FAIZ AHMED vs CHIEF ENGINEER (NORTH) and others
This matter originated as a petition, which was subsequently converted into an appeal by consent of the parties. The core legal question concerned whether an employer, specifically a government entity, is entitled to recover payments made to a civil servant where such payments were initially granted erroneously but received by the employee in good faith. Relying on the precedent established in Engineer-in-Chief Branch v. Jalaluddin (PLD 1992 SC 207), the Court held that while the employer may correct an illegal order regarding pay fixation, it cannot recover amounts already disbursed to an employee who received those payments under a bona fide impression of entitlement. The Court applied the principle of locus poenitentiae to protect the employee from the recovery of past payments made in good faith, despite the underlying order for such payments being legally flawed. Consequently, the Court dismissed the petitioner's claim for future payments but restrained the respondents from recovering the amounts already paid to the petitioner, thereby balancing the employer's right to correct administrative errors with the protection of an employee's bona fide receipt of funds.
- Can an employer recover salary payments made to a civil servant if those payments were based on an erroneous order but received in good faith?
- Does the principle of locus poenitentiae prevent the recovery of payments already disbursed by an employer to an employee under a bona fide belief of entitlement?
- Does the power of an authority to rescind an order under Section 21 of the General Clauses Act 1897 extend to the recovery of past payments made in good faith?
- Section 21, General Clauses Act 1897
ORDER
MUNAWAR AHMED MIRZA, J.- Learned counsel for petitioner after examining reply filed by respondents and the Prospectus of Government College of Technology, Raiwind Road Campus, Lahore does not press the petition, provided in accordance with 'dictum laid by this Court in case Engineer-in-Chief Branch v. Jalaluddin (PLD 1992 SC 207) respondents are restrained from recovering the amount already received by petitioner. Learned Additional Advocate-General in view of said reported judgment does no object to the same. Even otherwise it is quite apparent that if any payment has been made erroneously by respondents/employer and civil servants received it, under good faith with bona fide impression of his being entitled the same cannot he recovered because principle of locus paenitentiae would he applicable in such circumstances. However, for illucidation relevant observations from afore-quoted judgment are also reproduced below:- "It is, therefore, clear that the Tribunal has also not disputed the contention of the appellant that respondent was not entitled to he fixed in Grade-II of National Pay Scale. The principle of locus poenitentiae was invoked by the learned Tribunal in aid of the respondent. Having gone through the facts of the case, we have come to the conclusion that this principle is not attracted in the present case. Additionally, under Section 21 of the General Clauses Act, the authority which can pass an order, is entitled to vary, amend, add to or to rescind that order. The order under which the payment was made to the respondent had no sanction of law. Locus poenitentiae is the power of receding till a decisive step is taken. But it is not a principle of law that order once passed becomes irrevocable and it is past and closed transaction. If the order is illegal then perpetual rights cannot he gained on the basis of an illegal order. The appellants when came to know that on the 'basis of incorrect letter, the respondent was granted Grade-l1, they withdrew the said letter. The principle of locus poenitentiae would not apply in this case. However, as the respondent had received the amount on the bona fide belief, the appellant is not entitled to recover the amount drawn by the respondent during the period when latter remained in the field. Learned counsel for the appellants had submitted that the appellants had drawn Rs. 12,890.86 (Rupees twelve thousand, eight hundred, ninety and paisa eighty-six only) during this period but the Engineer-in-Chief had directed the recovery of Rs. 1,860.00 only (Rupees one thousand, eight . hundred, sixty and pais nil only). We consider that as far as the recovery of the amount in question is concerned, the principle of locus poenitentiae would he applicable and the appellants are not entitled to recover the amount. The appellants have themselves taken a liberal view and the recovery of only 12 months is being made."
For the reasons stated above, we accept this appeal and set aside the order of the Tribunal.
However, the appellants would not recover even Rs. 1,860.00 (Rupees one thousand, eight hundred sixty and paisa nil only) from the respondent. There would be no order as to costs."
2. Accordingly with consent petition is converted into appeal and partly accepted. The claim pertaining to future payment demanded by the petitioner is dismissed. Whereas respondents are restrained from effecting recovery in respect of amount already paid to petitioner on the basis of advance increment. Petition on conversion into appeal stands disposed of in above terms. Parties are left to bear their own costs.