ivil Appeal No 4426 of 1986
From the Judgment and Order dated 119
1984 of the Delhi High Court in LPA No 219 of 1981 VK Kanth GD Gupta and CV Subba Rao for the Appel lants
Ram Panjwani Vijay Panjwani and DN Goburdhan for the Respondent
The Judgment of the Court was delivered by SEN J
This appeal by special leave directed against the judgment and order of the Delhi High Court dated Septem ber 11 1985 raises a question of frequent occurrence
The question is whether where a Government servant retains accommodation allotted to him under SR 317 B 11 beyond the concessional period of two months permissible under sub r2 thereof the liability to pay damages equivalent to the market rent for the period of such unauthorised occupa tion under SR 3 17 B 22 is contingent upon the Directorate of Estates serving a notice upon him that he would be liable to pay market rent for retention of such accommodation as held by the High Court
Put very briefly the essential facts are these
In the year 1968 the respondent who was then a Squadron Leader in the Indian Air Force on being posted at the Headquarters Western Command Palam Cantonment Delhi applied on May 9 1968 for allotment of accommodation in the Curzon Road Hostel New Delhi
In the application for allotment he gave a declaration that he had read the Allotment of Government Residences General Pool in Delhi Rules 1963 and the allotment made to him shall be subject to the said Rules including the amendments made thereto
The Directorate of Estates by its order dated June 27 1968 allotted Flat No 806 B to the respondent in the Curzon Road Hostel on a rent of Rs 161 per month exclusive of electricity and water charges
The respondent was transferred from Delhi to Chand igarh on June 11 1970 and therefore the allotment of the flat to him stood automatically cancelled under sub r 3 of SR 317 B 11 after the concessional period of two months from the date of his transfer iewef
August 11 1970
He however did not give any intimation of his transfer to the Directorate of Estates with the result that he contined in unauthorised occupation of the said flat for a 98 period of nearly five years and was being charged the normal rent for that period
On February 28 1975 the Estate Offi cer having come to know about the transfer of the respondent from Delhi the Directorate addressed a letter dated March 18 1975 cancelling the allotment wef August 11 1970 and intimating that he was in unauthorised occupation thereof
On the next day ie the 19th the Directorate sent another letter asking the respondent to vacate the flat
On March 25 1975 the respondent vacated the flat and handed over possession of the same to the Directorate of Estates
But he addressed a letter of even date by which he repudiated his liability to pay damages alleging that he was in possession of the flat under a valid contract and that at no time was he in unauthorised occupation and further that under that the said contract he was not liable to pay any damages
It appears that there was some correspondence between the parties but the respondent disputed his liability to pay damages for the period of his unauthorised occupation
In consequence whereof proceedings were initiated by the Estate Officer under s7 of the to recover Rs3881117p
as damages
The Estate Officer duly served notices on the respondent under s73 of the Act from time to time and the respondent appeared in the proceedings and contested the claim
Apparently the respondent in the meanwhile made a representation to the Central Government
On such represen tation being made the Government on compassionate grounds reduced the amount to Rs2048278p
and deducted the same on October 30 1976 from out of the commuted pension payable to the respondent
On November 25 1976 the respondent appeared and protested against the recovery of the amount of Rs2048278p
from the commuted pension payable to him which according to him was contrary to section 11 of the Pen sions Act 1871 by process of seizure and sequestration
The respondent complained that despite his repeated re quests he was not given opportunity of a hearing and was informed that the matter was being examined in depth and that the whole procedure was arbitrary and capricious
The respondent filed a petition in the High Court under article 226 of the Constitution challenging the action of the Government in making a unilateral deduction of Rs2048278p
towards recovery of damages from the commuted pension payable to him which according to him was contrary to section 11 of the 
The writ petition was allowed by a learned Single Judge by his judgment and order dated September 7 1981 who held that although the allotment of the 99 fiat to the respondent stood cancelled in terms of sub r3 of SR 317 B 11 wef August 11 1970 ie after the conces sional period of two months from the date of his transfer the Government was estopped from claiming the amount of Rs2048278p
as damages equivalent to the market rent under SR 3 17 B 22 for the period from August 11 1970 to March 25 1975
