Holding

Only employees who satisfy the eligibility criteria laid down in O.M. 12‑11/60‑ACC‑1 dated 2‑8‑1960 are entitled to rent‑free accommodation or compensation in lieu thereof; otherwise no such entitlement exists, though any compensation already paid shall not be recovered.

Summary

Five Group B, C and D government employees posted in Nagaland claimed they were entitled to rent‑free furnished accommodation, which was not provided, and therefore sought compensation in lieu of such accommodation (licence fee and House Rent Allowance). The Central Administrative Tribunal allowed the claim, relying on the Supreme Court’s decision in Union of India v. S.K. Ghosh. On appeal, the Supreme Court held that only employees who fall within the eligibility criteria prescribed in O.M. 12‑11/60‑ACC‑1 dated 2‑8‑1960 are entitled to rent‑free accommodation or compensation thereof. The respondents did not satisfy those criteria, so the Tribunal’s order granting compensation was set aside. However, the Court ruled that any compensation already paid could not be recovered. The appeals were allowed.

Issues considered

Whether government employees posted in Nagaland are entitled to rent‑free accommodation or compensation in lieu thereof.
Whether the Central Administrative Tribunal erred in granting compensation based on the decision in Union of India v. S.K. Ghosh.
Whether compensation already paid can be recovered from the employees.

Legislation cited

Fundamental Ruless. 45-A

Subjects

rent‑free accommodationcompensation in lieueligibility criteriaCentral Administrative TribunalFundamental Rule 45-AHouse Rent Allowancegovernment employees

Judgment

UNION OF INDIA AND ORS. A
v.
M. LEPDON AO AND ORS.

OCTOBER 1, 2001

[S. RAJENDRA BABU AND DORAISWAMY RAJU, JJ.] B

Service Law :

Fundamental Rule 45-A.

Rent-Free Accommodation-Compensation in lieu o,f-Tribunal ordered c
payment of compensation to Government employees since' no accommodation
was provided to them-Correctness o,f-Held : Only those employee who are

- within the eligibility criteria prescribed in OM dated 2-8-1960 entitled to rent-
.free accommodation-Since the said Government employees are not entitled to
rent-free accommodation they are not eligible.for compensation in lieu thereo,f- D
Howeve1; any compensation that may have already been paid shall not be
recovered-0.M. 12-11160-ACC-l dated 2-8-1960---Tribunal 's decision set aside.

The respondents filed applications before the Central Administrative
Tribunal claiming that they were eligible for free furnished accommodation
but no such accommodation had been provided to them and, therefore, E
they were entitled to be paid compensation in lieu of the rent-free
accommodation consisting of licence fee and House Rent Allowance. The
Tribunal felt bound by the decision of this Court in Union of India & Ors. v.
S.K. Ghosh & Ors. C.A. No. 2705 of 1991 and allowed the application.
Hence this appeal. F

Allowing the appeal, the Court

HELD : 1. In the order of the President of India the expression 'who
are not provided with rent-free accommodation' would only mean those
employees who were within the eligibility criteria prescribed in the O.M. G
12-11/60-ACC-1 dated 2-8-1960. The respondents are not in a position to
controvent this factual background. If that is the position, in fact, the
decision of this Court in Union of India & Ors. v. S.K. Ghosh & Ors., CA No.
2705 of 1991 will not come in the way of deciding whether the respondents
are not entitled to compensation in lieu of rent-free accommodation and H
455
456 SUPREME COURT REPORTS [2001] SUPP. 3 S.C.R.
A the view taken by the Tribunal in this regard cannot be sustained.
[458-B; H; 459~A]

Union of bulia & Ors. v. S.K. Ghosh & Ors., C.A. 2705 of 1991,
referred to.

B 2. If any compensation in lieu of rent-free accommodation that may
have already been paid shall not be recovered. [459-C]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1309-1310 of
1998.

C From the Judgment and Order dated 22.8.95 of the Central Administrative
Tribunal, Guwahati in O.A. Nos. 48/91 and 105 of 1995.

WITH

D
C.A. No. 2087 of 1998.

Ranjit Kumar and N.N. Goswami, Hemant Sharma, D.S. Mahra, Arvind
--
Kumar Sharma, K.R. Nagaraja, H.K. Puri, S.K. Puri, Rajesh Srivastava, Ujjwal
Banerjee and Ms. Anidita Gupta for the appearing parties.

The Judgment of the Coun was delivered by
E RAJENDRA BABU, J. Five applications were filed before the Central
Administrative Tribunal, Guwahati Bench [hereinafter referred to as 'the
Tribunal'] by Group 'B', 'C' and 'D' employees of different departments of
the Government of India posted in the State of Nagaland wherein they claimed
that they are eligible for free furnished accommodation but no such
F accommodation had been provided to them and, therefore, they are entitled
to be paid compensation in lieu of the rent free accommodation consisting of
licence fee and House Rent Allowance. Since that has been denied to them,
they approached the Tribunal for redressal.

The appellants before us contended that the respondents are not entitled
G to such benefits in terms of different notifications issued by the Governmen,t
fromtime to time. The Tribunal examined the matter and held that the respondents·
are entitled to House Rent Allowance at the rate prescribed for 'B' class cities
to ,the Central Government employees which would be payable at the rate of
15% from 1.1.1986 to 30.9.1986 and from 1.10.1986 at flat rate prescribed
H under O.M. dated 7.8.1987 read with another O.M: dated 13.11.1987 and the
U.0.1. v. M. LEPDON AO [RAJENDRA BABU, J.] 457
notification GSR No. 623(E) amending the Fundamental Rule 45A with effect A
from 1.7.1987 as held by this Court in Civil Appeal No. 2705 of 1991 [Union
of India & Ors. v. S.K. Ghosh & Ors.]. This part of the order made by the
Tribunal is not in challenge before us.

