Penal rent for unauthorized retention of government accommodation is legally adjustable against an employee's gratuity.

The applicant, a retired Auditor-cum-Stock Verifier at PGIMER, was allotted House No. B-2/14 within the PGI Campus in 1997

He retired on May 31, 2020, and was permitted to retain the accommodation for a concessional period of eight months until January 31, 2021

Due to the COVID-19 pandemic, the applicant failed to vacate the premises by the deadline, eventually vacating on July 25, 2022

Respondent No. 2 issued an order on August 27, 2022, demanding Rs. 1,02,048 as license fee/penal rent for the period of occupation

The applicant challenged this demand and the withholding of his gratuity amounting to Rs. 1,16,000, asserting that the demand was arbitrary and contrary to a "No Dues Certificate" issued on January 4, 2021

The matter was heard ex-parte due to the continued non-appearance of the respondents

1. Whether the recovery of penal rent/license fee from the applicant’s gratuity for overstaying in government accommodation after the expiry of the permitted retention period is legally sustainable

2. Whether the "No Due Certificate" issued prior to the vacation of the house absolved the applicant of liability for subsequent penal rent

Post Graduate Institute of Medical Education and Research (Allotment of Residencies) Rules (Amended), 1970, specifically Rule 9, which mandates deemed cancellation of allotment upon the expiry of the concessional retention period

Rule 73 of the CCS (Pension) Rules, which empowers the government to withhold or adjust 10% of gratuity against outstanding dues related to government accommodation

Principle established by the Hon’ble Supreme Court in M/S Steel Authority of India Ltd. v. Raghbendra Singh (SLP No. 11025/2020), which held that penal rent is a natural consequence of overstaying in official quarters and can be adjusted against retirement dues including gratuity

The Tribunal observed that the applicant was explicitly informed via the extension letter dated June 12, 2020, that no further extensions would be granted beyond January 31, 2021, and that a graduated scale of license fees (normal to six times the normal rate) would apply during the permitted eight months

The Tribunal rejected the applicant's reliance on the January 4, 2021, "No Dues Certificate," noting that the document specifically stipulated that dues for any period beyond the retention date would be calculated upon actual vacation

The Tribunal reasoned that the right to occupy government housing is an incident of service that terminates upon superannuation or the expiry of a permitted extension

Since the applicant continued to occupy the premises until July 2022 without authorization, the initiation of eviction proceedings under the Public Premises Act, 1971, and the subsequent calculation of penal rent were deemed consistent with statutory rules

The Tribunal affirmed that penal rent is the natural consequence of unauthorized occupation and that such dues are legally adjustable against gratuity under Rule 73 of the CCS (Pension) Rules

No order as to costs was made