( 2025:HHC:28536 ) IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA LPA No. 576 of 2025 Date of Decision: 22.08.2025 ____________________________________________________ State of H.P and others ....Appellants Versus Veena Kumari and another …Respondents _____________________________________________________ Coram Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice Hon'ble Mr. Justice Ranjan Sharma, Judge Whether approved for reporting? 1 For the Appellants: Mr. Anup Rattan, Advocate General with Mr.Rakesh Dhaulta, Additional Advocate General. G.S. Sandhawalia, Chief Justice (Oral) CMP(M) No. 407 of 2025 In view of the averments made in the application, duly supported by an affidavit of the official, delay of 192 days’ in filing the Appeal is condoned. The application stands disposed of. LPA No.576 of 2025 2. The present appeal is preferred against the order passed on 27.03.2024 by the learned Single Judge in CWP No. 8470 of 2023 titled Veena Kumari and another vs. State of H.P and others. The learned Single Judge disposed off the Writ 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 petition on the ground that it is covered by the judgment dated 11.10.2023 passed by the learned Single Judge in CWP No.6427 of 2022 titled Nitya Nand Sharma vs. State of H.P and others. In the said Writ petition, challenge to the recovery notices dated 17.01.2023 and 03.01.2022 was made. 3. It is not disputed that LPA No. 457 of 2024 State of H.P and others vs. Nitya Nand filed by the State was decided on 24.07.2025 against it. Relevant portion reads as under:- “19. In such circumstances, we are of the considered opinion that the present case squarely falls under Clause (i), (iii), and (v) of the Rafiq Masih’s case. The reliance as such, placed upon the judgment in Jagdev Singh’s case would not take State’s case long way on account of undertaking given. The said case was of a judicial officer, who had been given revised pay scale and he had furnished undertaking to that effect. Therefore, in such circumstances, the Apex Court allowed the appeal of the employer and set aside the judgment of the High Court. However, the Class-III employees, as such, cannot be placed at the same pedestal in view of the law laid down in Rafiq Masih’s case (supra) and, therefore, we are of the considered view that the reasoning assigned by the learned Single Judge is not liable to be interfered with or modified. 20. Recently in Jagdish Prasad Singh versus State of Bihar and others, (2024) SCC Online SC 1909, while also taking note of the judgment in Thomas Daniel (supra), the appeals filed by the employees were allowed and it was held that the reduction of pay scales and the consequent recovery were arbitrary and also suffered from 3 bias and non-adherence to the principles of natural justice. The relevant portions of the judgment, read as under: “22. Similarly, this Court in ITC Limited v. State of Uttar Pradesh held as under: “108 we may give an example from service jurisprudence, where a principle of equity is frequently invoked to give relief to an employee in somewhat similar circumstances. Where the pay or other emoluments due to an employee is determined and paid by the employer, and subsequently the employer finds, (usually on audit verification) that on account of wrong understanding of the applicable rules by the officers implementing the rules, excess payment is made, courts have recognized the need to give limited relief in regard to recovery of past excess payments to reduce hardship to the innocent employees, who benefited from such wrong interpretation.” “25. The Government Resolution dated 8th February, 1999 to be specific, the highlighted portion supra is amendable to the interpretation that it protects the status and pay of those employees who had received their time bound promotions prior to 31st December, 1995. As a consequence, the Secretary concerned, while rejecting the representation clearly misinterpreted and misapplied the said Resolution to the detriment of the appellant. 26. The learned Single Judge as well as the Division Bench of the High Court of Patna also seem to have fallen in the same error. In addition thereto, we are of the view that any step of reduction in the 4 pay scale and recovery from a Government employee would tantamount to a punitive action because the same has drastic civil as well as evil consequences. Thus, no such action could have been taken against the appellant, more particularly, because had had been promoted as an ADSO, while drawing the pay scale of Rs.6500-10500 applicable to the post, way back on 10th March, 1991 and had also superannuated eight years ago before the recovery notice dated 15th April, 2009 was issued. The impugned action directing reduction of pay scale and recovery of the excess amount is grossly arbitrary and illegal and also suffers from the vice of non-adherence to the principles of natural justice and hence, the same cannot be sustained. 27. The order dated 8th October, 2009 passed by the State Government directing reduction in the pay scale of the appellant from Rs.6500-10500 to Rs.5500-9000 w.e.f. 1st January, 1996 and directing recovery of the excess amount from him is grossly illegal and arbitrary and is hereby quashed and set aside. The impugned order dated 27th August, 2012 passed by the Division Bench of the High Court does not stand to scrutiny and is hereby quashed. Therefore, the appellant shall continue to receive the pension in accordance with the pay scale of Rs.6500-10500. 28. In case, if any reduction in pension and consequential recovery was effected on account of the impugned orders, the appellant shall be entitled to the restoration/reimbursement thereof with interest as applicable. 5 29. The appeal is allowed in these terms. No order as to costs.” 