Case Note & Summary
The dispute arose from the unauthorized payment of higher salaries to employees of the Ferozepur Jhirka Co-operative Credit & Service Society Limited in Haryana. The employees, including the respondents, were initially entitled to a consolidated salary as per the Primary Co-operative Credit & Service Society Staff Service Rules, 1992. However, the Managing Committee resolved to grant them regular pay scales with retrospective effect, leading to excess payments. When the Registrar of Co-operative Societies discovered this, he rescinded the resolution and ordered recovery of the excess payments. The employees appealed against this decision, which was upheld by the High Court, stating that while the payments were illegal, recovery should not be enforced. The appellants contended that the High Court erred in not directing the refund, arguing that the resolutions were made in collusion with the employees. The respondents cited precedents where recovery was denied due to hardship. The Supreme Court clarified that recovery could be denied only in cases of miscalculation or misunderstanding, not where there was collusion or knowledge of excess payments. The court emphasized that the Managing Committees acted outside their authority and that the employees were aware of the illegality. Ultimately, the Supreme Court allowed the appeals, set aside the High Court's order, and directed the recovery of excess payments in installments to mitigate hardship.
Headnote
A) Co-operative Societies - Recovery of Excess Payments - Employees liable to refund excess payments - Haryana Co-operative Societies Act, 1984, Section 27 - The court held that the Managing Committees could not unilaterally extend regular pay scales without amending the Rules, and the employees were aware of the illegality of the payments. The appeals were allowed, and the High Court's order against recovery was set aside, directing recovery in installments (Paras 6-8).
Issue of Consideration
Whether the employees of co-operative societies are liable to refund excess payments made to them in violation of service rules.
Final Decision
The Supreme Court allowed the appeals, set aside the High Court's order, and directed the recovery of excess payments in twenty-four monthly installments.
Law Points
- Recovery of excess payments
- Judicial discretion
- Misrepresentation
- Co-operative Societies Act
- Service Rules