In coming to that conclusion the learned Single Judge held that the Government not only knowingly allowed the respondent to continue in occupation till March 25 1975 and charged him the normal rent of Rs 161 per month presumably under its power of relaxation under SR 317 B 25
Further he held that the Government having failed to serve the respondent with a notice that he would be liable to pay market rent for the period of such unautho rised occupation the doctrine of promissory estoppel pre cluded the Government from claiming damages equivalent to the market rent under SR 317 B 22 for the period in ques tion
Aggrieved the appellant preferred an appeal but a Division Bench by its judgment under appeal affirmed the decision of the learned Single Judge
It based its decision mainly on the terms of SR 317 B 25 which confer the power of relaxation on the Government and held that since the Govern ment had not recovered the rent at the market rate as per missible under SR 317 B 22 wef August 11 1970 and having knowingly allowed the respondent to retain the flat for the period in question it must be presumed that the Government had acted in exercise of its power of relaxation under SR 317 B 25
In support of the appeal Shri G Ramaswamy learned Additional Solicitor General mainly advanced two conten tions
First of these is that where a Government servant has retained the government accommodation allotted to him under SR 317 B 111 beyond the concessional period of two months allowed under sub r2 thereof the liability to pay dam ages equal to the market rent for the period of his unautho rised occupation is not a contingent liability
It is urged that the High Court was in error in holding that the appel lant was not entitled to deduct Rs2048278p
from the commuted pension payable to the respondent because of the failure of the Directorate of Estates to serve the respond ent with a notice after the allotment of the flat in ques tion stood automatically cancelled wef August 11 1970
Secondly he submits that the construction placed by the High Court upon SR 317 B 22 was plainly erroneous
It is submitted that the High Court was wrong in assuming that there was some kind of estoppel operating against the Gov ernment and in proceeding upon the basis that recovery of damages equivalent to the market rent for use and occupation for the period of unauthorised occupation was punitive in nature and 100 therefore the Court had power to grant relief against recov ery of damages at that rate
These contention must in our opinion prevail
It would be convenient here to set out the relevant statutory provisions
Sub s2 of s7 of the Public Prem ises Eviction of Unauthorised Occupants Act 1971 invests the Estate Officer with authority to direct the recovery of damages from any person who is or has at any time been in unauthorised occupation of any public premises having regard to such principles of assessment of damages as may be prescribed
R8 of the Public Premises Eviction of Unautho rised Occupants Rules 1971 lays down the principles for assessment of such damages
Among other things r8c provides that in making assessment of damages for unautho rised us  and occupation of any public premises the Estate Officer shall take into consideration the rent that would have been realised if the premises had been let on rent for the period of unauthorised occupation to a private person
Allotment of residential premises owned by Government in Delhi is regulated by the Allotment of Government Residences General Pool in Delhi Rules 1963
Sub r
1 of SR 3 17 B 11 provides inter alia that an allotment of such premises to a Government officer shall continue in force until the expiry of the concessional period permissible under sub r2 thereof after the officer ceases to be on duty in an eligible office in Delhi
Sub r2 of SR 317 B 11 provides that a residence allotted to an officer may subject to sub r3 be retained on the happening of any of the events specified in Column 1 of the Table underneath for the period specified in the corresponding entry in Column 2 thereunder
The permissible period for retention of such premises in the event of transfer of the Government officer to a place outside Delhi is a period of two months
SR 3 17 B 22 insofar as material provides as follows Where after an allotment has been cancelled or is deemed to be cancelled under any provi sion contained in these rules the residence remains or has remained in occupation of the officer to whom it was allotted or of any person claiming through him such officer shall be liable to pay damages for use and occupation of the residence services furni tures and garden charges equal to the market licence fee as may be determined by Government from time to time
 It is difficult to sustain the judgment of the High Court or the reasons therefore
The construction placed by the High Court on the 101 two provisions contained in SR 317 B 22 and SR 317 B 25 is apparently erroneous
