2026 INSC 263

1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 025516 – 025517 OF 2024

THE MANAGEMENT OF STEEL

AUTHORITY OF INDIA AND OTHERS … APPELLANT(S)

VERSUS

SHAMBHU PRASAD SINGH AND OTHERS … RESPONDENT(S)

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 010175 – 010176 OF 2026

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 021316 – 021317 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 021318 – 021319 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 021320 – 021321 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 025518 – 025521 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026140 – 026141 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026350 – 026351 OF 2024

2

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026352 – 026353 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026861 – 026862 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026863 – 026864 OF 2024

WITH

CIVIL APPEAL NOS. __________ OF 2026

@ SPECIAL LEAVE PETITION (CIVIL) NOS. 026865 – 026866 OF 2024

J U D G M E N T

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

3

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

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 11.09.2007 and 20.09.2010, the Ex-

Employee(s), including Shambu Prasad Singh , requested that the

management allows retention of the allotted quarter beyond the permissible

period under the Rules of retention. The management, instead of accepting

the request to retain the allotted quarter post-retirement, issued notices

calling upon the Ex-Employees to vacate and hand over possession to the

management. Subsequently, Shambu Prasad Singh filed W.P. (C) No. 1681 of

5

2012 challenging the notice of eviction, which was dismissed. The said Writ

Petition was dismissed on 28.07.2016, following the Order dated 24.01.2014

passed by the Division Bench of the High Court. In the batch of LPAs filed by

the Ex-employees, the Division Bench of the High Court of Jharkhand, by

Order dated 20.01.2020, disposed of the LPAs by relying on Ram Naresh Singh

v. Bokaro Steel Limited.

1

On 15.12.2020, in S.L.P. (C) No. 11025 of 2020, this

Court took a different view and observed that regulating the discretion of

management to adjust the penal rent payable from the gratuity was

misplaced. The management , relying on the Order dated 15.12.2020,

preferred Civil Review before the Division Bench to review the Order dated

20.01.2020. Through the impugned order, the Civil Review Petitions have

been dismissed. Hence, the management of SAIL/Bokaro Steel challenges the

Orders dated 16.05.2024 and 20.01.2020 in the present Civil Appeals.

7. It is contextual to refer to Writ Petition No. 373 of 2012 filed by Ex-

Employee/Shri Ram Naresh Singh. The Writ Petition was disposed of with a

direction to pay the full gratuity with 6% interest. SAIL assailed the Order

dated 10.12.2012 in Writ Petition No. 373 of 2012 in LPA No. 15 of 2013, and

the LPA was allowed. Ram Naresh Singh challenged the Order in LPA No. 15

of 2013 by filing the Civil Appeal No. 4740 of 2017.

8. To shorten the narration, the Orders dated 31.03.2017 in Civil Appeal

No. 4740 of 2017 and 15.12.2020 in S.L.P. (C) No. 11025 of 2020 are

excerpted below:

1 Civil Appeal No. 4740 of 2017.

6

Civil Appeal No. 4740 of 2017

“3. We are of the view that in the facts of the case the

High Court was not justified in sustaining the action of

the respondent - Bokaro Steel Limited in retaining the

amount of Rs.2,06,000/- due to the appellant on account

of gratuity. The respondents shall release the said

amount to the appellant forthwith along with interest at

the rate of 6% per annum from the date of retention of

the amount till the date of actual payment. However, it

will be open for the respondents to charge normal rent

(i.e. Rs.88/- per month) of the quarter/premises in

question for the period for which the appellant was in

occupation after his superannuation.”

15.12.2020 in SLP (C) 11025 of 2020

“We, however, set aside the observations made in paras

19 and 21 qua the principles of penal rent being charged

as we are of the view the it if an employee occupies a

quarter beyond the specified period, the penal rent would

be the natural consequence and such penal rent can be

adjusted against the dues payable including gratuity.

This is so in view of the judgment in Secretary, ONGC

Ltd. v. V. U. Warrier - (2005) 5 SCC 245 and the reliance

placed in the impugned judgment on the case of Ram

Naresh Singh v. Bokaro Steel Plant [Civil Appeal

No.4740/2007] dated 31.03.2017 is misplaced as is not

even a judgment but an order in the given facts of the

case.”

9. We have heard Learned Senior Counsel and Counsel for the parties and

perused the record.

10. The following questions arise for determination in the present batch of

Civil Appeals:

(i) Whether the reliance placed by the Division Bench of the High

Court on the Order dated 31.03.2017 in Ram Naresh Singh v.

