' UMAR ATA BANDIAL, J.--- This petitioners are employees of respondent No.2 the Civil Aviation Authority ("CAA") who challenge the office memorandum dated 4-9-2004 issued by the Ministry of Finance Government of Pakistan, respondent No.1. By this memorandum the Federal Government has given policy decision on the revised pay scales introduced on 1-12-2002 by the CAA for its officers in pay group 7 to 11. The said decision of the Federal Government regularizes the pay scales introduced by the CAA management in 1998 but is disputed for its directive to the CAA to recover "over payments made as a result of wrong fixation of pay to the officers" in easy instalments. That directive becomes clear from the letter dated 11-9-2004 issued in implementation by the CAA, respondent No.2 which has ordered excess payment made to its officers with effect from 1-12-2001 to be recovered in easy instalments "due to anomaly in 2001 pay scales". Accordingly the office.
Memorandum by the Federal Government dated 4-9-2004 and the aforesaid order by the CAA dated 11-9-2004 are impugned in this petition.
2. The petitioners had received their pay and allowances according to the decision of the Board of Directors of the Authority dated 16-3-2002 with effect from 1-12-2001. This decision was taken by the Board of Directors in the light of the prevailing directive by the Federal Government as is evident from the contents of paragraph 17 of the minutes of the 96th meeting of the Board of Directors of CAA held on 16-3-2002 The relevant extract of the said minutes are reproduced below:--- "Decision:
17. After due deliberation the CAA Board approved the following:---
(a) Implementation of the revised Pay Scales for PG-1 to PG-11 of CAA employees, as contained in Annexure 'D' with effect from 1st December, 2001.
(b) Discontinuation of (i) the facility of move over, (ii) Cost of Living Allowances being paid at 7% of Basic Pay, (iii) Ad hoc relief being paid a Rs,300/- per month and (iv) Rent and Recreation Allowance with effect from 1st December, 2001.
(c) Revision of Allowances for PG-1 to PG-9, as contained in Annexure "C" with effect from 1st December, 2001.
(d) Fixation of Pay in the revised pay scales with effect from 1st December, 2001 as per provision of the Finance Division (Regulation Wing) O.M.
(e) Adoption of provision relating to revision of pension and other pension reform as contained in Finance Division (Regulation Wing) O.M. No.1(5)Imp/2001 dated 4th September, 2011 and any amendment/addition thereto with effect from 1st December, 2001.
(f) The revision of Pay, Allowance as approved by the CAA Board be submitted for concurrence of the Ministry of Finance. However, pending concurrence or the Ministry of Finance, 50% the increase in Pay and/allowances as approved by the CAA. Board, should be paid on provisional basis immediately."
3. It is clear from para 7(0 above that the decisions of the Board of Directors of CAA were meant to conform the law and guidelines laid down by the Federal Government. However, it is equally clear therefrom that the payment of 500% increase in pay and allowances to the eligible officers of the CAA was specifically allowed and directed by the Board. Consequently, the question arises whether said payment of pay and allowances specifically authorized by the Board of Directors of the CAA on 16-3-2002 can be reversed subsequently at the instance of the Federal Government through its aforenoted impugned memorandum dated 4-9-2004. The difference in the amounts of pay and allowances that had been paid to CAA officers from the amounts that were ultimately approved by the Federal Government through the impugned office memorandum is listed in the Administrative Order No.1/2002 (Revised) Revision of Pay Scales of CAA Employees dated 18-11-2002. This gives a comparative table showing difference in the said two scales of payments to be in the range of 20% to 25% of the total entitlement of the respective employees. The said differential amount in the payment made to the petitioners over a period of three years from 1-12-2001 to 4-9-2004 is sought to be recovered natal the petitioners through the impugned action by the CAA at the instance of the Federal Government.
4. Learned counsel for the petitioners has articulated his case at three levels. Firstly, he submits that the respondent No.2 CAA is constituted by the CAA Ordinance, 1982 as an autonomous body with a duly constituted Board of Directors having authority to take decisions in respect of all affairs of authority including the determination of the terms and conditions of service of its officers and employees under section 12 ibid. The autonomy of CAA is emphasized with reference to sections 15 and 16 of the Ordinance. Consequently, he submits that the Board's decision dated 16-3-2002 is liable to be implemented fully without any adverse interference by the Federal Government.
