STATE OF PUNJAB AND OTHERS ETC.versusRAFIQ MASIH (WHITE WASHER) ETC.

                   [2014] 13 S.C.R. 1343


         STATE OF PUNJAB AND OTHERS ETC.                         A
                              V.

          RAFIQ MASIH (WHITE WASHER) ETC.
              (Civil Appeal No. 11527 of 2014)
                                                                 B
                   DECEMBER 18, 2014
 (JAGDISH SINGH KHEHAR AND ARUN MISHRA, JJ.)
       Service Law- Recovery of monetary benefits- Wrongly
extended to the employees - Due to unintentional mistake
committed by the employer and not on account of any              C
misrepresentation or fraud committed by the employees -
Propriety of the recovery - Held: In view of the doctrine of
equality enshrined u!Arts. 14 to 18 and 38, 39, 39A, 43 and
46 of the Constitution, equity and good conscience has to
be basis of all governmental actions, in the matter of           D
livelihood of the people - Recovery of monetary benefit given
in excess of entitlement to the employee would be
permissible in law, so long it is equitous and does not have
harsh and arbitrary effect on the employee - Such recovery
would be impermissible in cases of Class Ill and Class IV        E
employees; retired employees or due to retire within one year;
where the excess payment was made for a period in excess
of five years; where employee has wrongfully been required
to discharge duty of a higher post and has been paid
accordingly; and in any other case where the court finds that    F
recovery would be iniquitous or harsh or arbitrary to such an
extent to outweigh the equitable balance of employer's right
to recover- In the present case, recovery was impermissible
- Constitution oflndia, 1950-Arts. 14 to 18, 38, 39, 39A, 43
and 46 - Equity.                                                 G
     Disposing of the appeals, the Court
      HELD: 1. The provisions under Articles 14 to 18,
contained in Part Ill of the Constitution and Articles 38,
39, 39A, 43 and 46 contained in Part IV of the Constitution, H
                            1343
1344      SUPREME COURT REPORTS             [2014] 13 S.C.R.


 A contain a mandate to the State requiring it to assure a
   social order providing justice - social, economic and
   political, by inter alia minimizing monetary inequalities,
   and by securing the right to adequate means of
   livelihood, and by providing for adequate wages· so as
 B to ensure, an appropriate standard of life, and by
   promoting economic interests of the weaker sections.
   In view ~fthe afore-stated constitutional mandate, equity
   and good conscience, in the matter of livelihood of the
   people of the country, has to be the basis of all
 c governmental actions. [Paras 9 and 10][1352-D-H;
   1353-A]
        2. Orders passed by the employer seeking recovery
   of monetary benefits wr~ngly extended to employees,
   can only be interfered with, in cases where such recovery
 D would result in a hardship of a nature, which would far
   outweigh, the equitable balance of the employer's right
   to recover. i.e. it would be iniquitous to recover the
   payment made. [Para 7][1351-C-E]
 E       3. An action of the State, ordering a recovery from
    an employee, would be in order, so long as it is not
    rendered iniquitous to the extent, that the action of
    recovery would be more unfair, more wrongful, more
    improper, and more unwarranted, than the
  F corresponding right of the employer, to recover the
    amount. Or in other words, till such time as the recovery
    would have a harsh and arbitrary effect on the employee,
    it would be permissible in law. [Para 10][1353-A-B]
        4. Such recovery from employees belonging to the
 G lower rungs (i.e., Class-Ill and Class-IV - sometimes
   denoted as Group 'C' and Group 'D') of service, should
   not be l?Ubjected to the ordeal of any recovery, even
   though they were beneficiaries of receiving higher
   emoluments, than were due to them. Such recovery
 H
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1345


