Holding

The liability to pay market rent for unauthorised occupation is absolute, no promissory estoppel applies, and the Government cannot deduct the amount from the commuted pension as it contravenes Section 11 of the Pensions Act, 1871.

Summary

Wing Commander R.R. Hingorani, a retired Air Force officer, was allotted a government flat in 1968. After his transfer in 1970 he failed to inform the Directorate of Estates and continued to occupy the flat for nearly five years beyond the two‑month concessional period, after which the allotment was deemed cancelled. The government demanded damages equal to market rent under SR 317‑B‑22, reduced the claim to Rs 20,482.78 and unilaterally deducted this amount from his commuted pension, which the respondent challenged as a violation of Section 11 of the Pensions Act, 1871. The High Court held the government was estopped from claiming market rent and the Supreme Court reversed this, ruling that the liability to pay market rent is absolute, not contingent on any notice, and that no promissory estoppel arose. The Court further held that deduction of the amount from the commuted pension was prohibited by Section 11 of the Pensions Act. Consequently, the Supreme Court set aside the High Court order, directed the refund of Rs 20,482.78, and allowed the appeal in part.

Issues considered

Whether liability to pay damages equal to market rent for unauthorised occupation under SR 317‑B‑22 is contingent upon a notice of liability under SR 317‑B‑25.
Whether the doctrine of promissory estoppel bars the Government from recovering market rent.
Whether deduction of the claimed amount from the respondent's commuted pension violates Section 11 of the Pensions Act, 1871.
Whether the Government can presume a relaxation of rent conditions due to its inaction.
Whether the Government may recover the damages by means other than deduction from pension.

Legislation cited

Allotment of Government Residences (General Pool in Delhi) Rules, 1963s. SR 317‑B‑11, s. SR 317‑B‑22, s. SR 317‑B‑25
Pensions Act, 1871s. 11
Public Premises (Eviction of Unauthorised Occupants) Act, 1971s. 7, s. 7(2), s. 7(3)

Subjects

government accommodationunauthorised occupationmarket rentliabilitypromissory estoppelpension attachmentSection 11 Pensions ActSR 317‑B‑22SR 317‑B‑25public premises actcommuted pensionrelaxation of rules

Judgment

UNION OF INDIA & ANR.
A
v.
WING COMMANDER R.R. HINGORANI (RETD.)

JANUARY 30, 1987

B [A.P. SEN AND S. NATARAJAN, JJ.]

Government residential accommodation-Retention beyond the
concessional period admissible under SR 317-B-ll (2)-Liabi/ity to pay
market rent for the period of such unauthorised occupation under SR
317-B-22 whether contingent upon the Directorate of Estates serving a
notice pay market rent for retention of such accommodation-Whether
c the amount due (difference between Market rent minus concessional
Rent) recovered from the commuted pension was contrary to s.11 of the
Pensions Act, 1871, by process of seizure and sequestration-Whether
presumption of relaxation under SR 317-B-25 be drawn and resultant
applicability of doctrin1' of promissory estoppel-Public Premises
D (Eviction of unauthori<ed occupants) Act, 1971, section 7(2),
Supplementary Rules SR 317-B-11(2)(22) and (25) and Pensions Act,
1871 section 11 effect of, Allotment of Government Residences (General
Pool in Delhi) Rules, cJ963-Principle of Unjust enrichment-Contract
Act section 56 pointed out.

E The respondent while he was posted as a Squadron Leader at
Delhi was on June 27, 1968 allotted by the Directorate of Estate a
residential flat in the Curzon Road Hostel on a monthly rent of Rs.16 I,
under sub•r.(l) of SR 317-B-!1. Although he was transferred from
Delhi to Chandigarh on June 11, 1970, he did not give any intimation of
-
his transfer to the Directorate of Estates and therefore the said aUot-
F ment stood automatically cancelled under sub-r. (2) thereof after the
concessional period of two months from the date of his transfer i.e.
w.e.f. August 11, 1970. The respondent continued in unauthorised
occupation of the said flat for a period of nearly five years and in the
meanwhile he was being charged the normal rent for that period. On
February 28, 1975 the Esta1te Officer having come to know of the trans-
G fer of the respondent from Delhi, the Directorate addressed a letter
dated March 18, 1975 cane<elling the allotment w.e.f. August 11, 1970.
On the next day i.e. the 19tlil, the Directorate sent another letter asking
the respondent to vacate thE' flat, which he did on March 25, 1975. The
Estate Officer raised a demand for recovery of Rs.38,81I.17 p. under
SR 317-B-22 and served the respondent with a notice under s.7(3) of the
H Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The