Bokaro Steel Ltd., Civil Appeal No. 4740 of 2017, as a binding

precedent, is sustainable in law?

(ii) Whether the management of SAIL is entitled to adjust the penal

rent from the gratuity/security amount of Ex-Employees who have

retained staff quarters beyond the permissible period?

7

11. Rule 3 of SAIL Gratuity Rules, 1978 deals with the payment of Gratuity

by the management, and Rule 3.2.1 deals with the amount of gratuity payable

to an Ex-Employee. For our purpose, Rule 3.2.1 clause (c) is relevant and

excerpted hereunder:

“(c) The company will have the right to withhold the gratuity

amount payable to an ex-employee or his nominee/legal

heir(s), in case of his death, for non-compliance of Company's

rules including non-vacation of Company's accommodation.

No interest shall be payable on the gratuity amount so

withheld for the period of unauthorised occupation of

Company's accommodation and up to one month after the

vacation of the Company’s accommodation.”

12. On the policy of retention of staff quarters, the counsel relied on

O&M/Procedure/789 and for immediate reference the following clauses are

excerpted:

“I. Failure to vacate the house after permitted period

1.⁠ ⁠The ex -employee shall vacate the house on the last day of

retention period or earlier. In case of failure by the employee

to vacate the quarters, the security Deposit by him will be

forfeited in addition to eviction action.

2.⁠ ⁠The surety will be liable to pay the penalty and other

outstanding dues if the allottee fail to clear the outstanding

dues.

3.⁠ ⁠In case of any dispute on any of the clauses of this circular

the decision of the HOD. TSD will be binding on all parties.

4.⁠ ⁠Management reserves the right to withdraw this scheme

fully or partially without assigning any reason at any point

of time BSP also reserves the right to cancel any retention

granted to any employee, if the quarters are required for

further allotment.”

13. Further, the Office Order dated 16.06.2009 stipulates the admissible

period of quarter retention, admissible rent, the rent payable during the grace

and retention period:

8

“Ref. No. 1402/2009 June 16, 2009

OFFICE ORDER

NO.2183/A.O.

Sub: Modification in Quarter Retention policy.

REF: Office Order No. 2036.A.O. dated 20.03.2008.

Office order No. 1774/A.O. dated 19.10.2006.

1. The following modification have been made in the existing

quarter Retention policy for employees Separated from the

rolls of the company:-

A. Period if Retention

Type of quarter Admissible period of quarter

Retention

All Types 2, (two) months grace period plus 10

month Retention i.e. a total of 12

month from the date of

superannuation.

B. Charges

Type of

quarter

Admissible

Rent

A Type 2 times normal rent during the grace

period Rs. 5000/-per month during

the retention period (i.e. for 10 month

after grace period) thereafter

Applicable penal rent.

B Type 2 times normal rent during the grace

period Rs. 5000/-per month during

the retention period (i.e. for 10 month

after grace period) Thereafter

Rs.8000/- per month

C Type 2 times normal rent during the grace

period Rs. 3000/-per month during

the retention period (i.e. for 10 month

after grace-period) thereafter

Rs.4500/- per month

XxX”

14. The management argues that it is obligated to pay gratuity to an

employee who has retired from service. There is no dispute regarding the

gratuity amount payable to an employee, as it is determined in accordance

with the SAIL Gratuity Rules, 1978. However, the Ex-Employees covered by

the present batch have not vacated the allotted staff quarters. Therefore, any

direction to release either the gratuity or the gratuity with interest is contrary

to the SAIL Gratuity Rules, 1978, as well as the admissible period of staff

9

quarter retention and the terms and conditions thereof governing the default

circumstances. Retention of a staff quarter allotted to an employee beyond the

permissible period warrants determination of rent strictly as per the

management policy. Without discharging the obligation of vacating the staff

quarters, directing the management to refund gratuity with a rate of interest

and adjust only nominal or normal rent is ex facie illegal and contrary to the

Order of this Court dated 15.12.2020 in S.L.P. (C) No. 11025 of 2020. It is

argued that the obligation to vacate or pay the gratuity amount cannot be

treated independently. In substance, the receipt of gratuity is dependent on

the employee’s performance of his obligation. It is argued that the employee

cannot be heard to pray for the release of gratuity without conforming to the

management’s policy on retention of staff quarters. The issue is no longer res

integra, both in view of the decision reported in ONGC Ltd. v. V.U. Warrier,

2

and the Order dated 15.12.2020 in S.L.P(C) No. 11025 of 2020.

