2001 JTR(SC) 1054
2001 AIR(SC) 2433 ; 2001 AIR(SCW) 2819 ; 2001 AllLJ 2026 ; 2001 3 AWC 2436 ; 2001 3 BBCJ(SC) 184 ; 2001 3 CLR 262 ; 2001 91 FLR 166 ; 2001 3 JCR(SC) 240 ; 2001 2 JLJR(SC) 538 ; 2001 6 JT 285 ; 2001 3 KLT(SN) 15 ; 2001 LIC 2821 ; 2001 4 LLN 9 ; 2001 4 RSJ 267 ; 2001 5 Scale 87 ; 2001 6 SCC 591 ; 2001 SCC(L&S) 1032 ; 2001 3 SCT 1059 ; 2001 3 SLR 735 ; 2001 5 SLT 648 ; 2001 2 UJ 1523 ; 2001 3 UPLBEC 2479 ; 2001 KHC 857 ; 2001 5 Supreme 798
2001(5) Supreme 798
SUPREME COURT OF INDIA
(From Allahabad High Court)
S. Rajendra Babu and Doraiswamy Raju, JJ.
Gorakhpur University & Ors. -Appellants
versus
Dr. Shitla Prasad Nagendra & Ors. -Respondents
Civil Appeal No. 1874 of 1999
Decided on 7-8-2001
Counsel for the Parties :
For the Appellants : B.D. Agarwal, Sr. Advocate, Vinay Garg, Anish Dayal and Ms. Anjali, Advocates.
For the Respondents : Dr. R.G. Padia, Sr. Advocate, Ms. Shalini Kumar and Rajesh, Advocates.
For the State of U.P. : Ms. Alka K. Agrawal and Ajay K. Agrawal, Advocates.
VERY IMPORTANT POINT
Withholding of quarter allotted by employer-University, while in service to a teacher, even after retirement without vacating the same is not a valid ground to withhold the disbursement of the terminal benefits. Employer can deal with it separately, as is permissible under the law.
Act Referred :CONSTITUTION OF INDIA : Art.14, Art.16
(A) The principles enunciated under Article 14 and Article 16 of the Constitution of India mandate equal treatment and non-discrimination in matters relating to public employment and benefits arising therefrom. In the present case, these constitutional provisions govern the dispute over the recovery of accommodation and the adjustment of retiral benefits, emphasizing that pension and gratuity are vested rights and cannot be withheld or adjusted for unrelated claims. The Constitution ensures that an employees right to retiral benefits is protected and any encumbrance on such entitlements must conform to the principles of fairness, reasonableness, and non-discrimination.
(B) The core legal principles include that pension and provident fund amounts are statutory rights immune from attachment or adjustment for other dues; withholding benefits against an employee for not vacating accommodation is illegal; any demand for penal rent must not be pursued in a vindictive or discriminatory manner; and an employee is entitled to normal rent concessions even after retirement, and any waiver of penal rent by the authority creates equity and must be applied consistently. Further, the principles of natural justice require giving an opportunity to be heard before determining liability.
Facts of the case:
The first respondent, a teacher and later professor in the appellant university, was allotted university accommodation which he continued to occupy even after serving as Vice-Chancellor of another university and post-retirement. He remained in the quarter beyond the permissible period without vacating it. Upon superannuation, he became entitled to pension and other terminal benefits, but the university withheld these amounts, seeking adjustment of outstanding rent and penal charges. The Finance Controller and university authorities deducted amounts from his provident fund and pension, prompting the respondent to approach the High Court. The High Court held that pension and retiral benefits could not be adjusted for other dues and directed disbursement with interest. The university has challenged that order.
Findings of Court:
The court observed that the university had been accepting rent regularly and only contested the liability after the quarter was vacated. It noted discriminatory treatment, lack of bona fides, and that the university had waived penal rent for others but not for the respondent. The absence of notice, inconsistent application of rules, and attempts to recover disputed sums were found to be mala fide. The court held that the university could not recover the disputed amounts by way of adjustment and that the High Courts order was valid.
Issues:
Whether the university can withhold or adjust retiral benefits such as pension and provident fund for the alleged unpaid penal rent and unauthorized occupation of accommodation post-retirement? Whether the principles of natural justice were followed in determining the liability for penal rent? Whether the discriminatory and vindictive approach of the university in selectively enforcing rules is permissible?
