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High Court Of Punjab And Haryana And Others v. Jagdev Singh .
Factual and Procedural Background
The respondent, appointed as a Civil Judge (Junior Division) on 16 July 1987 and promoted to Additional Civil Judge on 28 August 1997, opted for revised pay scales notified on 28 September 2001 under the Haryana Civil Service (Judicial Branch) and Haryana Superior Judicial Service Revised Pay Rules, 2001. As a pre-condition, he executed a written undertaking to refund any amount later found to be paid in excess.
He received the selection grade on 7 January 2002 but was suspended on 19 August 2002 and compulsorily retired on 12 February 2003. Subsequent pay revisions pursuant to acceptance of the Shetty Commission recommendations (Rules notified on 7 May 2003) revealed an over-payment. On 18 February 2004 the State sought recovery of Rs 1,22,003 based on the undertaking.
The respondent challenged the recovery in CWP No. 3999 of 2005 before the Punjab and Haryana High Court, which on 1 August 2005 allowed the writ petition and restrained the recovery. The State appealed to the Supreme Court.
Legal Issues Presented
- Whether the State can recover excess salary paid to a judicial officer who has retired, when the officer had earlier furnished an express undertaking to refund any such excess.
- Whether the bar on recovery from retired employees recognised in State of Punjab v. Rafiq Masih (2015) 4 SCC 334 applies in the presence of such an undertaking.
Arguments of the Parties
Respondent's Arguments
- Relying on proposition (ii) in State of Punjab v. Rafiq Masih, recovery from a retired employee is impermissible where no fraud or misrepresentation is alleged.
- The excess payment was made by the State’s own mistake; therefore recovery post-retirement would cause undue hardship.
Appellant-State's Arguments
- The respondent had voluntarily signed an undertaking agreeing to refund any excess payment detected later; the State is entitled to enforce that undertaking.
- The specific facts fall outside the situations in which Rafiq Masih prohibits recovery.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Punjab v. Rafiq Masih, (2015) 4 SCC 334 | Enumerated situations where recovery of excess payments by the employer is impermissible, including from retired employees. | The Court held that proposition (ii) (bar on recovery from retirees) does not apply when the employee had given an express undertaking to refund excess amounts; the undertaking overrides the general prohibition. |
Court's Reasoning and Analysis
1. The Supreme Court noted that the respondent’s undertaking was unequivocal: any excess payment discovered later “will be refunded to the Government”. This contractual promise formed the basis of the employment benefit.
2. When the pay scales were again revised in 2003, a computation showed that the respondent had been over-paid Rs 1,22,003. The demand raised on 18 February 2004 was therefore traceable directly to the undertaking.
3. The Court examined the principles in Rafiq Masih and acknowledged that, generally, recovery from retired employees is barred. However, it emphasised that Rafiq Masih itself recognises that its propositions cannot be applied mechanically to every factual scenario.
4. Because the respondent had foreseen the possibility of future adjustments and knowingly agreed to refund any excess, enforcing the recovery would not be “iniquitous or harsh”. The equitable balance therefore favoured the State.
5. Accordingly, the High Court had erred in treating the case as governed by the blanket prohibition in Rafiq Masih without considering the effect of the undertaking.
6. To mitigate hardship, the Supreme Court exercised discretion to spread the recovery over reasonable instalments.
Holding and Implications
Appeal Allowed; High Court judgment set aside. The excess amount of Rs 1,22,003 is recoverable from the respondent in equal monthly instalments over two years. No order as to costs.
Implications: The decision clarifies that the protections against recovery of excess payments post-retirement, articulated in Rafiq Masih, do not override a specific undertaking given by an employee. While it does not create a new legal test, it underscores that individual undertakings will be enforced even after retirement, thus guiding future disputes on salary recoveries involving similar undertakings.
Dr D.Y. Chandrachud, J.— The High Court of Punjab and Haryana allowed, by its judgment dated 1-8-2005 CWP No. 3999 of 2005, a petition filed by the respondent under Article 226 of the Constitution to challenge a direction issued by the State to the Accountant General for the recovery of an excess payment towards salary.
