Supreme Court Upholds Recovery of Excess Payments to In-Service Nursing Trainees: Mekha Ram vs. State of Rajasthan (29 March 2022)

Date of the Judgment: 29 March 2022
Citation: (2022) INSC 283
Judges: M.R. Shah, J., B.V. Nagarathna, J.
Can the State recover excess payments made to employees who were on study leave, when these payments were made under a court order that was later reversed? The Supreme Court of India recently addressed this question in a case involving in-service nursing candidates in Rajasthan. This case clarifies the circumstances under which the principle of restitution applies, allowing the State to recover payments made under a subsequently overturned court order. The judgment was delivered by a bench of Justices M.R. Shah and B.V. Nagarathna.

Case Background

The appellants were in-service employees of the Rajasthan Medical & Health Subordinate Service, working as ANMs, Lab Technicians, and other similar positions. They applied for a three-year General Nursing Training course under the General Nursing Training Course Rules, 1990. These candidates applied as in-service candidates, seeking admission to the course. They were granted study leave to pursue the training.

Initially, the employees sought study leave, fully aware that the three-year nursing course would not be treated as deputation. However, after completing the course, some of them filed writ petitions seeking to have their study leave treated as deputation. A Single Judge of the High Court allowed these petitions, directing the State to treat their training period as deputation and grant them associated benefits.

The State challenged this decision in intra-court appeals. The Division Bench of the High Court overturned the Single Judge’s decision, ruling that the training period should be treated as leave, not deputation, and permitted the State to recover excess payments made to the employees. The employees then appealed to the Supreme Court.

Timeline

Course of Proceedings

The original writ petitioners, after completing their nursing course or while doing their internship, filed writ petitions before a Single Judge of the High Court of Judicature at Rajasthan. They sought to have their study leave, which was granted for the three-year nursing course, to be treated as deputation. The Single Judge allowed the writ petitions, directing the State to comply with the Supreme Court’s observations in the case of State of Rajasthan vs. Sushil Sharma, Civil Appeal No. 5283/2001, and to grant deputation benefits.

The State then filed intra-court appeals before the Division Bench of the High Court. The Division Bench allowed the appeals, setting aside the Single Judge’s order. The Division Bench held that the period spent on the training course by the in-service candidates should not be treated as deputation, but rather as leave. It also allowed the State to recover the excess amount paid to the employees during their training period.

Legal Framework

The case primarily revolves around the interpretation of the Rajasthan Medical & Health Subordinate Service Rules, 1965, and the General Nursing Training Course Rules, 1990. Rule 9 of the Rules 1990 specifies that in-service candidates can apply for the General Nursing course. Rule 11 of the Rules 1990 outlines the eligibility criteria for admission.

The Supreme Court also considered Section 144 of the Code of Civil Procedure, 1908, which deals with restitution. Section 144 of the Code of Civil Procedure states:

“144. Application for restitution – (1) Where and insofar as a decree or an order is varied or reversed in any appeal, revision or other proceeding or is set aside or modified in any suit instituted for the purpose, the Court which passed the decree or order shall, on the application of any party entitled in any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or order or such part thereof as has been varied, reversed, set aside or modified; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are property consequential on such variation, reversal, setting aside or modification of the decree or order.”

Arguments

Appellants’ Arguments:

• The appellants argued that they belonged to Class III and Class IV service (Group C and Group D service), and therefore, based on the Supreme Court’s decision in State of Punjab v. Rafiq Masih, (2015) 4 SCC 334, recovery of excess payments was impermissible.

• They contended that the excess amount should not be recovered, or at least, they should be allowed to repay the amount in reasonable monthly installments.

State’s Arguments:

• The State argued that the Rafiq Masih case was not applicable because the excess amount was not paid due to a mistake by the State, but rather due to an order of the Single Judge, which was later set aside. The State contended that the principle of restitution should apply.

• The State relied on the Supreme Court’s decisions in Indore Development Authority v. Manohar Lal, (2020) 8 SCC 129 and South Eastern Coalfields Ltd. v. State of M.P., (2003) 8 SCC 648, to support the principle of restitution, which allows for the recovery of benefits obtained under an order that is subsequently reversed.

• The State submitted that the Division Bench of the High Court was correct in permitting the recovery of excess payments, and that the original writ petitioners may be given reasonable installments to repay the amount.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether there shall be recovery of the amounts from the original writ petitioners, as directed in the impugned judgment and order passed by the Division Bench of the High Court.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

Legal Provisions Considered by the Court:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court distinguished State of Punjab v. Rafiq Masih, (2015) 4 SCC 334*, stating that it does not apply to cases where payments were made due to a court order that was later reversed.
• The Supreme Court relied on Indore Development Authority v. Manohar Lal, (2020) 8 SCC 129*, and South Eastern Coalfields Ltd. v. State of M.P., (2003) 8 SCC 648*, to reaffirm the principle of restitution, which requires parties to return benefits gained under an order that is subsequently overturned.
• The Supreme Court also relied on Ouseph Mathai v. M. Abdul Khadir, (2002) 1 SCC 319* to support the view that after the dismissal of a lis, the party is relegated to the position existing before the filing of the petition.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle of restitution and the need to ensure that no party benefits from a court order that is later reversed. The Court emphasized that the excess payments were not a result of a mistake by the State, but rather a consequence of an order passed by the Single Judge of the High Court, which was subsequently set aside by the Division Bench.

The Court also considered that the employees had initially applied for study leave, knowing that the three-year nursing course would not be treated as deputation. The Court noted that the employees were seeking to benefit from a favorable order that was later found to be incorrect.

The Court also considered Section 144 of the Code of Civil Procedure, 1908, which provides for restitution, further reinforcing the decision to allow the State to recover the excess payments.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law Ratio

Logical Reasoning Flowchart

The Court considered the principle of restitution, the fact that the payments were made under a court order that was later reversed, and that the employees initially understood that their training period would be treated as leave. These factors led the Court to conclude that the State was entitled to recover the excess payments.

The Court rejected the argument that the Rafiq Masih case applied, distinguishing it on the basis that the payments in the present case were not made due to a mistake by the State, but rather due to a court order that was subsequently overturned.

The Court also considered Section 144 of the Code of Civil Procedure, 1908, which provides for restitution, further reinforcing the decision to allow the State to recover the excess payments.

Key Takeaways

• The principle of restitution applies when a party benefits from a court order that is later reversed.
• Excess payments made under a court order can be recovered if that order is subsequently set aside.
• The Rafiq Masih ruling on non-recovery of excess payments for Class III and IV employees does not apply when the payments were made due to a court order, not a mistake by the State.
• Section 144 of the Code of Civil Procedure, 1908, supports the principle of restitution.
• Employees cannot retain benefits obtained under a court order that is later reversed.

Directions

The Supreme Court directed that the excess amount paid to the original writ petitioners be recovered in thirty-six equal monthly installments, to be deducted from their salary commencing from April 2022.

Development of Law

The ratio decidendi of this case is that the principle of restitution applies when payments are made under a court order that is later reversed. This case clarifies that the bar on recovery of excess payments from Class III and IV employees, as established in Rafiq Masih, does not apply when the payments were made due to a court order, not a mistake by the State. This judgment reinforces the principle that no one should benefit from a court order that is later found to be incorrect.

Conclusion

The Supreme Court upheld the Division Bench’s decision to allow the State of Rajasthan to recover excess payments made to in-service nursing candidates who were on study leave. The Court clarified that the principle of restitution applies in such cases, and the Rafiq Masih ruling does not prevent the recovery of payments made under a court order that was later reversed. The Court directed that the recovery be made in thirty-six equal monthly installments.