RECOVERY OF WRONGFUL / EXCESS
PAYMENTS MADE TO GOVERNMENT SERVANTS
F.No.18/03/2015-Estt. (Pay-I)
Government of India
Ministry of Personnel, Public Grievances & Pensions
Department of Personnel & Training
New Delhi, the 2nd March, 2016
OFFICE MEMORANDUM
Sub: Recovery of wrongful / excess payments made to Government
servants.
The undersigned is directed to refer to this Department’s OM
No.18/26/2011-Estt (Pay-I) dated 6th February, 2014 wherein certain instructions
have been issued to deal with the issue of recovery of wrongful / excess
payments made to Government servants in view of the law declared by Courts,
particularly, in the case of Chandi Prasad Uniyal And Ors. vs. State of
Uttarakhand And Ors., 2012 AIR SCW 4742, (2012) 8 SCC 417. Para 3(iv) of the OM
inter-alia provides that recovery should be made in all cases of overpayment
barring few exceptions of extreme hardships.
2. The issue has subsequently come up for consideration before
the Hon’ble Supreme Court in the case of State of Punjab & Ors vs Rafiq
Masih (White Washer) etc in CA No.11527 of 2014 (Arising out of SLP(C) No.11684
of 2012) wherein Hon’ble Court on 18.12.2014 decided a bunch of cases in which
monetary benefits were given to employees in excess of their entitlement due to
unintentional mistakes committed by the concerned competent authorities, in
determining the emoluments payable to them, and the employees were not guilty
of furnishing any incorrect information / misrepresentation / fraud, which had
led the concerned competent authorities to commit the mistake of making the
higher payment to the employees. The employees were as innocent as their
employers in the wrongful determination of their inflated emoluments. The
Hon’ble Supreme Court in its judgment dated 18 th December, 2014 ibid has,
inter-alia, observed as under:
“7. Having
examined a number of judgments rendered by this Court, we are of the view, that
orders passed by the employer seeking recovery of monetary benefits wrongly
extended to employees, can only be interfered with, in cases where such
recovery would result in a hardship of a nature, which would far outweigh, the
equitable balance of the employer’s right to recover. In other words,
interference would be called for, only in such cases where, it would be
iniquitous to recover the payment made. In order to ascertain the parameters of
the above consideration, and the test to be applied, reference needs to be made
to situations when this Court exempted employees from such recovery, even in
exercise of its jurisdiction under Article 142 of the Constitution of India.
Repeated exercise of such power, “for doing complete justice in any cause”
would establish that the recovery being effected was iniquitous, and therefore,
arbitrary. And accordingly, the interference at the hands of this Court.”
“10. In view of
the afore-stated constitutional mandate, equity and good conscience, in the
matter of livelihood of the people of this country, has to be the basis of all
governmental actions. An action of the State, ordering a recovery from an
employee, would be in order, so long as it is not rendered iniquitous to the
extent, that the action of recovery would be more unfair, more wrongful, more
improper, and more unwarranted, than the corresponding right of the employer,
to recover the amount. Or in other words, till such time as the recovery would
have a harsh and arbitrary effect on the employee, it would be permissible in
law. Orders passed in given situations repeatedly, even in exercise of the
power vested in this Court under Article 142 of the Constitution of India, will
disclose the parameters of the realm of an action of recovery (of an excess
amount paid to an employee) which would breach the obligations of the State, to
citizens of this country, and render the action arbitrary, and therefore,
violative of the mandate contained in Article 14 of the Constitution of India.”
3. The issue that was required to be adjudicated by the Hon’ble
Supreme Court was whether all the private respondents, against whom an order-of
recovery (of the excess amount) has been made, should be exempted in law, from
the reimbursement of the same to the employer. For the applicability of the
instant order, and the conclusions recorded by them thereinafter, the
ingredients depicted in paras 2&3 of the judgment are essentially
indispensable.
4. The Hon’ble Supreme Court while observing that 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 has summarized 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.
5. The matter has, consequently, been examined in consultation
with the Department of Expenditure and the Department of Legal Affairs. The
Ministries / Departments are advised to deal with the issue of wrongful /
excess payments made to Government servants in accordance with above decision
of the Hon’ble Supreme Court in CA No.11527 of 2014 (arising out of SLP (C)
No.11684 of 2012) in State of Punjab and others etc vs Rafiq Masih (White
Washer) etc. However, wherever the waiver of recovery in the above-mentioned
situations is considered, the same may be allowed with the express approval of
Department of Expenditure in terms of this Department’s OM No.18/26/2011-Estt
(Pay-I) dated 6th February, 2014.
6. In so far as persons serving in the Indian Audit and Accounts
Department are concerned, these orders are issued with the concurrence of the
Comptroller and Auditor General of India.
7. Hindi version will follow.
sd/-
(A.K.Jain)
Deputy Secretary to the Government of India
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