Penal rent cannot be recovered when quarter retention is impliedly permitted through regular rent deductions.

The petitioner served as Assistant Grade-III at the Industrial Training Institute (ITI), Bhilai, until his transfer to ITI Mohla in June 2009

Following the transfer, the petitioner was not allotted any government accommodation at ITI Mohla; consequently, he continued to occupy the government quarter at ITI Bhilai

Throughout the period of his stay until June 2017, the respondents deducted House Rent Allowance (HRA) of ₹95/- from the petitioner's salary, as evidenced by his salary slips

Despite this, the respondents issued an order dated 04.07.2017 seeking to recover ₹4,97,600/- as penal rent from the petitioner’s gratuity

The petitioner challenged the legality of this recovery order through a writ petition under Article 226 of the Constitution of India

Whether the recovery of penal rent from the petitioner's gratuity is legally sustainable when the petitioner was not provided alternative accommodation at the transferred location and the state continued to deduct regular rent/HRA for the occupied premises?

The court applied the principle of implied permission by a Competent Authority.

It established that where an employee retains government accommodation post-transfer due to non-allotment of housing at the new station, and the employer continues to deduct standard rent/HRA from the employee's salary, such actions constitute implied consent to the occupation

Under such circumstances, the occupation cannot be characterized as unauthorized, thereby precluding the state from recovering penal rent

The court scrutinized the respondents' claim that the petitioner was an unauthorized occupant.

It noted that the petitioner was never allotted a quarter at the transferred location (ITI Mohla) and that the respondents had consistently deducted HRA from his salary for the Bhilai quarter until June 2017

The court reasoned that this deduction signified that the Competent Authority had impliedly permitted the petitioner to retain the accommodation

Since the "usual rent" was already being recovered by the State, the court found the subsequent imposition of penal rent to be unjustified

Furthermore, the court dismissed the respondents' argument regarding show-cause notices served for vacating the quarter, holding that such notices were overridden by the authority's conduct of accepting regular rent, which regularized the stay for the purposes of avoiding penal charges

The court held that the petitioner stayed in the accommodation with implied permission, making the recovery of penal rent illegal

The respondents were directed to refund the recovered amount of ₹4,97,600/- to the petitioner’s gratuity within 30 days of the order