Central Administrative Tribunal - Chandigarh
Panikaran vs Engineering Deptt., Ut Chandigarh on 29 April, 2025
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CENTRAL ADMINISTRATIVE TRIBUNAL
CHANDIGARH BENCH
O.A. No. 60/705/2023
Reserved On: 01.04.2025
Pronounced On: 29.04.2025
HON'BLE MRS. ANJALI BHAWRA, MEMBER (A)
Panikaran s/o Pichakaran, Aged 60 years, presently residing at #
196, Sector 38 West, Shapur Rajeev Colony, Chandigarh retired
from the office of Electricity "OP" Circle, U.T. Sectt. Sector-9,
Chandigarh.
...Applicant
(BY ADVOCATE: Mr. Ricky Verma)
VERSUS
1. Electricity "OP" Division No. 04, through its Executive Engineer,
Sector 34-C. U.T Chandigarh. Pin- 160022.
2. Chandigarh Administration Office of Assistant Controller (F7A)
Rents, Deluxe Building, U.T Secretariat, Sector-9, Chandigarh. Pin-
160009.
3. House Allotment Committee, through its Secretary, EWS
Houses-cum Executive Engineer C.P Division No. 4, 2nd Floor Govt.
Press Building, Sector-18, Chandigarh. Pin-160018.
4. The A.G (A&E), Fund Section-1, Plot no. 20, Sector-17 F,
Chandigarh. Pin-160017.
5. Central Treasury, through its Treasury Officer, Treasury Office,
Opposite Hotel Shivalik View, Sector-17, Chandigarh160017.
6. Electricity "OP" Circle, through its Superintending Engineer, Room
No. 511, 5th Floor, UT Secretariat, (Deluxe) Building, Sector 9D,
Chandigarh. Pin-160009.
7. Sh. Mani Ram, House no. 563, Sector 40, Chandigarh-160036..
...Respondents
(BY ADVOCATE: Mr. Mukesh Kaushik for R1-3, 5 & 6 and Mr. Barjesh
Mittal for R-4)
ORDER
Per: ANJALI BHAWRA, MEMBER (A):
1. The applicant has preferred this instant O.A under section 19 of the Administrative Tribunals Act, 1985 seeking the following relief:
"(i) The Respondents be directed to release entire pensionary benefits such as regular pension, gratuity with 12% interest per annum with immediate effect from due date, till the date of realization.
(ii) That respondents be directed to recover the loan amount from respondent no. 7 namely Mani Ram, Ex-Trade Mate, to whom the government accommodation was allotted. 2
(iii) To take strict action against the concerned authority in violation of Pension Rules, in arbitrary and illegal manner ."
2. The brief facts of the case as pleaded by the applicant are as follows:
I. The Applicant commenced service as a Multi-Tasking Staff (MTS) worker in the Public Works Department (PWD) on 08.09.1980, working on daily wages. He was later regularized and appointed as a Regular Trade Mate (R.T.M.) in the office of the Executive Engineer, Electricity "OP" Circle, U.T., Chandigarh, Sector-9, on 08.12.2012. His employee identification card has been annexed as Annexure A-1.
II. On 30.04.2016, a colleague of the applicant, Sh. Mani Ram (Electrician), retired from the same department. As per rules, Sh. Mani Ram was to vacate House No. EWS/3377/1, Sector-38, Chandigarh by 31.08.2016. For the purpose of seeking extension of the stay in the said government accommodation, the applicant stood surety for Sh. Mani Ram and executed a Surety Bond (Annexure A-2).
III. A letter dated 15.07.2021 (Endst. No. 8002 dated 12.07.2021) (Annexure A-3) was issued by the Executive Engineer, Electrical Division No. 2, Chandigarh, to Sh. Mani Ram directing immediate vacation of the quarters and payment of all dues with interest.
