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IN THE HIGH COURT OF DELHI AT NEW DELHI
JYOTI SINGH, J.
Madan Mohan Sharma and Others - Petitioners
Versus
State Trading Corporation of India Ltd. and Another - Respondents
W.P.(C) No. 1564 of 2019 & CM Appl. No. 7230 of 2019 & 9738 of 2021
Decided On : 25-04-2023
Recovery of Excess Payments - Senior Officials - - Electricity/Attendant/Gardener/Entertainment Charges - The court quashed the demand letters seeking recovery of amounts paid to the petitioners as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices. The court held that the recoveries were impermissible as they were sought to be made from retired employees and when the excess payment had been made for a period in excess of five years, prior to the issue of recovery order. The recovery was deemed harsh, arbitrary, and iniquitous, and therefore, the demand letters were quashed and set aside with a direction that no recovery shall be effected from the petitioners.
Fact of the Case:
The petitioners, senior officials at the State Trading Corporation of India Ltd., sought to quash demand letters for recovery of amounts paid to them as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices. The petitioners contended that the payments were legitimate reimbursements made by the corporation for functional purposes and were not in contravention of the Department of Public Enterprises (DPE) Guidelines.
Finding of the Court:
The court found that the recoveries were impermissible as they were sought to be made from retired employees and when the excess payment had been made for a period in excess of five years, prior to the issue of recovery order. The recovery was deemed harsh, arbitrary, and iniquitous, and therefore, the demand letters were quashed and set aside with a direction that no recovery shall be effected from the petitioners.
Issues: The main issue was whether the demand letters seeking recovery of amounts paid to the petitioners as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices were valid.
Ratio Decidendi: The court held that the recoveries were impermissible as they were sought to be made from retired employees and when the excess payment had been made for a period in excess of five years, prior to the issue of recovery order. The recovery was deemed harsh, arbitrary, and iniquitous, and therefore, the demand letters were quashed and set aside with a direction that no recovery shall be effected from the petitioners.
Final Decision: The court quashed the demand letters seeking recovery of amounts paid to the petitioners as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices. The recovery was deemed impermissible and the court directed that no recovery shall be effected from the petitioners. The court also directed that amounts deducted during the pendency of the writ petition shall be refunded with interest.
JUDGMENT :
Jyoti Singh, J.
By this writ petition, Petitioners seek a writ of certiorari quashing the demand letters, all dated 25.04.2018, issued to them for recovery of amounts paid to them prior to their retirements as reimbursements towards electricity/attendant/gardener and entertainment charges/expenses towards maintaining their respective residential offices.
2. There are four Petitioners in the present writ petition and their respective dates of appointments and retirements as well as dates of demand letters and amounts sought to be recovered thereunder are given hereinbelow, in a tabular form:—
| Sl. No. | Petitioner's name | Date of Appointment | Date of Retirement | Date and numbers of Demand Letters | Amounts |
| 1. | Madan Mohan Sharma | 30.07.2008 | 30.06.2014 | 25.04.2018 (STC/CO/PER/IR/02500(VOL-III)/2017/21/2018) | Rs.8,76,611/- |
| 2. | Naresh Kumar Mathur | 22.07.2005 | 30.11.2012 | 25.04.2018 (STC/CO/PER/IR/02500(VOL-III)/2017/23/2018) | Rs.6,59,029/- |
| 3. | Nirmal Narendra Kumar | 01.08.2006 | 11.12.2011 | 25.04.2018 (STC/CO/PER/IR/02500(VOL-III)/2017/20/2018) | Rs.4,30,704/- |
| 4. | Sujoy Sonkar Roy Burman | 01.05.2007 | 30.04.2012 | 25.04.2018 (STC/CO/PER/IR/02500(VOL-III)/2017/19/2018) | Rs.4,79,311/- |
3. Petitioners were working at Board Level positions with Respondent No. 1/The State Trading Corporation of India Ltd. (hereinafter referred to as ‘STC’). Petitioner No. 1 worked as Director (Personnel) from 30.07.2008 to 30.06.2014, Petitioner No. 2 as Director (Marketing) from 22.07.2005 to 08.02.2009 and as Chairman and Managing Director from 09.02.2009 till 30.11.2012, Petitioner No. 3 as Director (Finance) from 01.08.2006 to 11.12.2011 and Petitioner No. 4 worked as Director (Marketing) from 01.05.2007 to 30.04.2012. STC is a Company wholly owned by the Government of India and under the administrative control of Respondent No. 2 i.e. Department of Commerce, Ministry of Commerce and Industry, Government of India.
4. Shorn of unnecessary details, the facts necessary and relevant are that STC approved certain facilities and allowances to Senior Officials such as CMD/Directors/CVO/CGMs for maintaining residential offices w.e.f. 01.04.2005 after the decision was taken in a Board Meeting. These included reimbursements of : (a) electricity charges; (b) attendant charges; (c) gardener allowance; and (d) entertainment expenses.
5. Petitioners being senior officials and holding Board level positions, received the above benefits in the form of allowances, for maintaining the offices at their residences. An Office Memorandum was issued by Department of Public Enterprises (DPE) on 26.11.2008 for revision of pay scales of Board Level and below Board Level executives and non-unionised Supervisors in Central Public Sector Enterprises (CPSEs) w.e.f. 01.01.2007. The O.M. specifically provided that the allowances and perks admissible to different categories of executives were subject to maximum ceiling of 50% of the Basic Pay.
6. On 23.12.2010, a circular was issued by STC in respect of Cafeteria-based perks and allowances for Board Level and below Board Level executive posts and as per the Petitioners although there was a mention of list of allowances to be withdrawn w.e.f. 01.12.2008, it did not include the earlier allowances payable from 01.04.2005. Petitioners were in receipt of the allowances till the time of their respective retirements. However, subsequently, show-cause notices, all dated 27.06.2017, were issued by STC to the Petitioners, inter alia, claiming recovery of the alleged wrongful/excess payments made to them during their service on account of the allowances paid towards maintenance of residential offices.
7. Respondent No. 2 issued a letter dated 09.05.2017 directing STC to recover the alleged excess/wrongful payments stating that the payments were in contravention of the DPE Guidelines. Petitioners r
Point of Law : 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 wi....
Recoveries from retired employees based on erroneous salary payments are impermissible, emphasizing equitable treatment and judicial discretion in enforcing employee rights.
Recovery of excess payments from employees without their fault violates principles of equity and fairness, especially when recovery occurs post-retirement and after a significant period.
Recovery of monetary benefits wrongly extended to employees can only be interfered with in cases where such recovery would result in a hardship of a nature that far outweighs the equitable balance of....
Recovery from retired employees is impermissible when excess payments were made without misrepresentation, as per established legal precedents.
Where court arrives at conclusion, that recovery if made from the employee, would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of employer's righ....
No disciplinary proceedings are pending against the petitioner. Under such circumstances, withholding of retirement benefits under the guise of the impugned Memo is unjust, arbitrary.
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