1. Retired employees contested the management's decision to withhold gratuity for unauthorized retention of company-allotted staff quarters beyond the permissible post-retirement period. (Para 3 , 4 , 6 )
Back
Next 
2026 Supreme(SC) 284
SUPREME COURT OF INDIA
Pankaj Mithal, S.V.N. Bhatti, JJ.
The Management of Steel Authority of India And Others – Appellants
Versus
Shambhu Prasad Singh And Others – Respondents
Civil Appeal Nos. 3499-3500 of 2026 @ Special Leave Petition (Civil) Nos. 025516 – 025517 OF 2024 WITH Civil Appeal Nos. 3489-3490 OF 2026 @ Special Leave Petition (Civil) Nos. 010175 – 010176 OF 2026 Civil Appeal Nos. 3491-3492 OF 2026 @ Special Leave Petition (Civil) Nos. 021316 – 021317 OF 2024 Civil Appeal Nos. 3493-3494 OF 2026 @ Special Leave Petition (Civil) Nos. 021318 – 021319 OF 2024 Civil Appeal Nos. 3495-3496 OF 2026 @ Special Leave Petition (Civil) Nos. 021320 – 021321 OF 2024 Civil Appeal Nos. 3501-3504 OF 2026 @ Special Leave Petition (Civil) Nos. 025518 – 025521 OF 2024 Civil Appeal Nos. 3505-3506 OF 2026 @ Special Leave Petition (Civil) Nos. 026140 – 026141 OF 2024 Civil Appeal Nos. 3407-3508 OF 2026 @ Special Leave Petition (Civil) Nos. 026350 – 026351 OF 2024 Civil Appeal Nos. 3509-3510 OF 2026 @ Special Leave Petition (Civil) Nos. 026352 – 026353 OF 2024 Civil Appeal Nos. 3497-3498 OF 2026 @ Special Leave Petition (Civil) Nos. 026861 – 026862 OF 2024 With Civil Appeal Nos. 3511-3512 OF 2026 @ Special Leave Petition (Civil) Nos. 026863 – 026864 OF 2024 With Civil Appeal Nos. 3513-3514 OF 2026 @ Special Leave Petition (Civil) Nos. 026865 – 026866 OF 2024
Decided On : 18-03-2026
Advocates appeared:
For the Appellant(s) : Mr. Ashok Anand, AOR Mr. Moni Cinmoy, Adv. Mr. Rakesh Kumar Singh, Adv. Mr. Anshul Rai, AOR Mr. Mallika Ranjan, Adv. Mr. Raunaq Singh, Adv.
For the Respondent(s): Mr. Chandan Kumar, AOR Mr. Anshuman Siddharth Nayak, AOR Mr. N. S. Dalal, Adv. Mr. Devesh Pratap Singh, Adv. Mr. Rahul Kulhare, Adv. Mr. Baibhaw Gahlaut, Adv. Mr. Krishan Mourya, Adv. Mr. Divya Prakash Arya, Adv. Mr. Ratnadeep Raha, Adv. Mrs. Garima Yadav, Adv. Mr. Seemab Qayyum, Adv. Mr. Kumar Shivam, AOR Mr. Ashok Anand, AOR Mr. Moni Cinmoy, Adv. Mr. Rakesh Kumar Singh, Adv. Mr. Somanatha Padhan, Adv. Mr. Akash Kakade, Adv. Mr. Kameshwar Gumber, Adv. Mr. Ajay Gupta, Adv. Mr. Mukul Dev Mishra, Adv.
For the Appellant(s) : Mr. Ashok Anand, AOR Mr. Moni Cinmoy, Adv. Mr. Rakesh Kumar Singh, Adv. Mr. Anshul Rai, AOR Mr. Mallika Ranjan, Adv. Mr. Raunaq Singh, Adv.
