1. Recovery of annual increments by an electricity board from employees who failed to pass a mandatory departmental Hindi examination until a later date. (Para 3 , 4 , 6 )
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1999 Supreme(SC) 1403
SUPREME COURT OF INDIA
S.B.Majmudar : U.C.Banerjee
Bihar State Electricity Board
Versus
Bijay Bhadur
Case No. : 6913 of 1999, 6914 of 1999
Date of Decision : 12/1/99
Recovery of increments paid by a state authority is impermissible if the payment was made without misrepresentation by the employee, particularly when the authority selectively enforces regulations by recovering financial benefits but not withdrawing corresponding promotions.
Headnote:(A) Service Law - Recovery of Increments - Mandatory Departmental Examinations - Where a regulation stipulates that passing a specific examination is a condition precedent for the grant of annual increments and promotions, the recovery of increments already paid in error is not permissible if such payments were made without any misrepresentation on the part of the employees. (Paras 7 and 10)
(B) Article 12 of the Constitution of India - Fairness and Equity - A state authority must act with fairness and cannot maintain dual standards by seeking to recover financial benefits (increments) while simultaneously allowing administrative benefits (promotions) to stand, when both were prohibited under the same regulation. Such selective enforcement is contrary to equity, good conscience, and justice. (Para 7)
(C) Terms of Service - Unilateral Change - A unilateral change in the terms and conditions of service cannot be sustained without evidence that such changes were duly intimated to the staff. (Para 8)
Facts of the case:
Employees joined service in 1966 and were granted increments and promotions in the normal course. A regulation adopted in 1979 made passing a departmental Hindi examination a condition for increments and promotions. Despite this, the employees continued to receive increments and promotions, eventually passing the exam in 1993. The employer subsequently sought to recover the increments paid since 1979, leading to a challenge in the High Court which quashed the recovery orders.
Findings of Court:
The recovery of excess payments made without any misrepresentation by the employees is not sustainable. The employer's action of recovering increments while not withdrawing promotions granted under the same regulation constitutes an unacceptable dual standard. While the court disagreed with the High Court's observation that the amount had "become due" to the employees (as the regulation explicitly barred arrears of stopped increments), the recovery itself was held to be inequitable.
Issues: Whether a state authority is entitled to recover increments paid to employees who had not passed a mandatory departmental examination, in the absence of any misrepresentation by the employees and where other benefits under the same regulation were not withdrawn.
Ratio Decidendi: Where payments are made by a state authority without any misrepresentation by the employee, such amounts cannot be recovered retrospectively as it would be contrary to equity, good conscience, and fairness. Furthermore, a state authority cannot selectively enforce a regulation by recovering financial benefits while allowing administrative benefits to stand.
Result: Appeals dismissed.
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2. Board contends increments were conditional on passing the examination; employees argue payments were made without misrepresentation and recovery is unfair. (Para 3 , 7 )
3. The Board applied dual standards by allowing promotions while recovering increments and failed to intimate employees of the unilateral change in service conditions. (Para 7 , 8 )
4. Excess payments made by a governmental agency without misrepresentation by the employee cannot be recovered as it violates equity, good conscience, and fairness. (Para 9 , 10 )
5. Appeals dismissed; recovery orders quashed. (Para 12 )
6. Can a governmental employer recover excess salary payments made due to a mistake if the employee did not misrepresent facts?
No, payments made without any representation or misrepresentation by the employee cannot be recovered, as such recovery is contrary to equity, good conscience, and the principle of fairness. (Para 9 , 10 )
7. Is it permissible for an authority under Article 12 to selectively recover one benefit while retaining another based on the same regulation?
No, a governmental agency cannot maintain dual standards by withdrawing only one part of the benefits conferred under a resolution while ignoring the other. (Para 7 )
8. Can an employer unilaterally change service conditions without notifying the employees?
No, a unilateral change of terms of service is not permissible without evidence that proper intimation was provided to the staff. (Para 8 )
9. Is an employee entitled to arrears of increments that were stopped pending the passing of a mandatory examination?
No, if regulations specifically state that no arrears of stopped increments shall be payable, the employee cannot claim such amounts even after passing the examination. (Para 4 , 11 )
(1) LEAVE granted.
(2) THE Bihar State Electricity Board (for short "the Board") is in appeal before this Court against the judgment of the Division Bench of the Patna High Court wherein two memoranda dated 15-2-1996 and 1-4-1996 issued by the Executive Engineer of the Board stand set aside and quashed.
(3) ON the factual score it appears that both the writ petitions CWJCs Nos, 4576 and 1007 of 1997 contained a challenge to the above-noted two office orders dated 15-2-1996 and 1-4-1996. The writ petitioners, respondents herein, assert that both the writ petitioners have been given yearly increments based on service records without any misrepresentation on their part and that they have passed the Hindi Noting and Drafting Examination in the year 1993. The Board, however, on the basis of the above-noted two memoranda had ordered for recovery of diverse sums of money paid to them as and by way of increments on the ground that they did not pass the Hindi Noting and Drafting Examination at the relevant time which was a condition precedent for the grant of annual increment in terms of the policy decision of the Board.
(4) BE it noted that the Board by its Resolution No. 537 dated 16-7-1979 adopted the Bihar Government Service (Hindi Examination) Regulation, 1968 and made it applicable to the Board employees. Regulations 7 and 8 are set out hereinbelow:
"7. Such government servants, who have to pass the Hindi Reading-Writing Examination in Devnagari script or Hindi Noting and Drafting Examination in Devnagari script or both the examinations, shall neither be given increment nor be confirmed nor should they be allowed to cross the efficiency bar till such time as they pass the required Hindi examination or examinations.
8. Stoppage of increment shall have non-cumulative effect. The government servant concerned after passing the required examination or examinations, shall draw pay from the following date of that last examination at which he appeared and passed, at that stage of the timescale to which he shall be entitled, if his increment (increments) had not been stopped. No arrears of the stopped increment shall be payable."
(5) EVEN a cursory look at the above-noted two Regulations would depict the mandatory requirements of the Regulation that persons not being able to pass the Hindi Noting and Drafting Examination in Devnagari script or the Hindi Reading and Writing Examination in Devnagari script or both the examinations shall not be given increments or any promotion nor be allowed to cross the efficiency bar till such time the employees passed such examination or examinations and the entitlement to increment or promotion or crossing of the efficiency bar would commence only after passing of the required examination or examinations and not at any time prior thereto. It has been specifically stated that no arrears of the stopped increments shall be payable.
(6) ON the further factual score it appears that the writ petitioner, Shri Bashishtha Narain Prasad and another being respondents herein, joined the services of the Board in or about the year 1966 as Accounts Assistants and in due course of time they were, as a matter of fact, being paid in the normal course of events their salaries together with all due increments and also promotions in the scale and the grade. Resolution No. 537 dated 16-7-1979 as noted above was adopted by the Board making it necessary for the employees to pass the departmental examination of Hindi Noting and Drafting but in spite thereof all due promotions and increments were allowed to the petitioners and it is on this score that the petitioners assert that only in the year 1993 they came to know about the requirement and as such appeared in the examination in December 1993 wherein the petitioners were declared successful. Incidentally the Board also by Resolution No. 119 dated 15-3-1996 laid down that all employees of the Board excepting Class IV employees sh
