SC: Recovery of Excess Payments Paid to Employee Due to Wrong Interpretation of Service Rules Unjustified


Shivani Thakur

Published on: May 4, 2022 at 15:22 IST

The Supreme Court observed that recovery of excess payments made to the employee on account of wrong interpretation of service rules is wholly unjustified.

A Division Bench of Justices S Abdul Nazeer and Vikram Nath observed that, “This relief against the 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”.

While hearing a Plea Supreme Court made observation, the Plea challenging the Kerala High Court decision to allowed the state to recover the additional service benefit given to the Appellant due to misinterpretation of service rules.

At the outset, the Apex Court was of the view that excess amounts are not recoverable if there was no misrepresentation or fraud by the employee, or a wrong principle for calculating the pay was applied, or on the basis of a particular interpretation that was subsequently found to be erroneous.

Supreme Court observed in this Case:

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 passage of ten years of his retirement is unjustified”.

Supreme Court allowed the Appeal and set aside Kerala High Court decision.

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