JOGESWAR SAHOO & ORS.versusTHE DISTRICT JUDGE, CUTTACK & ORS.

                  [2025] 5 S.C.R. 13 : 2025 INSC 449

                      Jogeswar Sahoo & Ors.
                                 v.
                 The District Judge, Cuttack & Ors.
                      (Civil Appeal No. 4989 of 2025)
                                 04 April 2025
                 [Pamidighantam Sri Narasimha and
                    Prashant Kumar Mishra,* JJ.]


                           Issue for Consideration
       Whether recovery of the amount extended to stenographer Grade-I
       and Personal Assistant, while they were in service, justified after
       their retirement and without affording any opportunity of hearing.

                                  Headnotes†
       Service law – Retrospective promotion/appointment – Grant
       of financial benefit – Recovery of excess drawn arrears after
       superannuation of the employees, if permissible – Appellants-
       stenographer Grade-I granted certain financial benefit
       on grant of promotion/appointment retrospectively upon
       upgradation – Appellants superannuated from their posts and
       three years thereafter, the respondent no.1 ordered recovery
       of said amount and directed the appellants to deposit the
       excess drawn arrears, without affording any opportunity of
       hearing – Writ petition by appellants, dismissed by the High
       Court – Sustainability:
       Held: If the excess amount was not paid on account of any
       misrepresentation/fraud by 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 – Such relief 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 would be
       caused if the recovery is ordered – On facts, payment made to the
       appellants was not on account of any fraud or misrepresentation
       by them – It seems, when the financial benefit was extended to the

* Author
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      appellants by the District Judge, the same was subsequently not
      approved by High Court which resulted in the subsequent order
      of recovery – Recovery was directed six years after the payment
      was made, and three years after the appellants retired, and that
      too without affording any opportunity of hearing – Appellants
      having superannuated on a ministerial post of Stenographer were
      admittedly not holding any gazetted post – Thus, the recovery
      order is unsustainable, and is set aside. [Paras 9, 11, 12]

                               Case Law Cited
      Thomas Daniel v. State of Kerala & Ors. (2022) SCC online SC
      536 – relied on.
      Sahib Ram v. State of Haryana [1994] Supp. 3 SCR 674 : (1995)
      Supp. 1 SCC 18; Shyam Babu Verma v. Union of India [1994] 1
      SCR 700 : (1994) 2 SCC 521; Union of India v. M. Bhaskar [1996]
      Supp. 2 SCR 358 : (1996) 4 SCC 416; V. Gangaram v. Regional
      Jt. Director [1997] 3 SCR 1043 : (1997) 6 SCC 139 – referred to.

                              List of Keywords
      Superannuation; Financial benefit on retrospective promotion/
      appointment; Shetty Commission; Erroneous interpretation of rule/
      order; Wrong principle for calculating pay/allowance; Stenographer
      Grade-I and Personal Assistant; Retirement; Opportunity of hearing;
      Grant of financial benefit; Recovery of excess drawn arrears after
      superannuation of the employees; Upgradation of Stenographers;
      Misrepresentation/fraud by employee; Excess payments of
      emoluments or allowances; Judicial discretion; Ministerial post of
      Stenographer not gazetted post.

                             Case Arising From
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4989 of 2025
      From the Judgment and Order dated 09.11.2023 of the High Court
      of Orissa at Cuttack in WP (C) No. 33482 of 2023

                          Appearances for Parties
      Advs. for the Appellants:
      Kedar Nath Tripathy, Aditya Narayan Tripathy, S. Debabrata Reddy.
      Advs. for the Respondents:
      Joby P. Varghese, Shahid Akhtar, Shovan Mishra, Ms. Bipasa Tripathy.
[2025] 5 S.C.R.                                                            15

                        Jogeswar Sahoo & Ors. v.
                    The District Judge, Cuttack & Ors.

                Judgment / Order of the Supreme Court

                                 Judgment

     Prashant Kumar Mishra, J.

     Leave granted.