IV. Prior office communication (Letter No. SOR-IV-UT-09/2016/6222 dated 03.08.2016) indicated that all retirement benefits of Sh. Mani Ram had already been released, and the office was no longer in a position to recover license fees or interest from him.
3V. A demand letter dated 11.08.2021 was addressed to the applicant, wherein the outstanding dues of Rs. 4,43,752/- against Sh. Mani Ram were sought to be recovered from the applicant as a surety.
VI. Sh. Mani Ram submitted a handwritten communication dated 24.11.2021 (Annexure A-5), expressing willingness to deposit the dues in EMI form. Notice for recovery of dues was issued to the applicant by the Executive Engineer, C.P. Division No. 4, U.T., Chandigarh (Annexure A-6). Multiple reminders followed, reiterating the demand for recovery of the outstanding license fee.
VII. The applicant sent a formal communication to the Assistant Controller (F&A) Rent, Chandigarh, wherein he clarified that he stood surety in good faith on the assurance by Sh. Mani Ram that the premises would be vacated and dues paid. Alleged departmental negligence allowed continued unauthorized occupation until 05.07.2021. Dues were allowed to accrue unchecked despite non-clearance over 5 years. Retirement benefits of Sh. Mani Ram were released promptly, whereas the applicant's benefits remain withheld. VIII. The applicant filed a police complaint alleging collusion between Sh. Mani Ram and departmental staff, enabling illegal retention of accommodation and non-payment of license fees (Annexure A-9).
IX. The applicant received Rs. 2,44,158/- towards GPF post-retirement, vide Sanction Order dated 28.02.2023 (Annexure A-10).
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3. Notice was issued to respondents. The respondents filed Written Statement wherein the respondents submits as follows:
I. Respondent No. 7, Sh. Mani Ram, has filed his detailed reply and submissions. Respondent No. 7 admitted that he was formerly employed as an Electrician in the Electricity "OP" Circle, U.T. Chandigarh, and had retired from service. He affirmed that both he and the applicant had worked together in the PWD department and shared an amicable and friendly relationship over the years.
II. Respondent No. 7 averred that in 2016, the applicant approached him seeking financial assistance for domestic and personal reasons. The applicant allegedly assured Respondent No. 7 that he would pay all dues related to House No. EWS/3377/1, Sector-38, Chandigarh and return the remaining amount within one month. It is further submitted that the applicant insisted that he would furnish a surety bond for securing an extension of the said government accommodation. Respondent No. 7 claimed he extended a friendly loan of Rs. 5,50,000/- to the applicant, which was disbursed in two tranches:
Rs. 2,50,000/- on 17.06.2016, and Rs. 3,00,000/- on 25.07.2017.
III. In response to repeated demands by Respondent No. 7 for repayment, the applicant allegedly issued Cheque No. 637186 dated 22.08.2023 for Rs. 2,50,000/-, and Cheque No. 637185 dated 22.08.2023 for Rs. 3,00,000/-, both drawn on Axis Bank, Chandigarh. These cheques, when presented for encashment at Punjab National Bank, Sector-40, 5 Chandigarh, were dishonored on 23.08.2023 with the remark "Account Closed". Due to this act, Respondent No. 7 was unable to settle the departmental dues in time and initiated criminal proceedings under Section 138 of the Negotiable Instruments Act against the applicant on 17.10.2023, registered as Case No. NACT/7364/2023 (Annexure R-7/2). IV. Respondent No. 7 maintained that despite several communications and reminders from the department, he consistently urged the applicant to clear the dues as originally assured.
V. The Respondents No. 1 to 3, 5, and 6 have filed a short reply wherein it is submitted that the applicant was initially engaged as a daily wager (MTS) in the PWD on 08.09.1980 and was later absorbed as a Regular Trade Mate (RTM) in the office of the Superintending Engineer, Electricity "OP" Circle, UT Chandigarh, on 08.12.2012. The applicant continued to serve till his retirement on 02.01.2023 (FN) from the office of the Executive Engineer, Electricity "OP" Division No. 4, UT Chandigarh.
