Employer can’t force employee to refund excess payment given erroneously long back: Supreme Court

May 3: In a significant judgement as related to service matters, the Supreme Court on Monday said that  increments granted to an employee cannot be recovered from him after his retirement on the ground that they were granted erroneously. The apex court stated that employers can’t claim such refunds, if there was no misrepresentation made or fraud committed by the employee.

Delivering judgement, a bench of Justices S Abdul Nazeer and Vikram Nath came to the rescue of a government teacher from Kerala against whom recovery proceedings were initiated by the state for wrongly granting him increments. The Supreme Court brought to an end his legal battle of 20 years during which he had lost the case in the Kerala High Court.

The govt teacher from Kerala took study leave in 1973 but that leave period was not considered while granting him promotion. Twenty-four years later in 1997 he was issued notice and recovery proceedings were initiated against him after he retired in 1999. He first approached the Public Redressal Complaint Cell of the chief minister of Kerala but was not granted relief after which he moved the High Court which dismissed his plea.

The Supreme Court bench said, “This court in a catena of decisions has consistently held that if the excess amount was not paid on account of any misrepresentation or fraud of the employee or 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, such excess payment of emoluments or allowances are not recoverable.”

The bench further said, “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. This court has further held that if in a given case, it is proved that an employee had knowledge that the payment received was in excess of what was due or wrongly paid, or in cases where error is detected or corrected within a short time of wrong payment, the matter being in the realm of judicial discretion, the courts may on the facts and circumstances of any particular case order for recovery of amount paid in excess.”