On the question of payment of compensation in lieu of rent free
accommodation, the Tribunal felt bound by the decision of this Court in S.K. B
Ghosh's case though O.M. dated 2.8.1960 is not superseded and ordinarily the
compensation would be payable only to those who fall within the eligibility
criteria thereunder. That in view of the ratio of the decision in S.K. Ghosh 's
case wherein this Court approved the view taken by the Tribunal in its order
which was the subject matter of consideration before them in appeal that the C
House Rent Allowance should be paid at a particular rate and the manner in
which· the same could be reduced subsequently by efflux of time was also
indicated.

Though five applications were filed before the Tribunal, only two sets
of appeals have been preferred to this Court pertaining to employees working D
in Geological Survey of India and Telecommunications Department.

The Tribunal in the order under appeal had proceeded to analyse the
pleadings raised in the original application No. 42 of 1989 out of which the
decision in S.K. Ghosh 's case was rendered. In that application, it appears, the
claim was that all the employees when posted in Nagaland are entitled to rent- E
free accommodation and if the same is not provided for by the Government be
allowed to draw the House Rent Allowance as is admissible to the employees
posted in 'B' class cities as categorised in the Government of India letter No.
11013/2/86-E.II(B) dated 23.9.1986. Before this Court in Civil Appeal No.
2705 of 1991 the question whether the employees were entitled to rent free F
accommodation or not was not put in issue.

The only issue posed before this Court and answered is whether employees
working in the State of Nagaland were entitled to be allowed to draw House
Rent Allowance as is admissible to employees posted in 'B' class cities and,
therefore, it was not necessary for the Tribunal in the present case to read the G
pleadings raised in that case into the judgment of this Court to come to a
conclusion that there was an assumption that all the employees posted in
Nagaland were entitled to rent free accommodation or compensation in lieu
thereof since the rate of House Rent Accommodation was one of the components
of compensation in lieu of rent free accommodation. H
458 SUPREME COURT REPORTS [2001) SUPP. 3 S.C.R.
A Therefore, we think that the decision of this Court in Civil Appeal No.
2705 of 1991 will not be an impediment to decide the second questiOn as to
whether the employees posted in the State of Nagaland are entitled to rent free
accommodation or compensation in lieu thereof. It is a separate and distinct
question to be decided unhindered by the decision of this Court in Civil Appeal
B 2705 of 1991 [Union of India & Ors. v. S.K. Ghosh & Ors]. In the order of
the President of India the expression 'who are not provided with rent free
accommodation' would only mean those employees who were within the
eligibility criteria prescribed in the O.M. dated 2.8.1960.

The factual position is as follows :-
c
(1) O.M. 12-11/60-ACC-I dated 2.8.1960 is still operative. That
order clearly sets out that 'it had been decided with the concurrence
of the Ministry of Finance, that where for the efficient discharge
of duties, it is necessary that an employee should live in or near
the premises where he works, it would be desirable that he should
D be rent-free or rent recovered at reduced rates only if the nature
of his duties or conditions under which they have to be performed
are such that a higher scale of pay or special pay etc. would be
granted but for the concession of rent-free or recovery of rent at
reduced rates. It has been decided that this concession should,
E in future, be allowed only with the concurrence of the Ministry
of Finance in each case'.

(2) O.M. 12-11/60-ACC-I dated 2.8.1960 is also applicable to O.Ms.
dated 23.3.1986and 22.5.1987 and also to O.M. dated 13.11.1987
which makes it clear that the concession of compensation in lieu
F of rent free accommodation to be available only to those
employees who fulfil the criteria of eligibility as prescribed by
O.M. 12-11/60-ACC-I dated 2.8.1960.

After adverting to certain aspects it is made clear that other terms
and conditions for admissibility 0f compensation in lieu of rent free
G
accommodation would be as indicated in the O.Ms. dated 19.2.1987
and 22.5.1987 and 22.5.1987 remains the same. O.M. 12-11/60-ACC-
I dated 2.8.1960 would be applicable in turn to this notification as well.

The respondents arc not in a position to controvert this factual background.
H If that is the position, in fact, the decision of this Court in Civil Appeal No.
U.O.I. v. M. LEPDON AO [RAJENDRA BABU, J.] 459
2705 of 1991 [Union o.f/ndia & Ors. v. S.K. Ghosh & Ors.] will not come A
in the way of deciding whether the respondents are not entitled to compensation
in lieu of rent free accommodation and the view taken by the Tribunal in this
regard cannot be sustained.

Thus, the conclusion is irresistible that there is no decision of the
Government of India entitling the Central government employees posted in B
Nagaland, except who are eligible for the concession of rent free accommodation
or compensation in lieu thereof under O.M. 12-ll/60-ACC-I dated 2.8.1960
and, therefore, the view taken by the Tribunal in this regard has got to be set
aside.

However, we must make it clear that if any compensation in lieu of rent
c
free accommodation that may have already been paid shall not be recovered.

The appeals are allowed accordingly. No costs.

v.s.s. Appeals allowed.