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
Authority :www.persmin.gov.in
