1. This appeal raises a novel and somewhat difficult question. The appellant was in the service of Government. In January 1921 he applied for and was granted leave for 18 months. Under the rules governing the conduct of public servants he was prohibited from working for another employer while on leave without the permission of the authority empowered to appoint him. The same prohibition is to be found in Rule 69 of the Fundamental Rules. In breach of the rule he obtained employment from Messrs. Jackson and Barker in Madras without the requisite permission from 3rd January 1921. Thirteen days later he applied for permission without disclosing the fact that he had already secured private employment. On 11th March permission was definitely refused. Despite the refusal he continued to be in the service of Messrs. Jackson and Barker. This fact came to the notice of the Chief Engineer of the P.W.D. who, in August, 1922, called upon him to show cause why he should not be dismissed. In reply, he admitted the facts and asked to be allowed to resign. On 26th October he was dismissed. The Secretary of State then brought a suit to recover the leave allowances paid to him from 3rd January 1921 to 31st July 1922. The suit was tried by the Judge of the City Civil Court, who decreed it, holding that the leave allowances had been paid under a mistake of fact and were recoverable as they had been paid in ignorance of the fact that the appellant was in private employment.
2. In the Lower Court there was some controversy on the question whether Mr. Stoney, the Deputy Chief Engineer, was or was not aware that the appellant was in the service of Messrs. Jackson and Barker. The Judge found that he was not. The same question was raised in the Memorandum of Appeal, but has not been pressed. The finding of the trial Judge therefore stands. The sole question for decision is as to the Secretary of State's right to recover the leave allowances drawn by the appellant. It is conceded that there is no provision in the Fundamental Rules for a case of this nature and the trial Judge had to fall back on the general principle that money paid under a mistake of fact can always be recovered by suit. The decision seems to me, to depend on the terms of which the appellant was employed by the respondent.
3. Mr. Krishnaswami Aiyar's main argument turns on Rule 52 of the Fundamental Rules which lays down that the pay and allowances of a Government servant who is dismissed from service cease from the date of such dismissal. His client, he points out, was not dismissed till October 1922 and till then he must be considered to have been a Government servant and, as such, entitled to his leave allowances. I think that the argument is sound and that the respondent would have been in a stronger position if the order of dismissal had been dated back to the date of the appellant's breach of his contract. The wording of Rule 52 is perfectly clear and the only possible inference from it seems to me to be that a Government servant who is dismissed is entitled to his pay and allowances till the date of his dismissal unless, of course, he has been suspended pending enquiry, when he is entitled to subsistence allowance.
4. Mr. Ananthakrishna Aiyar has quoted a number of cases which do not seem to me to be in point. As an example I will take In Re The Bodega Co., Ltd. (1904) 1 Ch. 276. One Wolseley was a Director of the Company. By Article 70 of the Articles it was provided that the office of any director should be vacated if he inter alia should be concerned in or participate in any contract with the company not disclosed to and authorised by the Board. Wolseley on 24th December, 1900 became secretly concerned in a contract with the company and did not disclose his interest to the Board. It was held that under Article 70 he automatically vacated his office of Director on December 24, 1900, that he was not entitled to a quantum meruit for his services as a Director rendered to the company after that date, and that the company was entitled to recover from him the fees paid to him as being moneys paid to him under the mistake of fact that he was a director. I know of no provision in the Fundamental Rules by which any Government servant can be held to have automatically lost his appointment under Government. No doubt, certain Government servants are compelled to retire when they reach a certain age, but that is not in point. We are dealing with a case of misconduct and the only way in which a Government servant who has been guilty of misconduct can lose his appointment is by dismissal by a competent authority. Till then he remains a Government servant, I cannot agree with the Judge below that the allowances paid to the appellant were paid under a mistake of fact. They were paid to him as a Government servant, and a Government servant he was. The fact that his superior was ignorant of his misconduct seems to me to make no difference. Government had to pay him till he was dismissed. If his misconduct had been discovered earlier, he could have been suspended or dismissed earlier, but he had to be paid till he was dismissed. I do not think that there was any material mistake of fact. To quote the case above cited
The mistake on which you can recover must, as Bramwell B. puts it in Aiken v. Short (1856) 1 H&N; 210 be a mistake as to a fact which, if true, would make the person paying liable to pay the money.
If then I apply Bramwell B.'s test, the money was paid under the mistaken belief that Wolseley was a director: if this had not been a mistake, the company would have been liable.
5. In this case the allowances were paid to the appellant on the perfectly correct assumption that he was a public servant, which he was till he was dismissed. The only material consideration at the time was whether he was a public servant, and as to that there was no mistake.
6. I would allow the appeal and dismiss the suit with costs throughout.