Registrar Coop. Societies Haryana & Ors vs Israil Khan & Ors

2. The respondents are employees of Ferozepur Jhirka Co-operative Credit & Service Society Limited, a primary 2 co-operative society in the State of Haryana. The service conditions of employees of such societies were governed by the Primary Co-operative Credit & Service Society Staff Service Rules, 1992 (for short `the Rules'). The said Rules classified the Societies according to their business turnover and prescribed the corresponding staffing pattern. Rule 9 of the said Rules provided that all categories of employees were entitled to a consolidated salary with annual increments as provided therein. The same post carried different consolidated pay depending upon the size/turnover of the Society. The Registrar of co-operative societies, and not the Managing Committees of the primary co-operative societies, was empowered to effect revisions in pay.

3. Respondents and other employees of the said society submitted representations for regular pay scales, instead of consolidated pay. The Managing Committee of the said society passed a resolution extending the benefit of regular pay scale to the respondents with retrospective effect from 1.1.1996. As a consequence, instead of a consolidated salary of Rs.1200/- and Rs. 800/- respectively to which they were entitled, the first respondent and second respondent were paid salary at the rate of Rs.3050/- and Rs.2550/- per month. As no funds 3 were sanctioned or available to pay the arrears on the basis of such higher pay, the Managing Committee diverted the funds made available by the State Government (through the controlling Bank) for disbursement of loans to farmers, to pay arrears of Rs.47891/- to first Respondent and Rs.42300/- to second respondent on 27.2.1999. When this came to the notice of the office of the Registrar of Co-operative Societies, the Deputy Registrar of Co- operative Societies, Gurgaon made an order dated 2.4.2002 rescinding the resolution dated 1.3.1999 of the Managing Committee, in exercise of powers conferred under Section 27 of the Haryana Co-operative Societies Act (for short `the Act') and directed the employer Society to recover back the excess payment made to the employees. The Society gave effect to the said direction by passing a resolution dated 22.3.2002 directing recovery of the excess payments from the respondents. Feeling aggrieved, the employees filed the appeals before the Registrar, Co- operative Societies, Haryana. The Registrar by a detailed order rejected the said appeals by order dated 22.8.2002.

(emphasis supplied) 6 What is important is recovery of excess payments from employees is refused only where the excess payment is made by the employer by applying a wrong method or principle for calculating the pay/allowance, or on a particular interpretation of the applicable rules which is subsequently found to be erroneous. But where the excess payment is made as a result of any misrepresentation, fraud or collusion, courts will not use their discretion to deny the right to recover the excess payment.

8. Therefore, the appeals are allowed, the impugned orders of the High Court holding that the illegal payments to the respondents need not be refunded to them are set aside. However, having regard to the hardship put forth by the employees, the appellants are directed to calculate and recover the excess payment in twenty four monthly installments.

.........................................................J [R. V. Raveendran] ......................................................J [P. Sathasivam] New Delhi;

October 8, 2009