It is plain upon the terms of SR 3 17 B 22 that the liability to pay damages equal to the market rent beyond the concessional period is an absolute liability and not a contingent one
Both the learned Single Judge as well as the Division Bench were clearly in error in subjecting the liability of a Government officer to pay market rent for the period of unauthorised occupation to the fulfilment of the condition that the Director of Estates should serve him with a notice that in the event of his continuing in unauthorised occupation he would be liable to pay market rent
They were also in error in proceeding upon the wrongful assumption that since the Government had not recovered the rent at the market rate as permissible under SR 3 17 B22 and allowed the respondent to continue in unau thorised occupation for a period of nearly five years it must be presumed that the Government had relaxed the condi tion in favour of the respondent under SR 317 B 25
The view expressed by the High Court that there was a presumption of relaxation of the condition for payment of market rent under SR 3 17 B 22 due to inaction on the part of the Government is not at all correct
For a valid exercise of power of relaxation the condition pre requisite under SR 317 B 25 is that the Government may relax all or any of the provisions of the Rules in the case of any officer or residence or class of officers or types of residences for reasons to be recorded in writing
There was no question of any presump tion arising for the relaxation which had to be by a specif ic order by the Government for reasons to be recorded in writing
Nor was there a question of any promisory estoppel operating against the Government in a matter of this kind
In the facts and circumstances of the present case the respondent had given a declaration in his application for allotment that he had read the Allotment of Government Residences General Pool in Delhi Rules 1963 and that the allotment made to him shall be subject to the said Rules as amended from time to time
According to sub r3 of SR 317 B 11 the allotment was to continue till the expiry of the concessional period of two months under sub r2 there of after June 11 1970 the date of transfer and thereafter it would be deemed to have been cancelled
It is not disput ed that the respondent continued to remain in occupation of the premises unauthorisedly from August 11 1970 even after his transfer outside Delhi
He was not entitled to retain any accommodation either from the general pool or the de fence pool once he was transferred to a place outside Delhi
The respondent retained the flat in question at his own peril with full knowledge of the consequences
He was bound by the declaration to abide by the Allot 102 ment Rules and was clearly liable under SR 3 17 B 22 to pay damages equal to the market rent for the period of his unauthorised occupation
Before an estoppel can arise there must be first a representation of an existing fact distinct from a mere promise made by one party to the other secondly that the other party believing it must have been induced to act on the faith of it and thirdly that he must have so acted to his detriment
In this case there was no represen tation or conduct amounting to representation on the part of the Government intended to induce the respondent to believe that he was permitted to occupy the flat in question on payment of normal rent or that he was induced to change his position on the faith of it
If there was any omission it was on the part of the respondent in concealing the fact from the Director of Estates that he had been transferred to a place outside Delhi
There was clearly a duty on his part to disclose the fact to the authorities
There is nothing to show that he was misled by the Government against whom he claims the estoppel
It is somewhat strange that the High Court should have spelled out that the respondent being a Squadron Leader was an employee of the Central Government and therefore the Government of India to whom the Curzon Road Hostel belongs must have had knowledge of the fact of his transfer
The entire judgment of the High Court proceeds upon this wrongful assumption
In the premises it is difficult to sustain the judgment of the High Court and it has to be reversed
Nonetheless the writ petition must still succeed for another reason
It is somewhat strange that the High Court should have failed to apply its mind to the most crucial question involved namely that the Government was not competent to recover the amount of Rs2048278p
alleged to be due and payable towards damages on account of unauthorised use and occupa tion of the flat from the commuted pension payable to the respondent which was clearly against the terms of section 11 of the which reads as follows Exemption of pension from attachment No pension granted or continued by Government on political considerations or on account of past services or present infirmities or as a compassionate allowance and no money due or to become due on account of any such pension or allowance shall be liable to seizure attachment or sequestration by process of any Court at the instance of a creditor for any demand against the pensioner or in satisfac tion of a decree or order of any such Court
