Kidar Nath Petitioner(S) v. State Of Punjab & Others (S), Punjab & Haryana High Court, Judgment, Law, casemine.com

Factual and Procedural Background

This petition was filed under Articles 226/227 of the Constitution of India seeking a writ in the nature of certiorari to quash recoveries sought to be made by the respondents. The petition concerns alleged recoveries relating to retrenchment increments and special increments that had been granted to employees who served in a work charge capacity. Learned counsel for the petitioner submitted that the issue was covered by this Court's earlier judgment dated 27.5.2009 in Civil Writ Petition No. 5568 of 2008 (Charan Dass & Others v. State of Punjab & Others). Learned counsel for the respondents conceded that the matter is covered by that judgment. The Court ultimately allowed the present petition in the same limited terms as the Charan Dass judgment.

Legal Issues Presented

Whether the respondents are entitled to effect recovery from employees of amounts paid by way of retrenchment increments and special increments that were granted while the employees served in work charge capacity.

Whether the work charge period and emoluments drawn during such period are to be counted as qualifying period and emoluments for the grant of pensionary/retiral benefits.

If benefits were granted erroneously by authorities but without any fraud, misrepresentation or deception on the part of the employees, whether the government can recover such amounts already paid.

To what extent the respondents may re-fix emoluments (for example, by reducing special increments) and how retiral benefits and delayed payments should be addressed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Charan Dass & Others v. State of Punjab & Others (Judgment dated 27.5.2009 in CWP No. 5568 of 2008)	- Work charge period is to be counted as qualifying period for pensionary benefits and emoluments drawn as work charge employee are to be considered. - Retrenchment increments were allowed to bring salaries to parity in revised pay scales. - Where benefits (retrenchement and special increments) were conferred without fraud or misrepresentation by employees, amounts already paid cannot be recovered though such benefits may be stopped for the future. - Where special increments were selectively granted, they can be subject to re-fixation (reduction) but past payments are not recoverable.	The present Court applied the Charan Dass judgment to allow the petition in the same limited terms. The Court held that respondents are not entitled to effect recovery from petitioners for retrenchment or special increments already paid; respondents may re-fix emoluments by reducing the special increment only; retiral benefits already due should be released within two months; interest is payable on delayed payments as specified; and any amounts deducted shall be refunded within the prescribed period.
Budh Ram and others v. State of Haryana and others (Full Bench judgment dated 22.5.2009)	- If benefits were extended on an erroneous interpretation or application of rules, and the employee did not contribute to the error nor commit fraud/misrepresentation, then the benefit already paid cannot be recovered. - The benefit may be stopped prospectively but recovery of amounts already received is unfair and inequitable where employees acted in good faith.	The Court relied on the Full Bench pronouncement as authority for the proposition that erroneously granted benefits, when not obtained by employee fraud, are not recoverable. This principle supported the Court's decision to disallow recovery and to allow only prospective adjustment (re-fixation by reducing special increment).

Precedent

Rule or Principle Cited For

Application by the Court

Charan Dass & Others v. State of Punjab & Others (Judgment dated 27.5.2009 in CWP No. 5568 of 2008)

- Work charge period is to be counted as qualifying period for pensionary benefits and emoluments drawn as work charge employee are to be considered.
- Retrenchment increments were allowed to bring salaries to parity in revised pay scales.
- Where benefits (retrenchement and special increments) were conferred without fraud or misrepresentation by employees, amounts already paid cannot be recovered though such benefits may be stopped for the future.
- Where special increments were selectively granted, they can be subject to re-fixation (reduction) but past payments are not recoverable.

The present Court applied the Charan Dass judgment to allow the petition in the same limited terms. The Court held that respondents are not entitled to effect recovery from petitioners for retrenchment or special increments already paid; respondents may re-fix emoluments by reducing the special increment only; retiral benefits already due should be released within two months; interest is payable on delayed payments as specified; and any amounts deducted shall be refunded within the prescribed period.

