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Judgment
R.V. Raveendran, C.J.
Petitioners 1 and 2 claim to represent the staff of tile Tropical Forest Research Institute (First Respondent) which is a unit or'' Indian Council of Forestry Research & Education (Second Respondent). The constitution of the Council provides that in regard to matters which are not governed by Rules made by the Council/Institute, the relevant Central Government Rules will apply.
The First respondent has constructed about 226 Residential quarters for the benefit of its employees. As a large number of the quarters constructed by it were lying vacant, the First Respondent Institute issued an order dated 12.4.2004 in regard to allotment of quarters. The said order stated that as there were no rules of the Institute in regard to allotment of quarters and House Rent Allowance (''HRA'' for short), the Central Rules governing HRA will apply to its employees. After referring to the Central HRA Rules which provide that HRA will not be payable where the quarters is made available by the Government or where accommodation offered by the Government is refused by the employee, the order stated that as a large number of residential quarters constructed by the Institute were lying vacant and required considerable expenditure for their maintenance (in addition to the expenditure incurred for payment of conveyance allowance), it was offering the quarters to its employees who were living outside, that such employees should apply for allotment on or before 19.4.2004 and the available accommodation will be allotted to such employees considering their eligibility, from 22.4.2004 onwards, and if any employee fails to acceptor occupy the offered accommodation, he will not be entitled to HRA.
Feeling aggrieved, the petitioners filed O.A. No. 360/2004 for quashing the said circular dated 12.4.2004 and for a direction to the first respondent Institute to continue to pay HRA. The petitioners claim that several employees of the Institute have obtained House Building Advances (''HBA'' for short) from the Institute, or Housing Loans from outside agencies like LIC or Banks, for construction of their houses and have occupied such houses after construction, and deductions are being made from their salary in regard to the loan installments. The institute has been paying H.R.A. to such employees who were staying in their own houses constructed by obtaining loan either from the Institute or from outside agencies. It is contended that such employees cannot be required to occupy the quarters, nor be denied HRA on their refusal to occupy such quarters.
The said application was rejected by the Tribural by order dated 23.9.2004. The Tribunal has held that when the Institute has accommodation available, an employee, who fails to apply for such accommodation when required to do so, will not be entited to HRA. The said order of the Tribunal is challenged in this petition.
The petitioners have raised the following contentions in this petition:
(i) HRA is part of pay or wages, and is not a compensatory allowance. Therefore, the Institute cannot stop payment of HRA to any employee who is residing in an accommodation (either own or rented) not provided by the employer, or to an employee who refuses to accept the accommodation offered by the employer.
(ii) The Institute ought not to have constructed quarters more in number than the strength of employees (198) and then require the employees to occupy the same.
(iii) The Institute has permitted several employees to take loans from LIC, Banks or other Government agencies. The Institute has also granted House Building advances to some employees. The Institute has all along paid HRA to all such employees. There is thus an implied assurance/representation by the Institute that those who have constructed houses by taking loans need not occupy the Institutes quarters and that they can occupy their own houses and draw HRA from the Institute. The petitioners having acted on such representation, the Institute is estopped from changing the position to the detriment of the petitioners.
(iv) In many cases, the Central Government has issued orders that employees staying in their own houses constructed by taking loans from Banks, LIC or the Government, are entitled to draw HRA, even if the Departmental residential quarters are available. One such example is the circular date 12.5.2004 issued by Government Vehicle Factory, Jabalpur. Similar relief should be granted by the Institute.
It is not in dispute that in the absence of any Rules framed by the Institute in regard to residential quarters or House rent Allowance, the Central HRA Rules contained in the Office Memorandam dated 27.11.1965 of Government of India will govern the matter. Relevant portains of Para 4 of the said Memorandum are extracted blow :
The grant of house rent allowance shall be subject to the following conditions :-
(a) (i) To these Government servants who are eligible for Government accommodation, the allowances will be admissible only if they have applied for such accommodation in accordance with the prescribed procedure, if any but have not been provided with 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 servant 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 residential 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.
(b) (i) The allowance shall 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. 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 Government accommodation, shall be stopped from the date of occupation, or from the eighth day after the date of allotment of Government accommodation, 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 admissible, will be payable from the date of such surrender.
(emphasis supplied)
The said Para 4 of the Office Memorandum dated 27.11.1965 of the Government of India regulating HRA, came up for consideration by the Supreme Court in Director Central Plantation Crops Research Institute vs. M. Purushothaman (AIR 1994 SC 2541). The Supreme Court held:
It is clear from the aforesaid provisions that paragraphs 4(a)(i) and (ii) lay 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) and (ii) state that an application has to be made to secure accommodation. However, that does not mean the 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.
H.R.A. 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 Para 4 of the said Government Office Memorandum.
(emphasis supplied)
Keeping the said principle laid down by the Supreme Court in view, we will consider the four contentions urged by the petitioner.