15. It is urged for the employees that the reviews filed by the management

have been dismissed on a correct appreciation of the law. The Order dated

20.01.2020 was passed with reference to the binding precedent in Ram

Naresh Singh’s case dated 31.03.2017. The retention policy of staff quarters

introduced post-retirement by the management does not apply to employees

who have retired. Thousands of staff quarters remain unoccupied. Therefore,

considering the employees that have retired are from skilled/semi-skilled

posts, allowing management to recover penal rent as per the policy may

ultimately result in the recovery of a larger amount from the employees, which

2 (2005) 5 SCC 245.

10

would cause excessive hardship. Thus, even if any amount is to be adjusted

under the SAIL Gratuity Rules, 1978, it may be treated as normal rent rather

than penal rent. Since gratuity has not been paid, the management is

obligated to pay it with interest. Alternatively, it is urged that instead of

leaving discretion to management, this Court stipulates a reasonable sum

towards penal rent, and that, after adjusting the penal rent, the balance of

the gratuity amount payable to the Ex-Employees is determined.

16. At the outset, we have to examine whether the Order dated 20.01.2020

warrants interference, in light of the decision in S.L.P. (C) No. 11025 of 2020.

We have perused the Order dated 31.03.2017 and the Order dated

15.12.2020, and are prima facie of the view that the Order in Ram Naresh

Singh (supra) dated 31.03.2017 can at best be treated as a concession given

to an employee. The said Order dated 31.03.2017 also does not refer to a few

precedents on the point. The specificity of the concession has been noted and

explained by a Three-Judge Bench of this Court vide Order dated 15.12.2020.

Without much deliberation or discussion, we are of the view that the

obligation to pay gratuity and the penal consequences with which an

employee can continue to retain the staff quarter allotted to him are squarely

covered by the Order dated 15.12.2020.

17. The fundamental distinction between the Order dated 31.03.2017 in

Ram Naresh Singh (supra) and the Order dated 15.12.2020 in S.L.P. (C) No.

11025 of 2020 is noted. The former was passed on grounds of equity in the

specific facts of that case, where the gratuity was offered as security, and did

not purport to lay down a binding precedent. The latter order, passed by a

Three-Judge Bench, expressly set aside the observations made in paragraph

11

nos. 19 and 21 of the impugned judgment in S.L.P. (C) No. 11025 of 2020,

holding that if an employee occupies a quarter beyond the specified period,

penal rent would be the natural consequence. Such penal rent can be

adjusted against dues payable, including gratuity. In view of the binding

judgment in Secretary, ONGC Ltd. (supra), a case is an authority only for what

it decides and an order passed on facts cannot be elevated to the status of a

precedent by operation of Article 141 of the Constitution of India.

18. Therefore, the reliance placed by the Division Bench on Ram Naresh

Singh’s case warrants interference and accordingly the impugned judgment

dated 20.01.2020 is liable to be set aside.

19. We also note that the SAIL Gratuity Rules, 1978, read with the policy

under O&M/Procedure/789 dated 26.03.2009, govern the post -retirement

obligations of Ex-Employees with respect to the vacation of management-

allotted accommodation and the consequent release of gratuity. Under Rule

3.2.1(c) of the SAIL Gratuity Rules, 1978, the management is expressly

empowered to withhold the gratuity amount payable to an Ex-Employee, or

his nominee/legal heirs in the event of death, for non-compliance of the SAIL’s

rules, including non-vacation of the management’s accommodation. Further,

no interest shall be payable on the gratuity amount so withheld during the

period of unauthorised occupation. The amount ultimately payable to the Ex-

Employee upon vacation of the allotted staff quarter shall be computed after

adjusting the penal rent accrued for retention beyond the grace period

permissible under SAIL’s policy, in the manner and at the rate as determined

in accordance with the said Rules and applicable circulars. The reasoning

pertaining to reciprocal obligations need not detain us in a long narration.

12

The obligations are mutual and reciprocal. The Ex-Employee is obligated to

vacate and surrender possession of the staff quarters, and the management

is obligated to release the gratuity amount after making permissible

deductions. Neither obligation can be enforced in isolation nor independently

of the other. The simultaneous discharge of these reciprocal obligations, i.e.,

handing over of vacant possession by the Ex-Employee and payment of the

balance gratuity amount by the management, is essential under SAIL Gratuity

Rules, 1978 and policy O&M/Procedure/789 dated 26.03.2009.