Budh Ram and others v. State of Haryana and others (Full Bench judgment dated 22.5.2009)

- If benefits were extended on an erroneous interpretation or application of rules, and the employee did not contribute to the error nor commit fraud/misrepresentation, then the benefit already paid cannot be recovered.
- The benefit may be stopped prospectively but recovery of amounts already received is unfair and inequitable where employees acted in good faith.

The Court relied on the Full Bench pronouncement as authority for the proposition that erroneously granted benefits, when not obtained by employee fraud, are not recoverable. This principle supported the Court's decision to disallow recovery and to allow only prospective adjustment (re-fixation by reducing special increment).

Court's Reasoning and Analysis

The Court's analysis is concise and anchored on the conceded position that the present matter is covered by the earlier decision in Charan Dass (and the Full Bench decision in Budh Ram). The Court excerpted and relied upon the reasoning in Charan Dass which:

Recognizes that work charge service and emoluments must be treated as qualifying for pensionary benefits.

Explains that retrenchment increments were given to align pay under revised scales and that special increments were granted selectively, but in both cases the benefits were conferred without any misrepresentation or fraud on the part of employees.

Adopts the Full Bench principle that where the erroneous grant was not attributable to employee fault, recovery of amounts already paid is inequitable because employees acted in reliance on the granted benefit.

Applying those principles to the petition before it, and given the respondents' admission that Charan Dass covers the matter, the Court concluded that respondents cannot lawfully recover the past payments of retrenchment or special increments from the petitioners. The Court nevertheless accepted that the employer may prospectively re-fix emoluments by reducing only the special increment. The judgment prescribed concrete remedial steps: re-fixation of pay, payment of retiral benefits within two months for retired employees, payment of prescribed interest on delayed payments (statutory rate where available; 6% where statutory interest is not provided), and refund of any deductions already made within the same period.

Holding and Implications

HOLDING: The petition is ALLOWED in the same limited terms as the Court's earlier judgment dated 27.5.2009 in Charan Dass & Others v. State of Punjab & Others.

Consequences and direct effects on the parties (as ordered in the judgment):

The respondents are not entitled to effect recovery from the petitioners for retrenchment increments or special increments previously paid.

The respondents are entitled only to re-fix the petitioners' emoluments by reducing the special increment (i.e., prospective adjustment), but not to recover past payments.

For employees already retired, retiral benefits are to be released within two months from the date of the judgment.

Where statutory interest is available, pension/retiral delayed payments will carry the statutory rate; where no statutory interest is provided, interest at 6% shall apply to pension and other retiral benefits.

Any amount deducted from retiral benefits or salary shall be refunded within the aforesaid period.

The opinion does not discuss broader implications beyond applying the earlier Charan Dass and Full Bench Budh Ram principles; the decision follows and implements those precedents rather than announcing a new legal principle.

Kidar Nath Petitioner(S) v. State Of Punjab & Others (S)

AJAI LAMBA, J (Oral)

1. This petition has been filed under Article 226/227 of the Constitution of India praying for issuance of a writ in the nature of certiorari, quashing recovery sought to be made by the respondents.

2. Learned counsel for the petitioner contends that the issue raised in this petition is covered by Judgment dated 27.5.2009 rendered by this Court in Civil Writ Petition No. 5568 of 2008 titled ‘Charan Dass & Others v. State of Punjab & Others’.

3. Learned counsel for the respondents admits that indeed the matter is covered by the judgment in Charan Dass's case (supra).