2. The facts lie in a narrow compass. The respondent was appointed as a Civil Judge (Junior Division) on 16-7-1987 and was promoted as Additional Civil Judge on 28-8-1997 in the judicial service of the State. By Notification dated 28-9-2001, a pay scale of Rs 10,000-325-15,200 (senior scale) was allowed under the Haryana Civil Service (Judicial Branch) and Haryana Superior Judicial Service Revised Pay Rules, 2001. Under the Rules, each officer was required to submit an undertaking that any excess which may be found to have been paid will be refunded to the Government either by adjustment against future payments due or otherwise.
3. The respondent furnished an undertaking and was granted the revised pay scale and selection grade of Rs 14,300-400-18,000-300. While opting for the revised pay scale, the respondent undertook to refund any excess payment if it was so detected and demanded subsequently. The revised pay scale in the selection grade was allowed to the respondent on 7-1-2002.
4. The respondent was placed under suspension on 19-8-2002 and eventually, was compulsorily retired from service on 12-2-2003.
5. In the meantime, this Court in Civil Writ (C) No. 1022 of 1989 accepted the recommendations of the First National Judicial Pay Commission (Shetty Commission). Thereupon, the Haryana Civil Services (Judicial Branch) and Haryana Superior Judicial Service Revised Pay Rules, 2003 were notified on 7-5-2003.
6. In view thereof the pay scales of judicial officers in Haryana were once again revised with effect from 1-1-1996. An exercise was undertaken for adjustment of excess payments made to judicial officers, following the notification of the revised pay rules. On 18-2-2004, a letter for the recovery of an amount of Rs 1,22,003 was served upon the respondent pursuant to the direction of the Registrar of the High Court.
7. The respondent challenged the action for recovery in writ proceedings under Article 226. The petition was allowed by the impugned judgment of the High Court. The High Court found substance in the grievance of the respondent that the excess payment made to him towards salary and allowance prior to his retirement could not be recovered at that stage, there being no fraud or misrepresentation on his part.
8. The order of the High Court has been challenged in these proceedings. From the record of the proceedings, it is evident that when the respondent opted for the revised pay scale, he furnished an undertaking to the effect that he would be liable to refund any excess payment made to him. In the counter-affidavit which has been filed by the respondent in these proceedings, this position has been specifically admitted (2015) 4 SCC 334. Subsequently, when the Rules were revised and notified on 7-5-2003 it was found that a payment in excess had been made to the respondent. On 18-2-2004, the excess payment was sought to be recovered in terms of the undertaking.
9. The submission of the respondent, which found favour with the High Court, was that a payment which has been made in excess cannot be recovered from an employee who has retired from the service of the State. This, in our view, will have no application to a situation such as the present where an undertaking was specifically furnished by the officer at the time when his pay was initially revised accepting that any payment found to have been made in excess would be liable to be adjusted. While opting for the benefit of the revised pay scale, the respondent was clearly on notice of the fact that a future refixation or revision may warrant an adjustment of the excess payment, if any, made.
10. In State of Punjab v. Rafiq Masih (2015) 4 SCC 334 this Court held that while it is not possible to postulate all situations of hardship where payments have mistakenly been made by an employer, in the following situations, a recovery by the employer would be impermissible in law:
(i) Recovery from employees belonging to Class III and Class IV service (or Group C and Group D service).
(ii) Recovery from retired employees, or employees who are due to retire within one year, of the order of recovery.
(iii) Recovery from 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.
(emphasis supplied)
11. The principle enunciated in Proposition (ii) above cannot apply to a situation such as in the present case. In the present case, the officer to whom the payment was made in the first instance was clearly placed on notice that any payment found to have been made in excess would be required to be refunded. The officer furnished an undertaking while opting for the revised pay scale. He is bound by the undertaking.
12. For these reasons, the judgment of the High Court which set aside the action for recovery is unsustainable. However, we are of the view that the recovery should be made in reasonable instalments. We direct that the recovery be made in equated monthly instalments spread over a period of two years.
13. The judgment CWP No. 3999 of 2005 of the High Court is accordingly set aside. The civil appeal shall stand allowed in the above terms. There shall be no order as to costs.
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