would be iniquitous and arbitrary and therefore would A
also breach the mandate contained in Article 14 of the
Constitution. [Para 11)[1357-B-D]
      5. Recovery of excess payments, made from
employees who have retired from service, or are close
to their retirement, would entail extremely harsh             8
consequences outweighing the monetary gains by the
employer. A retired employee or an employee about to
retire, is a class apart from those who have sufficient
service to their credit, before their retirement Thus,
recovery would be iniquitous and arbitrary, if it is sought   C
to be made after the date of retirement, or soon before
retirement. A period within one year from the date of
superannuation, should be accepted as the period
during which the recovery should be treated as
iniquitous. Therefore, it would be justified to treat an      D
order of recovery, on account of wrongful payment made
to an employee, as arbitrary, if the recovery is sought to
be made after the employee's retirement, or within one
year of the date of his retirement on superannuation.
[Para 11][1358-C-G]                                           E
      6. The few situations, wherein recoveries by the
employers, would be impermissible in law are: (i)
Recovery from employees belonging to Class-Ill and
Class-IV service (or Group 'C' and Group '0' service). F
(ii)Recovery from retired employees, or employees who
are due to retire within one year, of the order of recovery.
(iii)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. (iv) Recovery in cases G
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
                                                              H
1346        SUPREME COURT REPORTS               [2014) 13 S.C.R.


 A 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. [Para 12][1360-G-H; 1361-A-E]
 B      7. In the present case, all the cases would
   undisputedly fall within the first four categories
   delineated hereinabove. Therefore, the impugned orders
   passed by the High Court quashing the order of recovery,
   shall be deemed to have been upheld. [Para 13]
 C (1361-E-F]
           Syed Abdul Qadir v. State of Bihar (2009) 3 SCC
           475: 2008 (17) SCR 917; Shyam Babu Venna
           v. Union of India (1994) 2 SCC 521 : 1994 (1)
 D         SCR 700 ; Col. B.J. Akkara v. Government of India
           (2006) 11 sec 709 : 2006 (7) Suppl. SCR 58 ;
           Sahib Ram Verma v. Union of India (1995) Supp.
           1 SCC 18 : 1994 (3) Suppl. SCR 674 - relied
           on.
 E                    CASE LAW REFERENCE
       2008 (17) SCR 917         relied on.           Para 11
       1994 (1) SCR 700       relied on.              Para 11
       2006 (7) Suppl. SCR 58 relied on.              Para 11
 F 1994 (3) Suppl. SCR 674 relied on.                Para 11
           CIVIL APPELLATE JURISDICTION : Civil Appeal No.
       11527 of2014.
         From the Judgment and Order dated 17.01.2011 of the
 G High Court of Punjab and Haryana at Chandigarh in Civil Writ
   Petition No. 16277 of 2010.
                                 With
       CivilAppeal Nos. 11528, 11530, 11531, 11532, 11533,
   11534, 11535, 11536, 11537, 11538, 11539, 11540, 11541,
 H 11542, 11543, 11544, 11545, 11546, 11547, 11548, 11549,
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1347