For the Respondent(s): Mr. Chandan Kumar, AOR Mr. Anshuman Siddharth Nayak, AOR Mr. N. S. Dalal, Adv. Mr. Devesh Pratap Singh, Adv. Mr. Rahul Kulhare, Adv. Mr. Baibhaw Gahlaut, Adv. Mr. Krishan Mourya, Adv. Mr. Divya Prakash Arya, Adv. Mr. Ratnadeep Raha, Adv. Mrs. Garima Yadav, Adv. Mr. Seemab Qayyum, Adv. Mr. Kumar Shivam, AOR Mr. Ashok Anand, AOR Mr. Moni Cinmoy, Adv. Mr. Rakesh Kumar Singh, Adv. Mr. Somanatha Padhan, Adv. Mr. Akash Kakade, Adv. Mr. Kameshwar Gumber, Adv. Mr. Ajay Gupta, Adv. Mr. Mukul Dev Mishra, Adv.
The court determined that gratuity can be withheld if an ex-employee fails to vacate company accommodation, constituting a breach of internal policies.
Headnote:(A) SAIL Gratuity Rules, 1978 - The management's right to withhold gratuity - Corporate policy on staff quarter retention - The obligation to vacate accommodation affects gratuity release.
(B) The court discussed the binding precedent set by orders of previous cases.
(C) The management contended that non-vacation of official quarters justified withholding gratuity as per internal policies.
Facts of the case:
Shambhu Prasad Singh and other Ex-Employees retired from service and retained allotted staff quarters longer than permissible. Management sought to withhold gratuity based on retention policies, leading to legal challenges.
Findings of Court:
The court held that gratuity payment is contingent upon vacation of allotted accommodation, guided by SAIL Gratuity Rules. The management's decision to charge penal rent was deemed legitimate under their policies.
Issues: Whether reliance on a previous order as a binding precedent is legally sustainable, and the entitlement of SAIL to adjust penal rent against gratuity of Ex-Employees for prolonged retention of staff quarters.
Ratio Decidendi: It was established that withholding gratuity for non-compliance with retention policies is permissible, and distinguishing past rulings underpins the rationale for penal rent adjustment prior to gratuity payment.
Result: Civil Appeals allowed, with modifications to prior decisions on gratuity payment.
Legal Category Hierarchy
Table of Contents
2. The employer argued that gratuity withholding for unauthorized quarter retention is sanctioned by internal rules, while employees contended for minimal rent adjustments and payment of withheld gratuity. (Para 14 , 15 )
3. The court found that the employer is entitled to withhold gratuity for unauthorized accommodation retention, and that prior judicial orders providing inconsistent relief were based on specific equities, not binding precedents. (Para 16 , 17 , 19 )
4. An employee's obligation to vacate premises and the employer's obligation to pay gratuity are reciprocal; gratuity may be withheld and penal rent adjusted for unauthorized retention. (Para 19 , 20 )
5. The court directed the parties to perform simultaneous reciprocal obligations, fixed a reasonable monthly penal rent of 1,000 to be adjusted against gratuity, and disallowed interest on withheld amounts. (Para 21 , 22 , 23 )
6. Does an employer have the legal right to withhold gratuity when a retired employee fails to vacate company-allotted accommodation?
Yes, under specific gratuity rules, management is empowered to withhold gratuity for non-compliance with rules, including the failure to vacate accommodation, and may adjust penal rent from the withheld amount. (Para 11 , 19 )
7. Are orders passed by the Supreme Court on equitable grounds in specific facts binding as precedents?
No, an order granted on the specific facts of a case to balance equities does not constitute a binding precedent under Article 141 of the Constitution of India. (Para 17 )
8. Is an employee entitled to interest on withheld gratuity if they continue to occupy company accommodation beyond the permissible period?
No, interest is not payable on gratuity withheld for the period of unauthorized occupation, as withholding is authorized by contract and the employee is responsible for the retention. (Para 11 , 20 , 22 )
JUDGMENT
S.V.N. BHATTI, J.
1. Leave Granted.
2. The batch of Civil Appeals arises from Civil Review Order dated 16.05.2024 in Civil Review No. 45 of 2021, etc., and the Order dated 20.01.2020 in LPA No. 561 of 2017 and batch. The questions of fact and law are the same in the Civil Appeals. The Civil Appeals were heard on 09.03.2026 and 11.03.2026, respectively, and reserved for judgment. Through the instant Judgment, the Civil Appeals are considered and disposed of.
