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 will be caused if recovery is ordered.

ORDER :

1. The petitioners are either serving, retired government servants or their successors and since the recovery has been ordered to be effected from them or their predecessors, they have approached this Court for quashing of such recoveries.

2. When these cases were taken up for hearing, the parties were ad idem that before proceeding to decide each case individually, the Court should lay down certain broad guidelines under which recoveries by the employers would be permissible/impermissible in law.

3. The principles for allowing recovery of over payments are well laid down through series of judgments of the Hon’ble Supreme Court. The earlier view that such recoveries should not be permitted unless over payment can be attributed to fraud or misrepresentation on part of the employee, has undergone major changes.

4. In case of Col. B.J. Akkara (Retd.) vs. Government of India and Others, (2006) 11 SCC 709, it was observed as under:

“28. Such relief, restraining recovery back of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion, to relieve the employees, from the hardship that will be caused if recovery is implemented. A Government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or where the error is detected or corrected within a short time of wrong payment, Courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery.”

5. Later in case of Syed Abdul Qadir vs. State of Bihar, (2009) 3 SCC 475, the Hon’ble Supreme Court observed as under:

“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.”

6. Both these decisions in cases of Col. B.J. Akkara (Retd.) and Syed Abdul Qadir (supra), were well considered by the Hon’ble Supreme Court in case of Chandi Prasad Uniyal and Others vs. State of Uttrakahand and Others, (2012) 8 SCC 417, wherein it was observed as under:

“14. We are concerned with the excess payment of public money which is often described as “tax payers money” which belongs neither to the officers who have effected over-payment nor that of the recipients. We fail to see why the concept of fraud or misrepresentation is being brought in such situations. Question to be asked is whether excess money has been paid or not may be due to a bona fide mistake. Possibly, effecting excess payment of public money by Government office