11550, 11551, 11552, 11553, 11554, 11555, 11556, 11557,        A
11558, 11559, 11560, 11561, 11562, 11563, 11564, 11565,
11566, 11567, 11568, 11569, 11570, 11571, 11572, 11573,
11575, 11574, 11576, 11577, 11578, 11579, 11580, 11581,
11582, 11583, 11584, 11585, 11586, 11587, 11588, 11589,
11590, 11591, 11593, 11594, 11595, 11596, 11597, 11598,        B
11599, 11600, 11601, 11602, 11603, 11605, 11606, 11607,
11608, 11609,·11610, 11611, 11612, 11613, 11614, 11615,
11616, 11617, 11618, 11619, 11620, 11621, 11622, 11623,
11624, 11625, 11626, 11627, 11628, 11629, 11630, 11631,
11632, 11633, 11636, 11637, 11638, 11639, 11640, 11641,        c
11642, 11643, 11644, 11645, 11646, 11647, 11648, 11649,
11650, 11651-11652, 11653, 11654, 11655, 11656, 11657,
11658, 11659, 11660, 11661, 11662, 11663, 11664, 11665,
11666, 11667, 11668, 11669, 11670, 11671, 11672, 11673,
11674, 11675, 11676, 11677, 11678, 11679, 11680, 11681,        D
11682, 11683, 11684, 11685, 11686, 11687, 11688, 11689,
11713, 11717, 11720, 11721, 11723, 11724, 11727, 11729,
11731, 11735, 11741, 11743, 11744, 11752, 11754, 11755,
11770, ~1772, 11773, 11790, 11791, 11794, 11795, 11798,
11800, 11802, 11806, 11807, 11810, 11812,.11814, 11816,        E
11818, 11819, 11821, 11836, 11837, 11838, 11839, 11840,
11841, 11842, 11843, 11844, 11845, 11846, 11848, 11850,
11853, 11854, 11857, 11859, 11861, 11863, 11864, 11866,
11868, 11870, 11873, 11875, 11876, 11878, 11879, 11881,
11883, 11884, 11885, 11847, 11849, 11851, 11852, 11855,        F
11856, 11858, 11860, 11862, 11865, 11867, 11869, 11872,
11874, 11877, 11880, 11882 and 11886 of2014.
     V. K. Bali, -Sr. Adv., Nikhil Nayyar, Aditya Soni, C. Kumar,
Pardaman Singh, Jagjit Singh Chhabra, Ajay Pal, Kuldip
Singh, Ms. Kaveeta Wadia, Jatinder Kumar Bhatia, Ms. Naresh G
Bakshi, Mrs. Rachana Joshi lssar, Ambreen Rassol, Advs. for
the Appellants. ·
     Sudhir Walia, Ms. Niharika Ahluwalia, Mrs. Anjali Nair,
Abhishek Atrey, Anis Ahmed Khan, Dr. (Mrs.) Vipin Gupta, H
1348       SUPREME COURT REPORTS                  (2014] 13 S.C.R.


A Ansar Ahmad Chaudhary, Dinesh Verma, Rajat Sharma,
  Subhasish Bhowmick, Yashpal Rangi, Satyendra Kumar,
  Kanhaiya Priyadarshi, Mukesh K. Verma, S. Tomar, Shishpal
  Laler, N. P. Midha, Sonit, Balbir Singh Gupta, Ms. Namita
  Choudhary, Anil Kumar Tandale, Mrs. Kanchan Kaur Dhodi,
B Jetendra Singh, Vijendra Kumar Kaushik, S. K. Sabharwal,
  Ms. Priyanka Singh, Ajay Kr. Singh, Ms. Shikha Roy, Karan
  Dewan, Rahul Gupta, Sarad Kumar Singhania, S. L. Aneja, P.
  N. Puri, Debasis Misra, Himanshu Gupta, Joginder Sukhija,
  Harsh Chandra Pant, Ajay K. Singh, Rahul Dagar, Sidhant
C Pandita,Advs., for the Respondents.
          The Judgment of the Court was delivered by
          JAGDISH SINGH KHEHAR, J. 1. Leave granted.
           2. All the private respondents in the present bunch of
D   cases, were given monetary benefits, which were in excess of
    their entitlement. These benefits flowed to them, consequent
    upon a mistake committed by the concerned competent
    authority, in determining the emoluments payable to them. The
    mistake could have occurred on account of a variety of reasons;
E   including the grant of.a status, which the concerned employee
    was not entitled to; or payment of salary in a higher scale, than
    in consonance of the right of the concerned employee; or
    because of a wrongful fixation of salary of the employee,
    consequent upon the upward revision of pay-scales; or for
F   having been granted allowances, for which the concerned
    employee was not authorized. The long and short of the matter
    is, that all the private respondents were beneficiaries of a
    mistake committed by the employer, and on. account of the
    said unintentional mistake, employees were in receipt of
G   monetary benefits, beyond their due.
        3. Another essential factual component in this bunch of
  cases is, that the respondent-employees were not guilty of
  furnishing any incorrect information, which had led the
  concerned competent authority, to commit the mistake of
H making the higher payment to the employees. The payment
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1349
          [JAGDISH SINGH KHEHAR, J.]