Ratio Decidendi:
Pension and provident fund constitute vested rights under Article 16 and cannot be adjusted or withheld for other independent claims. The right to receive retiral benefits is distinct and enforceable, and any encumbrance linked to unauthorized occupation must be pursued separately without prejudice to the employees entitlements. Consistent application of rules and adherence to principles of natural justice are mandatory, and discriminatory treatment vitiates the action of the authority.
Result:
The appeal is dismissed, and the order of the High Court directing disbursement of pension and provident fund with interest is upheld. No costs are awarded, and the judgment does not prejudice any future rights of the university to pursue legitimate claims through lawful means.
(A) The principles enunciated under Article 14 and Article 16 of the Constitution of India mandate equal treatment and non-discrimination in matters relating to public employment and benefits arising therefrom. In the present case, these constitutional provisions govern the dispute over the recovery of accommodation and the adjustment of retiral benefits, emphasizing that pension and gratuity are vested rights and cannot be withheld or adjusted for unrelated claims. The Constitution ensures that an employees right to retiral benefits is protected and any encumbrance on such entitlements must conform to the principles of fairness, reasonableness, and non-discrimination.
(B) The core legal principles include that pension and provident fund amounts are statutory rights immune from attachment or adjustment for other dues; withholding benefits against an employee for not vacating accommodation is illegal; any demand for penal rent must not be pursued in a vindictive or discriminatory manner; and an employee is entitled to normal rent concessions even after retirement, and any waiver of penal rent by the authority creates equity and must be applied consistently. Further, the principles of natural justice require giving an opportunity to be heard before determining liability.
Facts of the case:
The first respondent, a teacher and later professor in the appellant university, was allotted university accommodation which he continued to occupy even after serving as Vice-Chancellor of another university and post-retirement. He remained in the quarter beyond the permissible period without vacating it. Upon superannuation, he became entitled to pension and other terminal benefits, but the university withheld these amounts, seeking adjustment of outstanding rent and penal charges. The Finance Controller and university authorities deducted amounts from his provident fund and pension, prompting the respondent to approach the High Court. The High Court held that pension and retiral benefits could not be adjusted for other dues and directed disbursement with interest. The university has challenged that order.
Findings of Court:
The court observed that the university had been accepting rent regularly and only contested the liability after the quarter was vacated. It noted discriminatory treatment, lack of bona fides, and that the university had waived penal rent for others but not for the respondent. The absence of notice, inconsistent application of rules, and attempts to recover disputed sums were found to be mala fide. The court held that the university could not recover the disputed amounts by way of adjustment and that the High Courts order was valid.
Issues:
Whether the university can withhold or adjust retiral benefits such as pension and provident fund for the alleged unpaid penal rent and unauthorized occupation of accommodation post-retirement? Whether the principles of natural justice were followed in determining the liability for penal rent? Whether the discriminatory and vindictive approach of the university in selectively enforcing rules is permissible?
Ratio Decidendi:
Pension and provident fund constitute vested rights under Article 16 and cannot be adjusted or withheld for other independent claims. The right to receive retiral benefits is distinct and enforceable, and any encumbrance linked to unauthorized occupation must be pursued separately without prejudice to the employees entitlements. Consistent application of rules and adherence to principles of natural justice are mandatory, and discriminatory treatment vitiates the action of the authority.
Result:
The appeal is dismissed, and the order of the High Court directing disbursement of pension and provident fund with interest is upheld. No costs are awarded, and the judgment does not prejudice any future rights of the university to pursue legitimate claims through lawful means.
Pension - Relied upon by the High Court to establish that pension and retiral benefits cannot be withheld for other dues.
Adjustment - Cited by the appellant university to support the adjustment of dues against terminal benefits, but not followed in this judgment.
PenalRent - Relied upon by the appellant but found inapplicable to the specific facts of this case where normal rent was accepted.
TerminalBenefits - An earlier decision of the same High Court taking the same view, relied upon by the respondent to support the claim.
ProvidentFund - Applied by the High Court to hold that Provident Fund amounts are immune from attachment and adjustment against other dues.
