IMPORTANT POINT
There is no ‘principle’ that any excess payment to employees should not be recovered back by the employer.

ORDER

R.V.Raveendran, J.—

These appeals raise a common issue relating to recovery of unauthorised emoluments paid to employees of co-operative societies. For convenience, we will refer to the facts in Civil Appeal No.3668/2007.

2. The respondents are employees of Ferozepur Jhirka Co-operative Credit & Service Society Limited, a primary 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 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.

4. The employees challenged the said order before the High Court. The High Court disposed of the said writ petition by the impugned order dated 20.1.2004 wherein it held that the resolution of the Managing Committee extending the benefit of regular scale of pay and payment of arrears was illegal. However, the High Court was not inclined to direct recovery of the excess amount illegally paid by extending the benefit of regular pay scales. The said judgment is challenged in this appeal.

The connected appeals relate to similar payments to employees of other primary co-operative societies and involve the same issue.

5. The appellants contend that the resolutions of the Managing Committees directing payment of salary by extending the benefit of regular pay scales was in violation of the Rules and that such resolutions were a result of the collusion between the concerned employees and the respective Managing Committees and therefore the employees are liable to refund the same. They further contend that the High Court, having held that the employees were not entitled to the said benefit, committed an error in refusing to direct refund thereof. On the other hand, the respondents contended that having regard to the decisions of this Court