1. The Petitioner retired from the service of the 1st Respondent on 28.2.2017. He entered service as Driver on a provisional basis on 1.7.1979 and was regularised in service by Order, dated 18.9.1986. He got the first time bound higher grade with effect from 1.7.1996 and the second time bound higher grade with effect from 1.7.2004. After 12 years, in the year 2016, the Senior Deputy Director of the Audit Department of the 1st Respondent noticed certain irregularities in the fixation of pay between 1999 and 2013. Consequently, the Administrative Officer of the 1st Respondent issued Ext.P1 on 22.11.2016 directing recovery of excess pay alleged to have been drawn by the Petitioner between 1999 and 2013.2. By Ext.P2 order of the Managing Director of the 1st Respondent, on 14.11.2017, which is nine months after the retirement of the Petitioner, a sum of '1,00,757 was deducted from the DCRG payable to the Petitioner towards recovery of excess pay. Aggrieved by the recovery effected, the Petitioner has approached this Court seeking to quash Ext.P1 and for a declaration that the recovery effected from the DCRG as per Ext.P2 is illegal and arbitrary. There is also a prayer for release of the amount withheld from the DCRG, to the Petitioner.3. A Counter Affidavit has been filed on behalf of Respondents 1 to 3 disputing the claim of the Petitioner. The Petitioner has filed a reply Affidavit, wherein it is contended that apart from the question whether or not there was an excess pay, the action of the Respondents in making the recovery of the alleged excess pay was not permissible having regard to the decision of the Hon'ble Supreme Court in State of Punjab v. Rafiq Masih, 2015 (3) LLN 575 (SC): 2015 (5) CTC 455 (SC): 2015 (1) KLT 429. The Petitioner contended that he comes under the first three categories mentioned in Paragraph 12 of the Judgment.4. Heard Sri M. Sreekumar, Counsel for the Petitioner and Sri M. Ajay Counsel for Respondents 1 to 3.5. The Counsel for the Petitioner relied on the decision in Rafiq Masih (supra) and a recent decision of a Division Bench of this Court in State of Kerala v. Vinod Kumar, 2020 (3) LLN 207 (DB) (Ker): 2020 (4) KLT 230, in support of his contention that the Respondents are not entitled to recover the pay alleged to be drawn in excess and the decision of the Hon'ble Supreme Court in State of Uttar Pradesh and others v. Dhirendra Pal Singh, 2017 (1) SCC 49, and the decision of a Division Bench of this Court in Kerala Land Development Corporation v. N. Ravindran and another, 2013 (4) LLN 671 (DB) (Ker): 2013 (3) KLT 408, to contend that the Respondents are liable to pay interest.6. I shall first consider the question regarding whether the Petitioner is entitled to interest on the amount withheld from DCRG. Dhirendra Pal (supra) was a case where the Employee retired on 13.6.2009 and a portion of the gratuity and commutation of Pension were held up on an alleged reason that his actions while in service have caused loss to the Department. Six years later, in 2015, the State took a decision to withhold the remaining part of the gratuity and Pension and directed recovery of a sum of Rs.7,26,589 from the retiral dues. The High Court, in the Writ Petition filed by the Employee, directed release of the remaining amount of gratuity and pension with Interest at the rate of 10% per annum on the sum withheld by the State. The Supreme Court upheld the findings of the High Court but reduced the rate of Interest from 10% to 8%. The Supreme Court referred to the decisions in State of Kerala and others v. M. Padmanabhan Nair, 1985 (1) SCC 429; and Y.K. Singla v. Punjab National Bank and others, 2013 (1) LLN 44 (SC): 2013 (3) SCC 472, wherein the Hon'ble Supreme Court had granted Interest at the rate of 6% per annum and 8% per annum respectively. The Hon'ble Supreme Court also took into account the provisions of Section 7(3-A) of the Payment of Gratuity Act, 1972, which provides that where there is delay in payment of gratuity, the Employer shall pay simple interest at such rate, not exceeding the rate notified by the Central Government from time to time for repayment of long term deposits.7. In Kerala Land Development Corporation (supra), a Division Bench of this Court held that even in the absence of any specific provision in the Gratuity Rules of an Employer, no scheme for payment of gratuity shall run contrary to the Payment of Gratuity Act and the provision for payment of interest under the Payment of Gratuity Act will necessarily apply. In the light of the above two decisions and the provisions of the Payment of Gratuity Act, the Employer cannot contend that they are not liable to pay interest