* THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.8707 of 2010 % 06.9.2011 # Kodali Vani, W/o.A.Purnachandar Rao ... Petitioner VERSUS $ Kendriya Vidyalaya Sangathan, represented by its Commissioner, 18, Institutional Area, Shaheet Jeet Singh Marg, New Delhi And others ... Respondent < GIST: > HEAD NOTE: ! Counsel for Petitioner: Mr.D.Ramalinga Swamy ^Counsel for Respondents: Sri B.Lakshmi Narasimha Sarma Standing Counsel for Kendriya Vidyalaya Sangathan ? Cases referred 1. AIR 1994 SC 2541 2. W.P.Nos.38937 of 2006 and batch, dated 21.4.2006 THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.8707 of 2010 06.9.2011 Between: Kodali Vani, W/o.A.Purnachandar Rao … Petitioner AND Kendriya Vidyalaya Sangathan, represented by its Commissioner, 18, Institutional Area, Shaheet Jeet Singh Marg, New Delhi And others …Respondents THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.8707 of 2010 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner is aggrieved by the order dated 17.12.2009 in O.A.No.804 of 2009 passed by the Central Administrative Tribunal, Hyderabad Bench whereby and whereunder the application filed by the petitioner for a direction to respondents not to withhold House Rent Allowance (HRA) on the basis of letter of allotment of an official quarters, duly declaring the said proceedings issued by the third respondent as illegal and arbitrary, was dismissed. The petitioner is working as Lower Division Clerk in Kendriya Vidyalaya School (hereafter, the School) run by Kendriya Vidyalaya Sangathan (KVS), which is a fully financed Government of India Organization registered under the Societies Registration Act, 1860. Her husband is working in the Office of the Assistant Commissioner, KVS. Statedly she is staying in her own house, which is at a distance 3 KMs from the School since 1991. By a letter dated 27.8.2009, the third respondent allotted one of the eleven quarters within the premises of the School to the petitioner. In response thereto, the petitioner sent a letter dated 31.8.2009 declining to accept the allotment of quarter on the ground that she is staying with her husband in their own house and she did not require the official quarters. In view of this, she was not paid HRA with effect from 01.9.2009, aggrieved which she filed the OA. She contended that she is staying in her own house since 1991, which was renovated by taking bank loan; as per the Kendriya Vidyalaya Sangathan (Allotment of Residence) Rules, 1998 (the Rules), unless she applies for quarters she cannot be compelled to accept the quarters which was unilaterally appointed by the third respondent; Rule 11 of the Rules disentitling an employee from claiming HRA would have no application when the quarters is allotted against the wishes of an employee; and the action of the third respondent in not cancelling the allotment is illegal and arbitrary. The Assistant Commissioner, KVS, Secunderabad filed reply statement on behalf of the respondents opposing the OA. Placing reliance on Director, Central Plantation Crops Research Institute, Kesaragod v M.Purushothaman[1], it was contended that even when the allotment is made without an application, in the event of refusal to accept the allotment, the employee would not be eligible for HRA. It was further submitted that as clarified by the KVS, by proceedings dated 30.7.2003 all the authorities should ensure that all the quarters at their disposal are allotted to the eligible members of staff and no HRA is allowed to such staff and that when the petitioner refused to accept the allotment made in accordance with the Rules she would not be entitled to claim HRA. The learned Tribunal considered two points that arose for adjudication, namely, whether the impugned order of allotment of quarters to the applicant is liable to be set aside? and, whether the respondents are not entitled to deny HRA in the event of refusal of the applicant to occupy the quarters allotted to her. Both the points were answered against the petitioner and in favour of the respondents. The learned Tribunal held that though under Rule 4(1) of the Rules the employer has got a right to refuse to allot Government quarters, it does not disable to allot the quarters if available under Rule 4(4) of the Rules; when there is no competition and there are sufficient number of quarters available for allotment to its employees the employer is at liberty to allot the same in order to save the HRA payable to the employees; and that whenever accommodation is offered the employee has either to occupy the same or forfeit the HRA. The Counsel for the petitioner would contend that the learned Tribunal committed an error in interpreting Rule 4 of the Rules; the ratio in Purushothaman has no application; and when the official quarters is allotted to an employee against his/her wishes which is not accepted on the ground that he/she already owns a house within the stipulated distance from the School, Rule 11 of the Rules has no application. KVS is a society fully financed by the Government of India. It runs, as stated in the reply statement before the Tribunal – 933 Schools situated all over the country including three Schools abroad. It caters education reach of the children of transferable Central Government employees and defence personnel. It has constructed residential quarters to the teaching and non-teaching