Double recovery of loss to state impermissible, rules High Court

Saurabh Malik

Chandigarh, May 11

In a significant judgment on the State’s authority to reclaim losses, the Punjab and Haryana High Court has ruled that money cannot be recovered from an employee after the government has recuperated losses from another source. The Bench asserted double recovery amounting to undue enrichment was impermissible.

‘Undue enrichment’

The judgment establishes a precedent that prevents the government from seeking double recovery, thereby safeguarding against undue enrichment. The ruling also serves as a bulwark against unjust enrichment while ensuring that the individual-employees are not unfairly burdened with financial liabilities beyond their responsibility.

The ruling by Justice Harsimran Singh Sethi came in a case where loss caused to the exchequer following extra payment to a particular firm was sought to be recovered from an employee after already recovering it from the security amount deposited by a firm.

The judgment is significant as it establishes a precedent that prevents the government from seeking double recovery, thereby safeguarding against undue enrichment. The ruling also serves as a bulwark against unjust enrichment while ensuring that the individual-employees are not unfairly burdened with financial liabilities beyond their responsibility.

Justice Sethi asserted that the question for adjudication before the Bench was whether the State could recover loss from the petitioner-employee once it had already recuperated the loss caused from the security deposited of the firm concerned.

Justice Sethi said the State, being a welfare entity, could not act in a manner so as to gain money beyond entitlement. The loss caused by the petitioner-employee could only be recovered in case the money had not already been recovered by the State from the firm concerned.

Justice Sethi said money could not be recovered from the petitioner in case it had already been recovered by the State as it would amount to undue enrichment, which was impermissible.

Justice Sethi also took note of the argument by a counsel representing Haryana and other respondents that the State was well within its power to impose punishment of recovery as penalty even if the excess amount had already been recovered once the disciplinary proceedings had started.

He said an employee undoubtedly could be punished by way of recovery to make good the loss. But it was to be seen whether the recovery was due to loss caused or penalty.

“It may be noticed that only punishment stated under rules can be imposed and nothing has been brought to the notice of this court that any financial penalty is envisaged under Rule to be imposed. In the absence of any financial penalty envisaged under Rules, no financial penalty except for recovery of loss caused can be imposed.”