IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 23904 of 2001(U)
1. STATE OF KERALA
For Petitioner :SRI.KRB.KAIMAL
For Respondent :SRI.T.P.KELU NAMBIAR (SR.) The Hon'ble MR. Justice P.N.RAVINDRAN
O R D E R
O.P.No.23904 of 2001
Dated this the 11th day of January, 2008.
The petitioners are former employees of the Kerala State Electronics Development Corporation, hereinafter referred to as "the Corporation. They voluntarily retired from the service of the Corporation with effect from 12.10.2000. Though the voluntary retirement of the petitioners took effect from 12.10.2000, the monetary benefits payable to them were disbursed only on 30.3.2001. Such benefits were computed on the basis of the pay and allowances which they had actually drawn on 12.10.2000.
2. The petitioners' main grievance is that from the V.R.S. compensation paid to them under Ext.P2 Scheme, recovery of the amounts set out in paragraph 2 of the original petition was effected in purported exercise of the power conferred on the Corporation under paragraph 5.3 thereof, which reads as follows: "5.3 The Corporation shall have the right to recover any amount that may be due to it from the OP 23904/01 -: 2 :-
amount payable under the VRS."
3. The petitioners contend that the amounts recovered from the VRS compensation could not have been recovered from them for the reason that there was no misrepresentation on their part when their pay was fixed and emoluments disbursed following the pay revision. The petitioners also contend that they are entitled to the benefit of Ext.P5 Government Order whereby the Dearness Allowance was raised with effect from 1.1.1999 in the case of Government employees. The petitioners have, aggrieved by the recovery made from the V.R.S. compensation that they were entitled to and the denial of benefits flowing from Ext.P5, filed this original petition seeking the following reliefs: "i) a writ of mandamus to the 2nd respondent to repay to the petitioners, the amounts recovered from the V.R.S. compensation, as alleged excess payment of salary.
ii) a writ of mandamus to the 2nd respondent to draw and disburse the arrears of Dearness Allowance due to the petitioners as per Ext.P5 for the period from 1.1.1999 to 12.10.2000.
iii) a writ of mandamus to the 2nd respondent to refix the V.R.S. compensation due to the OP 23904/01 -: 3 :-
petitioners, taking into account the D.A. as revised by Ext.P5, and to disburse the balance amount."
4. By letter No.35991/D3/89/ID dated 23.2.1990, a copy of which is Ext.P4, the State Government sanctioned revision of pay of Supervisory/Executive Personnel in the Corporation whereby they became entitled to the benefit of pay revision implemented with effect from 1.5.1988. Ext.P4 contains a stipulation to the effect that increase of pay in individual cases should be limited to 18%.
5. The petitioners have averred in the original petition that when their pay as on 1.5.1988 was fixed in terms of Ext.P4, it was not possible for the Corporation to arrive at the new scale of pay sanctioned to them and hence, the Corporation fixed the basic pay of the petitioners and others in the revised scale at the stage next above the amount arrived at by adding 18% to the then existing pay. They have also stated that there was a further pay revision with effect from 1.3.1996 and their pay in the revised scale with effect from 1.3.1996 was also fixed, based on the pay that they were then drawing. It is their contention that as there was no objection regarding the fixation of pay till they OP 23904/01 -: 4 :-
retired from service under the V.R.S. Scheme, recovery/deductions from the V.R.S. compensation is illegal. They also contend that recovery was made without notice to them and hence, there is gross violation of the principles of natural justice.
6. The Corporation has filed a counter affidavit justifying the recovery effected by it from the V.R.S. compensation payable to the petitioners. The relevant portion of the counter counter affidavit filed on behalf of the Corporation reads as follows: "5. Regarding the averments contained in paragraph 4 of the original petition, it is submitted that the Government of Kerala, in letter No.35991/D3/88/ID, dated 28.2.1990, had sanctioned revision of pay of Supervisory/Executive personnel of the 1st respondent; and in the said letter, there was a direction that the increase in individual cases should be limited to 18%. The said revision of pay was implemented in 2nd respondent corporation as well. The fitment formula adopted by the 2nd respondent was as follows:-
Basic pay, corresponding DA and ad hoc benefits as on 1st May 1988 and HRA are computed for each employee. This was increased by 18% on account of OP 23904/01 -: 5 :-
the revision giving rise to a sum total. From the said sum total, corresponding basic pay, DA applicable (State DA) as on 1.5.1988 and HRA at 10% of Basic pay were derived. This constituted the new total. In some cases, since the new basic pay was not available in the revised scale, they were fitted in the next higher basic pay. In this process, in certain cases there have been increase over and above 18%. All the petitioners come under this category."