94
U.0.1. v. WING COMMANDER. R.R. HINGORANI 95

respondent disputed his liability to pay damages for the period of his
A
unauthorised occupation. Thereupon, the Estate Officer initiated pro-
ceedings under s. 7 of the Act to recover the amount of Rs.38,811. 17p.
Subsequently, the Central Government on a representation being made
by the respondent reduced the amount to Rs.20,482. 78p. On compas-
sionate grounds and deducted the same on October 30, 1976 from out of
the commuted pension payable to him. B

The respondent filed a petition under Art.226 of the Constitution
before the High Court. The writ petition was allowed by a learned
Single Judge holding that although the allotment of the flat stood
cancelled in terms of sub-r.(3) of SR 317-B-11 w.e.f. August 11, 1970
i.e. after the concessional period of two months from the date of his C
transfer, the government was estopped from claiming the amount of
Rs.20,482. 78p. as damages equivalent to the market rent under SR
317-B-22 for the period from August 11, 1970 to March 25, 1975 on the
ground that the government not only knowingly allowed the respondent
, to continue in occupation till March 25, 1975 but also charged him-the
normal rent of Rs. 161 p.m. presumably under its power of relaxation D
under SR 317-B-25. Further, he held that the government having failed
to serve the respondent with a notice that he would be liable to pay
market rent for the period of his unauthorised occupation, the doctrine
of promissory estoppel precluded the government from claiming
damages equivalent to the market rent under SR 317-B-22 for the
period in question. On appeal, a Division Bench upheld the decision of E
the learned Single Judge inainly on the terms of SR 317-B-23 which
conferred the power ofrelaxation on the government.

Hence the appeal by Special Leave.

Allowing the appeal, in part, the Court, F
,
HELD: 1.1 The Government could not unilaterally deduct the
amount of Rs.20,482. 78p. from the commuted pension payable to the
respondent, contrary to s.11 of the Pension Act, 1871. [106B-C]

,' 1.2 According to its plain terms, section 11 of the Pensions Act, G
1871 protects from attachment seizure or sequestration pension or
money due or to become due on account of any such pension. The
words "money due or to become due on account of pension" by
necessary implication mean money that has not yet been paid on
account of pension or has not been received by the pensioner and
therefore wide enough to include commuted pension. [I03A-B] H
96 SUPREME COURT REPORTS [1987] 2 S.C.R.

A Union of India v. Jyoti Chit Fund & Finance & Ors., [1976] 3
SCR 763, followed. r
Crowe v. Price, [ 1889] 58 LJ QB 215; Municipal Council, Salem
v. B. Gururaja Rao, ILR ( 1935) 58 Mad. 469; C. Gopalachariar v.
Deep Chand Sowcar, AIR 1941 Mad. 207; and Hassomal Sangumal v.
B Diaromal Laloomal, AIR 1942 Sind 19, referred to.