4. In Charan Dass's case (supra), the following has been held:-

“It is admitted case of the parties that the work charge period is to be counted as qualifying period for the grant of pensionary benefits and thus the emoluments drawn by the employee as work charge employee had to be considered as also the period when the employee served in work charge capacity. It is admitted case of the parties that the benefit of retrenchment increments and special increments was granted to the employees during the period they were serving in work charge capacity without any misrepresentation or fraud on their part. The benefit allowed to the petitioners is, however, sought to be withdrawn after take over and regularisation by the State Government with effect from 13.3.1996 The retrenchment increments were allowed to bring their salary and emoluments at par with other employees in the revised pay scale, keeping in view their last drawn salary as retrenchees. No reasons have been given in the reply as to how such benefit is impermissible or illegal. The State, however, has attempted to justify its action regarding withdrawal of special and retrenchment increments. Admittedly, special increments were granted from time to time to some of the employees/petitioners for their alleged good work. There was no uniform policy and benefit of special increments was given on selective basis. In so far as the retrenchment increments are concerned, there cannot be any second opinion that the benefit was granted to bring their wages at par under the revised pay scale and that too before their take over by the State Government.

As regards the grant of special increments is concerned, it was selectively granted from person to person and is not justified. However, one fact remains common in regard to grant of both the benefits i.e retrenchment increments and special increments that the said benefits were conferred upon the petitioners without any misrepresentation or fraud on their part. The issue is squarely covered by the Full Bench judgment of this Court passed in CWP No. 2799 of 2008 alongwith other connected matters (Budh Ram and others v. State of Haryana and others) decided on 22.5.2009 The case of the petitioners falls in category ii) wherein following observations have been made:-

“It is in the light of the above pronouncement, no longer open to the authorities granting the benefits, no matter erroneously, to contend that even when the employee concerned was not at fault and was not in any way responsible for the mistake committed by the authorities, they are entitled to recover the benefit that has been received by the employee on the basis of any such erroneous grant. We say so primarily because if the employee is not responsible for the erroneous grant of benefit to him/her, it would induce in him the belief that the same was indeed due and payable. Acting on that belief the employee would, as any other person placed in his position arrange his affairs accordingly which he may not have done if he had known that the benefit being granted to him is likely to be withdrawn at any subsequent point of time on what may be then said to be the correct interpretation and application of rules. Having induced that belief in the employee and made him change his position and arrange his affairs in a manner that he would not otherwise have done, it would be unfair, inequitable and harsh for the Government to direct recovery of the excess amount simply because on a true and correct interpretation of the rules, such a benefit was not due……

We have, therefore, no hesitation in holding that in case the employees who are recipient of the benefits extended to them on an erroneous interpretation or application of any rule, regulation, circular and instructions have not in any way contributed to such erroneous interpretation nor have they committed any fraud, misrepresentation, deception to obtain the grant of such benefit, the benefit so extended may be stopped for the future, but the amount already paid to the employees cannot be recovered from them….”

In view of the above, the respondents are not entitled to effect any recovery from the petitioners either on account of retrenchment increments or special increments allegedly erroneously given. However, the respondents are entitled to re-fix the emoluments by reducing the special increment only. Consequently the pay of the petitioners will be re-fixed and in case of those employees who have already retired from service, the retiral benefits shall be released within a period of two months. The petitioners shall also be entitled to interest on the delayed payment of pension/retiral benefits at the statutory rate wherever admissible and at the rate of 6% on pension and other retiral benefits where statutory interest is not provided for. Any amount deducted from the retiral benefits or the salary of the petitioners shall be refunded within the aforesaid period.

Ordered accordingly. Disposed of.”

5. Considering the conceded position that the matter is covered by decision rendered in Charan Dass's case (supra), relevant portion whereof has been extracted above, this petition is allowed in the same limited terms of Judgment dated 27.5.2009 of this Court in Civil Writ Petition No. 5568 of 2008 titled ‘Charan Dass & Others v. State of Punjab & Others’.

(AJAI LAMBA)

November 08, 2010 JUDGE

avin

1. To be referred to the Reporters or not?

2. Whether the judgment should be reported in the Digest?

Civil Writ Petition No. 19033 of 2010

Kidar Nath Petitioner(S) v. State Of Punjab & Others (S)

Judgment Summary: Ajai Lamba, J. — November 08, 2010

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Kidar Nath Petitioner(S) v. State Of Punjab & Others (S)

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