Penal rent for unauthorized occupation of official accommodation is recoverable from retiral benefits, including gratuity.

The applicant retired as an Associate Professor-cum-Officiating Principal from Government Home Science College, Chandigarh, on 28.02.2011

During her service, she occupied the "Principal’s Lodge" located within the college premises

Following retirement, the applicant continued to occupy the accommodation until 21.08.2013, citing pending litigation regarding the enhancement of superannuation age and alleged interim protection from the Hon’ble Supreme Court

Consequently, the respondents withheld her Death-cum-Retirement-Gratuity (DCRG) to recover penal rent for the period of unauthorized occupation.

After a previous round of litigation (CWP No. 1395 of 2017), the Hon'ble Punjab and Haryana High Court remanded the matter for a fresh decision after granting the applicant a hearing

The respondents subsequently passed the impugned order dated 26.02.2024, assessing the penal rent at Rs. 10,41,866/- and adjusting it against the applicant’s DCRG

The applicant challenged this order, asserting the accommodation was rent-free and the assessment was retrospective and unauthorized

1. Whether the respondents were justified in determining liability against the applicant for damages/penal rent for the retention of the official accommodation post-superannuation

2. Whether the respondents could legally adjust/recover the assessed penal rent from the Death-cum-Retirement-Gratuity (DCRG) payable to the applicant

Rule 9.16 of the Punjab Civil Services Rules, Volume II, which provides for the adjustment of government dues, including license fees, from the gratuity of a retired employee

official accommodation is an incident of service that terminates upon retirement

the legal principle that official accommodation is an incident of service that terminates upon retirement

precedent set by the Hon'ble Supreme Court in Steel Authority of India Ltd. v. Raghbendra Singh & Others, which established that penal rent for overstaying in official quarters can be adjusted against retiral dues including gratuity

The Management of Steel Authority of India & Ors. vs. Shambhu Prasad Singh & Ors. (2026), affirming that the obligation to vacate and the obligation to release gratuity are reciprocal

The Tribunal found that the applicant’s right to occupy the Principal’s Lodge ceased on her retirement date, 28.02.2011, as she did not continue in service thereafter despite pending litigation

It rejected the applicant’s plea of interim protection, noting that the tagging of her SLP with other matters did not automatically grant her stay orders regarding accommodation

On the categorization of the lodge, the Tribunal held that the applicant was estopped from challenging the classification (Type-VI) or the application of the House Allotment Rules, 1996, having enjoyed the benefit of the residence for a prolonged period

Regarding the assessment, the Tribunal observed that the respondents took a "lenient view" by reducing the initial assessment from approximately Rs. 21 Lakhs to Rs. 10.41 Lakhs

The Tribunal concluded that since the occupation was unauthorized from 01.03.2011 to 21.08.2013, the respondents possessed the inherent right to recover compensation, and the procedural requirements of natural justice were satisfied through the show-cause notice and hearing conducted post-remand

The Tribunal affirmed the validity of the impugned order dated 26.02.2024, ruling that the adjustment of Rs. 10,41,866/- from the applicant’s DCRG was consistent with Rule 9.16 of the Punjab Civil Services Rules and settled Supreme Court jurisprudence

No order as to costs was made