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Excess Payment Made To Employee Due To Erroneous Interpretation Of Rule Not Recoverable: SC

Team SoOLEGAL 6 May 2022 10:21am

Excess Payment Made To Employee Due To Erroneous Interpretation Of Rule Not Recoverable: SC

NEW DELHI: The Supreme Court stated that recovering excess payments made to employees due to incorrect interpretation of service rules is completely unjustified.

According to a Division Bench of Justices S Abdul Nazeer and Vikram Nath, such recoveries are more unfair, wrongful, improper, and unwarranted than the employer's corresponding right to the amount.

"This relief from 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 noted.

The Supreme Court made such observations while hearing an appeal challenging a Kerala High Court decision that permitted the state to recover excess service benefits granted to the existing appellant due to an incorrect interpretation of the Kerala Service Rules.

The question before the Court was whether the appellant's increments, which he received while in service, could be recovered from him almost ten years after his retirement because they were granted due to an incorrect interpretation of the prevailing service rules.

The apex court relied on its decisions in Sahib Ram v. State of Haryana and Other, Col BJ Akkara (Retd.) v. Government of India and Others, Syed Abdul Qadir and Others v. State of Bihar and Others, and State of Punjab and Others v. Rafiq Masih (White Washer) and Others, in which it consistently granted relief against recovery of the excess wrong payment of allowances from an employee.

The Supreme Court stated that "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 the passage of ten years of his retirement is unjustified."

Thus, the appeal was granted and the Kerala High Court's decision was overturned.



Tagged: Supreme Court   Sahib Ram v. State of Haryana and Other  
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