Relief against recovery of excess payment of emoluments/allowances by Company – when granted

The Hon’ble High Court at Rajasthan, in Narayan Lal V/s Ajmer Vidyut Vitaran Nigam Limited, Ajmer & Co., 2011 ruled that, as per Indian employment law, relief against recovery of excess payment of emoluments/allowances can be granted only if it is seen that; (i) the excess amount was not paid on account of misrepresentation or fraud on the part of the employee and (ii) if such excess payment was made by applying wrong principles for calculating employee’s dues.

In Narayan Lal’s case, a writ petition was filed by the petitioner challenging the validity of a recovery statement passed by the Accounts Officer of the respondent after a lapse of 20 years, praying that the respondents may be directed to make fixation of his pay and make payment of proper retirement benefits including gratuity, commutation, pension etc. with all consequential benefits including interest @12% per annum. The petitioners, relied upon the judgement of The Hon’ble Supreme Court in Syed Abdul Quadir & Ors V/s State of Bihar & Ors, 2009 and stated that no recovery can be made by the respondents from the petitioner’s retirement benefits because whatever benefits were granted by the respondents were in accordance with law and without any misrepresentation or fraud by the petitioner.

The Hon’ble High Court at Rajasthan opined that as per the landmark judgement of Syed Abdul Quadir & Ors V/s State of Bihar & Ors, 2009 relief against recovery of excess payment of emoluments/allowances may be granted to an employee if … “(a) the excess amount was not paid on account of any misrepresentation or fraud on the part of the employee and (b) if such excess payment was made by the employer by applying a wrong principle for calculating the pay/allowance or on the basis of a particular interpretation of rule/order, which is subsequently found to be erroneous.” The Hon’ble Court further held that the relief was granted by the Court to relieve the employees from great hardships that will be caused if recovery was ordered, however, if it was proved that the employee had knowledge that the payment received was in excess of what he was entitled to or if the error is detected or corrected within a short time of the wrong payment, the Courts may, depending on the facts and circumstances of the matter and as per principles of Indian employment laws,  order recovery of the excess amount.

The Hon’ble Court therefore, in keeping with principles of labour laws in India,  quashed the recovery order and directed respondents to make proper pay fixation of the petitioner’s salary in accordance with relevant provisions of employment laws in India and release all retirement benefits in accordance with law.