IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA CWP(T) No. 2850/2008 (OA-D-66/94). Reserved on : 12.05.2009. Date of Decision: 19.6.2009. Girdhari Lal Petitioner. Versus State of H.P. and Another. Respondents. Coram: The Hon’ble Mr. Justice Rajiv Sharma, J. Whether approved for reporting7? Yes. For the petitioner : Mr. Ranjan Sharma, Advocate Vice Mr. T.C. Rana, Advocate. For respondent No. 1 : Mr. R.K. Sharma, Senior Additional Advocate General with Mr. Rajinder Dogra, Additional Advocate General and Mr. Vikas Rathore, Deputy, Advocate General. For respondent No. 2 : Mr. G.D. Sharma, Advocate. ---------------------------------------------------------------------------- Rajiv Sharma, J. The petitioner was promoted as Assistant on 26.12.1984 on adhoc basis. He was subsequently regularized w.e.f. 25.10.1986 after due consideration of his eligibility etc. as prescribed in the service rules. The post of Assistant was re-designated as Senior Assistant in the revised pay scale of Rs.1800-3200 w.e.f. 1.1.1986. His pay was fixed in the revised pay scale of Rs.1800- 3200 vide office order dated 3.11.1990. However, vide Whether the reporters of Local Papers are allowed to see the Judgment? Yes. : 2 : office order dated 9.2.1994/19.2.1994 issued in pursuance to the H.P. Government Notification dated 21.12.1991, the pay of the petitioner was re-fixed under F.R.-35 in the revised pay scale w.e.f. 1.1.1986. Mr. Ranjan Sharma, Advocate has strenuously argued that the impugned Annexure A-1 has been issued without following the principles of natural justice. He then contended that the petitioner has neither misled nor misrepresented at the time of issuance of letter dated 3.11.1990, whereby the post of Assistant was re- designated as Senior Assistant and he was placed in the pay scale of Rs.1800-3200 w.e.f. 1.1.1986. He lastly contended that Annexure A-2 dated 21st December, 1991 could not be applied retrospectively to destroy the acquired and vested rights of the petitioner and similarly situate persons. The learned Senior Additional Advocate General and Mr. G.D. Sharma, learned counsel have supported the issuance of Annexure A-1. They also contended that the decision has been taken vide office memorandum dated 21st December, 1991 on the basis of two Notifications issued by the Central Government dated 18.7.1986 and 29.7.1987. I have heard the parties and perused the record carefully. : 3 : A conscious decision has been taken by the Board to re-designate the post of Assistant as Senior Assistant on 3rd November, 1990. His pay was fixed at Rs.1800-3200 w.e.f. 1.1.1986. However, vide letter dated 9.2.1994/19.2.1994, his pay was again re-fixed under F.R. 35 w.e.f. 1.1.1986. The impact of issuance of this office order was that the pay of the petitioner was drastically reduced. The recoveries were to be effected from the salary of the petitioner after the approval of the Board. He was required to be heard before issuance of office order dated 9.2.1994/ 19.2.1994. He has been visited with civil and evil consequences as his pay stood reduced. The petitioner has neither misled nor misrepresented the facts to the respondent –Board at the time of his re-fixation in the pay scale of Rs.1800-3200 w.e.f. 1.1.1986 vide letter dated 3.11.1990. He has not played any fraud upon the authorities. 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 : 4 : required to be followed. Their Lordships have held as under: “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.” 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 : 5 : Resource Development, Government of Bihar, wanted to apply the unamended 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 nonexistent 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 : 6 : 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 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 : 7 : 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. 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 : 8 : the fitness of things that the amount that has been recovered from the teachers should be refunded to them.” The matter is required to be considered from another angle. The petitioner has been granted the pay scale of Rs.1800-3200 after the re-designation of the post of Assistant as Senior Assistant w.e.f. 1.1.1986. This was done vide letter dated 3.11.1990. However, the pay of the petitioner has been re-fixed on the basis of letter dated 21.12.1991. The letter dated 21.12.1991 could not be applied retrospectively to destroy the vested rights of the petitioner acquired on the basis of letter dated 3.11.1990. The letter dated 21.12.1991 has been issued on the basis of instructions dated 18.7.1986 and 29.7.1987 issued by the Central Government. However, a clarification was issued by the Central Government on 22nd October, 1990. This clarification has not been taken into consideration by the State Government while issuing Notification dated 21.12.1991. The petitioner, as per reply filed by the respondent-Board, was promoted after he fulfilled the eligibility criteria as per the Recruitment and Promotion Rules framed by the Board. In fact, the Board has also not taken any decision on the recoveries as per the reply filed by the Board. : 9 : The petitioner has also claimed annual increments and proficiency step up after completion of requisite number of years. The Board in its reply has clearly stated that the matter is under consideration of the Board. The reply was filed by the Board on 30th March, 1994. In view of the observations made hereinabove, it is held that the action of the Board to re- fix the salary of the petitioner on the basis of F.R.-35 is in violation of the principles of natural justice. The petitioner was required to be heard before issuance of office order dated 9.2.1994/ 19.2.1994. The office memorandum dated 21.12.1991 could not be applied retrospectively. The clarification dated 22nd October, 1990 issued by the Central Government has not been taken into consideration by the State Government while issuing Notification dated 21.12.1991. Accordingly, the writ petition is allowed. Annexure A/1 dated 9.2.1994/19.2.1994 is quashed and set aside. The respondents are restrained from effecting recoveries from the salary of the petitioner. However, the liberty is reserved to the respondent No. 2 to proceed with the matter in accordance with law. The Board is : 10 : directed to consider and grant the petitioner annual increments/proficiency increments by taking a decision, as undertaken in the reply within a period of eight weeks. No costs. (Rajiv Sharma) Judge. June 19th, 2009. Bhupender