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Judgment
Heard Sh. Apurb Lal with Sh. Daleep Singh and Ms. Meenu Pandey, learned counsel for applicants and Sh. B.L.Wanchoo, learned counsel for respondents no.1 & 3 and Sh. Sanjay Katyal with Sh. Rajesh Katyal, learned counsel for respondents no.2 & 4.
There are 153 applicants in this OA, who all are working in Forest Research Institute (FRI) in Dehradun. All these applicants are drawing House Rent Allowance (HRA) as applicable to them at present. However, they are feeling aggrieved on account of circular issued on 02.04.2018 by Indian Council of Forestry Research and Education addressed to the Director, Tropical Forest Research Institute, Jabalpur and copied to all other Institutes, including FRI, Dehradun, wherein a request has also been made to issue instructions to DDO and Estate Officer to follow these instructions in letter and spirit. The applicants apprehend that in follow up of this letter dated 02.04.2018 the Forest Research Institute, Dehradun may implement the same and in turn payment of HRA may get stopped in future. This is the grievance being ventilated in the instant OA.
In support thereof, the applicants brought out that the relevant policy directives for grant of HRA were issued by Ministry of Finance vide their office memorandum dated 27.11.1965. Any alteration thereof can be issued by the Ministry of Finance only and not by any of the subordinate authorities like FRI, and therefore, the directions issued on 02.04.2018 are without jurisdiction and cannot be implemented.
The applicants brought out that the Government quarters meant for allotment to the staff working under FRI are not habitable at present, and therefore, the applicants are living either in their own private accommodation at Dehradun or with one of their relatives and accordingly, they are being paid HRA at present. However, vide instructions dated 02.04.2018, it has been laid down that every employee has to first apply for allotment of a quarter and in case such a quarter is not allotted, a non-availability certificate (NAC) has to be issued and it is only thereafter when such a NAC has been issued, he is to be paid HRA.
Therefore, the plea of the applicants is that once the quarters available with the FRI are repaired and made habitable, the applicants will be forced to apply for allotment of the same, which will deprive them of the payment of HRA, which they are drawing at present. The applicants brought out that a coordinate bench of Tribunal at Jodhpur vide their decision in OA No.71/2008 withbatch cases dated 27.02.2009 has laid down as under:
"18. Taking the totality of facts and circumstances into account and legal position in the subject, we come to the considered conclusion that the orders issued by the respondent concerned dated 14.11.2007 (Annexure A-1), dated 15.12.2007 (Annexure A-2), and dated 18.2.2008 being in consonance with the extant Government OM dated 27.11.1965 are legally valid. Para 7 of the OM deals with the Government servant living in the house owned by the employee and such an employee shall be entitled for the HRA. There is justification for the HRA, if applicant having their house where they stay or intend to stay. But, those applicants who desire to stay in private accommodation while the government accommodations are available, are not entitled for HRA. We are of the considered opinion that harmonious construction of all the relevant paragraphs (4 and 7) of OM dated 27.11.1965 bring out that the applicant and their immediate family members having houses/apartments where the applicants stay being different from others, will be eligible to get HRA in the location having surplus Government accommodation. We also find that as per the OM dated 27.11.1965, the NAC is a precondition to draw HRA only in the notified locations. Jodhpur is one of the locations notified by respondents. We also conclude that the demand for NAC from the applicants by the respondent No.2 is just and right procedure. However, we note that it is the executive to decide each applicant's case about the eligibility for NAC and HRA. In the result we direct the respondent no.2 to adopt the following procedure which is in conformity with the extant OM dated 27-11-1965 and in view of our observations within in deciding each applicant's case relating to (a) whether the applicant concerned is entitled for NAC and (b) consequently whether the applicant concerned is eligible for HRA:-
I. The "no accommodation certificate" may be issued in case of the applicant who comes in one of the 2 following categories subject to the condition that the applicant declares the accommodation with detailed proof where he stays:-
i. The applicant who owns a house/apartment at the place of posting (Jodhpur).
ii. The applicant whose immediate family member (spouse/child/mother) own a house/apartment where the applicant stays in the posting place of the applicant (Jodhpur).
