Excess Payments To Employee Can't Be Recovered When There Was No Fraud Or Misrepresentation: Supreme Court

The Supreme Court has reiterated that excess payment made to an employee cannot be recovered if such payment was not on account of any fraud or misrepresentation on the part of the employee. Also, excess payment to the employee due to any wrong application of the rule or incorrect calculation on the part of the employer is not recoverable.A bench comprising Justice PS Narasimha and Justice Prashant Kumar Mishra was deciding the appeals filed by persons, who were working as Stenographers and Personal Assistants in the Orissa District Judiciary, against the recoveries of excess payments. Amounts in the range of Rs.20,000 to 40,000 were sought to be recovered from the appellants. The recoveries were ordered nearly three years after their retirement and six years after the payment.After the High Court rejected their petitions, they approached the Supreme Court.The judgment authored by Justice Narasimha, after referring to various precedents, including the 2022 judgment in Thomas Daniel vs. State of Kerala & Ors(2022), observed :"This Court has consistently taken the view that if the excess amount was not paid on account of any misrepresentation or fraud on the part 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 payments of emoluments or allowances are not recoverable. It is held that such relief against the recovery is not because of any right of the employee but in equity, exercising judicial discretion to provide relief to the employee from the hardship that will be caused if the recovery is ordered."In Thomas Daniel, the Court had held that recoveries would be impermissible in following situations :(i) Recovery from the employees belonging to Class III and Class IV service (or Group C and Group D service).(ii) Recovery from the retired employees, or the employees who are due to retire within one year, of the order of recovery.(iii) Recovery from the employees, when the excess payment has been made for a period in excess of five years, before the order of recovery is issued.(iv) Recovery in cases where an employee has wrongfully been required to discharge duties of a higher post, and has been paid accordingly, even though he should have rightfully been required to work against an inferior post.(v) In any other case, where the court arrives at the conclusion, that recovery if made from the employee, 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.Here, the Court noted that there was no fraud or misrepresentation on the part of the petitioners in obtaining the excess payment. Also, no opportunity of hearing was afforded to them before ordering the recoveries."The appellants having superannuated on a ministerial post of Stenographer were admittedly not holding any gazetted post as such applying the principle enunciated by this Court in the above quoted judgment, the recovery is found unsustainable," the Court observed while allowing their appeals.Case : Jogeswar Sahoo and others vs The District Judge Cuttack and othersCitation : 2025 LiveLaw (SC) 396Click here to read the judgment

Excess Payments To Employee Can't Be Recovered When There Was No Fraud Or Misrepresentation: Supreme Court

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