L.P.A.No.375 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision:- 14.07.2010 C.M.Nos.1035, 1036 of 2010 in/and L.P.A.No.375 of 2010 (O&M) Subhash Arora ....appellant vs. State of Haryana and others ....Respondent(s) C.M.No.1038 of 2010 in/and L.P.A.No.376 of 2010 (O&M) M.G.Thakral ....appellant vs. State of Haryana and others ....Respondent(s) C.M.No.1041 of 2010 in/and L.P.A.No.377 of 2010 (O&M) O.P.Dahiya and others ....appellant vs. State of Haryana and others ....Respondent(s) C.M.No.1316 of 2010 in/and L.P.A.No.459 of 2010 (O&M) Paul Dutt ....appellant vs. State of Haryana and others ....Respondent(s) *** CORAM:- HON'BLE MR.JUSTICE JASBIR SINGH HON'BLE MR.JUSTICE AUGUSTINE GEORGE MASIH *** Present:- Mr.Girish Agnihotri, Sr. Advocate with Mr.Arvind Seth, Advocate, for the appellants. *** Augustine George Masih J. By this order, we propose to dispose of LPA Nos.375, 376, 377 and 459 of 2010. Through these appeals, the appellants have L.P.A.No.375 of 2010 -2- approached for setting aside of the judgment/order dated 20.5.2009 passed by the Hon'ble Single Judge in the writ petitions filed by the appellant-petitioners. The writ petitions were disposed of by a common order. Briefly, the facts leading to the filing of the writ petitions in these cases are that State of Haryana issued instructions dated 2.6.1989 to grant Sr.Scale of Rs.3000-4500/- and selection grade of Rs.4100-5300/- to Engineers and Doctors on completion of their 5 years and 12 years of service respectively. Vide notification dated 16.5.1990, the earlier instructions dated 2.6.1989 stood modified and the benefit of the senior scale and selection grade was restricted to 20% of the posts. Notification dated 16.5.1990 was challenged by many employees of the State of Haryana by filing writ petitions in this Court. Validity of the instructions dated 16.5.1990 was upheld by the Hon'ble Supreme Court in the case of State of Haryana vs. Ishwar Singh, vide order dated 20.11.2000. Respondent- Department thereafter issued instructions dated 21.4.2001 to initiate recovery from the employees. Demand notices for recovery were received by the appellant-petitioners and on receipt of the same, they challenged the notification dated 25.1.2001 and the demand notice through the writ petitions which were dismissed by this Court vide judgment/order dated 20.5.2009. It would not be out of way to mention here that when the notification dated 16.5.1990 was challenged by the employees of the State of Haryana in the writ petitions before the High Court, the operation of the said notification was stayed by this Court subject to final decision. The learned Single Judge vide order dated 20.5.2009, which has been impugned in the present appeals, relying upon a judgment of the Hon'ble Supreme L.P.A.No.375 of 2010 -3- Court in the case of Syed Abdul Qadir & others vs. State of Bihar and others, 2009 (1) SCT 611, rejected the contention of the appellant- petitioners that no recovery of the excess amount paid to them could be made from the petitioners as they had neither challenged the notification dated 16.5.1990 nor had given any undertaking that they would refund the amount in case the notification is upheld by the Court. It was their submission that the petitioners have neither committed any fraud nor misrepresentation or deception was practiced to obtain for grant of such benefit and, therefore, the excess amount paid to them could not be recovered from them. On these very pleas again, challenge has been posed to the judgment of the learned Single Judge. Counsel for the appellants vehemently argues that the appellants did not seek benefit of the instructions dated 2.6.1989 but were granted the benefit by the respondents of their own accord. The appellants have not contributed in any manner to get benefit from the respondents by unfair means but the said benefit has been extended to them by the respondent-State themselves. The appellants have retired from service and to effect recovery from them at this stage would neither be justified nor in accordance with law. He places reliance on a Full Bench Judgment of this Court in the case of Budh Ram and others vs. State of Haryana and others, 2009(3) SCT 333, to contend that the case of the appellants is fully covered by the cases falling in category (ii) which were the cases involving recovery of benefits sought by the employees on account of misrepresentation or erroneous interpretations like rules, regulations, circulars or instructions issued by the Government and the appellants have not in any way contributed to such erroneous interpretations. In this L.P.A.No.375 of 2010 -4- category of cases, the Full Bench of this Court had held that the benefit so extended erroneously may be stopped for the future but the amount already paid to the employees cannot be recovered from them. He accordingly, prays for setting aside of the order/judgment of the learned Single Judge and prays for the relief that no recovery be effected from the appellant- petitioners. Counsel for the appellants has further submitted that the respondents are also claiming interest on the amount sought to be recovered from the petitioner-appellants which would be totally unjustified in the light of the fact that the benefit now sought to be recovered was extended to them by the respondents themselves and the appellants had not contributed to receipt of any such excess amount claimed on their part. We have heard counsel