Management Can't Initiate Recovery Of Overpayment Unless Fraud/Misrepresentation Can Be Proven On Workman's Part: Central Administrative Tribunal, Allahabad

The matter pertained to a Workman who mistakenly entered the wrong date in his promotion form. Thereafter, the Management initiated the recovery of his past increments without giving a show cause notice or considering the Workman's representation. The Tribunal held that the Workman was a Group-C employee and had not committed any fraud or misrepresentation. Therefore, the recovery from his salary was held to be invalid.

Brief Facts:

The Workman was appointed as a Lineman on 11.03.1983 and was directed to join at Manea Station (Punjab). In 1995, he was promoted to the post of Phone Mechanic. In December 1999, he requested a transfer from Manea Station (Punjab) to Noida (Uttar Pradesh), which was approved. Later, he was transferred from Noida to Deoria and then to Varanasi in 2010.

A circular issued by the Management granted one-time bound promotion (O.T.B.P.) to those who worked for more than 10 to 16 years, leading to the Workman's promotion to Senior T.O.A.G. on 06.06.2003. However, while filling out the promotion form, the Workman mistakenly entered his promotion date as 09.06.2003 instead of 31.12.2002. He requested a correction through a representation dated 01.02.2018. However, the Management considered the date of promotion as 09.06.2003 only and started recovering money from the Workman's salary for the alleged overpayment. The Workman was not given any show cause notice and the Management ended up recovering Rs. 10,739/- from his salary and also stopped an increment. The Workman sent a detailed representation to the General Manager, Bharat Sanchar Nigam Ltd., requesting a decision on his representation and the recovery. However, no decision was made. Feeling aggrieved, the Workman filed an original application before the Central Administrative Tribunal, Allahabad (“Tribunal”).

The Workman contended that the initiation of recovery without any show cause notice and intimation was illegal, arbitrary, and violated Articles 14 and 16 of the Indian Constitution. Further, the Workman contended that he was a Group C employee. He relied on State of Punjab and Others vs Rafiq Masih and Others [(2015) 2 Supreme Court Cases (L&S) 33], where it was held that no recovery could be made from Group C employees in case of any excess in payment or overpayment.

The Management argued that the Workman received two increments in the same year, leading to excess payment due to the aforementioned mistake. This excess payment was rectified upon discovering the error. They further contended that mistakes can be rectified at any stage, so there was no illegality or infirmity in recovering the amount from the Workman. Additionally, they argued that since the excess payment/overpayment happened while granting two increments in a year to the Workman, the Management was competent to recover the excess amount/overpayment.

Observations of the Tribunal:

The Tribunal observed that according to established legal principles, recovery cannot be initiated without alleging fraud or misrepresentation on the part of the person from whom recovery is sought, and a show-cause notice is necessary before such action.

The Management failed to provide evidence of issuing a show cause notice before the recovery. Further, it was evident from the records that there was no misrepresentation by the Workman, and any mistake could be attributed to the Management itself. Referring to the case of State of Punjab vs. Rafiq Masih [(2015) 2 Supreme Court Cases (L&S) 33], the Tribunal highlighted situations where recovery by employers would be impermissible, including cases involving Class-III and Class-IV employees, retired employees, or employees due to retire soon, and instances where recovery is sought after five years from the excess payment. Additionally, the Tribunal placed reliance on Chandi Prasad Uniyal vs. State of Uttrakhand [(2012) 8 Supreme Court Cases 417], which emphasized that recovery cannot be made without proving misrepresentation or fraud. Furthermore, in the case of Davinder Singh vs. State of Punjab [(2010) 13 Supreme Court Cases 88], it was emphasized that the delinquent must be given an opportunity for a hearing before passing an order.

Given that the Workman was a Group 'C' employee and had not committed fraud or misrepresentation, recovery from his salary was held to be invalid. Therefore, the Tribunal allowed the original application, directing the Management to refund the entire recovered amount with 6% per annum interest within three months.

Case Title: Rajendra Ram vs Chief Managing Director and Others

Case No.: Original Application No. 330/00511 of 2019

Advocate for the Applicant: Shri M.S. Khan, Shri Jaswant Singh, and Shri Dharmendra Tiwari

Advocate for the Respondents: Shri Anil Kumar

Click Here To Read Order