II. Once the respondent identifies an applicant who does not come within the ambit of I above, the concerned applicant is to be offered Government accommodation as per extant rules/instructions by the competent respondent. If the applicant offered with the Government accommodation accepts or declines, such applicant will not be entitled for no accommodation certificate and consequently not eligible for the house rent allowance."
Applicants plead that in their case also this order is applicable and in that case they are not required to apply for Govt. quarter ,and as such payment of HRA needs to be continued.
Accordingly, the FRI cannot force the applicants to apply for the quarter first and thereafter issue NAC. In this regard, the very issuance of the instruction dated 02.04.2018 was claimed to be beyond jurisdiction as any such order could be issued by Ministry of Finance who had originally issued the letter dated 27.11.1965.
The applicants further brought out that the original letter issued in 1965 did not have any such provision as are contained in letter dated 02.04.2018. In view of the foregoing, the applicants sought quashing of letter dated 02.04.2018.
The respondents brought out that the original instructions in respect of HRA were issued in the office memorandum dated 27.11.1965 wherein following provisions have been specified in para 4 (a) (i) and 4 (b) (i) which reads as under:
"4. The 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 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.
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(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."
These instructions are still valid and are still holding good and have not been quashed or set aside or modified by any judicial pronouncement or Administrative directions. In the present OA also, the applicants have neither challenged nor sought quashing of this policy letter of 1965.
The respondents drew attention to a decision by Apex Court in Director, Central Plantation Crops Research Institute, Kesaragod vs. M.Purushothaman, CA No.885/1993 decided on 26.07.1994, the Apex Court had observed 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 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 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."
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 hot 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 Hon'ble Apex Court has held that HRA is compensation in lieu of accommodation and this compensatory allowance cannot be used as a source of profit.
The respondents also drew attention to a judgment of Hon'ble High Court of Delhi titled Municipal Corporation of Delhi vs. Workmen in WP (C) no.5173/2003 decided on 19.05.2010. The relevant portion is extracted below:
"1. The question which falls for adjudication in this writ petition is whether an employee in authorized occupation of the premises of the employer is nevertheless entitled to HRA.
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It is the admitted position that the Fundamental Rules & Supplementary Rules applicable to Government Servants apply to the payment of HRA to the employees of the MCD. Under the said Rules, HRA is not payable during the stay in Inspection Quarters of their posting or if the Government Servant shares Government accommodation allotted rent-free to another Government Servant or if the Government Servant resides in accommodation allotted to his/her parents/son/daughter by the Central Government, State Government etc. or if the spouse has been allotted accommodation at the same station. However Clause 4 (b)(vii) of the said Rules is as under:
"(vii) Displaced Governments servants who have not been allotted residential accommodation by Government but who are in unauthorized occupation of such accommodation and are paying damages to Government, shall be deemed to have been provided with Government accommodation and as such shall not be eligible for House Rent Allowance. Such persons cannot also be considered as "sharing Government accommodation" for the purpose of paragraph 5 (e) below."
No direct precedent has been found. The Supreme court in Director, Central Plantation Crops Research Institute Vs. M.Purushothaman 1994 Supp. (3) SCC 282 has held that the Government spends public funds for constructing quarters for their employees both for the convenience of the management as well as of the employees; the investment made in constructing and maintaining the employees, though entitled to official quarters, had declined to occupy the same HRA; the Central Administrative Tribunal held the employees to be entitled to HRA for the reason that only those employees who had applied for official accommodation and refused to occupy the same are liable to forfeit the benefit of HRA and not others and for the reason that HRA is a part of wages and no deduction from wages can be made merely on account of refusal to accept the accommodation.
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Seen in the aforesaid light, the order of the Tribunal in the present case cannot be sustained. If the workmen inspite of unauthorizedly occupying the accommodation of the petitioner MCD are also held entitled to HRA, it would tantamount to allowing the workmen to profiteer from the same and which is not permissible."
The Hon'ble High Court has thus prohibited that HRA cannot be made a source of profit.
Respondents also drew attention to another decision of Hon'ble Supreme Court titled State of Uttar Pradesh vs. Jeet S. Bisht decided on 20.04.2006 wherein in respect of remuneration and other perks to the members of the National Commission, the Apex Court had decided that a sum of Rs.8000 p.m. shall be paid by way of HRA, if the member is not provided with any Govt. accommodation.