for the appellants and have gone through the records of the case. The facts as enumerated above, clearly show that initially instructions dated 2.6.1989, was issued wherein senior scale and selection grade was granted to the engineers and doctors of the State of Haryana on completion of their 5 years and 12 years of regular service respectively. There was a mistake in issuance of that notification which when came to the notice of the State Government, was rectified vide Government letter dated 16.5.1990. The said letter was challenged by the doctors and engineers by filing various writ petitions during the years 1990-2001 in this Court wherein operation of the Government letter dated 16.5.1990 was stayed. Civil Writ Petition No.10843 of 1993 was filed by Ishwar Singh and others claiming therein the pay scale of Rs.4100-5300 after completion of 5 years' regular service on the ground that the operation of the government letter L.P.A.No.375 of 2010 -5- dated 16.5.1990 had been stayed by this Court and, therefore, they were entitled to the said benefit in the light of instructions dated 2.6.1989. The said writ petition was allowed by this Court vide order dated 23.9.1999 only on the ground that since the operation of the Government letter dated 16.5.1990 had been stayed by this Court, therefore, the petitioners are entitled to the said benefit. This order was challenged by the State of Haryana in the Hon'ble Supreme Court. Civil Appeal No.6585 of 2001 titled as State of Haryana vs. Ishwar Singh and others, was allowed vide order dated 20.5.2000 holding therein as follows:- “ ORDER Special leave granted. This is an appeal by the State of Haryana against the judgment of the High Court of Punjab and Haryana dated 23.9.99 in CWP No.18043/98. The parity in pay was granted to the Doctors/respondents category along with Executive Branch, by an order dated 2.6.89 and the Selection Grade posts were also sanctioned at par with the Executive Branch. The order unfortunately did not mention that the Selection Grade posts were restricted to 20% of the posts. This mistake was however, rectified by an order dated 16.5.90 of the Government with retrospective effect i.e. 1.5.89. The High Court has now held that Selection Grade is to be granted without restriction to 20% of the posts in the particular cadre. It is well known that in every department selection grade is restricted to certain percentage of the posts such L.P.A.No.375 of 2010 -6- as 20% in the present case. So merely because the percentage was not mentioned in the earlier order dated 2.6.89, the High Court could not have awarded Selection Grade to every member in the cadre. The High Court should have seen that the mistake in the order dated 2.6.89 was rectified. We, therefore, allow the appeal and set aside the order of the High Court and direct that the Selection Grade scale of Rs.4100-5300/- will be restricted to 20% of the posts in the cadre as provided in the clarification dated 16.5.90. The appeal is allowed accordingly. There shall be no order as to costs.” After the decision of the Hon'ble Supreme Court rendered in Ishwar Singh's case (supra), the State of Haryana issued instructions dated 21.4.2001 vide which recovery of excess amount was sought to be made from those employees who did not fell within 20% cadre posts as per instructions dated 16.5.1990. Admittedly, appellants do not fall in this 20% cadre posts who were entitled to selection grade but had received the selection grade as per instructions dated 2.6.1989 as the operation of the notification dated 16.5.1990 was stayed by this Court. The contention of the counsel for the appellants that since the petitioners did not approach the respondents for grant of selection grade, no recovery could be effected from them as their case falls in category (ii), where employees were permitted to retain the excess amount, by the Full Bench judgment of this Court in Budh Ram's case (supra), is totally misplaced. The Full Bench of this Court, of which one of us ( Jasbir L.P.A.No.375 of 2010 -7- Singh, J.) was a member, while deciding the reference made to it by the Division Bench of this Court as to 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 bona fide 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, broadly categorized the cases in the following three categories:- “(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 bona fide 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 L.P.A.No.375 of 2010 -8- mistake by the authority granting the same.” While dealing with cases falling in category (i), it was held that any benefit received or obtained by an employee by reasons of fraud, misrepresentation or any other act of deception would dis-entitle him to retain the benefit which he has obtained as a result of such acts or any one of them meaning thereby that recovery could be effected from such an employee. With regard to cases falling in category (ii), it was held 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 or 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. Category (iii) were cases which did not fall in categories (i) and (ii) as the employee has not committed any mistake neither the benefit is related to any erroneous interpretation or application of the rule. It could be a case where by reason of sheer neglect of the functionary of the State Government, a payment that is undeserved and wholly uncalled for is made to the employee. It would