Recovery of wrongful/excess payments made to Government servants

F. No. 18/26/ 2011-Estt (Pay-I)

Government of India

Ministry of Personnel, PG and Pension

Department of Personnel and Training

North Block, New Delhi,

Dated the 6th February, 2014

OFFICE MEMORANDUM

The undersigned is directed to say that the issue of recovery of  wrongful/excess payments made to Government servants has been examined in  consultation with the Department of Expenditure and the Department of Legal  Affairs in the light of the recent judgement of the Hon’ble Supreme Court in Chandi  Prasad Uniyal And On vs State Of Uttarakh and And Ors, 2012 AIR SCW 4742,  (2012) 8 ‘SCC 417, decided on 17th August, 2012. The Hon’ble Court has observed  as under:

15. We are not convinced that this Court in various judgments referred to  herein before has laid down any proposition of law that only if the State  or its officials establish that there was misrepresentation or fraud on the  part of the recipients of the excess pay, then only the amount paid could  be recovered. On the other hand, most of the cases referred to  herein before turned on the peculiar facts and circumstances of those  cases either because the recipients had retired or on the verge of  retirement or were occupying lower posts in the administrative  hierarchy.

16. We are concerned with the excess payment of public money which is  often described as “tax payers money” which belongs neither to the  officers who have effected over-payment nor that of the recipients. We  fail to see why the concept of fraud or misrepresentation is being  brought in such situations. Question to be asked is whether excess  money has been paid or not may be due to a bona fide mistake. Possibly,  effecting excess payment of public money by Government officers may  be due to various reasons like negligence, carelessness, collusion,  favouritism etc. because money in such situation does not belong to the  payer or the payee. Situations may also arise where both the payer and  the payee are at fault, then the mistake is mutual. Payments are being  effected in many situations without any authority of law and payments   have been received by the recipients also without any authority of law.  Any amount paid/received without authority of law can always be  recovered barring few exceptions of extreme hardships but not as a  matter of right, in such situations law implies an obligation on the payee  to repay the money, otherwise it would amount to unjust enrichment.

2. Hon’ble Supreme Court also distinguished the cases like Shyam Babu Verma  v UOI, 1994 SCR (1) 700, 1994 SCC (2) 52, Syed Abdul Qadir and Ors. v. State of  Bihar and Ors,(2009) 3 SCC 475, Sahib Ram v. State of Haryana,1995 Supp (1)  SCC 18 etc., where it had not allowed recovery of excess payment in view of the  peculiar facts and circumstances of those cases so as to avoid extreme hardship to  the concerned employees, for example, where the employees concerned were mostly  junior employees, or they had retired or were on verge of retirement, the employees  were not at fault, and recovery which was ordered after a gap of many years would  have caused extreme hardship.

3. In view of the law declared by Courts and recently reiterated by the Hon’ble  Supreme Court in the above cited case, Chandi Prasad Uniyal And Ors vs State Of  Uttarakhand And Ors, 2012 AIR SCW 4742, (2012) 8 SCC 417, the  Ministries/Departments are advised to deal with the issue of wrongful/excess  payments as follows:

i. In all cases where the excess payments on account of wrong pay fixation,  grant of scale without due approvals, promotions without following the  procedure, or in excess of entitlements etc come to notice, immediate  corrective action must be taken.

ii. In a case like this where the authorities decide to rectify an incorrect  order, a show-cause notice may be issued to the concerned employee  informing him of the decision to rectify the order which has resulted in  the over payment, and intention to recover such excess payments. Reasons  for the decision should be clearly conveyed to enable the employee to  represent against the same. Speaking orders may thereafter be passed after consideration of the representations, if any, made by the employee.

iii. Whenever any excess payment has been made on account of fraud,  misrepresentation, collusion, favouritism, negligence or, carelessness,  etc., roles of those responsible for over payments in such cases, and the  employees who benefited from such actions should be identified, and  departmental/criminal action should be considered in appropriate cases.

iv. Recovery should be made in all cases of over payment barring few  exceptions of extreme hardships. No waiver of recovery may be allowed  without the approval of Department of Expenditure.

v. While ordering recovery, all the circumstances of the case should be  taken into account. In appropriate cases, the concerned employee may be  allowed to refund the money in suitable installments with the approval of  Secretary in the Ministry, in consultation with the FA.

vi. Wherever the relevant rules provide for payment of interest on amounts  retained by the employee beyond the stipulated period etc as in the case  of TA, interest would continue to be recovered from the employee as  heretofore.

sd/-

(Mukesh Chaturvedi)

Deputy Secretary to the Government of India