Recovery of excess increments paid to employee due to wrong interpretation of service rules unjustified: Supreme Court

The Supreme Court on Monday observed that recovery of excess payments made to the employee on account of wrong interpretation of service rules is wholly unjustified [Thomas Daniel v. State of Kerala and Others]..A Division Bench of Justices S Abdul Nazeer and Vikram Nath stated that such recoveries are more unfair, wrongful, improper and unwarranted than the corresponding right of the employer to get the amount."This relief against the recovery is granted not because of any right of the employees but in equity, exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered," the Bench observed.The Supreme Court made these observations while hearing an appeal challenging a decision of the Kerala High Court that had allowed the State to recover excess service benefits granted to the present appellant (during his employment) on account of a wrong interpretation of the Kerala Service Rules.The issue for consideration before the Court was whether increments granted to the appellant, while he was in service, can be recovered from him almost 10 years after his retirement on the ground that the said increments were granted on account of an erroroneous interpretation of the prevailing service rules..At the outset, the top court was of the view that excess amounts are not recoverable if there was no misrepresentation or fraud by the employee, or a wrong principle for calculating the pay was applied, or on the basis of a particular interpretation that was subsequently found to be erroneous.Reliance was placed by the apex court on its decisions in Sahib Ram v. State of Haryana and Others (1995), Col BJ Akkara (Retd.) v. Government of India and Others (2006), Syed Abdul Qadir and Others v. State of Bihar and Others (2009) and State of Punjab and Others v. Rafiq Masih (White Washer) and Others (2015), where it had consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee.The Supreme Court, thus, observed in the present case,"The case of the respondents is that excess payment was made due to a mistake in interpreting Kerala Service Rules which was subsequently pointed out by the Accountant General. ...Having regard to the above, we are of the view that an attempt to recover the said increments after passage of ten years of his retirement is unjustified."The top court, therefore, allowed the appeal and set aside the decision of the Kerala High Court..[Read Judgment]