Background

Smt. Parwati Verma was initially appointed in the Home Department of Madhya Pradesh on 19 May 1981. She retired on 31 May 2016 as a Subedar (Ministerial cadre). On retirement, his pension was calculated and the pay scales were revised under an order extending similar pay scales to both executive and ministerial staff due to the similarity of their duties. However, in January 2022, Commandant 8 Battalion, SAF Chhindwada issued an order to recover ₹29,66,982 from her, consisting of ₹13,01,635 as excess salary paid and ₹16,65,347 as interest.

Verma challenged this recovery order under Article 226 of the Constitution, contending that it violated Rule 9(4) of the MP Civil Services Pension Rules, 1976. She argued that the State had no power to recover the amounts after four years from retirement and that she was not given a chance to be heard before the recovery order was issued. She further claimed that the pay scales were revised by the authorities themselves without any false statement or fraud on her part.

argument

Verma argued that the recovery order violated Rule 9(4) of the MP Public Service Pension Rules, 1976. This provision restricts recoveries beyond four years of retirement unless authorized by the Governor, which is not that was the case here. The lawyer pointed out that the recovery was initiated without any notice or opportunity of hearing, thereby violating the principles of natural justice. It was also argued that the pay revision was extended to both executive and ministerial cadres due to the similarity of duties and treating Verma differently amounted to discrimination. Counsel further referred to earlier decisions which held that recovery of overpayments cannot be made where there has been no fraud or misrepresentation on the part of the employee.

The State of Madhya Pradesh, represented by Shri Praveen Namdev, defended the recovery claiming that Verma’s pay was wrongly fixed at ₹4,000-6,000 instead of ₹3,050-4,590. This miscalculation resulted in overpayments. The Joint Director, Treasury and Accounts, reviewed his salary and identified the overpayment, which justified the recovery. The state argued that in financial matters, where a clear error is found, a show cause notice is not required and recoveries can be made. Moreover, in cases such as High Court of Punjab and Haryana v. Jagdev Singhwhere the employees gave their pledges at the time of wage fixation, the recovery was held to be legal.

The reasoning of the Court

First, the court found that the case did not involve any misconduct or misrepresentation on Verma’s part, which was a crucial distinction from other cases where recovery had been allowed. The overpayment resulted from administrative errors in wage determination, not from any fraudulent action by petitioner. The court held that the Supreme Court in State of Punjab v. Rafiq Masih, 2015 AIR SCW 401clearly set out the circumstances in which recovery could not be made, particularly from low-income pensioners or those without false declarations. The court determined that the state’s action violated these principles.

Second, the court addressed the interest component. Based on State of Madhya Pradesh and Ors. v. Rajendra Bhavsarthe court held that while the principal amount might be recoverable, the imposition of interest on the overpayment was “harsh” and “unwarranted”. The interest component would only increase the burden on the petitioner, especially when there was no fault on her part. Third, the court rejected the state’s argument that Rule 9(4) did not apply. Held that the provision was relevant to the instant case and prohibited such recovery actions after four years of retirement unless the Governor granted specific authority. The state had failed to follow this procedure, further invalidating the recovery order.

Finally, the court observed that Verma had entered into an undertaking at the time of salary determination, but this did not extend to recovery of interest and no misrepresentation was proved to support the state’s claims. Thus, the court decided that only the principal amount can be recalculated, no interest recovery being allowed. Thus, the court annulled the recovery order against Smt. Parvati Verma.

Decided on: 10-22-2024

Citation: 2024:MPHC-JBP:52596

Counsel for the petitioner: Shri Shailesh Tiwari

Counsel for the defendants: Shri Praveen Namdev, Advocate for Govt

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