Erroneous interpretation of rule not recoverable due to excess payment made to the employee: Supreme Court

The Supreme Court in the case Thomas Daniel vs State of Kerala observed if it is on the basis of a particular interpretation of rule/order which is subsequently found to be erroneous, the excess payment of emoluments or allowances to an employee are not recoverable.

Referring to various judgement on the same aspects the court observed:

the court noted while setting aside the High Court judgment was contended by the respondent An excess amount has been paid by the appellant in interpreting Kerala Service Rules and was made due to a mistake and which was subsequently pointed out by the Accountant General on the account of the misrepresentation or fraud played the court further noted that the department has no case further the court rely on the facts and circumstances of any particular case order for recovery of amount paid in excess.

It is about the rights of the employees it is not granted for the relief against the recovery but the employee’s right is granted in equity and with exercising judicial discretion for providing relief to the employees and if the recovery against the relief is ordered there will be much hardships. Thereafter the bench held that if it is proved that the payment received was in excess of what was due or wrongly paid and that an employee had knowledge or the matter being in the realm of judicial discretion furthermore in cases where error is detected or corrected within a short time of wrong payment

if the excess amount was not paid on account of any misrepresentation or fraud 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 found to be erroneous, such excess payment of emoluments or allowances are not recoverable.

whether increments granted to the appellant, while he was in service, can be recovered from him almost 10 years after his retirement on the ground that the said increments were granted on account of an error, an issue contended before the court. The appellant contended that the excess payment made to the appellant was not on account of any misrepresentation or fraud on his part, but due to a mistake in interpreting the Kerala Service Rules in an appeal before the Apex Court.

the bench comprising of justice S. Abdul Nazeer and the justice Vikram Nath observed that exercising judicial discretion to provide relief to the employees from the hardship that will be caused if the recovery is ordered, but in equity this relief against the recovery is granted and not because of any right of the employees’ any right of the employees.