20. On the question of interest, Rule 3.2.1(c) of the SAIL Gratuity Rules,

1978, stipulates that no interest shall be payable on the gratuity amount

withheld for the period of unauthorised occupation of the staff quarters and

up to one month after vacation thereof. The withholding of the

gratuity/security amount was not only authorised under the management’s

rules but also voluntarily consented to by each Ex-Employee in a written

undertaking. An employee cannot be permitted to approbate and reprobate.

Having availed of the benefit of retaining the staff quarters by offering the

gratuity amount as security, the employee cannot simultaneously claim that

withholding the said amount entitles the Ex-Employees to interest on the

withheld gratuity/security amount. To award interest in such circumstances

would effectively reward unauthorised occupation of public premises.

21. The above consideration leads us to the Ex-Employees’ alternative

argument for fixing a reasonable penal rent rather than determining the rent

payable in accordance with the management’s policy. We have heard the

counsel appearing for the management and also the Ex-Employees. We are of

the view that a reasonable sum of Rs. 1,000 per month may be fixed as penal

13

rent to be adjusted for the retention period beyond the grace period

permissible under SAIL’s policy. In arriving at the sum of Rs. 1,000 per month

as a reasonable penal rent, this Court has taken into account the following

considerations: (i) the Ex-Employees are retired workers, most of whom held

skilled or semi-skilled posts, and the full enforcement of the management’s

penal rent policy may, in several cases, entirely extinguish the gratuity

amount payable to them; (ii) the policy under O&M/Procedure/789 dated

26.03.2009 was framed and brought into existence post-retirement of several

of the Ex-Employees in the present batch; (iii) the sum of Rs. 1,000 per month

is intended to balance the legitimate interest of the management in recovering

occupation charges for unauthorized retention, with the equally legitimate

interest of the Ex-Employees in retaining a portion of the gratuity; and (iv)

this is an equitable exercise of jurisdiction, and the amount fixed is

reasonable and just between the normal rent and the full contractual penal

rent. This fixation is, however, confined strictly to the present batch and shall

not be treated as a precedent. The amount is calculated and communicated

to the employees within four weeks from today. The Ex-Employees/Legal

Heirs of the Ex-Employees are granted an additional 4 weeks’ time to vacate

the staff quarters in their respective possession. The reciprocal obligations are

discharged simultaneously, i.e., (i) the payment of gratuity by the

management and (ii) the handing over of vacant possession to the

management by the Ex-Employees or their legal heirs.

22. The direction in the impugned judgment, to pay interest on gratuity,

having regard to the SAIL Gratuity Rules, 1978, is unsustainable and an

equitable order in the circumstances of the case is passed while disposing of

14

the subject Civil Appeals. We reiterate that the Judgment in the instant

appeals shall not be treated as a precedent in any other matter governing SAIL

Gratuity Rules, 1978 and retention policy O&M/Procedure/789 dated

26.03.2009.

23. The Civil Appeals are allowed in the above terms. Pending

application(s), if any, is/are disposed of accordingly. No order as to costs.

..……….…………………J.

[PANKAJ MITHAL]

..…………………………J.

[S.V.N. BHATTI]

New Delhi;

March 18, 2026.

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

INHERENT JURISDICTION

CONTEMPT PETITION (CIVIL) NO(s). OF 2026

(@ D. No. 72828 of 2025)

IN

CIVIL APPEAL NOS. 3499 - 3500 of 2026

(@ SPECIAL LEAVE PETITION (CIVIL) NOS. 25516 – 25517/2024)

SHAMBHU PRASAD SINGH … PETITIONER(S)

VERSUS

PRIYA RANJAN AND OTHERS … ALLEGED CONTEMNOR(S)

J U D G M E N T

S.V.N. BHATTI, J.

1. Having regard to the view taken in the accompanying Civil Appeal Nos.

3499 - 3500 of 2026, arising out of SLP (Civil) Nos. 25516–25517 of 2024,

the disobedience complained in the present Contempt Cases do not warrant

our consideration. Hence, the Contempt Cases stand dismissed.

2. Pending application(s), if any, is/are disposed of accordingly.

..……….…………………J.

[PANKAJ MITHAL]

..…………………………J.

[S.V.N. BHATTI]

New Delhi;

March 18, 2026