2. 1 The construction placed by the High Court 011 the two provi- ~···
sions contained in SR 3 17-B-22 and SR 3 17-B-25 is apparently errone-
ous. It is plain upon th•! terms of SR 317-B-22 that the liability to pay
damages equal to the market rent beyond the concessional period is an -~·-
absolnte liability and not a contingent one. The Court was clearly in
c error in subjecting the liability of a government officer to pay market
rent for period of unauthorised occupation to the fulfilment of the con- 'y
dition that the Director of Estate should serve him with a notice that in
the event of his continuing in unauthorised occupation he would be
liable to pay market renll. llOlA-C l
D '
2.2 Non-recovery of the rent at the market rent as permissible
under SR 317-B-22 due to inaction of the government and allowing the
allottee to continue in unauthorised occupation for a period of nearly live
years, as in this case, d~ies not lead to the presnmption that the govern-
ment had relaxed the condition in his favour under SR 317-B-25. [1010 l
,..'
E
2.3 For a valid exercise of power of relaxation, the condition
pre-requisite nnder SR 317-B-25 is that the government may relax all or
any of the provisions of the Rules in the case of an officer or residence or
-
class of officers or types of residences, for reasons to be recorded in
.writing. There was no question of any presumption arising for the \'·
F relaxation which had to be by a specific order by the government for
reasons to be recorded in writing. [1010-E] '"
3. There was no question of any promissory estoppel operating
against the government in a matter of this kind. Before an estoppel can
arise, there must be first a representation of an existing fact distinct
G from a mere promise ma1de by one party to the other; secondly that the '\•
other party believing it must have ·been induced to act on the faith of it;
and thirdly, that he mm;t have so acted to his detriment. In this ·case,
'f
there was no representation or conduct amounting to representation on
the part of the government intended to induce the respondent to believe
that he was permitted to occupy the flat in question on payment of
H normal rent or that he was induced to change his position on the faith of
it. [ltllE; 102A-C]
U.0.Lv. WING COMMANDER R.R. HINGORANI [SEN, l.J 97

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4426 A
of 1986.

From the Judgment and Order dated 11. 9 .1984 of the Delhi High
Court in L.P.A. No. 219 of 1981

V.K. Kanth, G.D. Gupta and C.V. Subba Rao for the B
Appellants.

Ram Panjwani, Vijay Panjwani and D.N. Goburdhan for the
Respondent.

The Judgment of the Court was delivered by
c
SEN., J, This appeal by special leave directed against the judg-
ment and order of the Delhi High Court dated September ll, 1985
raises a question of frequent occurrence. The question is whether
where a Government servant retains accommodation allotted to him
under SR 317-B- ll beyond the concessional period of two months D
permissible under sub-r.(2) thereof, the liability to pay damages equi-
valent to the market rent for the period of such unauthorised occupa-
tion under SR 317-B-22 is contingent upon the Directorate of Estates
serving a notice upon him that he would be liable to pay market rent
for retention of such accommodation as held by the High Court.
E
Put very briefly, the essential facts are these. In the year 1968 the
respondent who was then a Squadron Leader in the Indian Air Force
on being posted at the Headquarters, Western Command, Palam,
Cantonment, Delhi, applied on May 9, 1968 for allotment of accom-

1 modation in the Curzon Road Hostel, New Delhi. In the application
for allotment he gave a declaration that he had read the Allotment of F
Government Residences (General Pool in Delhi) Rules, 1963 and the
allotment made to him shall be subject to the said Rules, including the
amendments made thereto. The Directorate of Estates by its order
dated June 27, 1968 allotted Flat No. 806-B to the respondent in the
Curzon Road Hostel on a rent ot Rs.161 per month, exclusive of
,,
..
electricity and water charges. The respondent was transferred from G
Delhi to Chandigarh on June 11, 1970 and therefore the allotment of
the flat to him stood automatically cancelled under sub-r.(3) of SR
317-B-11 after the concessional period of two months from the date of
his transfer i.e. w.e.f. August 11, 1970. He however did not give any
intimation of his transfer to the Directorate of Estates with the result
that he contined in t>nauthorised occupation of the said flat for a H
98 SUPREME COURT REPORTS [1987] 2 S.C.R.

