1. This application has been preferred by the State of Jharkhand against the judgment dated 21st June, 2005, passed by the learned Single Judge in W.P.(S) No. 6717 of 2004, whereby and whereunder, the learned Single Judge while set aside Office Order .No. 195/2004, communicated vide Memo No. 669 dated 26th May, 2004, held that the respondents cannot recover any amount from the petitioners gratuity and thereby, directed to refund the amount, already recovered, with statutory interest and on failure, to pay compensatory interest at the rate of 10% per annum.

2. The question, requires to be determined in this case, is whether the amount, if any, paid in excess, due to calculation mistake, can be recovered from pension or gratuity of a Government employee? If the aforesaid question is answered in affirmative and in favour of the State, then the following question will arise (a) who is the competent authority to recover/adjust such amount? (b) what will be the procedure to recover/adjust such amount? and (c) whether there is any period of limitation to recover such dues?

3. Brief facts of the case are that the appellant joined the services of the then State of Bihar as Constable (O), Wireless, on 16th August, 1969 and promoted to the higher post of Assistant Sub Inspector of Police in the year, 1974 and then to the next higher post of Sub Inspector of Police with effect from 1st August, 1992. His service was placed under the State of Jharkhand in the year, 2001 (after reorganization of the State) and on attaining the age of 58 years, he superannuated on 2th February, 2004.

4. After retirement, the 4th respondents, Superintendent of Police (Arms), Jharkhand, Ranchi, issued impugned Office Order No. 195/2004, circulated vide Memo No.669 dated 26th May, 2004 and ordered to recover a sum of Rs. 88,893/- from the gratuity of the appellant, denying/disapproving the reducible personal pay, which was paid to him during his service period, on the basis of fixation of pay, made by the department. The respondents also reduced his pension on the plea of the said impugned order and fixed his monthly amount of pension at a reduced rate of Rs. 8300/- per month.

5. Learned Single Judge having noticed the rival submissions and taking into consideration the order of promotion of the appellant and the fact that his pay was fixed by the department, held that there was no misrepresentation on the part of the appellant and giving reference to one or other decision of this Court and the Supreme Court, set aside the impugned Office Order No. 195/2004, circulated vide Memo No. 669 dated 26th May, 2004. The said order was held to be arbitrary and illegal and the respondents were directed to refund the amount, deducted from the appellants gratuity, with statutory interest within four months and, on failure, compensatory interest was also imposed.

6. Learned Government Advocate, supporting the impugned order, submitted that an order of wrong fixation of pay can not create any right in favour of the appellant and the payment, made by mistake or illegally, can be recovered from pension and/or gratuity. He relied on the decisions of this Court and Supreme Court, as discussed hereunder:

In the case of Union of India v. Sujatha Veda Chalam , the request by an employee for transfer was accepted on the condition that the employee should technically resign from the post, which he was holding and should join as direct recruit to lower post on transfer. The Supreme Court held that the employee having accepted the condition of transfer is entitled to pay scale as applicable to the lower post. The order for recovery of excess pay, which was recently paid to the employee, was held to be illegal. In the case of Union of India v. Rakesh Kumar reported in (2001)4 SCC 301 the Supreme Court noticed that the departmental authority on a wrong interpretation of rule granted pensionery benefits to an ineligible employee. On that basis, the High Court directed the departmen