staff in all the Schools presumably to mitigate hardship faced by such employees who are posted at distant areas. So as to govern allotment of these quarters, KVS has formulated the Rules. As per Rule 2, the Rules would apply to all the employees working in Kendiya Vidyalayas, Regional Offices and Headquarters office and any establishment under the administrative control of the KVS. Rule 3(1) defines “allotment” means the grant of a licence to occupy a residence in accordance with the provisions of the Rules. Rule 3 enumerates five categories of authorities, who are designated as Allotting Authorities. The Principal of Kendriya Vidyalaya concerned is – among others, the allotting authority in respect of the residences placed under his control. Rule 7 requires that applications for allotment should be made to allotting authority in such form and manner and before such date as may be specified. Rule 8 contains basis of allotment. It reads as under. Rule 8: Basis of allotment: (1) Save as otherwise provided in these Rules, a residence falling vacant will be allotted preferably to an applicant desiring a change of accommodation in that type, and if not required for that purpose, to an applicant without accommodation in that type having the earliest priority date for that type of residence. (2) Allotment of the residences earmarked for a specific employee or classes of employees shall be made only to that specific employee of those classes of employees in whose favour the residence has been earmarked. (3) Employees joining the Sangathan on deputation may be allotted residence of the eligible category or one category below on priority. (4) Separate seniority list will be prepared showing the order in which the allotment is to be made, for each type of residence. Reading of Rules 2(1) and 8 of the Rules together, it becomes clear that a residence falling vacant is allotted preferably to an applicant desiring a change of accommodation in that type, and if not required for that purpose, it is allotted to an applicant having the earliest priority date for that type of residence. Generally allotment of residence shall be made only to specific employees or class of employees to whom those quarters are earmarked. Rule 8(4) of the Rules requires preparation of separate list showing the order in which the allotment is to be made. Thus far, there is no requirement that allotment of quarters is only on an application. The quarters constructed in any Kendriya Vidyalaya are meant to be allotted to the employees – both teaching and non- teaching staff. In case of heavily demand for quarters Rule 8(1) of the Rules gives guidance that allotment should be made on priority basis taking into consideration the date on which the application was made. The operation of Rules 5 and 6 of the Rules is subject to Rule 7 of the Rules. It is quite apt here to quote Rule 4 of the Rules. It reads as follows. Rule 4: Ineligibility of Employees owning House(s). (1) No employee of the Sangathan shall be eligible for allotment of residence if either he or any member of his family owns a house within 15 Kms. (20 Kms. for Delhi, Calcutta, Bombay and Chennai) from place of his posting. (2) Notwithstanding anything contained in clause (1) of this rule, the Allotting Authority may allot or reallot a residence to any employee if- (a) The house owned by him, his wife, any dependent child or by his father/mother or any other dependent relation has been requisitioned by the Government/Local authority; or (b) It is proved to the satisfaction of the Allotting Authority that such house has been given out on lease: (i) Before the posting of the employee to the Vidyalaya, Regional Office(s) and Headquarters office of the Sangathan; and (ii) The Allotting Authority is satisfied that it is not possible for the lessor, for reasons beyond his control, to obtain vacant possession of the house; Provided that if at any time it appears to the Allotting Authority that no effort has been made to obtain vacant possession of the house, it shall be open to the Allotting Authority to cancel the allotment and require the allottee to vacate the residence forthwith and to recover the damages at the rates prescribed by Government of India or the Sangathan as damages from the date of such cancellation till the residence is vacated. (3) When after a residence has been allotted to an employee, he or any member of his family becomes owner of a house within the limits mentioned in clause (1) of this rule, such employee shall notify the fact to the allotting authority and shall vacate the residence allotted to him by the Sangathan under these rules within a period of one month from the date the house is provided with electricity connection. (4) The provisions of this rule will not apply where sufficient number of residences are available for allotment to all the applicant. Rule 4(1) of the Rules disqualifies any employee for allotment of residence if he or any member of his family owns a house within 15 KMs from the place of his posting or 20 KMs in Bombay, Calcutta, Chennai and Delhi. Under sub-rule (2) of Rule 4, notwithstanding anything contained under Rule 4(1) of the Rules, allotment of residence still can be made to those employees who own houses subject to conditions therein. Sub-rule (4) of Rule 4 of the Rules overrides all the other clauses therein and is