2.   This appeal is directed against the final judgment and order dated
     09.11.2023 passed by the High Court of Orissa at Cuttack in WP (C)
     No. 33482 of 2023 whereunder the High Cout dismissed the appellants’
     writ petition in which a challenge was made to the orders dated
     12.09.2023 and 08.09.2023 passed by the Special Judge, Special
     Court, Cuttack and Registrar, Civil Courts, Cuttack, as the case may
     be, directing recovery of Rs 26,034/-, Rs.40713/-, Rs. 26539/-, Rs.
     24683/- and Rs. 21,485/-.
3.   At the relevant time, the appellants were working as Stenographer
     Grade-I and Personal Assistant in the establishment of District Judiciary,
     Cuttack, Orissa. They were granted financial benefit for a sum of Rs
     26,034/-, Rs. 40713/-, Rs. 26539/-, Rs. 24683/- and Rs. 21,485/- by
     way of credit to their account vide Office Order No. 63 dated 10.05.2017
     passed by the District Judge, Cuttack granting promotion/appointment
     retrospectively w.e.f 01.04.2003 consequent upon upgradation of
     the Stenographers in three grades such as Stenographer Grade-I,
     Stenographer Grade-II and Stenographer Grade-III by relying upon
     the recommendations of the respondent no. 1 in compliance towards
     the implementation of the report of the Shetty Commission.
4.   After grant of such financial benefit, in the year 2017, the appellants
     have superannuated from their respective posts sometimes in the
     year 2020. After three years of their retirement and six years of
     granting the financial benefit, respondent no. 1 ordered for recovery
     of the said amount on the ground that extension of benefit of Shetty
     Commission’s recommendations to the appellants were on an
     erroneous interpretation of such recommendations, therefore, the
     financial benefit granted to them is liable to be recovered and under
     orders dated 12.09.2023 and 08.09.2023, the appellants were directed
     to deposit the excess drawn arrears. Since the orders were passed
     without affording any opportunity of hearing to the appellants, they
     preferred a writ petition before the High Court which came to be
     dismissed under the impugned judgment and order.
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5.     Learned counsel appearing for the appellants argued that the
       appellants were granted financial benefit without there being any
       fraud or misrepresentation by them, therefore, recovery of the amount
       after three years of their retirement is illegal and arbitrary. It is argued
       that the High Court has failed to consider the settled legal position in
       catena of decisions of this Court wherein such recovery from a low
       paid employee after retirement have been held bad in law.
6.     Per contra, learned counsel appearing for the respondents would
       support the impugned judgment on submission that the appellants
       were not entitled to the financial benefit extended to them and the
       order passed by the District Judge, Cuttack was affirmed by the High
       Court of Orissa in exercise of an administrative power, therefore, the
       recovery is justified. It is also argued that such financial benefit upon
       retrospective promotion was granted with the condition that excess
       amount, if any, paid shall be refunded by the appellants and the
       appellants have furnished their respective undertakings to the said
       effect, therefore, they are estopped from challenging the recovery.
7.     The issue falling for our consideration is not about the legality of
       the retrospective promotion and the financial benefit granted to the
       appellants on 10.05.2017. The issue for consideration is whether
       recovery of the amount extended to the appellants while they were in
       service is justified after their retirement and that too without affording
       any opportunity of hearing.
8.     The law in this regard has been settled by this Court in catena of
       judgments rendered time and again; Sahib Ram vs. State of Haryana,1
       Shyam Babu Verma vs. Union of India,2 Union of India vs. M.
       Bhaskar3 and V. Gangaram vs. Regional Jt. Director4 and in a recent
       decision in the matter of Thomas Daniel vs. State of Kerala & Ors.5.
9.     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


1     (1995) Supp. 1 SCC 18
2     (1994) 2 SCC 521
3     (1996) 4 SCC 416
4     (1997) 6 SCC 139
5     (2022) SCC online SC 536
[2025] 5 S.C.R.                                                          17

                        Jogeswar Sahoo & Ors. v.
                    The District Judge, Cuttack & Ors.

