DIRECTOR, CENTRAL PLANTATION CROPS RESEARCH A'

INSTITUTE, KESARAGOD AND ORS.

M. PURUSHOTHAMAN AND ORS.

JULY 26, 1994 B

(P.B. SAWANT AND MK MUKHERJEE, HJ

Sen>ice Law :

Fi111dame111al R11/es-R11/es 9(2l){a)a11d 44-<iovemmelll of l11dia Of- C [ice l\fe111ora11d11111 dated 27.11.1965.

House Rem A/lowa11ce-£mployees offered official accommodatio11- Ref11sa/ to occ11py tile same-£11tit/eme11t to House Relll Allowance-Held

1101 elllit/ed to.

The respondents are employees In th appellant-organisation. They were allotted official quarters, and on their rerusal to occupy the quarters,

the appellant denied them the benefit or House Rent Allowance. This was challenged by the respondents berore the High Court _and the petitions were subsequently transrerred to the Central Administrative Tribunal, and E it held that the employees cannot be compelled to occupy official quarters and their rerusal cannot lead to denial or benefit URA. The Tribunal observed that only those employees who had applied ror official accommodation and who refused to occupy the same were liable to rorrelt the benefit of URA and not others, and that URA is a part of wages and no deduction from wages can be made merely on account or the refusal to F accept the official accommodation. The appellant-organisation preferred the present appeal.

Allowing the appeal, this Court

HELD : 1.1. There Is no doubt that paragraphs 4(a)(I) and (Ii) of G the Office Memorandum dated 27.11.1965 state that an application has to be made to secure accommodation. 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 H

U.7

A the n1ployee applies for such accon1modation and he refuses to accept the same when offered that he would be disentitled to the HRA, is not correct.

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 B investment thus made in constructing and maintaining the quarters "ill be a waste if they are to lie unoccupied. [271-F-G]

1.2. House Rent Allowance 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 thatwhenever 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. [271-H]

1.3. The provisions of paragraphs 4(b)(i) are independent of the D provisions of paragraph 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(v)(i) provides for the forfeiture of the HRA even when the accommodation has been offered on its own by the manage ment, whether the application for the same has been made or not. There E is no distinction made in this provision between those who have applied . and those who have not applied for accommodation. Even otherwise, 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. [272-B-D]

2. The Tribunal is not right in including the HRA in the definition of wages. It should have perused the definition of wages. It should have persuade the definitions of "pay and compensatory allowance" given in the Fundamental Rules before pronouncing that HRA is a part of the wages or pay and, therefore, cannot be disturbed. HRA would be covered by the G definition of Compensatory Allowance. It is compensation in lieu of accom

modation. This definition itself further makes if clear that compensatory allowance is not to be used as a source of profit. It is given only to compen.safe for the amenities which are not available or provided to the employee. The moment therefore, the amenities are provided or offered, H the employee should cease to be in receipt of the compensation which is

CENTRALPLANTATIONCROPSRES.INSf. v. M.PURUSHOTIJAMAN 269

given for want of it. (272-E, 273CD) A

3. As agreed to by the appellant, HRA would be denied to the employee only for the period the quarter lies vacant consequent upon his refusal. (273-F)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 885 of B 1993.

From the Judgment and Order dated .28.10.88 of the Central Ad ministrative Tribunal, Madras Bench of Ernakulam in RP.No. K 47 of 1988. c;

Ranjit Kumar and Ms. Bina Tamta for the Appellant.

The following Order of the Court was delivered :

This short question that falls for consideration in this appeal is D whether the employees of the appellant -organisation, viz., the Central Plantation Corps. Research Institute are entitled to House Rent Allowance (HRA) although •they are offered official accommodation and they refuse to occupy the same.

The respondent-employees are occupying various posts in the appellant-organisation. Orders allotting official quarters they were entitled to, were passed by the appellant-organisation. However, the employees declined to occupy the sarrie for one reason or the other. On their refusal

F to occupy the quarters, the appellant issued orders denying to them the benefit of HRA which they were till then drawing. The respondentemployees challenged these orders before the High Court. Their writ petitions were subsequently transferred to the Central Administrative Tribunal and the Tribunal by the impugned common decision dated 5.5.1988, held that the employees cannot be compelled to occupy the official quarters and hence on their refusal to occupy the same, they cannot G be denied the benefit of the HRA. To arrive at this conclusion the Tribunal has given two reasons. The first is that under the relevant provisions, it is only those employees who had applied for official accommodation and who refused to occupy the same, are liable to forfeit the benefit of the HRA and not others. The second reason given by the Tribunal is that the HRA is a part of wages and no deduction from the wages can be made merely H

A on account of the refusal to accept the accommodation.

We are unable to agree with either of the said reason. It is obvious that the Tribunal has misread both the relevant provisions governing the entitlement of the accommodation and the HRA as-well as the rules which define "pay".