Secondly, he submits that the payments made to the petitioners were at the instance and under the orders of the competent authority. The petitioners did not secure these payments through any fault or wrongdoing. Consequently, the payments that have already been received by the petitioners under the orders of the competent authority without fault of the petitioners cannot be recovered under the impugned orders. On the other hand for future payments the impugned orders may be allowed to take effect. Thirdly, he submits that some of the petitioners have retired from service and some others have even died. Therefore, on grounds of equity no amounts should be recovered from such employees. The impugned directive has the effect of reopening past and closed transactions.
5. On behalf of the Federal Government, learned DAG has submitted that a statutory corporation established with the aid of public revenue is subject to the direction and control of the Federal Government. The respondent-Corporation is claimed to be subject to the aforesaid rule. Further submits that the impugned letters are issued in exercise of lawful authority by the Federal Government and in fact the impugned directive by the Federal Government dated 4-9-2004 condones certain branches committed by the CAA and only requires correction with regard to the differential of its pay scales from the approved pay scales of the Federal Government. In this regard it is alleged that the CAA had wrongly applied the Federal Government's letter dated 14-11- 2002. On behalf of the CAA, Mr. Yawar Ali Khan, has emphasized that the authority for the payments claimed by the petitioners is the Board's decision dated 16-3-2002. That decision which is reproduced above is provisional in nature and expressly acknowledges the effect of the financial measures to be subject to the concurrence of the Federal Government. Consequently, he submits that the petitioners cannot claim vested rights as the enabling decision of the Board is itself tentative and provisional in effect.
6. It is clear that notwithstanding the existence of an independent Board of Directors of the CAA having power to determine terms and conditions of service of its officers and employees, the decisions and action of Board are subject to direction and guidance through policy statements issued by the Federal Government under section 4 of the Ordinance. This legal position is acknowledged in the Board's decision of 16-3-2002 which by its own terms is submitted to the Federal Government for approval. Accordingly, there is no question of the Board's decision surviving the impugned corrective action directed in the Federal Government's memorandum dated 4-9-2004 with reference to future financial obligation of the CAA.
7. Therefore, the essential point of difference remaining between the parties that requires resolution is whether the petitioners can lawfully be directed in terms of the impugned memorandum dated 4-9-2004 and CAA's order dated 11-9-2004 to refund and deposit the excess amount of pay and allowances received by them in the past three years. It is unfair to expect the petitioners to have saved the large differential amount received by them over a three years period. It is on this question that the law extends its equitable principles to protect the rights of a person to retain benefits conferred by a competent authority. The primary ruling on the subject is the judgment of the Hon'ble Supreme Court in Controlling Authority N.-W.F.P., Board of Technical Education Peshawar and others v. Abdul Salam Secretary, N.-W.F.P. Chairman Board of Technical Education Peshawar (PLD 1993 SC 200). In that case remuneration paid in excess of entitlement was held not to be recoverable from the government employee. The basis of that decision lies in the principle of locus poenitentiae that was established a long time ago but was reiterated in the context of service dues in The Engineer in Chief Branch through Ministry of Defence, Rawalpindi and another v.
Jalal-ud-Din (PLD 1992 SC 207). Consequently, although the petitioners have received payment in excess of the amount allowed by the Federal Government, the fact is that these payments were authorized and disbursed to the petitioners by the competent authority in the CAA. The petitioners cannot be held responsible for the failure of the CAA to correctly administer the rules of internal administration with respect to securing the approval of and implementing policy directives from the Federal Government. In fact it was not even imagined by the relevant quarters whilst disbursing the impugned scales of pay and allowances to the petitioners that there may be any difference of opinion or calculation between the Federal Government and CAA, Consequently, both on the principle locus poenitentiae and past and closed transaction the petitioners shall retain the excess payments received by them. This petition is allowed to the foregoing extent. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.