be a case where the concerned employee can be called upon to refund the Government the undeserved payment that he has received. However, the employee is under an obligation to verify the reasons for the payment received by him and to act in a manner i.e. fair and equitable. An appropriation of payment which the employee has no reason to expect or accept would in such a case be dishonest and one who is L.P.A.No.375 of 2010 -9- dishonest cannot take shelter behind equity and, therefore, recovery could be effected from the employees who fall in this category. The Full Bench has, thus, only in category (ii) allowed the employees to retain the amount already paid to them and the same cannot be recovered from them. The case in hand, we are afraid, would not fall in the category (ii) as the benefit extended to the appellants cannot be said to be on an erroneous interpretation or application of any rule, regulation, circular and instructions but was because of the stay of the notification dated 16.5.1990 by this Court in the writ petitions preferred by the employees of the State of Haryana. The effect thereof was that operation of the notification dated 16.5.1990 stood suspended leaving notification dated 16.5.1990 to hold the field. Under those circumstances, respondent-State had no option but to grant selection grade to the appellants also, despite the fact that they had not approached this Court or obtained any stay order in their favour. Rather it would be a case where the benefit granted to the appellants is unrelated to any erroneous interpretation or application of the rule and because the operation of the notification dated 16.5.1990 had been stayed by this Court. Although, it can be said that the appellants had not contributed to the receipt of benefits extended to them by the respondents, but nevertheless the same would be not in accordance with law as they were not entitled to the said benefit. While issuing instructions dated 2.6.1989, a mistake had crept in as the parity of pay was granted to the engineers/doctors with the executive branch and the selection grade posts were also sanctioned at par with the executive branch wherein restriction to 20% of the cadre posts was not mentioned as was available to the executive branch. This error was L.P.A.No.375 of 2010 -10- corrected by issuing instructions dated 16.5.1990. The appellants were granted the benefit of instructions dated 2.6.1989 because of the stay granted by this Court and, thus, it cannot be said that the appellants were not aware of the fact that when admittedly they did not fall within 20% cadre posts, who were entitled to the selection grade, would be entitled to retain the said excess amount. They were well aware that as per instructions dated 16.5.1990, they were not entitled to the said benefit and in case these instructions dated 16.5.1990 are upheld by the Court, the appellants would have to refund the amount paid to them because of the benefit which they have received in the light of the stay order granted by this Court. The case of the appellants would fall in category (iii) as held in Budh Ram's case (supra) and, therefore, are not entitled to retain the same. The learned Single Juge has rightly relied upon the judgment of the Hon'ble Supreme Court in the case of Syed Abdul Qadir's case (supra), para 27 whereof has been reproduced therein while holding that where protracted litigation was already in progress with regard to the eligibility of the appellants to draw pay-scale of Rs.4100-5300 (selection grade), it cannot be held that the petitioners did not have the knowledge that payments received by them were in excess or at least that it was a matter of controversy. The order passed by the learned Single Judge is in accordance with law and, therefore, does not call for any interference in appeal. The contention of the counsel for the appellants, although not raised before the learned Single Judge, that the respondents are charging interest while effecting recovery from the appellants as per instructions L.P.A.No.375 of 2010 -11- dated 24.1.2001 (Annexure P-1) also cannot be sustained. As a matter of fact a perusal of the said instructions would show that the State of Haryana had decided that interest would not be charged for the past period for which the benefit has been availed of by the employees. The employees have been given an option of lump-sum payment of the recoverable amount within a period of three months from the date of issue of such recovery notice, without any interest. Alternatively, the employees have been given an option for depositing the recoverable amount in monthly instalments (not exceeding 36 in number) along with interest at the rate of 12% from the date of recovery notice till the date of payment. The interest has been further clarified to be applied following the reducing balance method. This action of the respondents is also fully justified and does not call for any interference. Finding no merit in the present appeals, the same stand dismissed. We have considered the applications for condonation of delay in filing these Appeals which vary from 177 days to 229 days but do not find any reasonable explanation or justification for condoning the same. The applications are also dismissed. A photocopy of this order be placed on the file of each connected case. ( JASBIR SINGH ) ( AUGUSTINE GEORGE MASIH ) JUDGE JUDGE July 14, 2010 poonam Whether referred to Reporters? Yes/No.