period of nearly five years and was being charged the normal rent for
A
that period. On February 28, 1975 the Estate Officer having come: to
know about the transfer of the respondent from Delhi, the Directorate
addressed a letter dated March 18, 1975 cancelling the allotment w.e.f.
August 11, 1970 andjntimating that he was in unauthorised occupation
thereof. On the next day i.e. the 19th, the Directorate sent another
B letter asking the respondent to vacate the flat. On March 25, 1975 the
respondent vacated the flat and handed over possession of the same to
the Directorate of Estates. But he addressed a letter of even date by
which he repudiated his liability to pay damages alleging that he was in
\
possession of the flat under a valid contract and that at no time was he
-"
in unauthorised occupation, and further that under that the said con-
e tract he was not liable to pay any damages.
It appears that 01ere was some correspondence between the
parties but the respondent disputed his liability to pay damages for the
period of his unauthorised occupation. In consequence whereof, pr-0-
ceedings were initiated by the Estate Officer under s. 7 of the Public
D Premises (Eviction of Unauthorised Occupants) Act, 1971 to recover
Rs.38,811.17p. as damages. The Estate Officer duly served notices on
the respondent under H.7(3) of the Act from time to time and the
respondent appeared in the proceedings and contested the claim.
Apparently, the respondent in the meanwhile made a representation
to the Central Government. On such representation being made, the
E Government on compassionate grounds reduced the amount to
Rs.20,482. 78p. and deducted the same on October 30, 1976 from out
of the commuted pension payable to the respondent. On November
25, 1976 the respondenit appeared and protested against the recovery
of the amount of Rs.20,482.78p. from the commuted pension payable
to him which, according to him, was contrary to s.11 of the Pensions
F Act, 1871, by process of seizure and sequestration. The respondent
complained that despite his repeated requests, he was not given
opportunity of a hearing and was informed that the matter was being
examined in depth, and that the whole procedure was arbitrary and
capricious.

G The respondent filed a petition in the High Court under Art. 226
of the Constitution challenging the action of the Government in
making a unilateral deduction of Rs.20,482.78p. towards recovery of
damages from the commuted pension payable to him which, according
to him, was contrary to s.11 of the Pensions Act, 1871. The writ peti-
tion was allowed by a learned Single Judge by his judgment and order
H dated September 7, 1981 who held that although the allotment of the
U.0.1. v. WING COMMANDER R.R. HINGORANJ [SEN, J.) 99

flat to the respondent stood cancelled in terms of sub-r.(3) of SR A
317-B-11 w.e.f. August 11, 1970 i.e. after the concessional period of
two months from the date of his transfer, the Government was estop-
ped from claiming the amount of Rs.20,482. 78p. as damages equiva-
lent to the market rent under SR 317-B-22 for the period from August
11, 1970 to March 25, 1975. In coming to that conclusion, the learned
Single Judge held that the Government not only knowingly allowed B
the respondent to continue in occupation till March 25, 1975 and
-~ charged him the normal rent of Rs.161 per month presumably under
\
its power of relaxation under SR 317-B-25. Further, he held that the
Government having failed to serve the respondent with a notice that
he would be liable to pay market rent for the period of such unau-
thorised occupation, the doctrine of promissory estoppel precluded C
the Government from claiming damages equivalent to the market rent
under SR 317-B-22 for the period in question. Aggrieved, the appel-
·--1 lant preferred an appeal but a Division Bench by its judgment under
appeal affirmed the decision of the learned Single Judge. It based its
decision mainly on the terms of SR 317-B-25 which confer the power of
relaxation on the Government and held that since the Government D
had not recovered the rent at the market rate as permissible under SR
317-B-22 w.e.f. August 11, 1970 and having knowingly allowed the
respondent to retain the flat for the period in question, it must be
presumed that the Government had acted in exercise of its power of
relaxation under SR 317-B-25.
E

