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Judgment
Hon’ble Mr. Manish Garg, Member (J) :
In the present Original Application, the applicant has prayed for the following reliefs:
“(a)Directing the respondents to place the relevant records pertaining to the present O.A. before their Lordships for the proper adjudication in the matter in the interest of justice, and thereafter;
(b)Declare that the inaction of the respondents in not considering and finalizing the applicants request for cancellation of the government accommodation allotted to him vide order dated 15.02.2025/01.03.2025 (Quarter No. E IV/A), and simultaneously deducting a sum of Rs.2210/- per month from his salary under the head of House Rent Allowance (HRA) from February 2025 onwards, is illegal, unjust, arbitrary, perverse, biased, unconstitutional, and unsustainable in the eyes of law.
(c)Direct the respondents to refund the amount illegally deducted from the salary of the applicant under the head of HRA w.e.f. February 2025 onwards, together with interest in accordance with the relevant rules and instructions on the subject.
(d)Pass such other and further orders as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case, in the interest of justice.
(e)Allowing the O.A. of the applicant with all other consequential benefits and costs.
(f)Any other fit & proper relief may also be granted to the applicant.”
Highlighting the facts of the case, learned counsel for the applicant submitted that the present OA has been filed primarily aggrieved by the respondents’ continued deduction of House Rent Allowance (HRA) from the applicant’s salary despite the fact that, although Railway Quarter No. E-IV/A was allotted to him on 01.03.2025, he neither accepted possession nor occupied the said quarter and was transferred on administrative grounds to North Central Railway, Agra on 31.05.2025, where no railway accommodation was allotted to him.
It was submitted that the applicant had immediately submitted representations dated 10.03.2025 and 09.04.2025 seeking cancellation of the allotment and had also pointed out that he was residing with his family in his own accommodation situated about 3 km from the station, while several employees senior to him had been ignored in the matter of allotment.
Learned Counsel further submitted that the applicant was transferred before he could occupy the allotted quarter and, therefore, the question of refusal or surrender of the accommodation does not arise. It was further pointed out that, even after his transfer, the respondents continued to deduct HRA, and the same was acknowledged by the respondents in their communication dated 19.06.2026, wherein the applicant was asked to furnish an NOC in respect of the quarter.
Reliance was placed upon the judgment of the Kolkata Bench of this Tribunal in Subhra Jyoti Choudhury v. Union of India & Ors., OA No. 1362/2020, decided on 21.03.2022, wherein it was observed that no rule had been shown requiring every railway employee to apply for railway accommodation as a condition for entitlement to HRA, as well as the decisions in Om Prakash Sharma v. Union of India & Ors., OA No. 1183/2010, affirmed in WPCT No. 111/2011, and the other decisions referred to in the judgment of Subhra Jyoti (supra), to contend that an employee cannot be compelled to occupy Government accommodation merely to deny him HRA.
Learned counsel drew our attention to Rule 15 and Rule 17 of the Central Government General Pool Residential Accommodation Rules, 2017, the same reads as under:
“15.Acceptance of allotment.- (1) An offer of allotment of an accommodation shall be accepted by the allottee within eight days from the date of allotment of the accommodation through automated system or by manual system of allotment, as the case may be.
(2)The allottee may accept the allotment of the accommodation by himself or through an authorised representative before the next bidding cycle.
17. Non acceptance of allotment or offer or failure to occupy the allotted accommodation after acceptance.- (1) If any
allottee fails to accept the allotment of a residential accommodation within eight days from the date of allotment of the said accommodation, or fails to take possession of that accommodation within five working days from the date of receipt of the letter of authorisation, he shall be debarred to apply for accommodation for a period of three months from the date of non-acceptance of allotment subject to payment of one month's normal licence fee for that type of accommodation.
(2)The date of non-acceptance of allotment shall be calculated from the date of allotment.
(3)If an allottee occupying a lower type of accommodation refuses to accept the offer of an accommodation of the type for which he is eligible under these rules, he shall be permitted to continue in the previously allotted accommodation: Provided that such allottee shall not be eligible for another allotment for a period of six months from the date of non-acceptance of such allotment.”
