REGISTRAR, CO-OPERATIVE SOCIETIES HARYANA versus ISRAIL KHAN & ORS.

Citation: [2009] 14 S.C.R. 1162 · Decided: 08-10-2009 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2009} 14 S.C.R. 1162 
A 
REGISTRAR, CO-OPERATIVE SOCIETIES HARYANA 
"' 
v. 
ISRAIL KHAN & ORS. 
(Civil Appeal No. 3668 of 2007) 
B 
OCTOBER 8, 2009 
[R.V. RAVEENDRAN AND P. SATHASIVAM, JJ.] 
., 
Primary Co-operative Credit and Service Society Staff 
)( 
Service Rules, 1992: 
c 
r. 9 - Consolidated salary payable to employees -
Managing Committee passing resolution and granting benefit 
of regular pay scale to employees with retrospective effect -
Further, in order to pay arrears to employees diverting funds 
D available for loan to farmers to pay arrears to employees -
, 
High Court holding the resolutions of Societies illegal but 
declined to direct recovery of excess amounts paid to 
employees - HELD: Registrar of Co-operative Societies, and 
not Managing Committee, was empowered to effect revisions 
E 
in pay scales -
There is no 'principle' that any excess 
payment to employees should not be recovered back by 
employer - The Court, in certain cases has merely used its 
judicial discretion to refuse recovery of excess wrong 
payments of emoluments/allowances from employees on the 
F 
ground of hardship, where certain conditions were fulfilled -
What is important is recovery of excess payments from 
employees is refused only where the excess payment is 
made by the employer by applying a wrong method or 
principles for calculating pay/allowance, or on a particular 
interpretation of applicable rules which is subsequently found 
G to be erroneous - But where excess payment is made as a 
result of any misrepresentation, fraud or collusion, courts will 
not use their discretion to deny the right to recover the excess 
H 
1162 
REGISTRAR, CO-OPERATIVE SOCIETIES HARYANA1163 
v. ISRAIL KHAN & ORS. 
.. 
payment -
In the instant cases, the Rules specifically A 
' 
provided that employees should be paid a consolidated salary 
__, 
- Therefore, without amendment to the Rules, the Managing 
---( 
Committees could not have passed a resolution for giving the 
benefit of regular pay scales that too with retrospective effect 
to the employees - Further, the Societies did not have the 
B 
funds to make such payments and illegally diverted the funds 
made available for disbursal of loans to farmers, for the 
purpose of making such excess payment to the employees 
- When resolution extending such benefit was passed and the 
amounts earmarked for loans for farmers was diverted for c 
making payment to the employees, the Managing Committee 
as well as the employees were aware that the resolution and 
consequential payment was contrary to the Rules - There was 
"\ 
no question of any wrong calculation or erroneous 
understanding of legal position - Most of the employees who 
received similar relief have refunded or have agreed for refund D 
of the excess payment - Making any exception in the case 
of respondents would also lead to discrimination - Therefore, 
orders of High Court holding that illegal payments to 
employees need not be refunded to them are set aside -
Service Law - Recovery of unauthorised emoluments paid to E 
employees. 
Sahib Ram vs. State of Haryana (1995) Supp. 1 SCC 
18; Shyam Babu Verma vs. Union of India (1994) 2 SCC 521 
and Co/ (Retd.) B.J. Akkaa vs. Govt. of India (2006) 11 SCC 
F 
709, referred to. 
Case Law Reference: 
(1995) Supp. 1 sec 18 
referred to 
para 5 
(1994) 2 sec 521 
referred to 
para 5 
G 
(2006) 11 sec 109 
referred to 
para 6 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
3668 of 2007. 
H 
1164 SUPREME COURT REPORTS [2009) 14 (ADDL.) S.C.R. 
A 
From the Judgment & Order dated 20.1.2004 of the High 
.. 
Court of Punjab & Haryana at Chandigarh in Civil Writ Petition 
No. 20301 of 2002. 
~
WITH 
.. 
B 
C.A. No. 3675, 3670, 3669, 3677, 3676 & 3671 of 2007. 
~ 
Jasbir Malik, S.K. Sabharwal, Kamakshi S. Mehlwal for the 
Appellants. 
c 
Harikesh Singh, Jeevan Prakash for the Respondent. 
The Order of the Court was delivered by 
ORDER 
D 
R.V. RAVEENDRAN, J. 1. These appeals raise a 
~
common issue relating to recovery of unauthorised emoluments _ 
paid to employees of co-operative societies. For convenience, 
~ 
we will refer to the facts in Civil Appeal No.3668/2007. 
2. The respondents are employees of Ferozepur Jhirka 
E 
Co-operative Credit & Service Society Limited, a primary co-
operative society in the State of Haryana. The service 
conditions of employees of such societies were governed by 
the Primary Co-operative Credit & Service Society Staff 
Service Rules, 1992 (for short 'the Rule

Excerpt shown. Read the full judgment & AI analysis in Lexace.