Gratuity - Referred to for the established principle that pension and gratuity are valuable rights and property, and their delay should be seriously dealt with.
JUDGMENT
Raju, J.-The first respondent in the above appeal was initially appointed as a Teacher in the Sociology Department of the appellant-university on 23.3.63 (Sic 73) and subsequently promoted as a Professor. The appellant-university had provided him with university accommodation. During the period between 20.5.86 and 19.5.89 the first respondent was appointed as Vice-Chancellor of the University of Lucknow but, in spite of the same, he appears to have continued to hold the accommodation without vacating the same. It is obvious from the facts stated that after his tenure as Vice-Chancellor he rejoined the appellant-university and continued to serve till 11.1.90, the date on which he attained the age of superannuation and even thereafter was continued on re-employment basis in terms of the First Statutes of the University till 30.6.90. It is an undisputable fact that he will be entitled to the payment of pension and settlement of his claim as such with effect from 1.7.90. Though, it is stated that the first respondent or for that matter any employee is entitled to retain the university accommodation for 4 months after retirement, the fact remained that he held the accommodation till 25.3.96. The appellant also does not seem to have taken steps to settle the claim relating to terminal benefits.
2. Since the appellant-university did not settle the first respondent s claim for terminal benefits including the fixation and disbursement of the pension, the first respondent filed C.M.W.P. No. 30428/97. The Writ Petition was opposed by the appellant-university contending that the first respondent, having not vacated the quarter held by him when he retired and within the permissible extended period, was liable for payment of penal rent in respect of such accommodation and that as a matter of fact the Finance Controller, Office of Directorate of Higher Education, U.P., who examined his pension papers, ordered on the recommendation of the university-authorities the adjustment of Rs. 3,20,638.04 from the amounts due towards the retiral benefits. Further, a sum of Rs. 64,441.54 was also ordered to be deducted from the Provident Fund amount due to first respondent. On a consideration of the respective claims of parties, a Division Bench of the Allahabad High Court by its Order dated 17.8.98, applying the principles laid down in Som Prakash v. Union of India1 and R. Kapur v. Director of Inspection (Painting and Publication) Income Tax & Anr.2 overruled the objections of the University holding that the pension and other retiral benefits cannot be withheld or adjusted or appropriated for the satisfaction of any other dues outstanding against the retired employee. The action of the university authorities to the contrary was held to be illegal and while allowing the claim of the first respondent, a direction came to be issued to pay the entire pension and Provident Fund etc. due to first respondent, with penal interest @ 18% within two months from the date of the order.
3. Aggrieved, the university authorities have come up before this Court. The learned senior counsel for the appellants contended that when the respondents did not vacate the official quarters even after retirement and rendered himself liable for penal rent for such unauthorized occupation, there is every justification in law to adjust the amounts due therefor to the university before settling and disbursing the terminal benefits and no exception could be taken for the move made on behalf of the University. It was contended further that unless certificate of no dues or no liability could be issued the question of finalising pension papers will not arise at any rate, as long as the claims relating to payment of penal rent remained unsettled. The decision in Daya Shankar Lal v. Vice Chancellor, University of Allahabad3 was relied upon to contend that the Division Bench in this case committed an error in taking a contra view. Reliance has also been placed on the decisions reported in Wazir Chand v. Union of India & Others4 as against the decisions noticed by the Division Bench of the High Court while deciding the case on hand.
4. Per contra, the learned senior counsel appearing for the contesting respondents, while justifying the relief granted to his client, highlighted certain facts which, according to the learned counsel, were peculiar to the case on hand and the stand taken for the appellant-university both before the High Court and this Court is unreasonable, unjust and only demonstrated an attitude of vindictiveness. The relevant facts so pointed out from the materials on records before us are that, every month the normal rent that was payable was being remitted continuously to the university and the same was being accepted without demur till 23.3.96 when the quarter was vacated, that in spite of a request and application made, as per practice in vogue for the allotment of the quarter in the name of his son who is also in the employment of the appellant-university as Lecturer no orders were passed thereon, that there are resolutions of the university to waive penal rent and grant of such benefit to persons even as late as in 1996, showed that a different stand and treatment to the respondent alone constituted hostile discrimination, that it was unreasonable to charge also rates stipulated by the Government in the year 1998 in the case of the respondent who retired in 1990 and vacated in 1996 and that the appellant not only did not choose to take any action to get the respondent vacated in accordance with law but on the other hand acquiesced in the occupation by accepting regularly the normal rent. A grievance has also been made that no notice or opportunity was given before determining and fixing liability for the penal rent. It was also contended that apart from these facts demonstrating lack of bona fides in the appellant, the withholding of information about the dismissal of the appeal filed by it on 22.7.96 in SLP (C) CC 329/96, against the earlier decision of a Division Bench reported in S.N. Mathur v. Gorakhpur University, Gorakhpur & Others5 taking the very same view as in the present case in respect of another employee of the appellant-university, indicated the unethical approach of the University and therefore, this appeal is liable to be dismissed as of no merit.