Highlighting the aforesaid Rules, learned Counsel for the applicant contended that the said provisions make a distinction between mere allotment of accommodation, acceptance of such allotment and actual physical possession thereof. It was submitted that under Rule 15, an offer of allotment is required to be accepted by the allottee within the prescribed period, whereas Rule 17 specifically deals with the consequences of non-acceptance of allotment or failure to take possession after acceptance. According to the learned Counsel, the applicant neither accepted nor occupied the allotted railway quarter and, therefore, the mere factum of allotment could not be treated as equivalent to acceptance or physical occupation of the accommodation. It was further submitted that Rule 17 prescribes the consequence of non-acceptance or failure to take possession, and does not provide for automatic or indefinite denial of HRA merely on account of an allotment which was never accepted or occupied. In the absence of any specific Railway Rule to the contrary, the learned counsel for the applicant contended that the principles underlying the aforesaid provisions ought to apply mutatis mutandis to the present case. It was, therefore, contended that the continued deduction of HRA from the applicant’s salary, despite his transfer to Agra without allotment of any accommodation there, is arbitrary and unsustainable, and that the applicant is entitled to release of HRA along with arrears from the due date.
Opposing the OA, learned counsel for the respondents submitted that the present Original Application is misconceived, devoid of merit and liable to be dismissed, as the Railway Administration has acted strictly in accordance with the rules governing allotment of railway accommodation.
It was submitted that Railway Quarter No. E-IVA was allotted to the applicant by the competent authority on administrative grounds, in the interest of the Railway Administration, particularly to ensure his availability at the station in the event of any emergency, and the allotment letter was duly acknowledged by him.
Learned Counsel further contended that the applicant, after being relieved from the said office on 31.05.2025, neither completed the prescribed formalities for cancellation of the allotment nor informed the concerned office regarding vacation of the allotted quarter. It was, therefore, submitted that the continued deduction of HRA from the applicant’s salary was in accordance with the applicable rules, as HRA could not be drawn unless the allotment was formally cancelled and the prescribed procedure regarding the accommodation was completed.
Learned Counsel further submitted that the applicant’s transfer was ordered by the competent authority, ADEN-II/MTJ, after complaints were received from other employees of Unit No. 06 OTD, and that the applicant had not disclosed the complete and correct factual position before this Tribunal. Accordingly, it was argued that the action of the Railway Administration is justified.
Learned counsel placed reliance upon para 2 of the Railway Board letter No. E(P&A) II/87/HRA/15 dated 16.05.1988. The said para reads as under:
“2.The above concession will not be admissible to employees for who railway accommodation is specifically earmarked or to employees, whose occupation of railway quarters is essential for easy accessibility during emergencies, efficient discharge of their duties etc. In case of the latter, however, one employee may be allowed to surrender this allotment in favour of another employee in the same category, provided it will not affect the efficient working during emergencies.”
Learned counsel for the respondents also relied upon Railway Board’s communication No. E(NG)I/2022/PM1/12 dated 08.06.2022, whereby Track Maintainer Gr. I, II, III and IV were classified as Safety Category posts. It was submitted that, in view of the nature of the applicant’s post as Track Maintainer-IV and the administrative exigencies attached to a Safety Category post, the allotment of railway accommodation at the previous place of posting was made to ensure his availability for attending to emergencies within a reasonable time.
Heard learned counsel for the respective parties and perused the pleadings available on record.
5. ANALYSIS :
The principal issue which arises for consideration is whether the applicant can claim HRA merely on the ground that he did not occupy the railway accommodation allotted to him, notwithstanding the fact that the said accommodation was allotted to him on administrative grounds having regard to the nature of his duties, i.e., safety category.