 103 According to its plain terms section 11 protects from attach ment seizure or sequestration pension or money due or to become due on account of any such pension
The words money due or to become due on account of pension by necessary implication mean money that has not yet been paid on account of pension or has not been received by the pensioner and therefore wide enough to include commuted pension
The controversy whether on commutation of pension the commuted pension becomes a capital sum or still retains the character of pension so long as it remains unpaid in the hands of the Government is not a new one till it was settled by the judgment of this Court in Union of India vs Jyoti Chit Fund  Finance  Ors
  We may briefly touch upon the earlier decisions on the question
In an English case in Crowe vs Price it was held that money paid to a retired officer of His Majesty s force for the commutation of his pension does not retain its character as pension so as to prevent it from being taken in execution
On p217 of the Report Coleridge CJ
said It is clear to me that commutation money stands on an entirely different ground from pension money and that if an officer commuted his pension for a capital sum paid down the rules which apply to pension money and make any assignment of it void do not apply to this sum
 Following the dictum of Coleridge CJ Besley CJ and King J in Municipal Council Salem vs B Gururaja Rao ILR held that when pension or portion thereof is commuted it ceases to be pension and becomes a capital sum
The question in that case was whether the commuted portion of the pension of a retired Subordinate Judge was income for purposes of assessment of professional tax under s354 of the Madras District Municipalities Act 1920
The learned Judges held that where pension is commuted there is no longer any periodical payment the pensioner receives once and for all a lump sum in lieu of the periodical pay ments
The pension is changed into something else and be comes a capital sum
On that view they held that the sum received by the retired Subordinate Judge in lieu of the portion of his pension when it was commuted was no longer pension and therefore not liable to pay a professional tax under s354 of the Madras District Municipalities Act
That is to say the commuted portion of the pension was not income for purposes of assessment of professional tax in a municipality
The question arose in a different form in C Gopalachariar vs Deep Chand Sowcar AIR 1941 Mad 207 and it was whether the commuted portion of the pension was not attachable in 104 execution of a decree obtained by certain creditors in view of section 11 of the 
Pandurang Row J interpreting section 11 of the Act was of the opinion that not only the pen sion but any portion of it which is commuted came within the provisions of the section
He particularly referred to the words money due or to become due on account of pension appearing in section 11 of the Act which according to him would necessarily include the commuted portion of the pension
He observed that the phrase on account of is a phrase used in ordinary parlance and is certainly not a term of art which has acquired a definite or precise meaning in law
Accord ingly to its ordinary connotation the phrase on account of means by reason of and he therefore queried Now can it be said that the commuted portion of the pension is not money due on account of the pension Though the pension has been commuted still can it be said that money due by reason of such commutation or because of such commutation is not money due on account of pension He referred to section 10 of the Act which provides for the mode of commutation and is part of Chapter III which is headed Mode of Payment and observed In other words the commutation of pension is regarded as a mode of payment of pension
If so can it be reasonably urged that payment of the commutation amount is not payment on account of the pension though not of the pension itself because after commutation it ceases to be pension I see no good reason why it should be deemed to be otherwise
No doubt money is due immediately under the commutation order but the commutation order itself is on account of a pension which was commuted or a portion of the pension which was commuted
The intention behind the provisions of section 11  is applicable to the commuted portion as well as to the uncommuted portion of the pension and the language of section 11 does not appear to exclude from its protection the money that is due under a commutation order commuting a part of the pension
 In Hassomal Sangumal vs Diaromal Laloomal AIR 1942 Sind 19
Davis CJ
speaking for a Division Bench referred to Gopalachariar s case and pointed out that it does not lay down that once a 105 pension has been commuted and the money paid over to the pensioner the exemption from attachment still continues
