IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. C.W.P.(T)No.:7965 of 2008. Decided on: 07.05.2009. __________________________________________________ Shri Jaswant Singh Mukker … Petitioner. Versus The State of H.P. and others … Respondents. ___________________________________________________________ Coram: Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. For the Petitioner : Mr. Ashwani Kumar Sharma, Advocate. For Respondents No. 1&2 : Mr. R.K. Sharma, Sr. Addl. A.G. with Mr. Rajinder Dogra, Addl. A.G. and Mr. Vikas Rathore, Dy.A.G. For Respondent No.3 : Mr. Lokinder Thakur, Advocate. _________________________________________________________ Rajiv Sharma, Judge. The petitioner was promoted as Health Educator vide office order dated 10.2.1984. His pay was fixed vide Annexure A-1 dated 28.10.1988 at Rs. 1040/- with the next date of increment on 1.11.1987. He has drawn the salary on the basis of Annexure A-1 for a period of eight years. His service book was verified by the Accountant General (Audit) vide Annexures A-2 and A-3. However, while deciding the case of the petitioner for pension, his pay vide letter dated 5.5.1997 was re- 1 Whether reporters of the local papers may be allowed to see the judgment?Yes. 2 fixed at Rs. 940/- at a later stage with effect from 1.6.1986 instead of Rs. 1040/-. His pay stood reduced to Rs. 2710/- from Rs. 2890/-. In fact, recovery of Rs. 26,942/- was also directed to be effected from the Death-cum- Retirement Gratuity of the petitioner. The case of the State on the basis of the reply filed is that the pay of the petitioner was wrongly fixed and the same has been rectified in the year 1997. Mr. Ashwani Kumar Sharma, Advocate has strenuously argued that the pay of his client was fixed in accordance with law vide Annexure A-1 with effect from 1.6.1986 in the pay scale of Rs. 1040/-. He then argued that at the time of retirement, the petitioner’s salary was Rs. 2890/-. However, on the basis of issuance of Annexure A-4, it stood reduced to Rs. 2710/-. He lastly contended that no notice was issued to his client before effecting recovery of Rs. 26,942/- from the Death-cum- Retirement Gratuity of the petitioner. The learned Senior Additional Advocate General has strenuously argued that pay of the petitioner was wrongly fixed and the same was rectified which led to the reduction of the salary and recovery of Rs. 26,942/- from the Death-cum-Retirement Gratuity of the petitioner. 3 I have heard the parties and gone through the record carefully. The pay of the petitioner was fixed in the pay scale of Rs. 1040/-. The next increment was due on 1.11.1987. His basic pay at the time of retirement was Rs. 2890/-. His retiral benefits were calculated on the basis of basic pay of Rs. 2890/-. However, vide Annexure A-4, the State has decided to re-fix the salary of the petitioner at a lower scale of Rs. 940/- with effect from 1.1.1986 instead of Rs. 1040/-. The effect of re-fixing the pay of the petitioner in the year 1997 was that his basic pay was reduced to Rs. 2710/-. The respondents have also deducted a sum of Rs. 26,942/- from the Death-cum- Retirement Gratuity of the petitioner. Mr. Ashwani Kumar Sharma has strenuously argued that the petitioner has not been issued any show cause notice before issuance of Annexure A-4. This position has not been refuted by the learned Senior Additional Advocate General. The Court is of the considered opinion that before reducing the salary of the petitioner, he was required to be heard. The petitioner has been visited with civil consequences by the impugned action of the respondents since his Death-cum- 4 Retirement Gratuity has been reduced and a sum of Rs. 26,942/- has been deducted. 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 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:- 5 "...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 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. 6 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 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 the present case, the petitioner has neither misled nor misrepresented nor played any fraud upon the respondent-State at the time of his re-fixation vide Annexure A-1. It was the conscience 7 decision of the State in granting the pay scale of Rs. 1040/- with effect from 1.11.1986. The petitioner has drawn higher salary from 1988 till 1997. His retiral benefits have been calculated, as noticed above, on the basis of his basic pay of Rs. 2890/-. The same were reduced by re-fixing his basic pay to Rs. 2710/-. In these circumstances, the respondent could not deduct a sum of Rs. 26,942/- from the Death-cum-Retirement Gratuity 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 ensure, principles of natural justice are 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.” Accordingly, the writ petition is allowed. Annexure A-4 dated 5.5.1997 is quashed and set aside. In normal circumstances, the liberty was required to be reserved 8 with the respondents to hear the petitioner and to pass appropriate orders. However, in the present case, the petitioner has retired after attaining the age of superannuation. A sum of Rs. 26,942/- has been deducted from his Death-cum-Retirement Gratuity. His pay has also been reduced on the basis of Annexure A-4. In these circumstances, it would be just, fair and proper to close this matter finally in order to mitigate the hardship which the petitioner might face if the matter is permitted to be re-opened. It is further directed that the petitioner’s pension shall be calculated on the basis of basic pay of Rs. 2890/- and a sum of Rs. 26,942/- wrongly deducted is directed to be released to the petitioner within a period of six weeks from today. This amount shall carry interest at the rate of nine per cent per annum. No costs. (Rajiv Sharma), J. May 7, 2009. (cr)