The Apex Court has, therefore, laid down that even for the members of the National Commission, HRA is to be paid only if the Govt. accommodation is not provided.
The respondents also drew attention to a decision of Hon'ble High Court of M.P. in WP (C) No. 8772/2012 delivered on 13.07.2012. The relevant paras of the judgment are reproduced below:
"The employer being aggrieved by the order has filed this petition, assailing the order by Tribunal on the ground that the Tribunal has committed grave folly in adjudicating the claim in favour of workmen on the basis of superseded circular and contrary to the General Rules and orders issued in respect of entitlement of House Rent Allowance.
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Issue which crops up for consideration is whether a no accommodation certificate is a condition precedent for grant of House Rent Allowance.
Thus, under the Rules, imperative it is to have no accommodation certificate for grant of HRA, and being a condition precedent unless issued and produced an employee will not be entitled for the grant of HRA. In this context reference can be had of the observations in Director, Central Plantation Crops Research Institute, Kesaragod and others v. M.Purushothaman and others (supra) which is in context to paragraph 4 of office memorandum dated 27.11.1965"
In this case, the Hon'ble High Court in this case had given following concluding directions:
"For these reasons we quash the impugned order dated 18.4.2012 and hold that unless an employee furnishes a no accommodation certificate as is required under paragraph 4 and 8 of the memorandum dated 27.11.1965, they are not entitled for the HRA. The petitioners would be entitled to review past cases in accordance herewith and if some employees are found to be not entitled shall after giving them an opportunity of hearing pass orders in accordance with law."
Therefore, the submission of a NAC is held as pre-requisite for payment of HRA.
In view of the foregoing, the respondents pleaded that it is inherent in the original policy letter dated 27.11.1965 that the employees have to first apply for allotment of an accommodation and thereafter in case quarters are available, the same will be allotted and in case quarters are not available the applicants will be put on a waiting list and so long as a quarter of the eligible type has not been allotted to the employee, NAC shall be issued and on the basis of such a NAC, HRA shall be paid. Such of the employees who do not apply for the quarter, NAC cannot be issued and accordingly HRA can also be denied. Such of the employees to whom an allotment is made but still they do not occupy the said quarter, HRA can also be denied.
The respondents finally pleaded that in view of the foregoing judgments, the procedure to be followed is as narrated in para 13 above and the same has been clearly and explicitly specified in the letter dated 02.04.2018, as such this letter, being in consonance to policy directives dated 27.11.1965, cannot be quashed.
Further, no such order for not paying HRA has yet been issued and as such applicants have no grievance at present. They only have some apprehension and on this account also the present OA is not maintainable.
Matter has been heard at length. The policy directives in the matter were issued in 1965. At various points of time, the matter has been adjudicated. However, this policy circular has never been quashed. The relevant paras have been interpreted right up to Hon'ble Apex Court and by Hon'ble High Court and they had been upheld. The HRA is not a right. It is only a compensation in lieu of accommodation. It follows that the employees are required to apply for allotment of a quarter and depending upon the availability of the same, the departments make an allotment or keep the applicants in a waiting list. Such of the employees who are eligible for allotment but could not be allotted, are paid HRA in lieu of the accommodation. HRA cannot be allowed to become a source of profit by itself. The pleas put forth by the respondents are, therefore, upheld.
The pleas of applicant that letter dated 02.04.2018 is without jurisdiction as this was not issued by Ministry of Finance who had issued the original policy directives on 27.11.1965, also does not sustain. There is nothing in letter dated 02.04.2018 which is repugnant to the provisions contained in letter dated 27.11.1965.
Para 4 (a)(i) of this letter (para 7 supra) is very explicit in that when it specifies "the allowances will be admissible only if they have applied for such accommodation". The requirement of NAC is only a logical corollary to this provision.
Further, the local departmental heads governing various wings of Govt., are certainly empowered to issue operative instructions for implementing the Policy Directives issued by Govt. of India. The argument of applicant that all such operative directives also need to be issued by Ministry only, cannot be accepted.
The pleas of the applicants do not sustain.
In view of the foregoing, the OA is dismissed being devoid of merit. No order as to costs.