5. We have carefully considered the submissions on behalf of the respective parties before us. The earlier decision pertaining to this very university reported in 1996(2) ESC 211 (All.) (supra) is that of a Division Bench rendered after considering the principles laid down and also placing reliance upon the decisions of this Court reported in 1994 (6) SCC 589 (supra) which, in turn, relied upon earlier decisions in State of Kerala v. M. Padmanabhan Nair6 and AIR 1981 SC page 212 (supra). This court has been repeatedly emphasizing the position that pension and gratuity are no longer matters of any bounty to be distributed by Government but are valuable rights acquired and property in their hands and any delay in settlement and disbursement whereof should be viewed seriously and dealt with severely by imposing penalty in the form of payment of interest. Withholding of quarters allotted, while in service, even after retirement without vacating the same has been viewed to be not a valid ground to withhold the disbursement of the terminal benefits. Such is the position with reference to amounts due towards Provident Fund, which is rendered immune from attachment and deduction or adjustment as against any other dues from the employee. In the context of this, mere reliance on behalf of the appellant upon yet another decision of a different Division Bench of the very High Court rendered without taking note of any of the earlier decisions of this court but merely proceeding to decide the issue upon equitable considerations of balancing conflicting claims of respective parties before it does not improve the case of the appellant any further. Reliance placed for the appellant university on the decision reported in JT 2000 Suppl. (1) SC 515 (supra) does not also sound well on the facts and circumstances of this case. It is not clear from the facts relating to the said decision as to whether the person concerned was allowed to remain in occupation on receipt of the normal rent as in the present case. As noticed earlier, the case of the contesting respondent in this case is that the university authorities regularly accepted the rent at normal rates every month from the petitioner till the quarters was vacated and that in spite of request made for the allotment of the said quarters in favour of the son of the respondent, who is in the service of the university, no decision seems to have been taken and communicated though it is now claimed in the Court proceedings that he is not entitled to this type of accommodation. Further, the facts disclosed such as the resolutions of the university resolving to waive penal rent from all Teachers as well as that of the Executive Council dated 18.7.1994 and the actual such waiver made in the case of several others cannot be easily ignored. The lethargy shown by the authorities in not taking any action according to law to enforce their right to recover possession of the quarters from the respondent or fix liability or determine the so-called penal rent after giving prior show-cause notice or any opportunity to him before ever even proceeding to recover the same from the respondent renders the claim for penal rent not only a seriously disputed or contested claim but the university cannot be allowed to recover summarily the alleged dues according to its whims in a vindictive manner by adopting different and discriminatory standards. The facts disclosed also show that it is almost one year after the vacation of the quarter and that too on the basis of certain subsequent orders increasing the rates of penal rent, the applicability of which to the respondent itself was again seriously disputed and to some extent justifiably too, the appellant cannot be held to be entitled to recover by way of adjustment such disputed sums or claims against the pension, gratuity and provident fund amounts indisputably due and unquestionably payable to the respondent before us. The claims of the university cannot be said to be in respect of an admitted or conceded claim or sum due. Therefore, we are of the view that no infirmity or illegality could, be said to be vitiated the order, under challenge in this appeal, to call for our interference, apart from the further reason that the disbursements have already been said to have been made in this case as per the decision of the High Court.
6. The appeal fails and, therefore, shall stand dismissed. No costs. We make it clear that this shall not have the effect of foreclosing the rights of the university, if any, if the appellant chose to workout the same, as is permissible in law.
(N.K.R.) Appeal dismissed.
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