- In support of the appeal Shri G. Ramaswamy, learned Addi-
tional Solicitor General mainly advanced two contentions. First of
these is that where a Government servant has retained the government
accommodation allotted to him under SR 317-B-11(1) beyond the con-
) cessional period of two months allowed under sub-r.(2) thereof, the
liability to pay damages equai-to the market rent for the period of his F
1 unauthorised occupation is not a contingent liability. It is urged that
the High Court was in error in holding that· the appellant was not
entitled to deduct Rs.20,482. 78p. from the commuted pension payable
to the respondent because of the failure of the Directorate of Estates
to serve the respondent with a notice after the allotment of the flat in
question stood automatically cancelled w.e:f. August 11, 1970. Sec- G
ondly, he submits that the construction placed by the High Court upon
SR 317-B-22 was plainly erroneous. It is submitted that the High Court
was wrong in assuming.that there was some kind of estoppel operating
against the Government and in proceeding upon the basis that rec-0-
very of damages equivalent to the market rent for use and occupation
for the period of unauthorised occupation was punitive in nature and H
100 SUPREME COURT REPORTS (1987] 2 S.C.R.

therefore the Court had power to grant relief against recovery of
A
damages at that rate. These contention must, in our opinion, prevail.

It would be convenient here to set out the relevant statutory
provisions. Sub-s.(2) of s.7 of the Public Premises (Eviction of Unau-
thorised Occupants) Act, 1971 invests the Estate Officer with autho-
B rity to direct the recovery of damages from any person who is, or has at
any time been, in unauthorised occupation of any public premises,
having regard to such principles of assessment of damages as may be
prescribed. R.8 of the Public Premises (Eviction of Unauthoised
Occupants) Rules, 1971 lays down the principles for assessment of
such damages. Among other things, r.8(c) provides that in making .J_
c assessment of damages for unauthorised use and occupation of any
public premises, the Estate Officer shall take into consideration the
rent that would have been realised if the premises had been let on rent
for the period of unauthorised occupation to a private person. Allot-
,...
ment of residential premises owned by Government in Delhi is
regulated by the Alloilment of Government Residences (General Pool
D in Delhi) Rules, 1963. Sub-r.(1) of SR 317-B-11 provides inter alia that
an allotment of such premises to a Government officer shall continue
in force until the expiry of the concessional period permissible under
sub-r.(2) thereof after the officer ceases to be on duty in an eligible
office in Delhi. Sub-:r.(2) of SR 317-B-l 1 provides that a residence
allotted to an officer may, subject to sub-r.(3), be retained on the
E happening of any of the events specified in Column 1 of the Table
underneath for the period specified in the corresponding entry in
Column 2 thereunder. The permissible period for retention of such
premises in the event of transfer of the Government officer to a place
outside Delhi is a period of two months. SR 317-B-22 insofar as mate-
--
rial provides as follows:
F •
"Where, after an allotment has been cancelled or is
deemed to be cancelled under any provision contained in
these rules, the residence remains or has remained in occu-
pation of the officer to whom it was allotted or of any
person claiming through him, such officer shall be liable to
G pay damages for use and occupation of the residence,
services, furnitures and garden charges, equal to the
market licence fee as may be determined by Government
from time to time."

It is difficult to sustain the judgment of the High Court or the
H reasons therefore. The construction placed by the High Court on the
U.0.1. v. WING COMMANDER RR. HINGORANI (SEN, J.l 101

two provisions contained in SR 317-B-22 and SR 317-B-25 is appa- A
rently erroneous. It is plain upon the terms of SR 317-B-22 that the
liability to pay damages equal to the market rent beyond the conces-
sional period is an absolute liability and not a contingent one. Both the
learned Single Judge as well as the Division Bench were clearly in
error in subjecting the liability of a Government officer to pay market
rent for the period of unauthorised occupation to the fulfilment of the B
condition that the Director of Estates should serve him with a notice
that in the event of his continuing in unauthorised occupation he
would be liable to pay market rent. They were also in error in proceed-
ing upon the wrongful assumption that since the Government had not
recovered the rent at the market rate as permissible under SR 317-B-
22 and allowed the respondent to continue in unauthorised occupation C
for a period of nearly five years, it must be presumed that the Govern-
ment had relaxed the condition in favour of the respondent under SR
../
317-B-25. The view expressed by the High Court that there was a
presumption of relaxation of the condition for payment of market rent
under-SR 317-B-22 due to inaction on the part of the Government, is
not at all correct. For a valid exercise of power of relaxation, the D
condition pre-requisite under SR 317-B-25 is that the Government
may relax all or any of the provisions of the Rules in the case of any
officer or residence or class of officers or types of residences, for
reasons to be recorded in writing. There was no question of any pre-
sumption arising for the relaxation which had to be by a specific order
by the Government for reasons to be recorded in writing. Nor was E
there a question of any promisory estoppel operating against the
Government in a matter of this kind.