     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.
10. In Thomas Daniel (supra), this Court has held thus in paras 10,
    11, 12 and 13:
           “10. In Sahib Ram v. State of Haryana1 this Court restrained
           recovery of payment which was given under the upgraded
           pay scale on account of wrong construction of relevant order
           by the authority concerned, without any misrepresentation
           on part of the employees. It was held thus:
                “5. Admittedly the appellant does not possess
                the required educational qualifications. Under the
                circumstances the appellant would not be entitled
                to the relaxation. The Principal erred in granting
                him the relaxation. Since the date of relaxation,
                the appellant had been paid his salary on the
                revised scale. However, it is not on account of
                any misrepresentation made by the appellant
                that the benefit of the higher pay scale was
                given to him but by wrong construction made by
                the Principal for which the appellant cannot be
                held to be at fault. Under the circumstances the
                amount paid till date may not be recovered from
                the appellant. The principle of equal pay for equal
                work would not apply to the scales prescribed by
                the University Grants Commission. The appeal
                is allowed partly without any order as to costs.”
           11. In Col. B.J. Akkara (Retd.) v. Government of India2 this
           Court considered an identical question as under:
                “27. The last question to be considered is
                whether relief should be granted against the
                recovery of the excess payments made on
                account of the wrong interpretation/understanding
                of the circular dated 7-6-1999. This Court has
                consistently granted relief against recovery
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      of excess wrong payment of emoluments/
      allowances from an employee, if the following
      conditions are fulfilled (vide Sahib Ram v. State
      of Haryana [1995 Supp (1) SCC 18 : 1995
      SCC (L&S) 248], Shyam Babu Verma v. Union
      of India [(1994) 2 SCC 521 : 1994 SCC (L&S)
      683 : (1994) 27 ATC 121], Union of India v. M.
      Bhaskar [(1996) 4 SCC 416 : 1996 SCC (L&S)
      967] and V. Gangaram v. Regional Jt. Director
      [(1997) 6 SCC 139 : 1997 SCC (L&S) 1652]):
      (a) The excess payment was not made on
      account of any misrepresentation or fraud on
      the part of the employee.
      (b) 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.
      28. Such relief, restraining back recovery of
      excess payment, is granted by courts not because
      of any right in the employees, but in equity,
      in exercise of judicial discretion to relieve the
      employees from the hardship that will be caused
      if recovery is implemented. A government servant,
      particularly one in the lower rungs of service
      would spend whatever emoluments he receives
      for the upkeep of his family. If he receives an
      excess payment for a long period, he would
      spend it, genuinely believing that he is entitled
      to it. As any subsequent action to recover the
      excess payment will cause undue hardship to
      him, relief is granted in that behalf. But where
      the employee had knowledge that the payment
      received was in excess of what was due or
      wrongly paid, or where the error is detected or
      corrected within a short time of wrong payment,
      courts will not grant relief against recovery. The
      matter being in the realm of judicial discretion,
      courts may on the facts and circumstances of
[2025] 5 S.C.R.                                                        19

                        Jogeswar Sahoo & Ors. v.
                    The District Judge, Cuttack & Ors.

