"The Errant Fixation: A Case of Gratuity, Justice, and Erroneous Pay"

 


1.   This judgment addresses the case of Maruti Sharan Mishra, a retired Assistant Teacher, who challenged the deduction of Rs. 7,08,718 from his gratuity. This deduction was made by the education department of the State of Bihar due to an alleged overpayment during his service. The Patna High Court deliberated on whether this recovery was justified, considering principles of natural justice, equity, and the circumstances surrounding the alleged excess payment.

Background of the Case

Maruti Sharan Mishra served as an Assistant Teacher in Gaya district, Bihar, starting in 1991. Over his career, he received a Selection Grade Scale in 2003 and was promoted to Graduate Trained Teacher in 2012. Mishra retired on January 31, 2022, with a pay scale of Rs. 72,100.

Following his retirement, the Accountant General of Bihar fixed his pension at Rs. 33,000, which Mishra contested as it was calculated after deducting three increments, effectively reducing his last pay drawn to Rs. 66,000. While his gratuity was initially sanctioned at Rs. 13,48,710, a sum of Rs. 7,08,718 was deducted under the premise of incorrect pay fixation during his service.

Petitioner's Arguments

Mishra sought the court's intervention to quash the order that led to the deduction from his gratuity and to direct the respondents to refund the deducted amount. His primary arguments were:

  1. Excess Payment Recovery: Recovering the alleged excess payment from his gratuity post-retirement placed him in a disadvantageous position.
  2. Lack of Misrepresentation: He was never found guilty of fraud or misrepresentation in the pay scale fixation.
  3. Violation of Natural Justice: The deduction was made without prior notice or a hearing, violating natural justice principles.

Respondent's Arguments

The State of Bihar, represented by the District Magistrate cum Collector, Gaya, defended the recovery based on the following points:

  1. Erroneous Pay Fixation: The excess payment resulted from an erroneous pay fixation during Mishra's promotion to Graduate Trained Scale.
  2. Accountant General's Directive: The Accountant General, Bihar, had directed the District Programme Officer to correct the pay fixation.
  3. Undertaking by Petitioner: Mishra had submitted a declaration with his pension papers stating that he would return any excess amount paid to him.
  4. Public Money: Recovery was necessary because public money was involved, and the mistake was detected later. The state relied on the Supreme Court's judgment in High Court of Punjab & Haryana vs Jagdev Singh to support their claim that an undertaking given by an employee is binding.

Court's Observations and Judgment

The court examined the arguments and relevant precedents, emphasizing the importance of natural justice and equity in administrative actions.

The court noted that even administrative orders that have civil consequences must adhere to natural justice principles. "Civil consequences" were defined broadly, affecting a citizen's life.

The court found that the respondent's claim did not involve misrepresentation or fraud by the petitioner. The excess payment, if any, resulted from an improper fixation by the concerned respondents, and the petitioner could not be held responsible.

The court referred to Syed Abdul Qadir Vs. The State of Bihar & Ors, which stated that recovery of excess payments should be avoided if the employee did not misrepresent facts and the excess payment was due to the employer's error in interpreting rules.

The court also cited State of Punjab & Others Vs. Rafiq Masih (White Washer), which outlined situations where recovery would be impermissible, including from retired employees or those about to retire. The court emphasized the need to balance the employer's right to recover with the hardship caused to the employee.

Conclusion

The Patna High Court ruled in favor of the petitioner, Maruti Sharan Mishra. The court quashed the order that led to the deduction from his gratuity and directed the respondents to refund the deducted amount. The decision rested on the principles of natural justice, equity, and the fact that the excess payment was not due to any fault or misrepresentation by the employee.

Read the full judgement Below;

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