State of Punjab Vs Rafiq Masih (White Washer)

Court: Supreme Court of India.

Citation: AIR 2015 SCC 1267.

Case No.: 11527 of 2014.

Case Type: Civil Appeal arising out of SLP (C) No. 11684 0f 2012.

Appellant: State of Punjab and others etc.

Respondent: Rafiq Masih (White Washer) etc.

Bench:

Statutes referred:

Cases referred:

Facts:

The respondents in the case were all employees of the appellants.
All the respondents were given monetary benefits in excess of their entitlement.
The employer committed the mistake, which led to the excess payments.
Upon realizing the error, the employer-appellant tried to recover the extra money paid to the employee-respondent.

Issue:

Should all the private respondents, against whom an order of recovery (of the excess amount) has been made, should be exempted in law from the reimbursement of the same to the employer?

Contention by Appellants:

The respondent-employees were paid money that was more than what they were entitled to.
Because of the unintentional mistake by the appellant-employer, the respondent-employees were the recipients of monetary benefits beyond their due.
Thus, the appellant-respondent had the right to recover the extra, undeserved income that was paid to the employee-respondents.

Contention by Respondents:

The respondent-employees had not furnished any incorrect information or withheld any information which would have caused the appellant-employer to commit the mistake.
They were being punished for an error that they did not cause in any way.

Obiter Dicta:

The respondent-employees were not guilty of furnishing any incorrect information, which had led the concerned competent authority to commit the mistake of making the higher payment to the employees. Recovery of excess payments discovered after five years would be iniquitous and arbitrary, and as such, violative of Article 14 of the Constitution of India.
The situations in which it would be iniquitous and arbitrary to recover excess payments from the employees, where the extra payments have been made due to no fault or malice on the part of the employees, are:

Recovery from employees belonging to Class-III and Class-IV service (or Group ‘C’ and Group ‘D’ service).
Recovery from retired employees or employees who are due to retire within one year of the order of recovery.
Recovery from employees, when the excess payment has been made for a period in excess of five years before the order of recovery is issued.
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.
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.

Judgement:

Rationale:

The extra money paid to employees belonging to lower-income groups would most certainly be used to better the lives of the employees’ family.
Recovering the extra money from retired employees or employees who were very close to retirement would cause immense harm to the employee as he/she was no longer young and would have a variety of responsibilities and duties.
Recovery of the excess monetary benefits, after five years or from an employee who had wrongfully been required to discharge duties of a higher post and has been paid accordingly, would be iniquitous and arbitrary.

Conclusion:

While exercising its powers under Article 142 of the Constitution of India, the Courts must ensure an equitable balance between the respective rights of all the parties involved in the case.

Prepared by Mihir Poojary.

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