Re. Contention (i)
We may refer to the relevant provisions bearing on the question whether HRA is part of ''Pay'' or is a ''Compensatory allowance''.
8.1) Pay is defined in F.R. 9(21) (a) as follows:
Pay means the amount drawn monthly by a Government servant as -
(i) the pay, other than special pay or 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.
2) Compensatory allowance is defined in F.R. 9(5) as follows:
Compensatory allowance means an allowance granted to meet personal expenditure necessitated by the special circumstances in which duty is performed. It includes a travelling allowance, but does not include a sumptuary allowance nor the grant of free passage by sea to or from any place outside India.
3) F.R. 44 dealing with Compensatory Allowance, provides thus:
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.
It is significant to note ''Compensatory allowance'' is found in Chapter V of Fundamental Rules relating to "additions to pay" and not in the Chapter relating to ''Pay''.
The Supreme Court in DIRECTOR, CENTRAL PLANTATION CROPS RESEARCH INSTITUTE Vs. M. PURUSHOTHAMAN (AIR 1994 SC 2541) held that HRA would fall under the definition of Compensatory Allowance and is not a pay. The relevant portion is extracted below :
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 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 of the wages or pay and, therefore, cannot be disturbed.
Therefore the contention of the petitioner that HRA is part of ''Pay'' and is not a ''Compensatory allowance'' is liable to be rejected. Consequently, it follows that when a residential quarter is provided by the employer to the employee, or where the employee does not accept the offer or accommodation by the employer, he ceases to have the right to receive the House Rent allowance which is a compensation for not providing residential quarters.
Re Contention (ii):
The employer has explained (in the return filed before the Tribunal) the reason of constructing a large number of quarters. It is stated that in the year 1996, the total strength of the staff was 248. In addition, there was also a need for 20 quarters for the staff of Kendriya Vidhyalaya of TFRI. Therefore, 226 quarters were constructed by TFRI. Long after the construction of the quarters, the Government took a policy decision in the year 2003; to abolish 30% of the posts and as a consequence, the staff strength was reduced. Be that as it may. Construction of residential quarters is a matter which falls within the ''policy'' of the employer and the employee has no say in it.
The fact that the employer has more number of quarters than employees does not mean that the employer constructed them as an investment to earn rent and therefore the employees need not occupy the accommodation. Quarters are constructed by the employer so that its employees can live comfortably and free from hassles, in a safe campus, many a time situated near the place of work, so that the productivity and efficiency of the employees will increase. Where the employee declines the offer of an apartment or refuse to occupy the quarters allotted to him, it is open to the employer to let out the quarters to any outsider instead of keeping it vacant. The fact that the quarters offered to the employee could be let out or is let out on rent to an outsider on refusal by an employee to occupy the same, is not a ground for the employee to conted that he should be paid House Rent Allowance. Once the offer is spurned by the employee, he becomes disentitled to the compensatory allowance of HRA, and subsequent letting out of the premises has no bearing on his entitlement to HRA. The period of disentitlement to HRA may either be for the reminder of the period of the employee''s stay at the station of posting or for such minimum period as the employer may decide and prescribe as a policy. In the absence of specific provision, HRA will not be admissible for the period for which the employee is debarred from further allotment.
Re. Contention (iii):
The employer has admitted in its return before the Tribunal that it has granted House Building Advances to several employees and has permitted several employees to obtain Housing loans from LIC, Banks or other agencies. But that has nothing to do with entitlement of HRA. HRA and Housing Loans are not interlinked concepts ? nor are the conditions of service dependant on each other. Whether a House Building Advance should be availed for construction of a house or not, is purely a personal decision of the employee and is in no way linked to his entitlement of HRA. House Rent Allowance is an allowance in addition to pay, entitlement to which is governed by the HRA Rules. House Building Advance is a credit facility given by the employer to the employee on the request of the employee governed by the HBA Rules. In the absence of a specific provision or exemption in the rules relating to HRA, in regard to employees who have availed housing loans, the mere fact of availment of Housing Loan from employer or an outside agency, will not entitle the employee to decline the offer of accommodation and claim HRA.
Re. Contention (iv):
The fact that the Government Vehicle Factory or any other department or employer is paying HRA to their employees staying in their own houses constructed by obtaining housing loans has no relevance. That a particular employer or a particular department has provided a particular facility or granted an exemption does not mean that employees of the Institute should be extended similar benefits. Grant of such exemption being in the realm of policy of the employer, no relief can be granted with reference to exemptions granted by other employers. The order dated 12.4.2004 of the Institute is a special order contemplated under Para 4(a)(i) of the HRA Rules (that is Official Memorandum relating to HRA) and on issue of such an order the consequence provided therein and Para 4 of the HRA Rule will follow.
Conclusion
We, therefore find no infirmity in the order of the TFRI informing the employees that those who do not accept the offer for quarters, will not be entitled to House Rent Allowance. The order of the Tribunal does not suffer from any infirmity and petition is therefore dismissed.