Recovery For Payments Made In Excess By Employers Is Impermissible In Law In Certain Situations: HP HC While Granting Benefit To Retired Employee

Noting the factual matrix and the submissions made on behalf of the deceased petitioner, a bench of Justice Jytosna Rewal Dua thus held, “…Apart from deducting the principal amount of Rs.13942/-, alleged to have been wrongly credited in petitioner’s GPF account in the years 1984-85 and 1989-90 the respondents also added interest thereupon and arrived at the figure of Rs. 1,31,152/- ,which they have deducted from the due and admissible GPF amount payable towards the petitioner. Such a recourse in the given facts was impermissible in law. The prayer of the petitioner for refund of an amount of Rs.1,31,152/- along with interest after quashing the impugned decision dated January 7, 2010 (ordering effecting recovery of this amount) is justified”.

Advocate Abhishek Dulta appeared for the petitioner while Additional Advocates General Y.P.S Dhaulta and Navlesh Verma appeared for the respondents.

The Court while rejecting the contention of the respondent relied upon S. S. Chaudhary v. State of H.P. and others, CWPOA No.3145 of 2012 which states,

“…35. In view of the aforesaid discussion, as held by Hon'ble Supreme Court in Rafiq Masih's case (State of Punjab v. Rafiq Masih), it is not possible to postulate all situations of hardship, where payments have mistakenly been made by the employer, yet in the following situations, 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…”.

The bench was of the opinion that it was incumbent upon the respondent to maintain the records and rectify the same in any event where a mistake occurs.

“…In the instant case, the petitioner had retired from Class-III post. The case of the petitioner would be covered by situations (i) and (ii) of the above judgment. It is not the case of the respondents that the petitioner had misrepresented any facts to them. Taking the mistake of the Department in maintain records for the GPF paid The GPF amount was being deducted by the respondents. The accounts thereof were being maintained by the respondents. In case, some error crept in maintaining the GPF amount of the petitioner during the years 1984-85 and 1989-90, the fault, if any, lay squarely on the respondents. It was for the respondents to have rectified the error at the appropriate time. The respondents sought to correct their mistake during January 2010. The exercise was undertaken after about 25 years from the date of alleged mistake and four months after petitioner’s retirement”, the single judge bench further opined.

The High Court placed reliance on the judgment of the Apex Court in the case of State Of Punjab & Ors vs Rafiq Masih in which it was held-

“…It is not possible to postulate all situations of hardship, which would govern employees on the issue of recovery, where payments have mistakenly been made by the employer, in excess of their entitlement. Be that as it may, based on the decisions referred to herein above, we may, as a ready reference, summarise the following few situations, wherein recoveries by the employers, 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”.

While observing so, the Court partly allowed the writ petition.

Cause Title: Jawahar Lal (deceased) through LRs v. State of H.P. & Ors.