Excess Payment Cannot be Recovered after Five Years: SC

Published: 23rd December 2014 05:59 AM  |   Last Updated: 23rd December 2014 05:59 AM   |  A+A-

NEW DELHI: The SC, while quashing an order for recovering excessive payments made to employees, held that if the mistake of making a wrong payment were detected within five years, the employer could indeed recover the same but if recovery proceedings were initiated after tha, then it would be impressible in law.

A Bench of Justice J S Khehar and Justice Arun Kumar Mishra in an order passed last week said, “If the mistake of making a wrongful payment is detected within five years, it would be open to the employer to recover the same, but if the payment is made for a period exceeding five years, even though it would be open to the employer to correct the mistake, it would be extremely iniquitous and arbitrary to seek a refund of the payments mistakenly made to the employee.”

The court held that such recovery would be impermissible in law, if the court arrives at the conclusion, that recovery if made from the employee would be iniquitous or harsh or arbitrary to such an extent, as would far outweigh the equitable balance of the employer’s right to recover.

“The logic of the action in the instant situation is iniquitous, or arbitrary, or violative of Article 14 of the Constitution, because it would be almost impossible for an employee to bear the financial burden, of a refund of payment received wrongfully for a long span of time. It is apparent, that a government employee is primarily dependent on his wages, and if a deduction is to be made from his/her wages, it should not be a deduction which would make it difficult for the employee to provide for the needs of his family. Besides food, clothing and shelter, an employee has to cater, not only to the education needs of those dependent upon him and a variety of sundry expenses,” the Bench ruled.


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