VI. It is specifically asserted that on 30.04.2016, the applicant stood surety for Sh. Mani Ram, Electrician (Respondent No.
7), who retired on that date and was allotted House No. EWS/3377/1, Sector 38, Chandigarh.
VII. In view of the rules, the retired employee was to vacate the premises by 31.08.2016. To facilitate an extension of stay, the applicant voluntarily submitted a Surety Bond to the Assistant Controller (F&A), Rent, thereby undertaking 'that he would remain liable for any outstanding license fee dues 6 pertaining to the said quarter'. Reference was made to communication dated 15.07.2021 (Endst. No. 8002 dated 12.07.2021) from the Executive Engineer, Electrical Division No. 2, directing Sh. Mani Ram to vacate the premises and deposit all outstanding dues with interest. VIII. A subsequent letter dated 11.10.2021 (Annexure R-1) clarified that all retirement benefits of Sh. Mani Ram had been released after issuance of No Dues Certificate (NOC) by the AO Rent, and hence, there was no scope for recovery from him by the office.
IX. As per the endorsement dated 04.04.2024 (No. SOR-IV-UT-09-A/2024/5004), a total sum of Rs. 4,09,145/- (as on 31.03.2024) remained outstanding in respect of license fees against the said government accommodation. The Assistant Controller (F&A) Rent has communicated to the Executive Engineer, Electricity "OP" Division No. 4, that no retirement benefits of the applicant (Surety) shall be released unless he is formally discharged from his surety obligations by issuance of an NDC. Multiple memos and reminders were issued between May 2021 and April 2024, directing the applicant to pursue recovery from the original allottee, failing which, the recovery would be enforced against him.
X. It is reiterated that the Surety Bond (Annexure R-2) furnished by the applicant explicitly stated that 'he would not withdraw from his responsibility at a later stage, and that he would be liable to make good any arrears of license fee that may become due'.
7XI. In consequence of the pending dues and non-issuance of the NDC from the AC (F&A), the following retirement benefits of the applicant were withheld:
Leave Encashment: Rs. 59,823/-
DCRG: Rs. 5,80,635/-
XII. Respondent No. 2 has submitted a short response based on official records and has contested the maintainability and merits of the Original Application on multiple grounds. XIII. Respondent No. 2 submits that Sh. Mani Ram, Electrician, who retired on 30.04.2016 from the office of Executive Engineer, Electrical Division No. 2, Chandigarh, was the original allottee of Government House No. EWS/3377/1, Sector-38, Chandigarh. In support of this allotment, the applicant had voluntarily furnished a Surety Bond dated 12.04.2016 (Annexure R-2/2), wherein he unequivocally undertook responsibility for the dues of the said allottee and affirmed that he would not withdraw from such responsibility at any later stage.
XIV. It is contended that, under the Government Residences (Chandigarh Administration Pool) Allotment Rules, 1996 (as amended), a government employee may retain government accommodation for up to four months post-retirement. XV. It is further submitted that despite repeated notices, Sh.
Mani Ram failed to vacate the premises, thus becoming an unauthorized occupant. As of 31.03.2024, a sum of Rs. 4,09,145/- was outstanding towards licence fees and accrued interest (Annexure R-2/3), which continues to accumulate till full recovery. Consequently, several reminders were also 8 issued to the applicant and his department regarding these dues and the unauthorised occupation. It is further submitted that the applicant himself is in unauthorized occupation of another government accommodation--House No. EWS/3380, Sector-38, Chandigarh--which he failed to vacate post his voluntary retirement on 02.01.2023. As a result, a separate amount of Rs. 1,99,889/- is currently outstanding against the applicant (Annexure R-2/5), exclusive of applicable interest.
