Recovery of overpayments from employees is impermissible if made after prolonged periods and without timely challenges by the employer.

J U D G M E N T

The petitioners were appointed as Principals in respect of the self financing institutions under the MG University. They were contractual employees. However, the University decided to give them the scale of pay applicable to the teachers of the University. Thereafter, the University took a decision by Ext.P11 to revoke the decision to grant scale of pay, and to recover the excess amount. This is how the petitioners approached this Court.

2. This writ petition was filed on 24.01.2011. An interim order was granted by this Court on 25.01.2011. The petitioners, on the strength of the interim order, were enjoying the scale of pay. Admittedly, the petitioners were terminated from service as the University decided to handover the self financing institutions to a newly formed society called Centre for Professional and Advanced Studies. Anyway, that is a matter to be separately W.P.(C) No.2489/2011 2 challenged.

3. Learned Standing Counsel for the University submitted that except the 3rd petitioner, petitioners 1 and 2 are not qualified to enjoy the scale of pay as they do not possess the necessary qualification.

4. Learned Senior Counsel appearing for the petitioners submitted that the petitioners are qualified.

5. Anyhow, the question with regard to qualification does not arise for consideration in the writ petition in the sense that the petitioners have already been terminated. InState of Punjab and others vs. Rafiq Masih (White Washer) and others ( (2015) 4 SCC 334 ), in paragraph 18, the Supreme Court illustrated the situations in which recovery from an employee would be impermissible in law. Paragraph 18 reads thus:

“18. It is not possible to postulate all situations of hardship which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to hereinabove, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, would be impermissible in law:

W.P.(C) No.2489/2011 3 (i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).

(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.

(iii) Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.

(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.

(v) In any other case, where the court arrives at the 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 the employer's right to recover”.

6. This Court is of the view that even if the petitioners are not qualified, such petitioners would fall within category (iii) and (iv) for two reasons. One is that the petitioners were enjoying the scale of pay for the last several years and the University has not chosen to vacate the interim order. It is to be noted that the W.P.(C) No.2489/2011 4 University has first time filed the counter affidavit on 13.11.2017. Secondly, in the impugned order, the reason for revocation of the scale of pay given to the petitioners was on the ground that the petitioners were contractual employees and they were not entitled for such scale of pay. It will be too iniquitous to recover the amount from the petitioners at this distance of time. This Court is of the view that no recovery shall be effected from the petitioners.

This writ petition is accordingly disposed of quashing Ext.P11. However, it is made clear that the issue regarding termination will have to be agitated separately and that issue is left open.