It cannot be disputed! and it does not appear to have been disputed before the Tribunal that i1t is para 4 of the Office Memorandum dated 27.11.1965 of the Governtlllent of India, Ministry of Finance which would govern the present case. T'he relevant portion of the said paragraph reads C as follows :

"4:''I'he grant of house rent allowance shall be subject to the following conditions:

(a) (i) To those Government servants who are eligible for Government accommodation, the allowance will be admissible only if they have applied for such accommodation in accordance with the prescribed procedure, if any; but have not heen provided wi.th it, in places where due to availability of surplus -Government accommodation, special orders are issued by the Ministry of Works and Housing from time to time making it obligatory for employees concerned to obtain and furnish 'no accommodation' certificate in respect of government residential accommodation at their place of posting. In all other • places no such certificate is necessary.

(ii) Government servants posted in localities where there is at present no residential accommodation in the general pool owned or requisitioned by the Central Government for allotment to them, need not apply for government residental accommodation in order to become eligible for house rent allowance. But where Government quarters are available for the staff of specified Departments or for specified categories of staff, the procedure for applying for accommodation will be regulated under the rules of allotment of the Department concerned or of the local office of the Central Public Works Department, as the case may be.

CENrRAL PLANTATION CROPS RES. lNSf. v. M. PURUSHOTIIAMAN 271

[b] (i) The allowance shall not be admissible to those who occupy A accommodation provided by Government or those to whom accommodation has been offered by Government but who have refused it." In the latter case, the allowance will not be admissible for the period for which a Government servant is debarred from further allotment of Government accommodation under the allotment rules applicable to him.

(ii) The house rent allowance drawn by a Government servant, who accepts allotment of Goverruiient accommodation, shall be stopped from the date of occupation, or from the eight day after the date of allotment of Government accommoda- C tion, whichever, is earlier. In case of refusal of allotment of Government accommodation, house rent allowance shall cease to be admissible from the date of allotment of Government accommodation. In case of surrender of Government accommodation, the house rent allowance, if otherwise" ad- D missible, will be payable from the date of such surrender."

It is clear from the aforesaid provisions that paragraphs 4 [a] (i) and

(ii) .Jay down the procedure for making application for accommodation.

Paragraph 4 (b] (i) lays down the consequences on refusal to accept the accommodation when offered. There is no doubt that paragraphs 4[a) (i) E and (ii) state that an application has to be made to secure accommodation.

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 accommoda- F lion 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 G 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 H

A 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 Goverrunent 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 B 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 paragraph 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 [v] (i) C 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, particular- D ly taking into consideration the resources spent on constructing the quarters.

We are also afraid that the Tribunal is not right in including the.BRA in the definition of wages. The Fundamental Rule 9(21] (a) which is E applicable to the respondent-employees defines "pay" as follows :

"9[21] (a) Pay means the amount drawn monthly by a Government servant as

[i] the pay, other than special pay granted in view of his personal qualifications, which has been sanctioned for a post held by him substantively or in an officiating capacity, or to which he is entitled by reason of his position in a cadre; and

[ii] overseas pay, special pay and personal pay; and

[iii] any other emoluments which may be specially classed as pay by the President."

It is obvious from this definition that HRA is not part of "pay".

Further, Fundamental Rule 44 defines "Compensatory Allowance" as fol- H lows:

CENTRALPLANfATION CROPS RES. INST. v. M. PURUSHOTIIAMAN 273

"F.R. 44. Compensatory allowance. - Subject to the general rule A that the amount of compensatory allowance should be so regulated that the allowance is not on the whole a source of profit to the recipient, the Central Government may grant such allowances to any Government servant under its control and may make rules prescribing their amounts and the conditions under which they may B be drawn.

The HRA would be covered by the definition of Compensatory Allowance. It is compensation in lieu of accommodation. This definition itself further makes it clear that compensatory allowance is not to be used as a source of profit. It is given only to compensate for the amenities which C are not available or provided to the employee. The moment, therefore, the amenities are provided or offered, the employee should cease to be in receipt of the compensation which is given for want of it. We wish the Tribunal had perused the definition of "pay and compensatory allowance" given in the Fundamental Rules before pronouncing that the HRA is a part D of the wages or pay and, therefore, cannot be disturbed.

For both these reasons, therefore, we are unable to accept the conclusion of the Tribunal.

Shri Ranjit Kumar, learned counsel appearing for the appellant- E organisation pointed out a letter dated 13.8.1986 addressed by the Under Secretary of the Indian Council of Agricultural Research to the appellant wherein it is stated that the matter was examined and it was held that the HRA should be denied to the employee who refuses to take the allotment made or when offered to him till such time the quarter in question lies vacant for want of any other taker. This would mean that the HRA would F be denied to the employee only for the period the quarter lies vacant consequent upon his refusal. While, therefore, setting aside the impugned order and allowing the appeal, we direct the appellant-organisation to deduct the HRA from the salary of the Respondent-employees only for the period the quarters which were offered to the employees remained vacant. G The appeal is allowed accordingly with no order as to cost.

G.N.

Appeal allowed.