In the facts and circumstances of the present case, the respon-
dent had given a declar.ation in his application for allotment that he
had read the Allotment of Government Residences (General Pool in F
Delhi) Rules, 1963 and that the allotment made to him shall be subject
to the said Rules as amended from time to time. According to sub-r.(3)
of SR 317-B-11 the allotment was to continue till the expiry of the
concessional period of two months under sub-r.(2) thereof after June
111· 1970, the date of transfer and thereafter it would be deemed to
have been cancelled. It is not disputed that the respondent continued G
t6 remain in occupation .of the premises unauthorisedly from August
v·
,.L- '
11, 1970 even after his transfer outside Delhi. He was not entitled to
retain any accommodation either from the general pool or the defence
pool once he was transferred to a place outside Delhi. The respondent
retained the flat in question at his own peril with full knowledge of the
consequences. He was bound by the declaration to abide by the Allot- H
102 SUPREME COURT REPORTS [1987] 2 S.C.R.

ment Rules and was clearly liable under SR 317-B-22 to pay damages
A
equal to the market rent for the period of his unauthorised occupation.
Before an estoppel can arise, there must be· first a representation of an
existing fact distinct from a mere promise made by one party to the
other; secondly that the other party believing it must have been in-
duced to act on the faith of it; and thirdly, that he must have so acted
B to his detriment. In this case, there was no representation or conduct
amounting to representation on the part of the Government intended
.to induce the respondent to believe that he was permitted to occupy }-
the flat in question on payment of normal rent or that he was induced
to change his position on the faith of it. If there was any omission, it
was on the part of the respondent in concealing the fact from the
Director of Estates that he had been transferred to a place outside
c Delhi. There was clearly a duty on his part to disclose the fact to the
authorities. There is .nothing to show that he was misled by the ' ,,..
Government against whom he claims the estoppel. It is somewhat
strange that the High Court should have spelled out that the respon-
dent being a Squadron Leader was an employee of the Central
D Government and therefore the Government of India to whom the
Curzon Road Hostel belongs must have had knowledge of the fact of
his transfer. The entire judgment of the High Court proceeds upon this
wrongful assumption.

In the premises, it is difficult to sustain the judgment of the High
E Court and it has to be reversed. Nonetheless, the writ petition must
still succeed for another reason. It is somewhat strange that the High
Court should have failed to apply its mind to the most crucial question
involved, namely, that the Government was not competent to recover
the amount of Rs.20.482. 78p. alleged to be due and payable towards
damages on account of unauthorised use and occupation of the flat
F from the commuted pension payable to the respondent which was
clearly against the terms of s.11 of the Pensions Act, 1871 which reads
as follows:

"Exemption of pension from attachment:- No pensi.on
granted or continued by Government on political co(tsi-
G derations, or on account of past services or present infir-
mities or as a compassionate allowance, and no money dde , ..._j: ..
or to become due on account of any such pension or allo-
wance, shaU be liable to seizure, attachment or sequestra-
tion by process of any Court at the instance of a creditor,
for, any demand against the pensioner, or in satisfaction of
H a decree or order of any such Court."
U.0.1. v. WING COMMANDER R.R. HINGORANJ [SEN, J.] 103

