Steel Authority Of India Ltd vs. Sada Nand Singh

2026 INSC 263
NON-REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. __________ OF 2026
@ SPECIAL LEAVE PETITION (CIVIL) NOS. 025516 – 025517 OF 2024

THE MANAGEMENT OF STEEL
AUTHORITY OF INDIA AND OTHERS … APPELLANT(S)


VERSUS


SHAMBHU PRASAD SINGH AND OTHERS … RESPONDENT(S)


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@ SPECIAL LEAVE PETITION (CIVIL) NOS. 010175 – 010176 OF 2026

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Signature Not Verified

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@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026350 – 026351 OF 2024
Digitally signed by
SNEHA DAS
Date: 2026.03.18
17:47:06 IST
Reason:
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@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026865 – 026866 OF 2024


J U D G M E N T

S.V.N. BHATTI, J.
1. Leave Granted.
2. The batch of Civil Appeals arises from Civil Review Order dated
16.05.2024 in Civil Review No. 45 of 2021, etc., and the Order dated
20.01.2020 in LPA No. 561 of 2017 and batch. The questions of fact and law
are the same in the Civil Appeals. The Civil Appeals were heard on 09.03.2026
and 11.03.2026, respectively, and reserved for judgment. Through the instant
Judgment, the Civil Appeals are considered and disposed of.
3. There are two types of cases before this Court. One type where the Writ
Petition was decided after the Order dated 31.03.2017 of this Court in Civil
Appeal No. 4740 of 2017, and the other is where the Writ Petition was decided
before the Order dated 31.03.2017 of this Court in Civil Appeal No. 4740 of
2






2017. To illustrate the two types of cases before this Court in the present
batch of Civil Appeals, a table is presented below:

3






4. The management of Steel Authority of India is the Appellant, and the
Respondents are retired employees of the Steel Authority of India/Bokaro
Steel Plant. For convenience, the parties are referred to as SAIL and Ex-
Employee(s), respectively. The circumstances, dates, and events in the Civil
Appeal filed against Shambu Prasad Singh/Ex-Employee against the Order in
Civil Review Petition No. 45 of 2021 in LPA No. 561 of 2017, against Writ
Petition No. 1681 of 2012, are referred to and would be sufficient for disposing
of the batch of Civil Appeals.
5. The Civil Appeals examine the workability of the right of SAIL to
withhold the gratuity of Ex-Employees because the Ex-Employees did not
surrender vacant possession of the quarter allotted to them while in service.
The consideration of circumstances and mutual legal obligations arises under
the SAIL Gratuity Rules, 1978 and O&M/Procedure/789 dated 26.03.2009.
The incidental consideration is the applicability of the Order dated 31.03.2017
in Civil Appeal No. 4740 of 2017 or the Order dated 15.12.2020 in S.L.P. (C)
No. 11025 of 2020.

6. Shambu Prasad Singh/Ex-Employee, on 31.05.2006, retired from the
service of Bokaro Steel Plant. He was allotted a staff quarter, and through
representations made between 11.09.2007 and 20.09.2010, the Ex-
Employee(s), including Shambu Prasad Singh, requested that the
management allows retention of the allotted quarter beyond the permissible
period under the Rules of retention. The management, instead of accepting
the request to retain the allotted quarter post-retirement, issued notices
calling upon the Ex-Employees to vacate and hand over possession to the
management. Subsequently, Shambu Prasad Singh filed W.P. (C) No. 1681 of
4






2012 challenging the notice of eviction, which was dismissed. The said Writ
Petition was dismissed on 28.07.2016, following the Order dated 24.01.2014
passed by the Division Bench of the High Court. In the batch of LPAs filed by
the Ex-employees, the Division Bench of the High Court of Jharkhand, by
Order dated 20.01.2020, disposed of the LPAs by relying on Ram Naresh Singh
1
v. Bokaro Steel Limited . On 15.12.2020, in S.L.P. (C) No. 11025 of 2020, this
Court took a different view and observed that regulating the discretion of
management to adjust the penal rent payable from the gratuity was
misplaced. The management, relying on the Order dated 15.12.2020,
preferred Civil Review before the Division Bench to review the Order dated
20.01.2020. Through the impugned order, the Civil Review Petitions have
been dismissed. Hence, the management of SAIL/Bokaro Steel challenges the
Orders dated 16.05.2024 and 20.01.2020 in the present Civil Appeals.
7. It is contextual to refer to Writ Petition No. 373 of 2012 filed by Ex-
Employee/Shri Ram Naresh Singh. The Writ Petition was disposed of with a
direction to pay the full gratuity with 6% interest. SAIL assailed the Order
dated 10.12.2012 in Writ Petition No. 373 of 2012 in LPA No. 15 of 2013, and
the LPA was allowed. Ram Naresh Singh challenged the Order in LPA No. 15
of 2013 by filing the Civil Appeal No. 4740 of 2017.
8. To shorten the narration, the Orders dated 31.03.2017 in Civil Appeal
No. 4740 of 2017 and 15.12.2020 in S.L.P. (C) No. 11025 of 2020 are
excerpted below:


1
Civil Appeal No. 4740 of 2017.
5






Civil Appeal No. 4740 of 2017

“3. We are of the view that in the facts of the case the
High Court was not justified in sustaining the action of
the respondent - Bokaro Steel Limited in retaining the
amount of Rs.2,06,000/- due to the appellant on account
of gratuity. The respondents shall release the said
amount to the appellant forthwith along with interest at
the rate of 6% per annum from the date of retention of
the amount till the date of actual payment. However, it
will be open for the respondents to charge normal rent
(i.e. Rs.88/- per month) of the quarter/premises in
question for the period for which the appellant was in
occupation after his superannuation.”

15.12.2020 in SLP (C) 11025 of 2020

“We, however, set aside the observations made in paras
19 and 21 qua the principles of penal rent being charged
as we are of the view the it if an employee occupies a
quarter beyond the specified period, the penal rent would
be the natural consequence and such penal rent can be
adjusted against the dues payable including gratuity.
This is so in view of the judgment in Secretary, ONGC
Ltd. v. V. U. Warrier - (2005) 5 SCC 245 and the reliance
placed in the impugned judgment on the case of Ram
Naresh Singh v. Bokaro Steel Plant [Civil Appeal
No.4740/2007] dated 31.03.2017 is misplaced as is not
even a judgment but an order in the given facts of the
case.”

9. We have heard Learned Senior Counsel and Counsel for the parties and
perused the record.

10. The following questions arise for determination in the present batch of
Civil Appeals:
(i) Whether the reliance placed by the Division Bench of the High
Court on the Order dated 31.03.2017 in Ram Naresh Singh v.
Bokaro Steel Ltd., Civil Appeal No. 4740 of 2017, as a binding
precedent, is sustainable in law?
(ii) Whether the management of SAIL is entitled to adjust the penal
rent from the gratuity/security amount of Ex-Employees who have
retained staff quarters beyond the permissible period?
6






11. Rule 3 of SAIL Gratuity Rules, 1978 deals with the payment of Gratuity
by the management, and Rule 3.2.1 deals with the amount of gratuity payable
to an Ex-Employee. For our purpose, Rule 3.2.1 clause (c) is relevant and
excerpted hereunder:
“(c) The company will have the right to withhold the gratuity
amount payable to an ex-employee or his nominee/legal
heir(s), in case of his death, for non-compliance of Company's
rules including non-vacation of Company's accommodation.
No interest shall be payable on the gratuity amount so
withheld for the period of unauthorised occupation of
Company's accommodation and up to one month after the
vacation of the Company’s accommodation.”


12. On the policy of retention of staff quarters, the counsel relied on
O&M/Procedure/789 and for immediate reference the following clauses are
excerpted:
“I. Failure to vacate the house after permitted period

1. ⁠ ⁠ The ex -employee shall vacate the house on the last day of
retention period or earlier. In case of failure by the employee
to vacate the quarters, the security Deposit by him will be
forfeited in addition to eviction action.

2. ⁠ ⁠ The surety will be liable to pay the penalty and other
outstanding dues if the allottee fail to clear the outstanding
dues.

3. In case of any dispute on any of the clauses of this circular
⁠ ⁠
the decision of the HOD. TSD will be binding on all parties.

4. ⁠ ⁠ Management reserves the right to withdraw this scheme
fully or partially without assigning any reason at any point
of time BSP also reserves the right to cancel any retention
granted to any employee, if the quarters are required for
further allotment.”

13. Further, the Office Order dated 16.06.2009 stipulates the admissible
period of quarter retention, admissible rent, the rent payable during the grace
and retention period:
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“Ref. No. 1402/2009 June 16, 2009
OFFICE ORDER
NO.2183/A.O.

Sub: Modification in Quarter Retention policy.
REF: Office Order No. 2036.A.O. dated 20.03.2008.
Office order No. 1774/A.O. dated 19.10.2006.
1. The following modification have been made in the existing
quarter Retention policy for employees Separated from the
rolls of the company:-

A. Period if Retention

XxX ”

