. There is no dispute between the parties that the personal or oral hearing was not granted to the appellant before passing the impugned order and therefore, the impugned order is in violation of principles of natural justice. Accordingly, in view of the observations made hereinabove, the petition is allowed. Annexure R-4 dated 16.11.2000 is quashed and set aside. In normal circumstances, an opportunity ought to have been 10 granted to the respondents to issue a show cause notice, however, it will be in the interest of justice to close the proceedings finally in view of the fact that the petitioner stood retired on 31.12.1999 and the amount involved is meagre. Consequently, the respondents are directed to refund a sum of Rs. 24,867-00 to the petitioner with interest @ 6% per annum within a period of four weeks from today. No costs. 3.8. 2009 (Rajiv Sharma ), J. *awasthi*