of higher dues to the private respondents, in all these cases, A
was not on account of any misrepresentation made by them,
nor was it on account of any fraud committed by them. Any
participation of the private respondents, in the mistake
committed by the employer, in extending the undeserved
monetary benefits to the respondent.:.employees, is totally ruled B
out. It would therefore not be incorrect to record, that the private
respondents, were as innocent as their employers, in thEl
wrongful determination of their inflated emoluments.
      4. The issue that we have been required to adjudicate
is, whether all the private respondents, against whom an order C
of recovery (of the excess amount) has been made, should be
exempted in law, from the reimbursement of the same to the
employer. For the applicability of the instant order, and the
conclusions recorded by us hereinafter, the ingredients
depicted in the foregoing two paragraphs are essentially D
 indispensable.
      5. Merely on account of the fact, that the release of these
monetary benefits was based on a mistaken belief at the hands
of the employer, and further, because the employees had no E
role in the determination of the employer, could it be legally
feasible, for the private respondents to assert, that they should
be exempted from refunding the excess amount received by ·
them? Insofar as the above issue is concerned, it is necessary
to keep in mind, that the following reference W!j.lS made by a F
Division Bench of two Judges of this Court, for consideration
by a larger Bench:
      "In view of an apparent difference of views expressed
      on the one hand in Shyam Babu Verma and Ors. vs. Union
      of India & Ors. (1994) 2 SCC 521 and Sahib Ram Verma G
      vs. State of Haryana (1995) Supp. 1 SCC 18; and on
      the other hand in Chandi Prasad Uniyal and Ors. vs.
      State of Uttarakhand & Ors. (2012) 8 SCC 417, we are
      of the view that the remaining special leave petitions
      should be placed before a Bench of Three Judges. The H
1350         SUPREME COURT REPORTS                 [2014] 13 S.C.R.


 A          Registry is accordingly directed to place the file of the
            remaining special leave petitions before the Hon'ble the
            Chief Justice of India for taking instructions for the
            constitution of a Bench of three Judges, to adjudicate
            upon the present controversy."
 B                                               (emphasis is ours)
             The aforesaid reference was answered by a Division
       Bench of three Judges on 8.7.2014. While disposing of the
       reference, the three-Judge Division Bench, recorded the
 c     following observations in paragraph 7:
            "7. In our considered view, the observations made by
            the Court not to recover the excess amount paid to the
            appellant-therein were in exercise of its extra-ordinary
            powers under Article 142 of the Constitution of India
D           which vest the power in this·Court to pass equitable
            orders in the ends of justice."
                                                 (emphasis is ours)
       Having recorded the above observations, the reference
E was answered as under:
           "12. Therefore. in our opinion, the decisions of the Court
           based on different scales of Article 136 and Article 142
           of the Constitution of India cannot be best weighed on
           the same grounds of reasoning and thus in view of the
F          aforesaid discussion, there is no conflict in the views
           expressed in the first two judgments and the latter
           judgment.
           13. In that view of the above, we are of the considered
           opinion that reference was unnecessary. Therefore,
G          without answering the reference. we send back the
           matters "to the Division Bench for its appropriate
           disposal."
                                                 (emphasis is ours)
H
 STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1351
           [JAGDISH SINGH KHEHAR, J.]