The learned Chief Justice went on to say that the words money due or to become due used in section 11 must by necessary implication mean the money that has not yet been paid to the pensioner
In Jyoti Chit Fund s case the Court repelled the conten tion that since the civil servant had already retired the provident fund amount pension and other compulsory deposits which were in the hands of the Government and payable to him had ceased to retain their character as such provident fund or pension under ss3 and 4 of the 
Krishna Iyer J speaking for himself and Chandrachud J observed On first principles and on precedent we are clear in our minds that these sums if they are of the character set up by the Union of India are beyond the reach of the court s power to attach
Section 2 a of the Provi dent Funds Act has also to be read in this connection to remove possible doubts because this definitional clause is of wide amplitude
Moreover s601 provides g and k leave no doubt on the point of non attachability
The matter is so plain that discussion is uncalled for
We may state without fear of contra diction that provident fund amounts pensions and other compulsory deposits covered by the provisions we have referred to retain their character until they reach the hands of the employee
The reality of the protection is reduced to illusory formality if we accept the interpretation sought
 The learned Additional Solicitor General has very fairly brought to our notice Circular No F728E V53 dated August 25 1985 issued by the Government of India Ministry of Finance to the effect When a pensioner refuses to pay Government dues The failure or refusal of a pensioner to pay any amount owed by him to Government cannot be said to be misconduct  within the meaning of Article 351 of the CSR Rule 8 CCS Pension Rules 1972
The Possible way of recoveringdamanding Government dues from a retiring officer who refuses to agree in writing to such dues being recovered from his pension is either to delay the final sanc 106 tion of his pension for some time which will have the desired effect for persuading him to agree to recovery being made therefrom or take recourse to Court of law
 It bears out the construction that the words money due or to become due on account of pension occurring in section 11 of the includes the commuted portion of the pension payable to an employee after his retirement
It must accordingly be held that the Government had no authority or power to unilaterally deduct the amount of Rs2048278p
from the commuted pension payable to the respondent con trary to section 11 of the 
For these reasons the appeal partly succeeds and is allowed
The judgment and order of the High Court are set aside
We allow the writ petition filed by the respondent in the High Court and direct that a writ of mandamus be issued ordaining the Central Government to refund the amount of Rs2048278p
deducted from the commuted pension paid to the respondent
The Government shall be at liberty to initi ate proceedings under s72 read with section 14 of the for recovery of Rs2048278p
due on account of damages for unauthorised use and occupation of the fiat in question from the respondent as arrears of land revenue or have recourse to its remedy by way of a suit for recovery of damages
Before parting with the case we wish to add a few words
The Government should consider the feasibility of dropping the proceedings for recovery of damages if the respondent were to forego his claim for interest
In this case the deduction of the amount of Rs2048278p
from the commuted pension payable to the respondent was made as far back as October 30 1976
Since then 10 years have gone by
Even if interest were to be calculated at 9 per annum the interest alone would aggregate to more than Rs18000
Since the Government had the benefit of the money for all these years it may not be worthwhile in pursuing the matter any further
There shall be no order as to costs
SR Appeal allowed


Summary:
The respondent while he was posted as a Squadron Leader at Delhi was on June 27 1968 allotted by the Directorate of Estate a residential fiat in the Curzon Road Hostel on a monthly rent of Rs 161 under sub r1 of SR 317 B 11
Although he was transferred from Delhi to Chandigarh on June 11 1970 he did not give any intimation of his transfer to the Directorate of Estates and therefore the said allotment stood automatically cancelled under sub r
2 thereof after the concessional period of two months from the date of his transfer ie wef August 11 1970
The respondent contin ued in unauthorised occupation of the said fiat for a period of nearly five years and in the meanwhile he was being charged the normal rent for that period
On February 28 1975 the Estate Officer having come to know of the transfer of the respondent from Delhi the Directorate addressed a letter dated March 18 1975 cancelling the allotment wef
August 11 1970