According to its plain terms, s.11 protects from attachment, seizure or A
sequestration pension or money due or to become due on account of
any such pension. The words "money due or to become due on
account of pension" by necessary implication mean money that has not
yet been paid on account of pension or has not been received by the
pensioner and therefore wide enough to include commuted pension.
The controversy whether on commutation of pension the commuted B
pension becomes a capital sum or still retains the character of pension
so long as it remains unpaid in the hands of the Government, is not a
new one till it was settled by the judgment of this Court in Union of
-r-' India v. Jyoti Chit Fund & Finance & Ors., [1976] 3 SCR 763. We may
briefly touch upon the earlier decisions on the question. In an English
case, in Crowe v. Price, [1889] 58 U QB 215 it was held that C
money paid to a retired officer of His Majesty's force for the commuta-
tion of his pension does not retain its character as pension so as to
prevent it from being taken in execution. On p.217 of the Report,
Coleridge, CJ. said:

"It is clear to me that commutation money stands on an D
entirely different ground from pension money, and that if
an officer commuted his pension for a capital sum paid
down, the rules which apply to pension money and make
any assignment of it void, do not apply to this sum."

Following the dictum of Coleridge, CJ., Besley, CJ. and King, J. in Muni- E
cipa/ Council, Salem v. B. Gururaja Rao, ILR [1935] 58 Mad. 469 held
that when pension or portion thereof is commuted, it ceases to be
pension and becomes a capital sum. The question in that case was
whether the commuted portion of the pension of a retired Subordinate
Judge was income for purposes of assessment of professional tax under
s.354 of the Madras District Municipalities Act, 1920. The learned F
Judges held that where pension is commuted there is no longer any
periodical payment; the pensioner receives once and for all a lump sum
in lieu of the periodical payments. The pension is changed into some-
thing else and becomes a capital sum. On that view they held that the
sum received by the retired Subordinate Judge in lieu of the portion of
his pension when it was commuted was no longer pension and there- G
fore not liable to pay a professional tax under s.354 of' the Madras
District Municipalities Act. That is to say, the commuted portion of
the pension was not income for purposes of assessment of professional
tax in a municipality. The question arose in a different form in C.
Gopalachariar v. Deep Chand Sowcar, AIR 1941 Mad. 207 and it was
whether the commuted portion of the pension was not attachable in H
104 SUPREME COURT REPORTS [1987] 2 S.C.R.

execution of a decree obtained by certain creditors in view of s.11 of
A the Pensions Act. Pandurang Row, J. interpreting s.11 of the Act was
of the opinion that not only the pension but any portion of it which is
commuted came within the provisions of the section. He particularly
referred to the words "money due or to become due on account of
pension" appearing in s.11 of the Act which, according to him, would
B necessarily include the commuted portion of the pension. He observed
that the phrase "on account of" is a phrase used in ordinary parlance
and is certainly not a term of art which has acquired a definite or
precise meaning in law. Accordingly to its ordinary connotation the I
._,j_
phrase "on account of' means "by reason of' and he therefore
queried:
c "Now can it be said that the commuted portion of the pen-
sion is not money due on account of the pension? Though
the pension ·1ias been commuted, still can it be said that
money due by reason of such commutation or because of
such ·commutation, is not money due on account of
D pension?"

He referred to s. IO of the Act which provides for the mode of commu-
tation and is part of Chapter III which is headed "Mode of Payment",
and observed:

E "In other weirds, the commutation of pension is regarded
as a mode of payment of pension. If so, can it be reasonably
urged that payment of the commutation amount is not pay-
ment on account of the pension, though not of the pensicn
itself, because after commutation it ceases to be pension? I
see no good reason why it should be deemed to be other-
F wise. No doubt money is due immediately under the com-
mutation order, but the commutation order itself is on
account of a pension which was commuted or a portion of
the pension which was commuted. The intention behind
the provisions of s.11, Pensions Act, is applicable to the
commuted portion as well as to the uncommuted portion of
G the pension and the language of s.11 does not appear to
exclude from its protection the money that is due under a
commutation order commuting a part of the pension."