14. The management argues that it is obligated to pay gratuity to an
employee who has retired from service. There is no dispute regarding the
gratuity amount payable to an employee, as it is determined in accordance
with the SAIL Gratuity Rules, 1978. However, the Ex-Employees covered by
the present batch have not vacated the allotted staff quarters. Therefore, any
direction to release either the gratuity or the gratuity with interest is contrary
to the SAIL Gratuity Rules, 1978, as well as the admissible period of staff
8






quarter retention and the terms and conditions thereof governing the default
circumstances. Retention of a staff quarter allotted to an employee beyond the
permissible period warrants determination of rent strictly as per the
management policy. Without discharging the obligation of vacating the staff
quarters, directing the management to refund gratuity with a rate of interest
and adjust only nominal or normal rent is ex facie illegal and contrary to the
Order of this Court dated 15.12.2020 in S.L.P. (C) No. 11025 of 2020. It is
argued that the obligation to vacate or pay the gratuity amount cannot be
treated independently. In substance, the receipt of gratuity is dependent on
the employee’s performance of his obligation. It is argued that the employee
cannot be heard to pray for the release of gratuity without conforming to the
management’s policy on retention of staff quarters. The issue is no longer res
2
integra , both in view of the decision reported in ONGC Ltd. v. V.U. Warrier ,
and the Order dated 15.12.2020 in S.L.P(C) No. 11025 of 2020.
15. It is urged for the employees that the reviews filed by the management
have been dismissed on a correct appreciation of the law. The Order dated
20.01.2020 was passed with reference to the binding precedent in Ram
Naresh Singh’s case dated 31.03.2017. The retention policy of staff quarters
introduced post-retirement by the management does not apply to employees
who have retired. Thousands of staff quarters remain unoccupied. Therefore,
considering the employees that have retired are from skilled/semi-skilled
posts, allowing management to recover penal rent as per the policy may
ultimately result in the recovery of a larger amount from the employees, which

2
(2005) 5 SCC 245.
9






would cause excessive hardship. Thus, even if any amount is to be adjusted
under the SAIL Gratuity Rules, 1978, it may be treated as normal rent rather
than penal rent. Since gratuity has not been paid, the management is
obligated to pay it with interest. Alternatively, it is urged that instead of
leaving discretion to management, this Court stipulates a reasonable sum
towards penal rent, and that, after adjusting the penal rent, the balance of
the gratuity amount payable to the Ex-Employees is determined.
16. At the outset, we have to examine whether the Order dated 20.01.2020
warrants interference, in light of the decision in S.L.P. (C) No. 11025 of 2020.
We have perused the Order dated 31.03.2017 and the Order dated
15.12.2020, and are prima facie of the view that the Order in Ram Naresh
Singh (supra) dated 31.03.2017 can at best be treated as a concession given
to an employee. The said Order dated 31.03.2017 also does not refer to a few
precedents on the point. The specificity of the concession has been noted and
explained by a Three-Judge Bench of this Court vide Order dated 15.12.2020.
Without much deliberation or discussion, we are of the view that the
obligation to pay gratuity and the penal consequences with which an
employee can continue to retain the staff quarter allotted to him are squarely
covered by the Order dated 15.12.2020.
17. The fundamental distinction between the Order dated 31.03.2017 in
Ram Naresh Singh (supra) and the Order dated 15.12.2020 in S.L.P. (C) No.
11025 of 2020 is noted. The former was passed on grounds of equity in the
specific facts of that case, where the gratuity was offered as security, and did
not purport to lay down a binding precedent. The latter order, passed by a
Three-Judge Bench, expressly set aside the observations made in paragraph
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nos. 19 and 21 of the impugned judgment in S.L.P. (C) No. 11025 of 2020,
holding that if an employee occupies a quarter beyond the specified period,
penal rent would be the natural consequence. Such penal rent can be
adjusted against dues payable, including gratuity. In view of the binding
judgment in Secretary, ONGC Ltd. (supra) , a case is an authority only for what
it decides and an order passed on facts cannot be elevated to the status of a
precedent by operation of Article 141 of the Constitution of India.
18. Therefore, the reliance placed by the Division Bench on Ram Naresh
Singh’s case warrants interference and accordingly the impugned judgment
dated 20.01.2020 is liable to be set aside.
19. We also note that the SAIL Gratuity Rules, 1978, read with the policy
under O&M/Procedure/789 dated 26.03.2009, govern the post-retirement
obligations of Ex-Employees with respect to the vacation of management-
allotted accommodation and the consequent release of gratuity. Under Rule
3.2.1(c) of the SAIL Gratuity Rules, 1978, the management is expressly
empowered to withhold the gratuity amount payable to an Ex-Employee, or
his nominee/legal heirs in the event of death, for non-compliance of the SAIL’s
rules, including non-vacation of the management’s accommodation. Further,
no interest shall be payable on the gratuity amount so withheld during the
period of unauthorised occupation. The amount ultimately payable to the Ex-
Employee upon vacation of the allotted staff quarter shall be computed after
adjusting the penal rent accrued for retention beyond the grace period
permissible under SAIL’s policy, in the manner and at the rate as determined
in accordance with the said Rules and applicable circulars. The reasoning
pertaining to reciprocal obligations need not detain us in a long narration.
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The obligations are mutual and reciprocal. The Ex-Employee is obligated to
vacate and surrender possession of the staff quarters, and the management
is obligated to release the gratuity amount after making permissible
deductions. Neither obligation can be enforced in isolation nor independently
of the other. The simultaneous discharge of these reciprocal obligations, i.e.,
handing over of vacant possession by the Ex-Employee and payment of the
balance gratuity amount by the management, is essential under SAIL Gratuity
Rules, 1978 and policy O&M/Procedure/789 dated 26.03.2009.
20. On the question of interest, Rule 3.2.1(c) of the SAIL Gratuity Rules,
1978, stipulates that no interest shall be payable on the gratuity amount
withheld for the period of unauthorised occupation of the staff quarters and
up to one month after vacation thereof. The withholding of the
gratuity/security amount was not only authorised under the management’s
rules but also voluntarily consented to by each Ex-Employee in a written
undertaking. An employee cannot be permitted to approbate and reprobate.
Having availed of the benefit of retaining the staff quarters by offering the
gratuity amount as security, the employee cannot simultaneously claim that
withholding the said amount entitles the Ex-Employees to interest on the
withheld gratuity/security amount. To award interest in such circumstances
would effectively reward unauthorised occupation of public premises.
21. The above consideration leads us to the Ex-Employees’ alternative
argument for fixing a reasonable penal rent rather than determining the rent
payable in accordance with the management’s policy. We have heard the
counsel appearing for the management and also the Ex-Employees. We are of
the view that a reasonable sum of Rs. 1,000 per month may be fixed as penal
12






