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Employees Can't Be Held Responsible If Employer Grants Terminal Benefits In Excess Of Their Entitlement: Gujarat High Court Quashes Recovery Order
PRIYANKA PREET
14 July 2022 9:45 AM IST
The Gujarat High Court has set aside an order of the Ahmedabad Municipal Corporation directing recovery of Rs. 63,878 from its former employee on the ground that the terminal benefits were wrongly granted to him at a higher pay-scale than he was entitled to.Justice Biren Vaishnav relied on several decisions of the High Court where it was held that when employees are paid excess amount,...
The Gujarat High Court has set aside an order of the Ahmedabad Municipal Corporation directing recovery of Rs. 63,878 from its former employee on the ground that the terminal benefits were wrongly granted to him at a higher pay-scale than he was entitled to.
Justice Biren Vaishnav relied on several decisions of the High Court where it was held that when employees are paid excess amount, not because of any misrepresentation or fraud on their part and if such employees had no knowledge that the amount that was being paid to them was more than what they were entitled to, they can't be held responsible for a mistake on part of the employer.
In an identical case decided by the High Court in 2016, the Ahmedabad Municipal Corporation had ordered recoveries from the pension of the pay-scale of the amounts due to wrong fixation of pay and grant of higher pay-scales without granting the opportunity of hearing. It was held therein that recoveries from employees or any excess payment were bad in law.
The High Court had also referred to the Supreme Court's decision in State of Punjab Vs Rafiq Masih, where it was held that where payments have mistakenly been made by the employer, in excess of their entitlement, recoveries by the employers would be impermissible in law where: (i) Recovery is sought from retired employees, or employees who are due to retire within one year; (i) The excess payment has been made for a period in excess of five years, before the order of recovery is issued; (iii) The Court arrives at the conclusion, that recovery if made from the employer, 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.
In this backdrop, the High Court held,
"The action of recovery of amount of Rs.63,878/- from the terminal benefits of the petitioner is quashed and set aside. The respondent corporation is directed to refund the amount of Rs.63,878/- to the petitioner within a period of ten weeks from the date of receipt of the writ of the order of this court."
Case No.: C/SCA/2840/2019
Case Title: SABIRMIYA GULAMAHEMAD GHORI v/s AHMEDABAD MUNICIPAL CORPORATION & 1 other(s)
Citation: 2022 LiveLaw (Guj) 271
