Pending HRA-recovery litigation does not preclude payment of eligible leave encashment with GPF-rate interest.

The applicant, Heera Singh Gill, was appointed as a Civil Motor Driver on 10 March 2005 and was not allotted government accommodation. Pursuant to the Ministry of Defence’s letter dated 13 June 2005, he was paid House Rent Allowance (HRA), including arrears, until 3 May 2018.

The respondents subsequently ordered recovery of the HRA allegedly paid erroneously through an office note dated 7 January 2019. The applicant contended that no show-cause notice or opportunity of hearing was afforded before the proposed recovery.

The applicant, along with similarly situated employees, was a party to OA No. 205 of 2020, Rama Shanker Shukla & Others v. Union of India & Others, in which the Tribunal set aside the recovery orders dated 30 January 2020 and 3 May 2018 and restrained the respondents from recovering past HRA already paid and utilised by the employees.

The applicant retired on 30 April 2023, but the respondents withheld his leave-encashment amount for 197 days on the ground that recovery might become payable depending on the outcome of the respondents’ proposed writ petition against the decision in OA No. 205 of 2020.

The applicant relied additionally on OA No. 723 of 2023, decided on 29 August 2024, wherein the Tribunal directed reconsideration of the similarly situated employees’ claims for leave encashment and payment with 6% simple interest if found eligible.

Whether the respondents were justified in withholding the applicant’s leave-encashment amount of 197 days merely because the Tribunal’s order restraining recovery of past HRA was allegedly under challenge before the High Court.

Whether the applicant was entitled to reconsideration of his claim for leave encashment and payment of the admissible amount with interest, in light of the orders in OA Nos. 205 of 2020 and 723 of 2023.

The Tribunal applied the principle that recovery of past HRA already paid and utilised by employees could not be pursued contrary to the binding directions in OA No. 205 of 2020, which had set aside the relevant recovery orders and restrained coercive recovery.

It further relied on the directions in OA No. 723 of 2023, requiring the competent authority to reconsider similarly situated employees’ eligibility for leave encashment and, where eligible, to release the amount with interest.

The Tribunal also applied the administrative-law principle that an employee’s retiral dues should not be withheld merely on the basis of a possibility of future recovery, particularly when the employee was covered by an existing order protecting him from recovery of past HRA.

The applicant was expressly included among the employees who had obtained relief in OA No. 205 of 2020. That order restrained the respondents from taking coercive action to recover past HRA already paid and utilised. Consequently, the respondents were required to consider the applicant’s case in accordance with that order, especially after he had supplied a copy of the judgment to the authorities.

The pendency or contemplated filing of a writ petition did not, by itself, extinguish or suspend the operative effect of the Tribunal’s order, nor did it justify indefinite withholding of the applicant’s leave encashment. The reasoning in OA No. 723 of 2023 further supported reconsideration of the applicant’s entitlement and payment of the amount with applicable interest.

The Tribunal therefore directed reconsideration rather than ordering unconditional immediate release of the entire claimed amount.

The respondents were directed to reconsider the applicant’s case within three months from receipt of the certified copy of the order. If the applicant was found eligible for leave encashment under the applicable rules, the competent authority was directed to release the admissible amount together with interest at the GPF rate.

All associated miscellaneous applications were disposed of, with no order as to costs.