Penalty for illegal overstay in government quarters can be recovered from retirement benefits: Bombay HC

Penalty for illegal overstay in government quarters can be recovered from retirement benefits: Bombay HC

Omkar Gokhale

The Bombay High Court recently found no error in the BMC’s decision to recover penal rent for illegal occupation of government quarters by a retired public servant from the death-cum-retirement benefits of the employee.

In doing so, the Court refused to entertain the plea of Prakash Laxman Damle, a former Brihanmumbai Municipal Corporation (BMC) employee, who sought directions to release his post-retirement benefits amounting to Rs 16.98 lakhs.

The employee moved Bombay High Court after BMC adjusted retiral amount against penal rent payable by him for overstaying in staff quarters for 23 months after retirement.

A Division Bench of Justices Akil Kureshi and S J Kathawalla dismissed the plea and held that since many retired employees refuse to vacate staff quarters denying allotment of the quarters to current employees, the Municipal Corporation was justified in charging penal rent. The Court observed,

“Most of the staff quarters are in very good areas/localities, the market rent of which is exorbitant. The employees like the petitioner do not vacate the staff quarters even after retirement and continue to unauthorizedly use the same for a paltry sum, thereby depriving the current employees who are entitled to and are awaiting allotment of a staff quarter since long.”

The Bench also added,

Penal rent is fixed by the Corporation not to get richer, but only to ensure that the same acts as a deterrent qua the erring ex-employees.

The petitioner-employee retired as an Executive Engineer of the BMC in 2012. He was staying in the staff quarters allotted to him in 2000 in Sewree. He was expected to vacate the quarters three months after his retirement. However, he sought for an extension of his stay in the staff quarters until December 2013 by an application made in January 2013. The BMC communicated that he would have to pay penal rent to extend his stay. The employee did not make any response to this communication.

In February the same year,  he was appointed as consultant in garden department of the BMC. Whereas this contractual stint ended in September 2013, the employee continued to stay on in the quarters until November 2015, nearly two years more past the period of the extension he had sought for.

After he vacated the quarters, in March 2017 the employee received a communication from the BMC stating that as he had stayed for 23 months after his term as a consultant ended, he had been charged penal rent of Rs 18.35 lakhs. The BMC informed him that the amount had been adjusted against his post-retirement benefits of Rs. 16.98 lakhs. It was communicated by the Civic Body that he should initiate payment of the remaining Rs. 1.36 lakhs.

Aggrieved by this letter, Damle approached the High Court seeking directions to quash the order for recovery of the penal rent and sought release of Rs 16.98 lakhs towards his post-retirement benefits.

The BMC pointed out that Damle had signed an undertaking six weeks prior to his retirement wherein he authorized the Civic Body to recover dues and penalties incurred by him from his post-retirement benefits. Hence, there was nothing perverse in its action of adjusting the penal amount from the retiral amounts, argued the BMC.

It was also submitted that Damle had been informed that he would be charged penal rent for the period commencing April 2013, if he failed to vacate the quarters within the stipulated time. Hence, the BMC argued, Damle’s stance of not having been informed of the consequences was not valid.

The Division Bench, in turn, relied on the Supreme Court’s ruling in Wazir Chand v Union of India on the issue. This case concerned a retired railway servant who continued to occupy the government quarter after superannuation. Whereas the railway employee (appellant) contended that the Central Government was bound not to withhold gratuity upon retirement, the Supreme Court found,

The appellant having unauthorizedly occupied the government quarters was liable to pay the penal rent in accordance with rules and therefore, there is no illegality in those dues being adjusted against the death-cum-retirement dues of the appellant. The appeals stand dismissed.”

In view of this position, the Bombay High Court found that there was no illegality on the part of BMC in adjusting the penal rent against the death-cum-retirement dues of the petitioner-employee in this case.

The Court also took note of the consent given by the petitioner-employee six weeks before his retirement, authorising the BMC to deduct any penalty from his retirement dues, in addition to the fact that the petitioner had been put on notice by the BMC that he would have to vacate the quarter after three months from date of his retirement.

The Division Bench, therefore, dismissed claims made by the former BMC employee, holding,

Pursuant to the order of the Municipal Commissioner, we do not see any illegality in the action taken by the Municipal Corporation to recover its dues from the retirement benefits of the Petitioner and we see no reason to interfere with such decision. In the circumstances, the Writ Petition is dismissed.”

The petitioner, Damle was represented by advocates Ashwin Shete and Prasad Sawant instructed by Jayakar and Partners. Advocates Anoop Patil and Sagar Patil appeared for respondent authorities.

[Read Order dated October 22, 2019]

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