In this regard, reliance placed by the respondents on Para 2 of Railway Board’s letter No. E(P&A)II/87/HRA/15 dated 16.05.1988 is relevant. The said provision makes it clear that the benefit of HRA concession is not available to employees for whom railway accommodation is specifically earmarked or whose occupation of railway quarters is considered necessary for their easy accessibility in emergencies and for efficient discharge of their duties. It further provides that, in such cases, surrender of the allotted accommodation may be permitted in favour of another employee of the same category, provided that such surrender does not adversely affect the efficient functioning during emergencies.
The aforesaid provision has to be considered in the factual backdrop of the applicant’s post. The applicant was working as Track Maintainer-IV, which has also been classified by the Railway Board as a Safety Category post vide communication No. E(NG)I/2022/PM1/12 dated 08.06.2022. The nature of duties attached to such post necessarily has a direct bearing upon the requirement of immediate accessibility of the employee, particularly in situations requiring attendance to railway track-related emergencies. Thus, the allotment of the quarter to the applicant on administrative grounds cannot be viewed as an ordinary allotment made merely for providing residential accommodation, but was connected with the administrative requirement of ensuring his availability at or near the place of duty.
In these circumstances, the contention of the applicant that he had his own accommodation at a distance of about 3 kilometres from the station, or that he had submitted representations seeking cancellation of the allotment, cannot by itself confer upon him an enforceable right to retain HRA contrary to the specific administrative requirement governing his post. The applicant has also not demonstrated that the competent authority accepted his request for cancellation of the allotment or formally relieved him from the obligation arising out of the said allotment.
The reliance placed by the applicant upon Rules 15 and 17 of the Central Government General Pool Residential Accommodation Rules, 2017 also does not advance his case. Those provisions, even assuming their principles to be applicable mutatis mutandis in the absence of specific Railway Rules, deal with the consequences of non-acceptance of allotment or failure to take possession of the allotted accommodation. They cannot, however, be read in isolation so as to create a right to HRA in favour of an employee whose occupation of railway accommodation is otherwise considered necessary on account of the nature of his duties and the administrative exigencies of the Railway Administration. The said Rules, being rules governing General Pool Residential Accommodation, cannot override the specific Railway Board instructions applicable to the applicant's case.
Once the applicant was offered Government accommodation in accordance with his seniority, he declined the same on the ground that he was already residing nearby. Having so declined the allotment, he remained silent for all these years and has now sought to claim HRA. It is also not in dispute that the applicant belongs to the Safety Category.
In The Divisional Engineer, G.I.P. Railway v. Mahadeo Raghoo and Another, 1955 (1) SCR 134, it was held that the employee does not acquire any absolute right to HRA merely by virtue of the conditions of service. Consequently, there arises no question of relinquishment of any such right. The relevant observations are extracted hereunder:
“The short point to be decided in this case is whether the house rent allowance claimed by the 1st respondent came within the purview of the definition of "wages" contained in the Act. There being no difference on questions of fact between the parties, the answer to the question raised must depend upon the construction to be placed upon the following material portion of the definition of "wages" in section 2(vi) of the Act:-
'Wages' means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable, whether conditionally upon the regular attendance, good work or conduct or other behaviour of the person employed or otherwise, to a person employed in respect of his employment or of work done in such employment, and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment, but does not include-
(a)the value of any house-accommodation, supply of light, water, medical Attendance or other amenity, or of any service excluded by general or special order of the State Government
Shorn of all verbiage, "wages" are remuneration payable by an employer to his employee for services rendered according to the terms of the contract between them. The question then arises, what are the terms of the contract between the parties. When the 1st respondent's employment under the railway administration represented by the appellant began, admittedly be was not entitled to any such house rent allowance. As already indicated, the scheme for payment of house rent allowance was introduced with effect from the 1st November 1947 when the rules were framed, admittedly under sub-section (2) of section 241 of the Government of India Act, 1935, by the Governor-General.
Those rules were amended subsequently. We are here concerned with the amendment made by the Railway Board by its letter No. E47CPC/ 14 dated the 1st December 1947, particularly rule 3(i) which is in these terms:-
"The house rent allowance will not be admissible to those who occupy accommodation provided by Government or those to whom accommodation has been offered by Government but who have refused it".