XVI. Respondent No.4 has filed short written statement stating that the applicant has failed to implead the necessary respondents through the concerned Ministry or Department, as required under the Administrative Tribunals Act, 1985. Instead, the respondents are impleaded directly through the Electricity Department, which is impermissible. Therefore, on this ground alone, the present OA deserves to be dismissed outright.
XVII. It was also submitted that the office of the answering respondent No. 4 (Accountant General - A&E Punjab and U.T. Chandigarh) is a Pension Authorizing Office for all government employees working in Punjab and Chandigarh Administration. This office is responsible for authorizing pensionary benefits only after receiving the necessary recommendations from the Pension Sanctioning Authority (i.e., the Parent Department). The action by the office of the answering respondent is initiated only upon receipt of a completed pension case with proper sanction from the relevant department.
9XVIII. It was submitted that the applicant, Sh. Panikaran, retired from government service on 02.01.2023 (FN). The pension case of the applicant was forwarded to the office of the answering respondent No. 4 by respondent No. 1 (Executive Engineer, Electrical Division No. 4) on 08.02.2023, as detailed in Annexure R-4/1. The pension case was processed and finalized on 17.03.2023, and the necessary orders, including the Commutation Payment Order, Gratuity Payment Order, and Pension Payment Order (PPO), were issued. XIX. However, on 27.03.2023, the PPO was returned by the Central Pension Accounting Office (CPAO), New Delhi, due to certain observations. These observations were duly addressed, and the case was resubmitted to the CPAO on 12.05.2023, as evidenced by Annexure R-4/2. XX. On 28.06.2023, the office of respondent No. 4 requested respondent No. 1 to re-examine the case and resubmit it on priority, in accordance with the Ministry of Home Affairs (MHA) notification dated 29.03.2023, implementing the Central Civil Services (Pension) Rules, effective from 01.04.2022. This request is recorded in Annexure R-4/3. XXI. In response to the above communication, the office of respondent No. 1 resubmitted the pension case on 30.08.2023, prepared according to the 7th Central Pay Commission notification, as seen in Annexure R-4/4. Following this resubmission, the case was processed and finalized by the office of respondent No. 4 on 08.11.2023. The relevant orders, including those regarding Family Pension 10 and Commutation of Pension, were issued, as detailed in Annexure R-4/5..
4. The applicant has filed rejoinder to the reply filed by the respondents.
I. Applicant has filed rejoinder for the reply filed by respondents No.1-3, 5 & 6. The applicant specifically emphasizes that the surety was given in good faith, and the actions or inactions of the respondents concerning the handling of the situation have had a direct impact on the applicant's liability. The applicant clarifies that the liability as a surety has been improperly imposed on the applicant, considering the failure of the official respondents and respondent No. 7 to fulfill their obligations as per the terms of the original arrangement. The applicant submits that the terms and conditions of the arrangement between the principal debtor (respondent No. 7) and the official respondents were altered without the applicant's knowledge or consent. The applicant, as a surety, should therefore be deemed automatically discharged, as no action was taken against respondent No. 7 for failing to vacate the allotted accommodation and clear dues. The applicant's discharge is substantiated by Section 133 of the Indian Contract Act, 1872, which asserts that any alteration in the terms of the contract without the surety's knowledge discharges the surety from liability.
II. The applicant highlighted that the official respondents' failure to act promptly against respondent No. 7 further complicates the situation. Despite the applicant's good-faith involvement as a surety, the official respondents did not take the 11 necessary steps to recover the outstanding dues from respondent No. 7, and as a result, the applicant was wrongfully left liable for amounts that should have been pursued from the principal debtor.
III. Referring to the case of State of Madhya Pradesh v.
Kaluram (1967 SCR (1) 266), the applicant contends that in this case, similar circumstances arose where the surety was discharged due to the fault of the creditor (in this case, the Department). The Hon'ble Court in the mentioned case ruled that the surety could not be held liable for the default of the principal debtor when the creditor (Government) had failed to take appropriate action.