3. There are two types of cases before this Court. One type where the Writ Petition was decided after the Order dated 31.03.2017 of this Court in Civil Appeal No. 4740 of 2017, and the other is where the Writ Petition was decided before the Order dated 31.03.2017 of this Court in Civil Appeal No. 4740 of 2017. To illustrate the two types of cases before this Court in the present batch of Civil Appeals, a table is presented below:
| Case name | Writ Petition | LPA on | Civil Review decided on |
| WPs Dismissed | |||
| Bokaro Steel Plant & Ors. v. Shambhu Prasad Singh & Ors. (S.L.P. (C) No. 25516-25517 of 2024) | Filed on 27.03.2012 Decided on 28.07.2016 | LPA No. 561 of 2017. 20.01.2020 | Civil Review No. 45 of 2021. 16.05.2024 |
| Bokaro Steel Plant & Ors. v. Shiv Shankar Jha & Ors. (S.L.P. (C) No. 21320-21321/2024) | Filed in April 2011 Decided on 28.07.2016 | LPA No. 428 of 2016. 20.01.2020 | Civil Review 23 of 2021 16.05.2024 |
| WPs Allowed | |||
| Bokaro Steel Plant & Ors. v. Hira Devi & Ors. (S.L.P. (C) No. 21316- 21317 of 2024) | Filed in April 2011 Decided on 12.07.2017 | LPA No. 490 of 2017. 20.01.2020 | Civil Review No. 12 of 2021. 16.05.2024 |
| Bokaro Steel Plant & Ors. v. Ganga Sagar Yadav & Ors. (S.L.P. (C) No. 21318-21319 of 2024) | Filed on 23.11.2017 Decided on 11.09.2018 | LPA No. 708 of 2018. 20.01.2020 | Civil Review No. 13 of 2021. 16.05.2024 |
| Steel Authority of India v. Arvind Kumar & Ors. (S.L.P. (C) No. 25518-25521/2024) | Filed on 31.07.2008 and decided on 11.04.2018 | LPA No. 423 of 2018. 30.06.2020 | Civil Review No. 44 of 2021 25.04.2024 |
| Steel Authority of India v. Virendra Pratap Singh (S.L.P. (C) No. 26861- 26862/2024) | Filed on 22.07.2004 Decided on 22.06.2018 | LPA No. 431 of 2018. 18.12.2019 | 25.04.2024 |
| Steel Authority of India Ltd. v. Sada Nand Singh (S.L.P. (C) Diary No. 33516 of 2024) | Decided on 02.08.2017 | LPA No. 733 of 2018. 20.01.2020 | Civil Review No. 11 of 2021. 25.04.2024 |
4. The management of Steel Authority of India is the Appellant, and the Respondents are retired employees of the Steel Authority of India/Bokaro Steel Plant. For convenience, the parties are referred to as SAIL and Ex-Employee(s), respectively. The circumstances, dates, and events in the Civil Appeal filed against Shambu Prasad Singh/Ex-Employee against the Order in Civil Review Petition No. 45 of 2021 in LPA No. 561 of 2017, against Writ Petition No. 1681 of 2012, are referred to and would be sufficient for disposing of the batch of Civil Appeals.
5. The Civil Appeals examine the workability of the right of SAIL to withhold the gratuity of Ex-Employees because the Ex-Employees did not surrender vacant possession of the quarter allotted to them while in service. The consideration of circumstances and mutual legal obligations arises under the SAIL GRATUITY RULES , 1978 and O&M/Procedure/789 dated 26.03.2009. The incidental consideration is the applicability of the Order dated 31.03.2017 in Civil Appeal No. 4740 of 2017 or the Order dated 15.12.2020 in S.L.P. (C) No. 11025 of 2020.
6. Shambu Prasad Singh/Ex-Employee, on 31.05.2006, retired from the service of Bokaro Steel Plant. He was allotted a staff quarter, and through representations made between 11.09.20