It has been argued on behalf of the appellant that the terms of the contract between the parties include the rule quoted above and that therefore the position in law is that there is no absolute right in the 1st respondent to claim the house rent allowance; in other words, it is contended that there is a condition precedent to the claim for house rent allowance being admissible, namely, that the employee should be posted at one of those places, like Bombay, Calcutta, Madras' etc., before the claim for house rent allowance could arise and that there is a condition subsequent, namely, that the employee posted at any one of those places will cease to be entitled to the - allowance if either the Government provides accommodation to the employee in question or the employee-refuses to occupy the accommodation so offered to him. On the other hand, it has been argued on behalf of the 1st respondent that the employee's right to the allowance accrues as soon as he has fulfilled the terms of the contract of employment including regular attendance, good work or conduct and his other behaviour in terms of the definition of "wages" as contained in the Act. It was also argued on behalf of the 1st respondent that the terms of the definition have to be construed consistently with the provisions of sections 7 and 11 of the Act; that rule 3(i) quoted above is inconsistent with some of the terms of the definition of "wages" and the provisions of sections 7 and 11 and that in any event, if rule 3(i) aforesaid were to be considered as a part of the terms of the contract between the parties, section 23 of the Act prohibits an employee from entering into such a contract as has the effect of depriving him of his vested rights. *********
The answer to the question whether house rent allowance is "wages" may be in the affirmative if the rules framed by the department relating to the grant of house rent allowance make it compulsory for the employer to grant house rent allowance without anything more: in other words, if the house rent allowed had been granted without any conditions or with conditions, if any, which were unenforceable in law. But the statutory rules framed by the Government governing the grant of house rent allowance do not make it unconditional and absolute in terms. The house rent allowance in the first instance is not admissible to all the employees of a particular class. It is admissible only to such railway employees as are posted at specified places in order "to compensate railway servants in certain costlier cities for excessive rents paid by them over and above what they might normally be expected to pay"; nor is such an allowance "intended to be a source of profit" or to be "an allowance in lieu of free quarters", as specifically stated in the preamble to the letter No. E47CPC/14, dated 1st December 1947, issued by the Railway Board. The argument on behalf of the 1st respondent would have been valid if the rules in terms contemplated the grant of house rent allowance to every employee of a particular category but the rules do not make the grant in such absolute terms. The house rent allowance is admissible only so long as an employee is stationed at one of the specified places and has not been offered Government quarters. The rules distinctly provide that the allowance will not be ad- raissible to those who occupy Government quarters or to those to whom such quarters have been offered but who have refused to take advantage of the offer.
Once an employee of the description given above has been offered suitable house accommodation and he has refused it, he ceases to be entitled to the house rent allowance and that allowance thus ceases to be "wages" within the meaning of the definition in the Act, because it is no more payable under the terms of the contract.
In our opinion, it is clear beyond all reasonable doubt that the rules which must be included in the terms of contract between the employer and the employee contemplate that an employee posted at one of the specified places would be entitled to house rent allowance; but that as soon as he is offered Government quarters for his accommodation, he ceases' to be so entitled., whether he actually occupies or does not occupy the quarters offered to him. Hence the grant of house rent allowance does not create an indefeasible right in the employee at all places wherever he may be posted and in all circumstances, irrespective of whether or not he has been offered Government quarters.
But it has been argued on behalf of the respondent that such a conclusion would be inconsistent with the provisions of sections 7 and 1 1 of the Act. We do not see any such inconsistency. Section 7 of the Act deals with such deductions as may be made from the wages as defined in the Act, of an employee. Subsection (2) of section 7 categorically specifies the heads under which deductions may lawfully be made from wages. Clause (d) of this sub-section has reference to "deductions for house accommodation supplied by the employer", and section 11 provides that such a deduction shall not be made unless the house accommodation has been accepted by the employee and shall not exceed the amount equivalent to the value of such accommodation. The definition of "wages" in the Act also excludes from its operation the value of house accommodation referred to in sections 7 and II as aforesaid. The legislature has used the expression "value of any house accommodation" in the definition of "wages" as denoting something which can be deducted from "wages". The one excludes the other. It is thus clear that the definition of "wages" under the Act cannot include the value of any house accommodation supplied by the employer to the employee; otherwise it would not be a legally permissible deduction from wages. It Is equally clear that house rent allowance which may in certain circumstances as aforesaid be included in "wages" is not the same thing as the value of any house accommodation referred to in the Act. That being so, there is no validity in the argument advanced on behalf of the 1st respondent that rule 3(i) aforesaid is inconsistent with the provisions of sections 7 and 11 of the Act.”
