Penal rent assessment must consider actual notice and the occupant’s prompt vacation.

The petitioner, a CRPF Assistant Sub-Inspector, challenged an order dated 06.07.2017 imposing penal rent of ₹3,93,833 for retaining a government quarter at Gwalior after his transfer.

He contended that earlier notices had been sent to the CRPF authorities, that he received notice to vacate only in March 2017, and that his family vacated the quarter on 24.05.2017.

The respondents maintained that his permission to retain the quarter had expired, that his occupation thereafter was unauthorised, and that the charges were assessed under the applicable government orders and CPWD rates.

The Court considered whether the demand was sustainable in light of the notice and the petitioner’s conduct.

1. Whether the respondents could sustain the penal-rent demand without adequately considering when the petitioner was actually informed to vacate and his conduct after receiving notice.

2. Whether the petitioner remained liable for ordinary licence fee and outstanding electricity or water charges despite the setting aside of penal rent.

Section 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 provides for recovery of rent arrears and assessment of damages for unauthorised occupation; Rule 8 of the 1971 Rules identifies relevant factors for assessing damages, requiring the authority to apply the statutory framework and relevant circumstances while distinguishing ordinary licence fee from damages.

In New India Assurance Co. Ltd. v. Nusli Neville Wadia, (2008) 3 SCC 279, the Supreme Court emphasised compliance with the Act’s prescribed procedure and an effective opportunity for the affected person to present their case.

The Court accepted that transfer did not give the petitioner an indefinite right to retain government accommodation and that damages could be recovered where legally warranted.

However, the demand had to account for whether and when the petitioner was actually informed of the direction to vacate; notice to the department alone did not conclusively establish his earlier knowledge.

As the petitioner vacated within approximately two months of the notice he said he received in March 2017, and the respondents had not demonstrated that he deliberately remained after receiving an earlier effective direction, the penal-rent demand was unjustified on the record before the Court.

The petitioner nevertheless remained liable for ordinary licence fee, while any separately established electricity or water charges could also be recovered.

The petitioner’s liability was restricted to ordinary licence fee equivalent to two months’ rent, subject to credit for amounts already paid; the respondents could recover separately established electricity or water charges after accounting for sums deposited.

Any excess penal rent already recovered was to be calculated and refunded or adjusted within three months of receipt of a certified copy of the order.

No order as to costs was made.