In Hassomal Sangumal v. Diaromal Laloomal, AIR 1942 Sind
19. Davis, CJ. speaking for a Division Bench referred to Gopala-
H chariar's case and pointed out that it does not lay down that once a
U.0.1. v. WING COMMANDER R.R. HINGORANI [SEN, J.] 105

~· pension has been commuted and the money paid over to the pen-
A
sioner, the exemption from attachment still continues. The learned
Chief Justice went on to say that the words "money due or to become
due" used in s.11 must by necessary implication mean the money that
has not yet been paid to the pensioner.

In Jyoti Chit Fund's case the Court repelled the contention that B
-\ since the civil servant had already retired, the provident fund amount,
pension and other compulsory deposits which were in the hands of the

-r.- Government and payable to him had ceased to retain their character as
such provident fund or pension under ss.3 and 4 of the Provident
Funds Act, 1925. Krishna Iyer, J. speaking for himself and Chandrn-
chud, J. observed:
c
'" "On first principles and on precedent, we are clear in our
minds that these sums, if they are of the character set up by
the Union of India, are beyond the reach of the court's
power to attach. Section 2 (a) of the Provident Funds Act
has also to be read in this connection to remove possible D
doubts because this definitional clause is of wide ampli-
tude. Moreover, s.60(1), provides (g) and (k), leave no
. .J.: doubt on the point of non-attachability. The matter is so
plain that discussion is uncalled for.

We may state without fear of contradiction that pro- E
vident fund amounts, pensions and other compulsory de-
posits covered by the provisions we have referred to, retain

• \
their character until they reach the hands of the employee .
The reality of the protection is reduced to illusory formality
if we accept the interpretation sought."

The learned Additional Solicitor General has very fairly brought
F

to our notice Circular No. F.7(28)E. V/53 dated August 25, 1985 issued
by the Government of India, Ministry of Finance to the effect:

"When a pensioner refuses to pay Government dues-The
failure or refusal of a pensioner to pay any amount owed G
by him to Government cannot be said to be 'misconduct'
within the meaning of Article 351 of the C. S.R. (Rule 8,
CC.S. (Pension) Rules, 1972). The Possible way of
recovering/damanding Government dues from a retiring
officer who refuses to agree in writing, to such dues being
recovered from his pension is either to delay the final sane- H
106 SUPREME COURT REPORTS [1987] 2 S.C.R.

A tion of his pension for some time which will have the de-
sired effect for persuading him to agree to recovery being
made therefrom or take recourse to Court of law."

It bears out the construction that the words "money due or to become
due on account of pension'' occurring in s.11 of the Pensions Act, 1871
B
includes the commuted portion of the pension payable to an employee
after his retirement. It must accordingly be held that the Government
had no authority or power to unilaterally deduct the amount of >-
Rs.20,482.78p. from the commuted pension payable to the respon- J __
dent, contrary to s.11 of the Pensions Act, 1871.

c For these reasons, the appeal partly succeeds and is allowed. The
judgment and order of the High Court are set ·aside. We allow the writ
petition filed by the re:spondent in the High Court and direct that a
writ of mandamus be issued ordaining the Central Government to
refund the amount of Rs.20,482.78p. deducted from the commuted
pension paid to the respondent. The Government shall be at liberty to
D
initiate proceedings under s. 7(2) read with s.14 of the Public Premises
(Eviction of Unauthorised Occupants) Act, 1971 for recovery of
Rs.20.482.78p. due on account of damages for unauthorised use and
occupation of the flat in question from the respondent as arrears of land
revenue, or have recourse to its remedy by way of a suit for recovery of
damages.
E
Before parting with the case, we wish to add a few words. The
Government should consider the feasibility of dropping the proceed-
ings for recovery of damages, if the respondent were to forego his
claim for interest. In this case, the deduction of the amount of
Rs.20,482.78p. from the commuted pension payable to the respondent ,...,.
F
was made as far back as October 30, 1976. Since then, 10 years have
gone by. Even if interest were to be calculated at 9% per annum, the
interest alone would aggregate to more than Rs.18,000. Since the
Government had the benefit of the money for all these years, it may
not be worthwhile in pursuing the matter any further.
G
There shall be no order as to costs.

S.R. Appeal allowed.

\