rent to be adjusted for the retention period beyond the grace period
permissible under SAIL’s policy. In arriving at the sum of Rs. 1,000 per month
as a reasonable penal rent, this Court has taken into account the following
considerations: (i) the Ex-Employees are retired workers, most of whom held
skilled or semi-skilled posts, and the full enforcement of the management’s
penal rent policy may, in several cases, entirely extinguish the gratuity
amount payable to them; (ii) the policy under O&M/Procedure/789 dated
26.03.2009 was framed and brought into existence post-retirement of several
of the Ex-Employees in the present batch; (iii) the sum of Rs. 1,000 per month
is intended to balance the legitimate interest of the management in recovering
occupation charges for unauthorized retention, with the equally legitimate
interest of the Ex-Employees in retaining a portion of the gratuity; and (iv)
this is an equitable exercise of jurisdiction, and the amount fixed is
reasonable and just between the normal rent and the full contractual penal
rent. This fixation is, however, confined strictly to the present batch and shall
not be treated as a precedent. The amount is calculated and communicated
to the employees within four weeks from today. The Ex-Employees/Legal
Heirs of the Ex-Employees are granted an additional 4 weeks’ time to vacate
the staff quarters in their respective possession. The reciprocal obligations are
discharged simultaneously, i.e., (i) the payment of gratuity by the
management and (ii) the handing over of vacant possession to the
management by the Ex-Employees or their legal heirs.
22. The direction in the impugned judgment, to pay interest on gratuity,
having regard to the SAIL Gratuity Rules, 1978, is unsustainable and an
equitable order in the circumstances of the case is passed while disposing of
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the subject Civil Appeals. We reiterate that the Judgment in the instant
appeals shall not be treated as a precedent in any other matter governing SAIL
Gratuity Rules, 1978 and retention policy O&M/Procedure/789 dated
26.03.2009.

23. The Civil Appeals are allowed in the above terms. Pending
application(s), if any, is/are disposed of accordingly. No order as to costs.



..……….…………………J.
[PANKAJ MITHAL]










..…………………………J.
[S.V.N. BHATTI]

New Delhi;
March 18, 2026.

14


NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
INHERENT JURISDICTION
CONTEMPT PETITION (CIVIL) NO(s). OF 2026
(@ D. No. 72828 of 2025)
IN
CIVIL APPEAL NOS. 3499 - 3500 of 2026
(@ SPECIAL LEAVE PETITION (CIVIL) NOS. 25516 – 25517/2024)
SHAMBHU PRASAD SINGH … PETITIONER(S)

VERSUS

PRIYA RANJAN AND OTHERS … ALLEGED CONTEMNOR(S)
J U D G M E N T
S.V.N. BHATTI, J.
1. Having regard to the view taken in the accompanying Civil Appeal Nos.
3499 - 3500 of 2026, arising out of SLP (Civil) Nos. 25516–25517 of 2024,
the disobedience complained in the present Contempt Cases do not warrant
our consideration. Hence, the Contempt Cases stand dismissed.
2. Pending application(s), if any, is/are disposed of accordingly.
..……….…………………J.
[PANKAJ MITHAL]
..…………………………J.
[S.V.N. BHATTI]
New Delhi;
March 18, 2026