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Applicability of HRA – Important HC judgement

Government servants working in places like Nagpur, and residing in  own house, whereas sufficient quarters are available and offered to them,  may not be entitled for any HRA.

Recently, the High Court division bench ruled that a government employee not staying in the quarters despite its availability can be disentitled from claiming the special allowance. The bench was hearing a petition filed by the defence ministry against its employees working in the ordinance factory in Nagpur, who were staying in their own accommodation. Nagpur has surplus government accommodation and is one of the few cities where a central government employee, who lives in his own house has to submit a "non-availability certificate" before he can ask for HRA. The government claimed that its employees, who are offered accommodation but refuse to occupy the same, would not be entitled to HRA.

The Court has held that, "HRA is not a matter of right, it is a compensatory allowance given by an employer towards the rental accommodation expenses when the government is unable to provide suitable accommodation to its employee," and that "The employee, if he resides in his own property, may not be entitled to claim the HRA, because it is paid to central government employees to compensate them partly for the especially higher rents which they have to pay for hired or rented residential accommodation in big cities, but not as a source of profit," the court further observed.

In this connection, the Hon'ble Court quashed an order of the CAT  wherein it asked  the government to pay HRA to employees who had were residing in their own houses. "Prima facie in our opinion, the pre-requisite for a non-availability certificate (NAC) as laid down in the office memorandum as operative in Nagpur, when central government accommodation is available in surplus and the government is required to spend huge amounts towards construction and maintenance (of the quarters), it is neither arbitrary nor malafide," the Hon'ble Court observed.