In Director, Central Plantation Crops Research Institute, Kesaragod, and others Vs. M. Purushothaman, and other -Civil Appeal No. 885 of 1993 decided on 26th July 1994, AIR 1994 SC 2541, the Hon’ble Supreme Court held as under:
“7.We are also afraid that the Tribunal is not right in including the HRA in the definition of wages. The Fundamental Rule 9 (21) (a) which is applicable to the respondents-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 payby the President."
8.It is obvious from this definition that HRA is not part of "pay". Further, Fundamental Rule 44 defines "Compensatory Allowance" as follows :-
"F.R. 44. Compensatory allowance. Subject to the general rule 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 be drawn."
9.The HRA would be covered by the definition of Compensatory Allowance. It is compensation in lieu of accommodations. 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 are no 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 FundamentalRules before pronouncing that the HRA is a part of the wages or pay and, therefore, cannot be disturbed.”
In D. Peri Reddy And Ors. vs Govt. Of A.P., Finance And Planning, Hon’ble Telengana High Court reported in 1997 (1) ALT721, it was held that the petitioners cannot demand the allowances claimed by them as of right and that they cannot compel the respondents to pay the said allowances by way of a writ of mandamus. But this, however, does not preclude the government from granting the said allowances as a matter of policy if it so decides.
The purport of the ratio laid down by the Hon’ble Supreme Court as well as the Hon’ble High Court is that HRA is meant to compensate for the lack of accommodation. If accommodation is offered, the employee cannot refuse it and still claim HRA (essentially, they cannot profit from the allowance).
Further, the judgment relied upon by the applicant in Subhra Jyoti (supra) is distinguishable on facts. The applicant cannot derive benefit from the general proposition regarding entitlement to HRA where the employee is not required to apply for or occupy railway accommodation, when in the present case the respondents have specifically relied upon the administrative necessity attached to the applicant’s Safety Category post and the Railway Board’s instructions dealing with employees whose occupation of railway quarters is considered essential for accessibility during emergencies.
We also find substance in the submission of the respondents that the applicant, after being relieved from the previous place of posting, did not complete the prescribed formalities for cancellation of the allotment or otherwise obtain an order formally cancelling the same. Mere submission of representations seeking cancellation cannot, in the absence of any consequential order by the competent authority, be treated as resulting in automatic cancellation of the allotment. The subsequent communication dated 19.06.2026, asking the applicant to furnish NOC in respect of the quarter, also indicates that the issue of the accommodation had not been formally brought to its logical conclusion by the applicant.
The applicant’s transfer to Agra, ipso facto does not establish that the earlier allotment stood automatically cancelled for all purposes. In any event, the applicant has not placed on record any specific order of the competent authority cancelling the allotment.
6. CONCLUSION :
Consequently, having regard to the specific Railway Board instruction contained in Para 2 of the letter dated 16.05.1988, the nature of the applicant’s post as a Safety Category post, the administrative purpose for which the accommodation was allotted, and the absence of any formal cancellation of the allotment by the competent authority, we find no illegality or arbitrariness in the action of the respondents in withholding HRA. Accordingly, the reliefs sought by the applicant for cancellation of the allotment and refund/release of HRA with consequential interest cannot be granted for the relevant period(s). The Original Application is, therefore, dismissed.
Pending M.A.(s), if any, shall stand disposed of.
There shall be no order as to costs.