Hon’ble Rajes Kumar, J.—Heard Sri A.K. Gaur, learned counsel for the petitioners and Sri S.S. Sharma, learned counsel appearing on behalf of respondent No. 2.

2. By means of the present writ petition, the petitioners have challenged the order of the Central Administrative Tribunal, Allahabad Bench, Allahabad dated 3.11.2008 passed in Original Application No. 365 of 2003, filed by the respondent No. 2, whereby the original application has been allowed.

3. The brief facts of the case are that respondent No. 2, who was a Railway employee, retired on 31.10.1994, while he was posted at Mirzapur. He was provided Railway accommodation No. 83-B, Type-II, Railway Colony, Mirzapur. It appears that after the retirement, he had been allowed to retain the house upto 29.2.1995. No further permission was granted to retain the said house after 1st March, 1995. Admittedly, the respondent No. 2 had vacated the premises on 15.2.2000. The respondent was required to pay the penal rent for the period 1.3.1995 to 15.2.2000 for which it appears that notices had been given to which the respondent No. 2 filed reply and finally by the order dated 8.1.2000, penal rent at Rs. 1,08,759.07 p. has been calculated. Further, on consideration of the reply of the respondent No. 2, by the order dated 24.4.2002, after the adjustment of gratuity amount of Rs. 36,855/-, the respondent No. 2 has been asked to pay balance amount of Rs. 71,904/-.

4. Being aggrieved by the aforesaid two orders dated 8.1.2000 and 24.4.2002, the respondent No. 2 filed Original Application No. 365 of 2003.

5. The main contention of respondent No. 2 before the Tribunal was that the accommodation has been retained upto 2000 because of non-payment of post retiral dues and further that the penal rent cannot be adjusted with the gratuity amount. The Tribunal by the impugned order has directed the payment of rent/damages @ Rs. 200/- per month with effect from 1.11.1994 till the date on which the premises has been vacated and directed the respondent No. 2 to pay the amount within eight weeks. The Tribunal further held that amount of rent cannot be adjusted with the gratuity amount and accordingly directed to pay the amount of gratuity or any other post retiral dues within a period of two months from the date of aforesaid deposit of rent/damages.

6. Learned counsel for the petitioners submitted that the rent has been calculated in accordance to the rules. At no stage, calculation of penal rent has been challenged by the respondent No. 2. Penal interest was chargeable as the respondent No. 2 has retained the accommodation unauthorizedly without permission. The Tribunal has erred in fixing the rent/damages @ Rs. 200/- per month without any basis. He further submitted that the amount of gratuity can be adjusted with the amount of penal rent. Reliance has been placed on the decision of the Apex Court in the case of Wazir Chand v. Union of India and others, JT 2000 (Suppl. 1) SC 515.

7. Learned counsel for the respondent No. 2 submitted that post retiral benefits, including pension and gratuity, etc. is the right of the retired employee and is not a bounty and is payable on the date of retirement. The respondent No. 2 could retain the accommodation for the reason that his post retiral benefits could not be settled and were paid in the year 1998. Even after four years, full gratuity has not been paid and the same has been illegally adjusted with the penal interest. He submitted that neither Rule 323 of the Manual of Railway Pension Rules, 1950 (hereinafter referred to as the “Rules, 1950”) nor the Rule 15 of the Railway Services (Pension) Rules, 1993 (hereinafter referred to as the “Rules, 1993”) provides for adjustment or the recovery of penal rent from the post retiral dues, gratuity, etc.

8. Reliance has been placed on the decision of the Apex Court in Civil Appeal No. 4832-4833 of 1999, Union of India and others v. Madan Mohan Prasad, decided on 28.2.2002, the Division Bench decision of this