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SUPREME COURT OF INDIA
Pamidighantam Sri Narasimha, Prashant Kumar Mishra, JJ.
Jogeswar Sahoo & Ors. – Appellants
Versus
The District Judge, Cuttack & Ors. – Respondents
Civil Appeal No(s). 4989 of 2025 (Arising out of SLP(C) No(s). 5918 of 2024)
Decided On : 04-04-2025
Service Law – Recovery – If excess amount was not paid on account of any misrepresentation or fraud on part of employee or if such excess payment was made by employer by applying a wrong principle for calculating pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous, such excess payments of emoluments or allowances are not recoverable – Such relief against recovery is not because of any right of employee but in equity, exercising judicial discretion to provide relief to employee from hardship that will be caused if recovery is ordered – In case at hand, appellants were working on post of Stenographers when subject illegal payment was made to them – It is not reflected in record that such payment was made to appellants on account of any fraud or misrepresentation by them – Appellants were not afforded any opportunity of hearing before issuing order of recovery – Appellants having superannuated on a ministerial post of Stenographer were admittedly not holding any gazetted post – Payment was made in year 2017 whereas recovery was directed in year 2023 – Recovery is found unsustainable – Impugned orders set aside. (Paras 9, 11 and 12)
Facts of the case:
Issue for consideration is whether recovery of amount extended to appellants while they were in service is justified after their retirement and that too without affording any opportunity of hearing.
Findings of Court:
Orders dated 12.09.2023 and 08.09.2023 by which appellants were directed to deposit excess drawn arrears set aside.
Result : Appeal allowed.
Key Points: - Appellants were Stenographers; financial benefit granted in 2017 based on Shetty Commission upgradation; recovery ordered in 2023; High Court dismissed writ petition; Supreme Court allowed appeal and set aside recovery orders. (!) (!) (!) (!) - Legal principle: recovery of excess payments not paid due to employer's wrong interpretation or without employee misrepresentation is not recoverable, as relief is in equity. (!) (!) (!) (!) - The court held that recovery is unsustainable where: (i) payment made to retired or superannuated employee; (ii) no opportunity of hearing; (iii) the employee held a ministerial/non-gazetted post at time of payment; (iv) payment occurred long after retirement (2017 payment vs 2023 recovery). (!) (!) (!) - Precedents cited include Sahib Ram v. State of Haryana, Shyam Babu Verma v. Union of India, Col. B.J. Akkara (Retd.), Syed Abdul Qadir v. State of Bihar, State of Punjab v. Rafiq Masih (White Washer). (!) (!) (!) (!) (!) - The Court enumerates hardship-based exceptions and circumstances where recovery is impermissible, particularly for lower-rung employees and retirees. (!) (!) (!) (!) (!) (!) - Outcome: Impugned orders directing recovery set aside; appeal allowed. (!)
JUDGMENT :
PRASHANT KUMAR MISHRA, J.
Leave granted.
2. This appeal is directed against the final judgment and order dated 09.11.2023 passed by the High Court of Orissa at Cuttack in WP (C) No. 33482 of 2023 whereunder the High Cout dismissed the appellants’ writ petition in which a challenge was made to the orders dated 12.09.2023 and 08.09.2023 passed by the Special Judge, Special Court, Cuttack and Registrar, Civil Courts, Cuttack, as the case may be, directing recovery of Rs 26,034/-, Rs.40713/-, Rs. 26539/-, Rs. 24683/- and Rs. 21,485/-.
3. At the relevant time, the appellants were working as Stenographer Grade-I and Personal Assistant in the establishment of District Judiciary, Cuttack, Orissa. They were granted financial benefit for a sum of Rs 26,034/-, Rs.40713/-, Rs. 26539/-, Rs. 24683/- and Rs. 21,485/- by way of credit to their account vide Office Order No. 63 dated 10.05.2017 passed by the District Judge, Cuttack granting promotion/appointment retrospectively w.e.f 01.04.2003 consequent upon upgradation of the Stenographers in three grades such as Stenographer Grade-I, Stenographer Grade-II and Stenographer Grade-III by relying upon the recommendations of the respondent no. 1 in compliance towards the implementation of the report of the Shetty Commission.
4. After grant of such financial benefit, in the year 2017, the appellants have superannuated from their respective posts sometimes in the year 2020. After three years of their retirement and six years of granting the financial benefit, respondent no. 1 ordered for recovery of the said amount on the ground that extension of benefit of Shetty Commission’s recommendations to the appellants were on an erroneous interpretation of such recommendations, therefore, the financial benefit granted to them is liable to be recovered and under orders dated 12.09.2023 and 08.09.2023, the appellants were directed to deposit the excess drawn arrears. Since the orders were passed without affording any opportunity of hearing to the appellants, they preferred a writ petition before the High Court which came to be dismissed under the impugned judgment and order.
5. Learned counsel appearing for the appellants argued that the appellants were granted financial benefit without there being any fraud or misrepresentation by them, therefore, recovery of the amount after three years of their retirement is illegal and arbitrary. It is argued that the High Court has failed to consider the settled legal position in catena of decisions of this Court wherein such recovery from a low paid employee after retirement have been held bad in law.
6. Per contra, learned counsel appearing for the respondents would support the impugned judgment on submission that the appellants were not entitled to the financial benefit extended to them and the order passed by the District Judge, Cuttack was affirmed by the High Court of Orissa in exercise of an administrative power, therefore, the recovery is justified. It is also argued that such financial benefit upon retrospective promotion was granted with the condition that excess amount, if any, paid shall be refunded by the appellants and the appellants have furnished their respective undertakings to the said effect, therefore, they are estopped from challenging the recovery.
7. The issue falling for our consideration is not about the legality of the retrospective promotion and the financial benefit granted to the appellants on 10.05.2017. The issue for consideration is whether recovery of the amount extended to the appellants while they were in service is justified after their retirement and that too without affording any opportunity of hearing.
8. The law in this regard has been settled by this Court in catena of judgments rendered time and again; Sahib Ram vs. State of Haryana, (1995) Supp (1) SCC 18, Shyam Babu Verma vs. Union of India (1994) 2 SCC 521, Union of India vs. M. Bhaskar, (1996) 4 SCC 416 and V. Gangaram vs. Regional Jt. Director, (1997) 6 SCC 139 and in a
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Recovery of excess pay from Class VI retiree's gratuity/leave encashment impermissible if due to departmental error over 5+ years, no fraud by employee, beyond 24-month regulatory limit, causing hard....
Recovery of excess payments from employees must consider the impact on individuals, particularly retirees, and may be deemed iniquitous if it leads to hardship.
Recovery from retired employees is impermissible when excess payments were made without misrepresentation, as per established legal precedents.
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