21. In Jogeswar Sahoo and others versus The District Judge, Cuttak & others, Civil Appeal [arising out of SLP (C) No(s).5918/2024], decided on 04.04.2025 a similar view was taken, wherein it was held that there was no fraud or misrepresentation on the part of the appellants, who were working as Stenographers, and the financial benefits had been extended by the District Judge, Cuttack, though the same were not approved by the High Court. It was noted that the payments were made in the year 2017, while the recovery was directed in 2023, and the appellants having superannuated and not holding Gazetted posts, the recovery was not sustainable. The relevant portions of the judgment, read as under:- “11. In Col. B.J. Akkara (Retd.) v. Government of India this Court considered an identical question as under: “27. The last question to be considered is whether relief should be granted against the recovery of the excess payments made on account of the wrong interpretation/understanding of the circular dated 7- 6-1999. This Court has consistently granted relief against recovery of excess wrong payment of emoluments/allowances from an employee, if the following conditions are fulfilled (vide Sahib Ram v. State of Haryana [1995 Supp (1) SCC 18 : 1995 SCC (L&S) 248], Shyam Babu Verma v. Union of India [(1994) 2 SCC 521 : 1994 SCC (L&S) 683 : (1994) 27 ATC 121], Union of India v. M. Bhaskar [(1996) 4 SCC 416 : 1996 SCC (L&S) 967] and V. Gangaram v. Regional Jt. Director [(1997) 6 SCC 139 : 1997 SCC (L&S) 1652]): (a) The excess payment was not made on 6 account of any misrepresentation or fraud on the part of the employee. (b) 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. 28. Such relief, restraining back recovery of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion to relieve the employees from the hardship that will be caused if recovery is implemented. A government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it, genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or where the error is detected or corrected within a short time of wrong payment, courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery. 29. On the same principle, pensioners can also seek a direction that wrong payments should not be recovered, as pensioners are in a more disadvantageous position when compared to in- service employees. Any attempt to recover excess 7 wrong payment would cause undue hardship to them. The petitioners are not guilty of any misrepresentation or fraud in regard to the excess payment. NPA was added to minimum pay, for purposes of stepping up, due to a wrong understanding by the implementing departments. We are therefore of the view that the respondents shall not recover any excess payments made towards pension in pursuance of the circular dated 7-6-1999 till the issue of the clarificatory circular dated 11-9-2001. Insofar as any excess payment made after the circular dated 11-9-2001, obviously the Union of India will be entitled to recover the excess as the validity of the said circular has been upheld and as pensioners have been put on notice in regard to the wrong calculations earlier made.” 12. In Syed Abdul Qadir v. State of Bihar excess payment was sought to be recovered which was made to the appellants-teachers on account of mistake and wrong interpretation of prevailing Bihar Nationalised Secondary School (Service Conditions) Rules, 1983. The appellants therein contended that even if it were to be held that the appellants were not entitled to the benefit of additional increment on promotion, the excess amount should not be recovered from them, it having been paid without any misrepresentation or fraud on their part. The Court held that the appellants cannot be held responsible in such a situation and recovery of the excess payment should not be ordered, especially when the employee has subsequently retired. The court observed that in general parlance, recovery is prohibited by courts where there exists no misrepresentation or fraud on the part of the employee and when the excess 8 payment has been made by applying a wrong interpretation/understanding of a Rule or Order. It was held thus: 59. Undoubtedly, the excess amount that has been paid to the appellant teachers was not because of any misrepresentation or fraud on their part and the appellants also had no knowledge that the amount that was being paid to them was more than what they were entitled to. It would not be out of place to mention here that the Finance Department had, in its counter- affidavit, admitted that it was a bona fide mistake on their part. The excess payment made was the result of wrong interpretation of the Rule that was applicable to them, for which the appellants cannot be held responsible. Rather, the whole confusion was because of inaction, negligence and carelessness of the officials concerned of the Government of Bihar. Learned counsel appearing on behalf of the appellant teachers submitted that majority of the beneficiaries have either retired or are on the verge of it. Keeping in view the peculiar facts and circumstances of the case at hand and to avoid any hardship to the appellant teachers, we are of the view that no recovery of the amount that has been paid in excess to the appellant teachers should be made.” 22. The said judgments, as such, thus have put a seal of approval on basic principle of law, and accordingly, we are of the considered opinion that the judgment passed by learned Single Judge does not suffer from any illegality or infirmity. We do not find any plausible reason to interfere with the well-reasoned order passed by the learned Single Judge, keeping in view the status of the employees, inaction of the State, the period of long payment, and the lack of any 9 misrepresentation, on the part of the employees and on account of violation of the principles of natural justice by the State. Accordingly, the present appeals are dismissed.” 4. Counsel for the State has also placed on record communication dated 21.08.2025 addressed to the Advocate General from the Director Health Services that the present controversy does not survive and the same be withdrawn in light of judgment passed in LPA No.457 of 2024. 5. Resultantly, the matter being covered, we dismiss the appeal on the same terms. 6. Pending applications, if any, also stand disposed of. ( G.S. Sandhawalia ) Chief Justice 22nd August, 2025 ( Ranjan Sharma ) (priti) Judge