Recovery Of Excess Payments Made To Retired Employee, Without Fraud Or Misrepresentation On Their Part, Is Impermissible : Calcutta High Court

Background Facts

The employee (Respondent) retired as a headmaster from the school on June 30, 2017. His school was upgraded from a 10-class high school to a 10+2 higher secondary school on July 1, 2102. The Additional District Inspector of Schools fixed his salary after the upgrade. It was fixed as per the memo issued from the Director of Accounts, School Education Department, Government of West Bengal. The employee's pay was fixed with an increment of 3% of the basic pay and additional grade pay of ₹200, which continued till his retirement.

However, on employee's retirement, the District Inspector of Schools alleged that the increment was not admissible to headmasters who had their schools upgraded after the 27 February 2009. Hence, the retiral benefits of the employee were put on hold. Further the appellant sought recovery of the overpayment.

Aggrieved by the same, the employee filed a writ petition in the Calcutta High Court. The single judge ruled in favor of the employee on 22-06-2021, upholding his increased pay. Dissatisfied with this, the State of West Bengal (Appellant) preferred an appeal against the single judge's order.

It was contended by the employee that his pay was fixed as per the directions of the Director of Accounts, School Education Department, Government of West Bengal. He claimed that there was no fraud or misrepresentation on his part. He further contested that he was not responsible for the increment of 3% and the additional grade pay of ₹200.

The employee further argued that upgraded pay scale was given to him for more than five years without any objection raised by the authorities. He pointed out that withholding of his retiral benefits and recovering the overpayment would result in injustice

On the other hand, it was contended by the appellant that the increment and the additional grade pay was not allowed to the Headmasters of schools which were upgraded after February 27, 2009.

The appellant further relied on the petitioner's signed undertaking, in which he agreed to refund any excess payment made due to erroneous pay fixation. The respondents claimed that this undertaking justified the withholding of retiral benefits until recovery of the overdrawn amount.

Findings of the Court

It was observed by the court that the pay fixation of the employee with increment and an added grade pay was done by the authorities. Also that there was no misrepresentation or fraud on the employee's part.

The case of Thomas Denial vs. State of Kerala was relied upon by the court, wherein the Supreme Court held that excess payments cannot be recovered from employees if there was no misrepresentation or fraud on the part of employee. Also the relief against recovery of the excess payment is not provided as a matter of right but as equity to prevent suffering to employees.

Further the case of State of Punjab v. Rafiq Masih (2015), was relied upon by the court wherein the Supreme Court held that recovery from retired employees or employees nearing retirement is impermissible when excess payments are made without their fault or misrepresentation.

It was noted by the court that the employee had retired and the payments had been made for more than five years, therefore the case falls within the exceptions provided in the Rafiq Masih case. It was held by the court that objection to the admissibility of increment and pay was legally unsustainable.

Further it was held by the court that unilateral withholding of retiral benefits of the employee was contrary to principles of equity and fairness. It was affirmed by the court that the recovery claimed was illegal.

With the aforesaid observations, the appeal was dismissed by the court.

Case No. : MAT 1002 of 2022

Counsel for the Appellants : Sanjib Das

Counsel for the Respondents : Gourav Das, Jayanta Kr. Das, Madhumati Das.