                any particular case refuse to grant such relief
                against recovery.
                29. On the same principle, pensioners can also
                seek a direction that wrong payments should
                not be recovered, as pensioners are in a more
                disadvantageous position when compared to
                in-service employees. Any attempt to recover
                excess wrong payment would cause undue
                hardship to them. The petitioners are not guilty
                of any misrepresentation or fraud in regard
                to the excess payment. NPA was added to
                minimum pay, for purposes of stepping up, due
                to a wrong understanding by the implementing
                departments. We are therefore of the view that
                the respondents shall not recover any excess
                payments made towards pension in pursuance
                of the circular dated 7-6-1999 till the issue of
                the clarificatory circular dated 11-9-2001. Insofar
                as any excess payment made after the circular
                dated 11-9-2001, obviously the Union of India
                will be entitled to recover the excess as the
                validity of the said circular has been upheld
                and as pensioners have been put on notice in
                regard to the wrong calculations earlier made.”
           12. In Syed Abdul Qadir v. State of Bihar3 excess payment
           was sought to be recovered which was made to the
           appellants-teachers on account of mistake and wrong
           interpretation of prevailing Bihar Nationalised Secondary
           School (Service Conditions) Rules, 1983. The appellants
           therein contended that even if it were to be held that the
           appellants were not entitled to the benefit of additional
           increment on promotion, the excess amount should not
           be recovered from them, it having been paid without any
           misrepresentation or fraud on their part. The Court held
           that the appellants cannot be held responsible in such a
           situation and recovery of the excess payment should not be
           ordered, especially when the employee has subsequently
           retired. The court observed that in general parlance,
           recovery is prohibited by courts where there exists no
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      misrepresentation or fraud on the part of the employee
      and when the excess payment has been made by applying
      a wrong interpretation/understanding of a Rule or Order.
      It was held thus:
           “59. Undoubtedly, the excess amount that has
           been paid to the appellant teachers was not
           because of any misrepresentation or fraud
           on their part and the appellants also had no
           knowledge that the amount that was being paid
           to them was more than what they were entitled
           to. It would not be out of place to mention here
           that the Finance Department had, in its counter-
           affidavit, admitted that it was a bona fide mistake
           on their part. The excess payment made was
           the result of wrong interpretation of the Rule that
           was applicable to them, for which the appellants
           cannot be held responsible. Rather, the whole
           confusion was because of inaction, negligence
           and carelessness of the officials concerned
           of the Government of Bihar. Learned counsel
           appearing on behalf of the appellant teachers
           submitted that majority of the beneficiaries have
           either retired or are on the verge of it. Keeping
           in view the peculiar facts and circumstances of
           the case at hand and to avoid any hardship to
           the appellant teachers, we are of the view that
           no recovery of the amount that has been paid
           in excess to the appellant teachers should be
           made.”
      13. In State of Punjab v. Rafiq Masih (White Washer)4
      wherein this court examined the validity of an order
      passed by the State to recover the monetary gains wrongly
      extended to the beneficiary employees in excess of their
      entitlements without any fault or misrepresentation at the
      behest of the recipient. This Court considered situations
      of hardship caused to an employee, if recovery is directed
      to reimburse the employer and disallowed the same,
      exempting the beneficiary employees from such recovery.
      It was held thus:
[2025] 5 S.C.R.                                                       21

                        Jogeswar Sahoo & Ors. v.
                    The District Judge, Cuttack & Ors.

                “8. As between two parties, if a determination
                is rendered in favour of the party, which is the
                weaker of the two, without any serious detriment
                to the other (which is truly a welfare State),
                the issue resolved would be in consonance
                with the concept of justice, which is assured to
                the citizens of India, even in the Preamble of
                the Constitution of India. The right to recover
                being pursued by the employer, will have to be
                compared, with the effect of the recovery on the
                employee concerned. If the effect of the recovery
                from the employee concerned would be, more
                unfair, more wrongful, more improper, and more
                unwarranted, than the corresponding right of the
                employer to recover the amount, then it would
                be iniquitous and arbitrary, to effect the recovery.
                In such a situation, the employee’s right would
                outbalance, and therefore eclipse, the right of
                the employer to recover.
                xxxxxxxxx
                18. It is not possible to postulate all situations
                of hardship which would govern employees on
                the issue of recovery, where payments have
                mistakenly been made by the employer, in excess
                of their entitlement. Be that as it may, based on
                the decisions referred to hereinabove, we may, as
                a ready reference, summarise the following few
                situations, wherein recoveries by the employers,
                would be impermissible in law:
                (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.
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                    (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.”
11. In the case at hand, the appellants were working on the post of
    Stenographers when the subject illegal payment was made to them.
    It is not reflected in the record that such payment was made to the
    appellants on account of any fraud or misrepresentation by them. It
    seems, when the financial benefit was extended to the appellants
    by the District Judge, Cuttack, the same was subsequently not
    approved by the High Court which resulted in the subsequent order
    of recovery. It is also not in dispute that the payment was made
    in the year 2017 whereas the recovery was directed in the year
    2023. However, in the meanwhile, the appellants have retired in the
    year 2020. It is also an admitted position that the appellants were
    not afforded any opportunity of hearing before issuing the order of
    recovery. 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.
12. For the aforestated, we are of the considered view that the appeal
    deserves to be allowed. Accordingly, we allow the appeal and set
    aside the order of the High Court and in consequence the orders
    dated 12.09.2023 and 08.09.2023 by which the appellants were
    directed to deposit the excess drawn arrears are set aside

      Result of the case: Appeal allowed.



      †
          Headnotes prepared by: Nidhi Jain