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2026 Supreme(Guj) 1221

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
NIRZAR S. DESAI, J.
Pravinkumar Gordhandas Patel - Petitioner
Versus
State of Gujarat & Ors. - Respondents
R/Special Civil Application No.4740 of 2023 With R/Special Civil Application No.4743 of 2023 With R/Special Civil Application No.4744 of 2023 With R/Special Civil Application No.4745 of 2023 With R/Special Civil Application No.4746 of 2023 With R/Special Civil Application No.4747 of 2023 With R/Special Civil Application No.4748 of 2023 With R/Special Civil Application No.4749 of 2023 With R/Special Civil Application No.4750 of 2023 With R/Special Civil Application No.4751 of 2023 With R/Special Civil Application No.4752 of 2023
Decided On : 06-04-2026

Advocates Appeared:
For the Petitioners: Mr. Gaurav Chudasama, Mr. J.V. Padhiyar.
For the Respondents: Mr. Henil Shah, Government Pleader, Mr. R.B. Thakor.

Recovery of excess emoluments paid due to an employer's error is impermissible if the employee did not induce the payment through fraud or misrepresentation. Judicial discretion prohibits such recovery to prevent undue hardship and address the inherent inequality in bargaining power, especially concerning lower-tier service employees.

Headnote:(A) Service Law - Recovery of excess payment - Recovery of payment made to an employee due to the employer's error is impermissible in cases where there is no misrepresentation or fraud on the part of the employee. (Paras 8-8.4)

(B) Equity and Hardship - Principles of equity and judicial discretion protect employees, especially those in lower-tier service groups, from the hardship caused by recovery of amounts paid over a long duration. (Paras 8.3, 8.4.1)

(C) Inequality of Bargaining Power - Standard undertakings to refund excess payments, signed in a routine manner without genuine choice, do not justify recovery where equality of bargaining power was absent. (Paras 8.5-8.7)

Facts of the case:
Employees were granted higher pay scales based on administrative orders. After more than a decade of receiving these benefits, the employer issued orders to revise the pay structure and recover alleged excess payments. The employees challenged the recovery, maintaining that the initial grant of higher pay was not obtained through fraud or misrepresentation.

Findings of Court:
The absence of misrepresentation or fraud by the employees rendered the recovery demand unsustainable. The court held that the financial burden of recovery would cause undue hardship and violate the principle of equity, regardless of any earlier signed undertaking.

Issues: The main issues were whether recovery of excess salary payments is permissible in the absence of employee fraud, and whether standard refund undertakings signed under unequal bargaining conditions permit such recovery.

Ratio Decidendi: Recovery of excess payment is prohibited when the error lies with the employer's interpretation or calculation, provided the recipient was not responsible for the mistake. Equitable considerations and the protection of lower-tier employees from financial hardship override the employer's right to recover, and standard forms regarding refunds cannot be enforced when they are inherently unreasonable or signed under a disadvantageous position.

Result: Petitions are partially allowed to the extent that the order for recovery of excess amounts is quashed and set aside.

Table of Content
1. factual background involving the withdrawal of higher pay scales and stay of recovery. (Para 1 , 2 , 3 , 4)
2. petitioners' contention that retrospective recovery of excess salary is impermissible without fraud or misrepresentation. (Para 5)
3. respondents' argument asserting the right to correct salary calculation errors and recover excess payments. (Para 6 , 7)
4. recovery from class iii/iv employees is barred when the error resulted from the employer's misinterpretation. (Para 8)
5. final order quashing recovery proceedings while allowing pay revisions to persist. (Para 9)

JUDGMENT :

1. Heard, learned Advocate, Mr. Chudasama, appearing for the petitioners, learned AGP, Mr. Shah, and learned Advocate, Mr. Thakor, appearing for the respective Respondents in these matters.

2. Considering the fact that the issue involved in these matters is identical, with the consent of the learned Advocates for the parties, all these matters are taken-up for hearing and final disposal, today. Hence, Rule. Learned AGP, Mr. Shah, and learned Advocate, Mr. Thakor, waive service for the respective Respondents.

3. For the sake of convenience, as the facts of all these matters are more or less similar, Special Civil Application No. 4740 of 2023 is treated as the lead matter and the facts are drawn, there from and the learned Advocates for the parties made their submissions in respect of facts of that petitioner, as the legal point involved in these petition is the same.

4. The facts, as stated in Special Civil Application No. 4740 of 2023, are as under;

The petitioner, therein, was appointed as an Assistant Teacher in Primary Section in Smt. M.U. Pethani Adarsh Primary School, Taluka: Deesa, District: Banaskantha, i.e. Respondent No.6-school and the same was done on receiving approval of Respondent Nos. 4 and 5 on 15.06.1989. Thereafter, in view of the Government Resolution dated 14.08.1998, which provided for the First Higher Pay Scale to the employees, who had no promotional post and therefore, in view of the less chance of promotion, on completion of 9 years’ service an employee was held to be entitled to get the First Higher Pay Scale. Hence, the Respondents, vide order dated 22.03.1999, granted the First Higher Pay Scale to the petitioner, as the petitioner had completed 9 years’ service.

4.1 Thereafter, as per GR dated 02.07.2007, as the petitioner had completed 20 years’ of service, he was granted the Second Higher Pay Scales with effect from 15.06.2009 and thereafter, the petitioner was being paid the salary, accordingly. The aforesaid fact was also entered into the Service Book of the petitioner and the petitioner continued to get the Second Higher Pay Scales for the period of about 14 years and then suddenly, Respondent No.3 issued an order dated 01.03.2023 to the Principals of as many as eight schools of the Banaskantha District, whereby, the benefit of grant of the Higher Pay Scale was withdrawn and the pay scale of the petitioner was revised along with the grade pay. The schools were also directed to revise the pay-scale of the petitioner, as per the entitlement, and to refund the excess amount received by the petitioner by April, 2023.

4.2 The petitioners have challenged the aforesaid order by way of the present petitions and the Coordinate Bench of this Court vide order dated 17.03.2023, by relying upon the decision of the Hon’ble Apex Court in the case of ‘State of Punjab & Others Vs. Rafiq Masih & Others’, reported in (2015) 4 SCC 334, stayed the recovery proceedings, till further orders. All the petitioners have been enjoying the aforesaid protection, whereby, recovery against the petitioners is stayed.

5. However, according to learned Advocate, Mr. Chudasama, at present, the pay-scale of all the petitioners have been revised and they are being paid less, than, what they were getting earlier, pursuant to the order dated 22.03.1999 and the order of 2009, whereby, the petitioners were granted the First and the Second Higher Pa

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