in case of delayed payment of gratuity. As per Section 7(3) of the Payment of Gratuity Act, there is a statutory obligation to pay the amounts due as gratuity within 30 days from the day on which it fell due. Non-payment within the said time will invite the obligation to pay interest from the day on which the amount fell due as per Section 7(3-A). As per the Proviso the section, the only legal reason available to the Employer for not paying interest is in a case where the delay was due to the fault of the Employee and that the Employer has received permission of the Controlling Authority for delayed payment on the above ground.8. Regarding the question whether the Respondents 1 to 3 are entitled to recover the alleged excess pay from the DCRG payable to the Petitioner, in Rafiq Masih (supra) the Hon'ble Supreme Court in Paragraph 12 held as follows:"12. 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 & 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."9. Later the Hon'ble Supreme Court in the decision in High Court of Punjab and Haryana & ors. v. Jagdev Singh, 2016 (14) SCC 267, held that the situation stipulated in sub-para (ii) in Paragraph 18 of the Judgment in Rafiq Masih cannot apply to certain situations. In Vinod Kumar (supra), a Division Bench of this Court considered the above two decisions and held in Paragraph 7 as follows:"7. .... .... .... .... .... .... .... .... .... .... .... ....On a reading of both Rafiq Masih and Jagdev Singh, it is difficult for us to accept the contention of the learned Government Pleader that Jagdev Singh is a complete departure from the principles laid down in Rafiq Masih. From a reading of Paragraphs 10 & 11 of Jagdev Singh, it appears to us that the Supreme Court had only clarified that in the case of recovery from retired Employees or Employees, who are due to retire within one year of the order of recovery, there would be no bar in ordering recovery, if the Employee concerned had executed an undertaking agreeing to refund any excess payment. We cannot read Jagdev Singh as having laid down the proposition that in every case where there is an undertaking as aforesaid, recovery can be ordered from the Employee concerned whatever be the point of time that such payment was made. We cannot overlook the fact that there is not even a suggestion in Jagdev Singh that in the event of there being an undertaking to refund excess pay, none of the situations envisaged as items (i) to (v) of Rafiq Masih can be pressed into service."10. The Petitioner contends that the first three situations stated in Paragraph 12 of Rafiq Masih applies to his case. That is, he belongs to Class III-Class IV service and the recovery regarding the payment made for a period in excess of five years before the order of recovery was proposed just 3 months prior to his retirement and was actually made almost 9 months after his retirement.11. The Counsel for Respondents 1 to 3 points out that the contention of the Petitioner before the Respondents 1 to 3 was not regarding the right to recover excess pay, but was regarding the correctness of the fixation of pay. The Counsel prays that the issue should be relegated to Respondents 1 to 3 who will take a decision on the basis of the law of the land. I find some justification in the request made by the Counsel for the Respondents, in so much so that the Petitioner has not clearly pleaded the facts which would justify the application of the dictum laid down in Rafiq Masih (supra) in the Writ Petition.12. In the above circumstances, this Writ Petition is allowed. Exhibit P1 order
Please Login To View The Full Judgment!
in so far as it directs recovery of pay drawn in excess from the Petitioner and Exhibit P2 in so far as it does not sanction the disbursement of Rs.1,00,757 are quashed. The Respondents 1 to 3 are directed to pass fresh orders regarding the claim of the Petitioner against recovery. The consideration by the Respondents will be confined to the question whether the Petitioner's case comes within the situations envisaged in Paragraph 12 of the Judgment in Rafiq Masih (supra). If the Respondents find that the Petitioner's case comes within the above said situations, they shall release the amounts withheld from the DCRG payable to the Petitioner as per Ext.P2, along with interest at the rate of 8% per annum from the date on which the balance amount of Rs.7,66,726 was paid to the Petitioner till the date of payment. The entire process directed to be undertaken by the Respondents 1 to 3 shall be completed within 3 months from the date of receipt of the copy of the Judgment.In the circumstances of the case, there will be no order as to costs.