7. The Corporation has further contended that the State Government had in Ext.R2(a) letter dated 5.12.1994 instructed the Corporation to deduct the extra payment made to the petitioners and based on that instruction the Corporation issued Ext.R2(b) circular dated 4.4.1995 to manage the excess payment made by it to its employees, by deducting it from the terminal benefits payable at the time of superannuation/resignation/separation from the Corporation. The Corporation has further contended that Ext.R2(b) was circulated among all the employees of the Corporation and there was no objection from any of the employees to the said circular. The Corporation has also stated in its counter affidavit that though the excess payment made to the petitioners was noticed OP 23904/01 -: 6 :-
as early as in 1994, the Corporation could not afford to take a decision to recover such excess payment for the reason that "the salary structure of Executives/Supervisors was not attractive" and recovery of excess payment from them would have resulted in complete demotivation of those employees. The stand taken by the Corporation in its counter affidavit is that it was entitled to recover the excess amount paid to the petitioners in terms of clauses (a) and (f) of Ext.R2(b) circular.
8. I have heard Shri.B.Unnikrishna Kaimal, the learned counsel appearing for the petitioners and Shri.M.Gopikrishnan Nambiar, the learned counsel appearing for the Corporation. The learned counsel appearing for the petitioners submits that the recovery effected from the V.R.S. compensation is bad for the reason that it was without notice to the petitioners and in gross violation of the principles of natural justice. He also submitted that the fitment of the petitioners in the new scale of pay limiting the increase to 18% was impossible even according to the Corporation, that fixation of pay in the revised scale with effect from 1.5.1998 was consciously done by the Corporation taking note of the facts set out in paragraph 5 of its counter affidavit OP 23904/01 -: 7 :-
and that the Corporation has also not followed the procedure prescribed in Ext.R2(b) circular before effecting recovery.
9. Shri.M.Gopikrishnan Nambiar, the learned counsel appearing for the Corporation on the other hand contended relying on the decisions of this Court in United India Insurance Co. Ltd v. Roy - 2005 (2) K.L.T. 63 and Santhakumari v. State of Kerala - 2005(4) K.L.T. 649 that the recovery of the excess payment made to the petitioners from the V.R.S. compensation was just and legal.
10. I have considered the rival contentions. It is no doubt true that Ext.R2(b) circular dated 4.4.1995 empowered the Corporation to recover the excess payment made to the petitioners while implementing the pay revision effected on 1.5.1988. However, the circular contemplated issue of individual orders to all Executives/Supervisors, who had received pay increase of over 18% with effect from 1.5.1988. It is admitted that no such individual order was issued to the petitioners and it was not based on any such order that recovery was made from the V.R.S. compensation paid to them. Though in Santhakumari v. State of Kerala (supra), a Division Bench of OP 23904/01 -: 8 :-
this Court has held that the State is entitled to recover the excess payment made by it to its employees in violation of the rules, the Division Bench had also held that facts and circumstances may warrant sympathetic consideration in some cases. In the case on hand, the Corporation has, in its counter affidavit, conceded that it was not possible to implement the pay revision introduced with effect from 1.5.1988 without giving the Executives/Supervisors an increase of over 18%. It is also not disputed that there was a further pay revision introduced with effect from 1.3.1996 and that the petitioners were given the benefit of 1996 pay revision also, and their pay in the revised scale with effect from 1.3.1996 was also fixed based on the pay that they were then drawing. Going by the pleadings in the case, it is evident that if the upper limit of 18% stipulated in Ext.P4 had been adhered to, the petitioners would have been denied the benefit of the pay revisions introduced with effect from 1.5.1988 and 1.3.1996. In other words, the petitioners would have continued in the pre-revised scale of pay which even according to the Corporation was not attractive, resulting in complete demotivation of the employees of Corporation. In the light of OP 23904/01 -: 9 :-
the stand taken by the Corporation in paragraph 5 of its counter affidavit and also the fact that no individual order in terms of Ext.R2(b) circular had been issued, I am of the opinion that the recovery effected by the Corporation from the V.R.S. compensation paid to the petitioners was not legal or proper. Accordingly, I hold that the recovery of the amount from the V.R.S. compensation paid to the petitioners is bad in law and that they are entitled to refund of the amounts recovered from them.
11. As regards the second prayer of the petitioners, the stand taken by the Corporation is that the benefit of Ext.P5 was given by the Corporation to its employees only with effect from 1.3.2001 long after the petitioners retired from the service of the Corporation and hence, they are not entitled to the benefit of Ext.P5. The Corporation has categorically stated in its counter affidavit that Ext.P5 was adopted only with effect from 1.3.2001. The Apex Court has in HEC Voluntary Retd. Employees Welfare Society v. Heavy Engineering Corpn. Ltd. - 2006(3) SCC 708 held that once an employee opts to retire voluntarily under the terms of the V.R.S. scheme, he cannot raise a claim for higher salary or emoluments unless by reason of a statute or OP 23904/01 -: 10 :-
policy he becomes entitled to such higher salary or emoluments. In the case on hand, the Corporation implemented Ext.P5 only with effect from 1.3.2001. By then the petitioners had been relieved from the service of the Corporation. Hence, I hold that the petitioners, who retired voluntarily from the service of the Corporation with effect from 12.10.2000, are not entitled to the benefit of Ext.P5.
11. In the result, I allow the original petition in part and direct the second respondent to repay to the petitioners the amounts recovered from the V.R.S. compensation that they were entitled to. Such payment shall be effected within one month from the date of receipt of a copy of this judgment. In the circumstances of the case, I make no order as to costs. P.N.Ravindran,