DIRECTOR, CENTRAL PLANTATION CROPS RESEARCH INSTITUTE, KESARAGOD AND ORS. versus M. PURUSHOTHAMAN AND ORS.

Citation: [1994] SUPP. 2 S.C.R. 267 · Decided: 26-07-1994 · Supreme Court of India · Bench: P.B. SAWANT, M.K. MUKHERJEE · Disposal: Appeal(s) allowed

Judgment (excerpt)

DIRECTOR, CENTRAL PLANTATION CROPS RESEARCH 
A' 
INSTITUTE, KESARAGOD AND ORS. 
'" 
M. PURUSHOTHAMAN AND ORS. 
JULY 26, 1994 
B 
(P.B. SAWANT AND MK MUKHERJEE, HJ 
Sen>ice Law : 
Fi111dame111al R11/es-R11/es 9(2l){a)a11d 44-<iovemmelll of l11dia Of-
C 
[ice l\fe111ora11d11111 dated 27.11.1965. 
House Rem A/lowa11ce-£mployees offered official accommodatio11-
Ref11sa/ to occ11py tile same-£11tit/eme11t to House Relll Allowance-Held 
1101 elllit/ed to. 
The respondents are employees In th appellant-organisation. They 
were allotted official quarters, and on their rerusal to occupy the quarters, 
D 
the appellant denied them the benefit or House Rent Allowance. This was 
challenged by the respondents berore the High Court _and the petitions 
were subsequently transrerred to the Central Administrative Tribunal, and E 
it held that the employees cannot be compelled to occupy official quarters 
and their rerusal cannot lead to denial or benefit URA. The Tribunal 
observed that only those employees who had applied ror official accom-
modation and who refused to occupy the same were liable to rorrelt the 
benefit of URA and not others, and that URA is a part of wages and no 
deduction from wages can be made merely on account or the refusal to F 
accept the official accommodation. The appellant-organisation preferred 
the present appeal. 
Allowing the appeal, this Court 
HELD : 1.1. There Is no doubt that paragraphs 4(a)(I) and (Ii) of G 
the Office Memorandum dated 27.11.1965 state that an application has to 
be made to secure accommodation. However, that does not mean that 
Government or the organisation such as the appellant-organisation to 
which the said provisions apply, cannot on their own offer accommodation 
to the employees. Hence the reason given by the Tribunal that It Is only If H 
U.7 
268 
SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R. 
A 
the ~n1ployee applies for such accon1modation and he refuses to accept the 
same when offered that he would be disentitled to the HRA, is not correct. 
The Government or the organisation of the kind of the appellant spends 
huge public funds for constructing quarters for their employees both for 
the convenience of the management as well as of the employees. The 
B 
investment thus made in constructing and maintaining the quarters "ill 
be a waste if they are to lie unoccupied. [271-F-G] 
c 
1.2. House Rent Allowance is not a matter of right. It is in lieu of the 
accommodation not made available to the employees. This being the case, 
it follows that·whenever the accommodation is offered the employees have 
either to accept it or to forfeit the HRA. The management cannot be 
saddled with double liability, viz., to construct and maintain the quarters 
as well as to pay the HRA. [271-H] 
1.3. The provisions of paragraphs 4(b)(i) are independent of the 
D provisions of paragraph 4(a)(i) and (ii). Whereas paragraphs 4(a)(i) and 
(ii) speak of procedure to be followed by the employees who are in need of 
accommodation, paragraph 4(v)(i) provides for the forfeiture of the HRA 
even when the accommodation has been offered on its own by the manage· 
ment, whether the application for the same has been made or not. There 
E 
is no distinction made in this provision between those who have applied 
. and those who have not applied for accommodation. Even otherwise, the 
distinction sought to be made by the Tribunal is on the face of it, irrational, 
particularly taking into consideration the resources spent on constructing 
the quarters. [272-B-D] 
F 
2. The Tribunal is not right in including the HRA in the definition 
of wages. It should have perused the definition of wages. It should have 
persuade the definitions of "pay and compensatory allowance" given in the 
Fundamental Rules before pronouncing that HRA is a part of the wages 
or pay and, ·therefore, cannot be disturbed. HRA would be covered by the 
G definition of Compensatory Allowance. It is compensation in lieu of accom· 
modation. This definition itself further makes if clear that compensatory 
allowance is not to be used as a source of profit. It is given only to 
compen.safe for the amenities which are not available or provided to the 
employee. The moment therefore, the amenities are provided or offered, 
H 
the employee should cease to be in receipt of the compensation which is 
CENTRALPLANTATIONCROPSRES.INSf. v. M.PURUSHOTIJAMAN 
269 
given for want of it. (272-E, 273·C·D) 
A 
3. As agreed· to by the appellant, HRA would be

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