THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 05.07.2012
+ W.P.(C) 20526/2005
CENTRAL P. F. COMMISSIONER & ORS ... Petitioners
A. RAMAN & ORS ... Respondents Advocates who appeared in this case:
For the Petitioners : Mr Satpal Singh
For the Respondent : Mr S. K. Gupta with Mr S. Shakeel
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL
BADAR DURREZ AHMED, J (ORAL)
1. This writ petition is directed against the order dated 26.05.2005 passed
by the Central Administrative Tribunal, Principal Bench, New Delhi, in OA
2993/2004. The primary petitioner is the Central Provident Fund
Commissioner (Employees Provident Fund Organization).
2. The facts of the case are that the respondents, who are all ex-
servicemen, were re-employed by the said petitioner sometime in February,
1991. On or about 17.11.1992, the petitioner fixed the pay of the
WP (C) No.20526/2005 Page 1 of 10 respondents in terms of OM No. 2(1) 83/ D/ Civ-I dated 08.02.1983. In the
year 2000, the petitioner noticed that it had erroneously fixed the pay of the
respondents in terms of the OM of 1983, whereas, in fact, OM No. 3
(i)/85/Esst. (P-II) dated 31.07.1986 was the one which was applicable. It is
then that the petitioner realized that it had erroneously fixed the salary of the
respondents based on the OM of 1983. On 24.09.2004, the petitioner issued
an order for recovery of the excess payment from the respondents. Shortly
thereafter the respondents filed the said Original Application 2993/2004 in
which the respondents claimed that there was no excess payment made to
them and that the OM of 1983 would continue to apply to them.
3. By virtue of the impugned order dated 26.05.2005, the Tribunal
rejected the plea of the respondents that the OM of 1983 would be
applicable. The Tribunal came to the conclusion that the OM of 1986 was
applicable. However, the Tribunal, following the decision of the Supreme
Court in the case of Shyam Babu Verma v. Union of India: (1994) 2 SCC
521 directed that the petitioner herein could not recover the excess payments
made to the respondents in the intervening period.
4. Being aggrieved by the said decision of the Tribunal to the extent that
WP (C) No.20526/2005 Page 2 of 10 the petitioner has been debarred from recovering the excess payments from
the respondents, the present writ petition has been filed. The question before
us is whether the Tribunal was right in allowing the prayer of the
respondents with regard to the non-recovery of the excess payment towards
salary/ allowances made to them between 1991 and 2004. The learned
counsel for the petitioners drew our attention to paragraph 17 of the
impugned judgment, wherein there is a reference to an undertaking given by
each of the respondents to the effect that in case of excess payments, they
would refund the amounts in lump sum with interest. The certificate/
undertaking that was given by the respondents is of the following nature:-
I, Ex No. 13908972 rank HAV (HON/NBSUS) name
DAVIS N.J. re-employed in the office of the Regional Provident Fund Commissioner, Delhi hereby exercised my option for fixation of pay and allowances from the date of my joining as LDC in this office under the provision of Govt. of India, Ministry of Defence O.M. No. 2(1) 83/D (Civ) I dated 8.2.1983. In case of any excess of payment I shall refund the amount in lump sum with interest.
This option will stand last and final.
(Signature of the individual)"
An identical undertaking/ certificate was furnished by each of the
respondents at the time of their re-employment. According to the learned
WP (C) No.20526/2005 Page 3 of 10 counsel for the petitioners, once such an undertaking has been given, the
respondents cannot oppose the recovery of the excess payments made to
them. We find that a similar plea had been raised before the Tribunal and
the Tribunal rejected the plea in the following manner:-
"18. A perusal of this certificate shows that the signatory of the certificate had given his option for fixation of the pay and allowance from the date of joining as LDC in the respondent organization in accordance with O.M dated 8.2.1983 and had undertaken that he would refund in lump sum in case of any excess payment. It is not the case of the respondent organization in accordance with OM dated 8.2.1983 and had undertaken that he would refund in lump sum in case of any excess payment. It is not the case of the respondent that some arithmetical or clerical mistake was committed or rule was wrongly interpreted while fixing the pay of the applicant in terms of the OM dated 8.2.1983. Conversely the argument of the counsel for respondent is that the respondent erroneously fixed the pay of the applicant applying OM dated 8.2.83 and that they pay of the applicant should have actually been fixed in accordance with OM dated 31.7.1986. Assuming that all the applicants had signed the option certificate as reproduced above there is no undertaking of the applicants, that they would refund the excess payment in case it was later found that OM 8.2.1983 did not apply. The error in fixation of the pay of the application has not occurred on account of some wrong application of the instructions contained in OM dated 8.2.1983 but on account of overlooking OM dated 8.2.1983. Therefore, this argument, would not come to the rescue of the respondent. As a result, we of the view that the respondent are not entitled to recover the excess payment of salary and allowances paid by the respondents to the applicants who have since retired on attaining the age of retirement and to the applicants who are in service till the date of revision order was passed which are impugned in the O.A."
WP (C) No.20526/2005 Page 4 of 10 We are in agreement with the view adopted by the Tribunal insofar as the
undertaking/ certificate is concerned.
5. The learned counsel for the petitioner also referred to the decision of a
Division Bench of this Court in the case of Rachpal Singh Gehlot and
Others v. Union of India and Others: CWP 6678/2003 decided on
25.08.2005. According to the learned counsel for the petitioner, the Division
Bench in that case distinguished the case of Shyam Babu Verma (supra) and
confirmed the order of the Tribunal in that case which had directed the
recovery of excess payments in easy instalments. The learned counsel for
the petitioners sought a similar relief in the present case also.