IV. The applicant draws attention to the fact that as of 30.11.2023, a sum of Rs. 3,97,948/- was outstanding as per the letter dated 21.11.2023. The applicant, who stood surety in good faith, cannot be penalized for the department's delay in taking action when respondent No. 7 retired in 2016. The applicant's liability should not extend beyond the initial period for which the surety was intended, as no actions were taken by the department against the principal debtor for overstay. This inaction on part of the department, along with respondent No. 7's failure to vacate the premises, should not result in the applicant being unjustly burdened with the responsibility.
V. The applicant filed rejoinder to the reply filed by respondent No.4 wherein he reiterates that he stood as surety in good faith for the period of 3 to 4 months, as was agreed upon. However, the terms of the contract were altered by the 12 creditor and the debtor, which automatically discharged the applicant from his liability as a surety. Respondent No. 7, who was under the obligation to vacate the government accommodation in a timely manner and clear the dues, failed to do so. Despite this, the official respondents did not take appropriate action against respondent No. 7, thus failing in their duty. Given this default on the part of the principal debtor and the creditor, the applicant, as a surety, should be discharged from his liability. He submits that Section 128 of the Indian Contract Act states that the liability of the surety is co-extensive with that of the principal debtor. The surety cannot be made liable for more than what the principal debtor owes.
VI. The applicant submits that he is willing to provide an undertaking to pay the outstanding amount of Rs. 1,99,889/- for House No. EWS/3380, but it is reiterated that the applicant should not be held responsible for the defaults committed by respondent No. 7, especially considering that respondent No. 7's failure to vacate the accommodation in a timely manner, coupled with the inaction of the official respondents, has placed the applicant in this position. VII. The applicant thereafter filed rejoinder to the reply filed by respondent No.7 wherein it is stated that the surety was given in good faith for a brief period of 3-4 months. The applicant had taken money from respondent No. 7 during 2012 to 2013. The applicant made a repayment of these sums in full, and no outstanding dues remain from those transactions. The applicant stood surety for the specified 13 period, after which the applicant's liability ceased as per the terms of the surety agreement. It is submitted that the surety was not meant to cover the extended occupation by respondent No. 7 and the applicant should not be held liable for actions taken by the official respondents or the principal debtor after the expiration of the agreed period. VIII. The applicant denied the claims made by respondent No. 7 regarding the filing of false cases based on cheques issued in 2012 and 2013. These allegations are unsupported and baseless, and the applicant reiterates that all such amounts were returned by 2015, and the financial dealings were settled amicably between the parties. The applicant further submitted that the respondent No. 7 is solely responsible for the default in paying the arrears for the accommodation. The applicant stood surety in good faith, and the official respondents had the responsibility to act when respondent No. 7 retired in 2016 and continued occupying the house beyond the permissible period. The applicant cannot be penalized for the failure of the department to enforce the rules. The department should have taken action much earlier and cannot now shift the liability onto the applicant.
5. Heard learned counsel for both the sides and perused the pleadings made by contesting parties in this case.
6. The brief question to consider in this case is when the unequivocal surety undertaking is in favour of the respondent No.7, as per Rules, the pensionary benefits of the respondent No.7 were rightly released in time. Now, the respondent No.7 had not honoured whatever had transpired between respondent No.7 and the 14 applicant, the administration is left with any other option but to declare respondent No.7 as unauthorised occupant and since no payments were pending for recovery of respondent no.7 with the official respondents, the recover has rightly been made from the surety. The undertaking given by the applicant as stated in aforesaid paras is unequivocal and leaves no doubt for disputing the recovery now been made by the administration in lieu of unauthorised occupation of official residence with respondent No.7. The orders passed by the official respondents need no interference by this Tribunal. The applicant also could not produce any judgment regarding absolving the responsibility of surety.
7. In view of the aforesaid, the present O.A is hereby dismissed without any costs.
(ANJALI BHAWRA) Member (A) bp