On the next day ie the 19th the Direc torate sent another letter asking the respondent to vacate the fiat which he did on March 25 1975
The Estate Officer raised a demand for recovery of Rs38811
17 p under SR 3 17 B 22 and served the respondent with a notice under s73 of the 
The 95 respondent disputed his liability to pay damages for the period of his unauthorised occupation
Thereupon the Estate Officer initiated proceedings under s7 of the Act to recov er the amount of Rs38811 17p
Subsequentiy the Central Government on a representation being made by the respondent reduced the amount to Rs2048278p
On compassionate grounds and deducted the same on October 30 1976 from out of the commuted pension payable to him
The respondent filed a petition under Art226 of the Constitution before the High Court
The writ petition was allowed by a learned Single Judge holding that although the allotment of the flat stood cancelled in terms of sub r3 of SR 317 B 11 wef August 11 1970 ie after the conces sional period of two months from the date of his transfer the government was estopped from claiming the amount of Rs2048278p
as damages equivalent to the market rent under SR 317 B 22 for the period from August 11 1970 to March 25 1975 on the ground that the government not only knowingly allowed the respondent to continue in occupation till March 25 1975 but also charged him the normal rent of Rs 161 pm presumably under its power of relaxation under SR 317 B 25
Further he held that the government having failed to serve the respondent with a notice that he would be liable to pay market rent for the period of his unautho rised occupation the doctrine of promissory estoppel pre cluded the government from claiming damages equivalent to the market rent under SR 317 B 22 for the period in ques tion
On appeal a Division Bench upheld the decision of the learned Single Judge mainly on the terms of SR 317 B 23 which conferred the power of relaxation on the government
Hence the appeal by Special Leave
Allowing the appeal in part the Court HELD 11 The Government could not unilaterally deduct the amount of Rs2048278p
from the commuted pension payable to the respondent contrary to s11 of the Pension Act 1871
106B C 12 According to its plain terms section 11 of the protects from attachment seizure or sequestration pension or money due or to become due on account of any such pension
The words money due or to become due on account of pension by necessary implication mean money that has not yet been paid on account of pension or has not been received by the pensioner and therefore wide enough to include commuted pension
103A B 96 Union of India vs Jyoti Chit Fund  Finance  Ors   followed
Crowe vs Price 15 Municipal Council Salem vs
B Gururaja Rao ILR  C Gopala chariar vs Deep Chand Sowcar AIR 1941 Mad
207 and Hasso mal Sangumal vs Diaromal Laloomal AIR 1942 Sind 19 re ferred to
21 The construction placed by the High Court on the two provisions contained in SR 317 B 22 and SR 3 17 B 25 is apparently erroneous
It is plain upon the terms of SR 3 17 B 22 that the liability to pay damages equal to the market rent beyond the concessional period is an absolute liability and not a contingent one
The Court was clearly in error in subjecting the liability of a government officer to pay market rent for period of unauthorised occupation to the fulfilment of the condition that the Director of Estate should serve him with a notice that in the event of his continuing in unauthorised occupation he would be liable to pay market rent
101A C 22 Non recovery of the rent at the market rent as permissible under SR 317 B 22 due to inaction of the govern ment and allowing the allottee to continue in authorised occupation for a period of nearly five years as in this case does not lead to the presumption that the government had relaxed the condition in his favour under SR 317 B 25
101D 23 For a valid exercise of power of relaxation the condition pre requisite under SR 3 17 B 25 is that the government may relax all or any of the provisions of the Rules in the case of an officer or residence or class of officers or types of residences for reasons to be recorded in writing
There was no question of any presumption arising for the relaxation which had to be by a specific order by the government for reasons to be recorded in writing
101D E 3
There was no question of any promissory estoppel operating against the government in a matter of this kind
Before an estoppel can arise there must be first a repre sentation of an existing fact distinct from a mere promise made by one party to the other secondly that the other party believing it must have been induced to act on the faith of it and thirdly that he must have so acted to his detriment
In this case there was no representation or conduct amounting to representation on the part of the government intended to induce the respondent to believe that he was permitted to occupy the fiat in question on payment of normal rent or that he was induced to change his position on the faith of it
101E102A C 97