      6. In view of the conclusions extracted hereinabove, it A
will be our endeavour, to lay down the parameters of fact
situations, wherein employees, who are beneficiaries of
wrongful monetary gains at the hands of the employer, may
not be compelled to refund the same. In our considered view,
the instant benefit cannot extend to an employee merely on B
account of the fact, that he was not an accessory to the mistake
committed by the employer; or merely because the employee
did not furnish any factually incorrect information, on the basis
whereof the employer committed the mistake of paying the
employee more than what was rightfully due to him; or for that C
matter, merely because the excessive payment was made to
the employee, in absence of any fraud or misrepresentation
at the behest of the employee.
       7. Having examined a number of judgments rendered by
this Court, we are of the view, that orders passed by the            D
employer seeking recovery of monetary benefits wrongly
extended to employees, can only be interfered with, in cases
where such recovery would result in a hardship of a nature,
which would far outweigh, the equitable balance of the
employer's right to recover. In other words, interference would      E
be called for, only in such cases where, it would be iniquitous
to recover the payment made. In order to ascertain the
parameters of the above consideration, and the test to be
applied, reference needs to be made to sittiations when this
Court exempted employees from such recovery, even in                 F
exercise of its jurisdiction under Article 142 of the Constitution
of India. Repeated exercise of such power, "for doing complete
justice in any cause" would establish that the recovery being
effected was iniquitous, and therefore, arbitrary. And
accordingly, the interference at the hands of this Court.            G
      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 consonancewith the concept H
1352        SUPREME COURT REPORTS                  [2014] 13 S.C.R.


 A of justice, which is assured to the citizens of India, even in the
   preamble of the Constitution oflndia. The right to recover being
   pursued by the employer, will have to be compared, with the
   effect of the recovery on the concerned employee. If the effect
   of the recovery from the concerned employee would be, more
 B 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
 C recover.
           9. The doctrine of equality is a dynamic and evolving
   concept having many dimensions. The embodiment of the
   doctrine of equality, can be found in Articles 14 to 18, contained
   in Part Ill of the Constitution of India, dealing with "Fundamental
 D Rights". These Articles of the Constitution, besides assuring
   equality before the law and equal protection of the laws; also
   disallow, discrimination with the object of achieving equality,
   in matters of employment; abolish untouchability, to upgrade
   the social status of an ostracized section of the society; and
 E extinguish titles, to scale down the status of a section of the
   society, with such appellations. The embodiment of the doctrine
   of equality, can also be found in Articles 38, 39, 39A, 43 and
   46 contained in Part IV of the Constitution of India, dealing
   with the "Directive Principles of State Policy". These Articles
 F of the Constitution of India contain a mandate to the State
    requiring it to assure a social order providing justice - social,
   economic and political, by inter a/ia minimizing monetary
    inequalities, and by securing the right to adequate means of
    livelihood, and by providing for adequate wages so as to
 G ensure, an appropriate standard of life, and by promoting
    economic interests of the weaker sections. ·
             10. In view of the afore-stated constitutional mandate,
       equity and good conscience, in the matter of livelihood of the
       people of this country, has to be the basis of all governmental
 H
 STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1353
           [JAGDISH SINGH KHEHAR, J.]

  actions. An action of the State, ordering a recovery from an A
  employee, would be in order, so long as it is not rendered
  iniquitous to the extent, that the action of recovery would be
  more unfair, more wrongful, more improper, and more
  unwarranted, than the corresponding right of the employer, to
  recover the amount. Or in other words, till such time as the B
  recovery would have a harsh and arbitrary effect on the
  employee, it would be permissible in law. Orders passed in
  given situations repeatedly, even in exercise of the power
  vested in this Court under Article 142 of the Constitution of
  India, will disclose the parameters of the realm of an action of C
  recovery (of an excess amount paid to an employee) which
  would breach the obligations of the State, to citizens of this
. country, and render the action arbitrary, and therefore, violative
  of the mandate contained in Article 14 of the Constitution of
  l~ia.                                                              D
        11. For the above determination, we shall refer to some
 precedents of this Court wherein the question of recovery of
 the excess amount paid to employees, came up for
 consideration, and this Court disallowed the same. These are
 situations, in which High Courts all over the country, repeatedly   E
 and regularly set aside orders of recovery made on the
 expressed parameters.
       (i). Reference may first of all be made to the decision in
 Syed Abdul Qadir v. State of Bihar, (2009) 3 SCC 475, wherein       F
 this Court recorded the following observation in paragraph 58:
      "58. The relief against recovery is granted by courts not
      because of any right in the employees, but in equity,
      exercising judicial discretion to relieve the employees
      from the hardship that will be caused if recovery is G
      ordered. But, if in a given case, it is proved that the
      employee had knowledge that the payment received was
      in excess of what was due or wrongly paid, or in cases
      where the error is detected or corrected within a short
      time of wrong payment, the matter being in the realm of H
1354       SUPREME COURT REPORTS                    [2014] 13 S.C.R.


