The Supreme Court said gratuity money of an employee can be withheld and forfeited in case of recovery of dues such as overstaying in official accommodation.
A bench headed by Justice Sanjay K Kaul held that there is no prohibition against recovering dues including penal rent -- the rent with the penalty for overstaying in official accommodation -- from an employee’s gratuity.
“If an employee occupies a quarter beyond the specified period, the penal rent would be the natural consequence and such penal rent can be adjusted against the dues payable, including gratuity," the Court noted.
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A Division Bench had in 2017 ruled unfavourably against confiscating the gratuity of an employee on account of overstaying in official quarters after his retirement. The Bench had ordered immediate release of his gratuity and held only normal and not penal rent should be charged for the period overstayed.
The Bench headed by Justice Kaul, however, held that any reliance on the 2017 order is misplaced since it is not even a judgment, but just an order on the given facts of that case. The 2017 order cannot be treated as a precedent, the Supreme Court also said, the report further stated.
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The report also cited a recent case in which an order by the Jharkhand high court, which snubbed an attempt by the Steel Authority of India Ltd (SAIL) to recover penal rent amounting to ₹1.95 lakh from an employee, who did not clear his dues and overstayed in the official accommodation in Bokaro after his retirement in 2016.
It said:
"This is so in view of the judgment in Secretary, ONGC Ltd. v. V.U. Warrier - (2005) 5 SCC 245 and the reliance placed in the impugned judgment on the case of Ram Naresh Singh v. Bokaro Steel Plant [Civil Appeal No.4740/2007] dated 31.03.2017 is misplaced as isn't even a judgment but an order in the given facts of the case."
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The high court relied upon the 2017 order of the top court, and said that the SAIL must release the employee’s gratuity immediately. However, it allowed the SAIL to raise a demand for normal rent.
The Supreme Court has now set aside the part of the high court order that held that the SAIL couldn't recover the dues from the gratuity amount. However, it did not interfere with the monetary aspect of the order, noting that a small amount is involved and that the SAIL’s residential scheme has also undergone change in recent years.
The judgement has been delivered by bench comprising of Justice Sanjay K Kaul, Justice Dinesh Maheshwari and Justice Hrishikesh Roy on 15-12-2020.
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