6. We have also heard the learned counsel for the respondents who
placed before us the decision of the Supreme Court in the case of Syed
Abdul Qadir v. State of Bihar: SCC 3 (2009) 475, wherein the Supreme
Court was, inter alia, concerned with the question of recovery of excess
payment of emoluments/ allowances. In this context, the Supreme Court
observed as under:-
"27. This Court, in a catena of decisions, has granted relief against recovery of excess payment of emoluments/allowances
WP (C) No.20526/2005 Page 5 of 10 if (a) the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee and (b) if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous. The relief against recovery is granted by courts not because of any right in the employees, but in equity, exercising judicial discretion to relieve the employees from the hardship that will be caused if recovery is ordered. But, if in a given case, it is proved that the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where the error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, courts may, on the facts and circumstances of any particular case, order for recovery of the amount paid in excess. See Sahib Ram v. State of Haryana, 1995 (1) SCT 668; 1995 Supp. (1) SCC 18; Shyam Babu Verma v. Union of India, 1994 (2)SCT 296:  2 SCC 521; Union of India v. M. Bhaskar, 1996 (4) SCT 57:  4 SCC 416; V. Ganga Ram v. Regional Jt. Director, 1997 (3) SCT 72:  6 SCC 139; Col. B.J. Akkara (Retd.) v. Government of India and Ors., (2006) 11 SCC 709; Purshottam Lal Das and Ors. v. State of Bihar, 2006 (4) SCT 537:  11 SCC 492; Punjab National Bank and Ors. v. Manjeet Singh and Anr., 2006 (4) SCT 570:  8 SCC 647 and Bihar State Electricity Board and Anr. v. Bijay Bahadur and Anr.,  10 SCC 99.
28. Undoubtedly, the excess amount that has been paid to the appellants - teachers was not because of any
misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counter affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of
WP (C) No.20526/2005 Page 6 of 10 wrong interpretation of the rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned Counsel appearing on behalf of the appellants- teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellants-teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellants-teachers should be made."
From a reading of the above extracted passages from the Supreme Court
decision, it is abundantly clear that the courts have granted relief against
recovery of excess payment of emoluments/ allowances where the excess
amount was not paid on account of any misrepresentation or fraud on the
part of the employee. Such relief is also granted where the excess payment
was also made by the employer by applying a wrong principle for calculating
the pay/ allowances or on the basis of a particular interpretation of a rule/
order which was subsequently found to be erroneous. Insofar as the facts of
the present case are concerned, there is no allegation that the excess amount
that was paid to the respondents was on account of any misrepresentation or
fraud on the part of the respondents. It is clear that the excess payments that
were made in the present case were made by the petitioners by wrongly
applying the OM of 1983 when, in fact, the OM of 1986 was applicable.
WP (C) No.20526/2005 Page 7 of 10 The Tribunal has categorically recorded that the OM of 1986 had superseded
all the earlier OMs on the subject matter and, therefore, the OM of 1986 was
the one that was applicable and not the OM of 1983. It is, therefore, clear
that the excess payment has been occasioned on account of the petitioners
applying a superseded OM and by not applying the applicable OM which
was of 1986.
7. From the above extracted portion, it is also clear that the relief against
recovery is granted by courts not because of any right possessed by the
employee but, in equity and in exercise of judicial discretion to relieve the
employees from the hardship that would be caused if recovery is ordered. It
has also been pointed out by the Supreme Court that if in a given case it is
proved that the employee had knowledge that the payment received was in
excess of what was due or wrongly paid or in cases where the error is
detected or corrected within a short time of wrong payment, the matter being
in the realm of judicial discretion, courts may, on the facts and circumstances
of any particular case, order recovery of the said amount paid in excess.
Thus, it is clear that, on equitable principles, when the conditions stipulated
above are satisfied, normally, the relief against recovery is granted by courts.
WP (C) No.20526/2005 Page 8 of 10 The courts, of course, do not grant such a relief where employees had the
knowledge that the payment received by them was in excess of what was due
or that the amounts were wrongly paid to them. The courts also do not
exercise the discretion in favour of the employees where the error on the part
of the employer is detected or corrected within a short period of time of the
excess payment. In the present case, there is nothing to indicate that the
respondents had knowledge that the payments that were received by them
were in excess of what was due to them. In fact, on the contrary, the
respondents in their Original Application had asserted that they ought to be
governed by the OM of 1983 and that the OM of 1986 did not apply to them.
It is, of course, another matter that the Tribunal, and, in our view, rightly so,
came to the conclusion that the OM of 1986 would apply, it having
superseded the OM of 1983. It is also clear that the error was not detected
within a short period of time of the excess payments. The respondents were
employed in 1991 whereas the error was detected by the petitioners in the
year 2000 after the same was pointed out in the course of an internal audit.
However, it is only in the year 2004 that the petitioners issued orders for
recovery of the excess payments. Such a conduct cannot be construed as a
WP (C) No.20526/2005 Page 9 of 10 detection of an error or correction of an error within a short time of excess
payments having been made.
8. Consequently, in view of the clear pronouncement of the proposition
of law by the Supreme Court in the case of Syed Abdul Qadir(supra), the
discretion that this Court has in the matter would have to be exercised in
favour of the respondents and not against them. As in the case of Syed
Abdul Qadir (supra), in the present case also, a majority of the respondents
have already retired and only two are serving and they are also on the verge
of retirement. We also feel that the discretion ought to be exercised in favour
of the respondents and not in favour of the petitioners as that would cause
undue hardship to the respondents.
9. In this view of the matter, no interference with the impugned order of
the Tribunal is called for. The writ petition is dismissed. There shall be no
order as to costs.
BADAR DURREZ AHMED, J
SIDDHARTH MRIDUL, J
JULY 05, 2012
WP (C) No.20526/2005 Page 10 of 10