 A        judicial discretion, courts may, on the facts and
          circumstances of any particular case, order for recovery
          of the amount paid in excess. See Sahib Ram v. State
          of Haryana, 1995 Supp. (1) SCC 18, Shyam Babu
          Verma v. Union of India, (1994) 2 SCC 521, Union of
 B        India v. M. Bhaskar. (1996) 4 SCC 416, V. Ganga Ram
          v. Director, (1997) 6 SCC 139, Col. B.J. Akkara (Retd.)
          v. Govt. of India, (2006) 11 SCC 709, Purshottam Lal
          Das v. State of Bihar, (2006) 11 SCC 492, Punjab
          National Bank v. Manjeet Singh, (2006) 8 SCC 647 and
 C        Bihar SEB v. Bijay Bahadur, (2000) 10 SCC 99."
                                                   (emphasis is ours)
           First and foremost, it is pertinent to note, that this Court
   in its judgment in Syed Abdul Qadir's case (supra) recognized,
 D that the issue of recovery revolved on the action being
   iniquitous. Dealing with the subject of the action being
   iniquitous, it was sought to be concluded, that when the excess
   unauthorised payment is detected within a short period of time,
   it would be open for the employer to recover the same.
 E Conversely, if the payment haa .been made for a long duration
   of time, it would be iniqClitous to make any recovery.
    Interference because an action is iniquitous, must really be
   perceived as, interference because the action is arbitrary. All
   arbitrary actions are truly, actions in violation of Article 14 of
 F the Constitution of India. The logic of the action in the instant
   situation, is iniquitous, or arbitrary, or violative of Article 14 of
   the Constitution of India, because it would be almost impossible
   for an employee to bear the financial burden, of a refund of
    payment received wrongfully for a long span of time. It is
 G apparent, that a government employee is primarily dependent
    on his wages, and if a deduction is to be made from his/her
    wages, it should not be a deduction which would make it difficult
    for the employee to provide for the needs of his family. Besides
    food, clothing and shelter, an employee has to cater, not only
    to the education needs of those dependent upon him, but also
 H
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1355
          [JAGDISH SINGH KHEHAR, J.]

their medical requirements, and a variety of sundry expenses. A
Based on the above consideration, we are of the view, that if
the mistake of making a wrongful payment is detected within
five years, it would be open to the employer to recover the
same. However, if the payment is made for a period in excess
of five years, even though it would be open to the employer to B
correct the mistake, it would be extremely iniquitous and
arbitrary to seek a refund of the payments mistakenly made to
the employee. In this context, reference may also be made to
the decision rendered by this Court in Shyam Babu Verma v.
Union of India (1994) 2 SCC 521, wherein this Court observed C
as under:
     "11. Although we have held that the petitioners were
     entitled only to the pay scale of Rs 330-480 in terms of
     the recommendations of the Third Pay Commission w.e. f.
     January 1, 1973 and only after the period of 10 years, D
     they became entitled to the pay scale of Rs 330-560 but
     as they have received the scale of Rs 330-560 since
     1973 due to no fault of theirs and that scale is being
     reduced in the year 1984 with effect from January 1,
     1973, it shall only be just and proper not to recover any E
     excess amount which has already been paid to them.
     Accordingly. we dire~t that no steps should be taken to
     recover or to adjust any excess amount paid to the
     petitioners due to the fault of the respondents. the
     petitioners being in no way responsible for the same."    F
                                         (emphasis is ours)
      It is apparent, that in Shyam Babu Verma's case (supra),
the higher pay-scale commenced to be paid erroneously in
1973. The same was sought to be recovered in 1984, i.e., G
after a period of 11 years. In the aforesaid circumstances,
this Court felt that the recovery after several years of the
implementation of the pay-scale would not be just and proper.
We therefore hereby hold, recovery of excess payments
                                                              H
1356         SUPREME COURT REPORTS                  [2014] 13 S.C.R.