to the effect that where sufficient number of residences are available, allotment should be made to all the applicants. In view of the language in Rules 7 and 8 as well as Rule 4 of the Rules, it is not possible to accept the submission of the Counsel for the petitioner that allotment should be made only on an application and that Rule 11 of the Rules denying HRA would be applicable only when allotment made on application is refused by an applicant. If such interpretation is accepted based on Rule 4 of the Rules, it would render Rules 7 and 8 of the Rules useless. Even though the Rules made by the KVS are not statutory, they are binding and they should be given such meaning which does not result in absurdity. Rule 4 of the Rules; in our considered opinion – was intended to exclude those employees owning houses to seek allotment and even then if there are sufficient number of quarters, no employee can seek exemption and stay in her/her own house. There is no dispute that non-acceptance of allotment or failure to occupy allotted residence would disentitle an employee from claiming HRA during which allotted quarters remains vacant/surplus. In Purushothaman, the Supreme Court considered Para (4) of the Office Memorandum dated 27.11.1965 of the Government of India. Its purport is similar to the Rules 4, 7 and 8 of the KVS Rules. Interpreting these Rules, the Supreme Court held that an employee who refused to accept official quarters when it is allotted by the competent authority suo motu or on an application would not be entitled to claim HRA. Relevant observations are as follows. However, that does not mean that Government or the organisation such as the appellant-organisation to which the said provisions apply, cannot on their own offer accommodation to the employees. Hence the reason given by the Tribunal that it is only if the employee applies for such accommodation and he refuses to accept the same when offered that he would be disentitled to the HRA, is not correct. It must be remembered in this connection that the Government or the organisation of the kind of the appellant spends huge public funds for constructing quarters for their employees both for the convenience of the management as well as of the employees. The investment thus made in constructing and maintaining the quarters will be a waste if they are to lie unoccupied. The HRA is not a matter of right. It is in lieu of the accommodation not made available to the employees. This being the case, it follows that whenever the accommodation is offered the employees have either to accept it or to forfeit the HRA. The management cannot be saddled with double liability, viz., to construct and maintain the quarters as well as to pay the HRA. This is the rationale of the provisions of paragraph 4 of the said Government Office Memorandum. It is for this reason again that paragraph 4(b)(i) provides that the HRA shall not be admissible to those who occupy accommodation provided for them as well as to those to whom accommodation has been offered but who have refused to accept it. The provisions of paragraph 4(b)(i) are independent of the provisions of paragraphs 4(a)(i) and (ii). Whereas paragraphs 4(a)(i) and (ii) speak of procedure to be followed by the employees who are in need of accommodation, paragraph 4(b)(i) provides for the forfeiture of the HRA even when the accommodation has been offered on its own by the management whether the application for the same has been made or not. There is no distinction made in this provision between those who have applied and those who have not applied for accommodation. Even otherwise, we are of the view that the distinction sought to be made by the Tribunal is on the face of it, irrational, particularly taking into consideration the resources spent on constructing the quarters. (emphasis supplied) In an unreported judgment (a copy of which is placed before us) in The Principal, Kendriya Vidyalaya Sangathan v The Registrar, Central Administrative Tribunal[2], the Rules were considered by a Division Bench of the Madras High Court. Following the ratio in Purushothaman, the action of KVS in denying HRA in similar factual background was upheld. The relevant observations are as follows. It is not the case of the staff members opting for allotment. On the contrary, sufficient quarters are available for allotment and the petitioners-KVS allotted the quarters as per the priority list. For reasons best known to each one of the staff members, they refused to take the accommodation and therefore, it has to be accepted that they have refused to take the offer and consequently, they will be disentitled to the HRA. The Apex Court in no uncertain terms has held that whenever the accommodation is offered to employees, they have to accept or forfeit the HRA. Therefore, in the light of the very clear pronouncement of the Apex Court, we have no hesitation to accept the stand of the petitioners-KVS. (emphasis supplied) In the result, for the above reasons, we are not able to countenance any of the submissions made by the Counsel for the petitioner. The writ petition is devoid of any merit and is, accordingly, dismissed. No costs. ______________ (V.V.S.RAO,J) __________________ (K.G.SHANKAR,J) September 06, 2011. NOTE: L.R.Copy marked. (By order) YS [1] AIR 1994 SC 2541 [2] W.P.Nos.38937 of 2006 and batch, dated 21.4.2006