 A discovered after five years would be iniquitous and arbitrary,
   and as such, violative of Article 14 of the Constitution of India.
             (ii). Examining a similar proposition, this Court in Col.
       B.J. Akkara v. Government of India, (2006) 11 SCC 709,
       observed as under:
 B
            "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
 c          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,
 D          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
 E
            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 any particular case refuse to grant such
            relief against recovery."
 F
                                                   (emphasis is ours)
          A perusal of the aforesaid observations made by this
   Court in Col. B.J. Akkara's case (supra) reveals a reiteration
   of the legal position recorded in the earlier judgments rendered
 G by this Court, inasmuch as, it was again affirmed, that the right
   to recover would be sustainable so long as the same was not
   iniquitous or arbitrary. In the observation extracted above, this
   Court also recorded, that recovery from employees in lower
   rung of service, would result in extreme hardship to them. The
 H
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1357
          [JAGDISH SINGH KHEHAR, J.]

apparent explanation for the aforesaid conclusion is, that A
employees in lower rung of service would spend their entire
earnings in the upkeep and welfare of their family, and if such
excess payment is allowed to be recovered from them, it would
cause them far more hardship, than the reciprocal gains to the
employer. We are therefore satisfied in concluding, that such B
recovery from employees belonging to the lower rungs (i.e.,
Class-Ill ~nd Class-IV - sometimes denoted as Group 'C' and
Group 'D') of service, should not be subjected to the ordeal of
any recovery, even though they were beneficiaries of receiving
higher emoluments, than were due to them. Such recovery c
would be iniquitous and arbitrary and therefore would also
breach the mandate contained in Article 14 of the Constitution
of India.
     (iii). This Court in Syed Abdul Qadir v. State of Bihar
(supra) held as follows:                                     D
     "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 E
     was being paid to them was more than what they were
     entitled to. It would not be out of place to mention here
     thatthe 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 F
     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 G
     of the beneficiaries have either r'etired or are on the verge
     of it. Keeping in view the peculiar facts and
     circumstances of the case at hand and to avoid any
                                                                H
1358          SUPREME COURT REPORTS                    [2014] 13 S.C.R.


 A           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."
                                                      (emphasis is ours)

 8            Premised on the legal proposition considered above,
       namely, whether on the touchstone of equity and arbitrariness,
       the extract of the judgment reproduced above, culls out yet
       another consideration, which would make the process of
       recovery iniquitous and arbitrary. It is apparent from the
 C     conclusions drawn in Syed Abdul Qadir's case (supra), that
       recovery of excess payments, made from employees who have
       retired from service, or are close to their retirement, would entail
       extremely harsh consequences outweighing the monetary gains
       by the employer. It cannot be forgotten, that a retired employee
. 0    or an employee about to retire, is a class apart from those
       who have sufficient service to their credit, before their
       retirement. Needless to mention, that at retirement, an
       employee is past his youth, his needs are far in excess of what
       they were when he was younger. Despite that, his earnings
 E     have substantially dwindled (or would substantially be reduced
       on his retirement). Keeping the aforesaid circumstances in
       mind, we are satisfied that recovery would be iniquitous and
       arbitrary, if it is sought to be made after the date of retirement,
       or soon before retirement. A period within one year from the
 F     date of superannuation, in our considered view, should be
       accepted as the period during which the recovery should be
       treated as iniquitous. Therefore, it would be justified to treat
       an order of recovery, on account of wrongful payment made to
       an employee, as arbitrary, if the recovery is sought to be made
 G     after the employee's retirement, or within one year of the date
       of his retirement on superanriuation.
            (iv). Last of all, reference may be made to the decision
       in Sahib Ram Verma v. Union of India, (1995) Supp. 1 SCC
       18, wherein it was concluded as under:
 H
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1359
          [JAGDISH SINGH KHEHAR, J.]

   "4. Mr. Prem Malhotra, learned counsel for the appellant,      A
   contended that the previous scale of Rs 220-550 to which
   the appellant was entitled became Rs 700-1600 since
   the appellant had been granted that scale of pay in
   relaxation of the educational qualification. The High Court
   was, therefore, not right in dismissing the writ petition.     B
   We do not find any force in this contention. It is seen that
   the Government in consultation with the University Grants
   Commission had revised the pay scale of a Librarian
   working in the colleges to Rs 700-1600 but they insisted
   upon the minimum educational qualification of first or         c
   second class M.A., M.Sc., M.Corn. plus a first or second
   class B.Lib. Science or a Diploma in Library Science.
   The relaxation given was only as regards obtaining first
   or second class in the prescribed educational
   qualification but not relaxation in the educational            o
   qualification itself.
   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 E
   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 F
   for which the appellant cannot be held to be at fault. Under
   the circumstances the amount p::iid tiil 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 G
   allowed partly without any order as to costs."
                                          (emphasis is ours)


                                                                  H
1360       SUPREME COURT REPORTS                   [2014] 13 S.C.R.


 A       It would be pertinent to mention, that Librarians were
   equated with Lecturers, for the grant of the pay scale of Rs. 700-
   1600. The above pay parity would extend to Librarians, subject
   to the condition that they possessed the prescribed minimum
   educational qualification (first or second class M.A., M.Sc.,
 B M.Com. plus a first or second class B.Lib. Scienc~ or a
   Diploma in Library Science, the degree of M.Lib. Science
   being a preferential qualification). For those Librarians
   appointed prior to 3.12.1972, the educational qualifications·
   were relaxed. In Sahib Ram Verma's case (supra), a mistake
 c was committed by wrongly extending to the appellants the
   revised pay scale, by relaxing the prescribed educational
   qualifications, even though the concerned appellants were
   ineligible forthe same. The concerned appellants were held
   not eligible for the higher scale, by applying the principle of
 D "equal pay for equal work". This Court, in the above
   circumstances, did. not allow the recovery of the excess
   payment. This was apparently done because this Court felt
   that the employees were entitled to wages, for the post against
   which they had discharged their duties. In the above view of
 E the matter, we are of the opinion, that it would be iniquitous
    and arbitrary for an employer to require an employee to refund
   the wages of a higher post, against which he had wrongfully
    been permitted to work, though he should have rightfully been
    required to work against an inferior post.
 F       12. ltis 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 herein above, we may, as a ready
 G reference, summarise the following few situations, wherein
   recoveries by the employers, would be impermissible in law:
             (i)    Recovery from employees belonging to Class-
                    111 and Class-IV service (or Group 'C' and Group
                    'D' service).
 H
STATE OF PUNJAB AND OTHERS ETC. v. RAFIQ MASIH 1361
          [JAGDISH SINGH KHEHAR, J.]

        (ii)     Recovery from retired employees, or employees A
                 who are due to retire within one year, of the order
                 of recovery.
        (iii)    Recovery. from employees, when the excess
                 payment has been made for a period in excess
                 of five years, before the order of recovery is B
                 issued.
        (iv)     Recovery in cases where an employee has
                 wrongfully been required to discharge duties of
                 a higher post, and has been paid accordingly,        c
                 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 D
                 arbitrary to such an extent, as would far outweigh
                 the equitable balance of the employer's right to
                 recover.
       13. We are informed by the learned counsel representing
the appellant-State of Punjab, that all the cases in this bunch E
of appeals, would undisputedly fall within the first four
categories delineated hereinabove. In the appeals referred
to above, therefore, the impugned orders passed by the High
Court of Punjab and Haryana (quashing the order of recovery),
shall be deemed to have been upheld, for the reasons recorded F
above.
       14. The appeals are disposed of in the above terms.

Kalpana K. Tripathy                            Appeals disposed of.