Supreme Court Rules on Housing for Retired Employees: Steel Authority of India Ltd. vs. Choudhary Tilotama Das & Ors. (12 February 2018)

Date of the Judgment: 12 February 2018
Citation: (2018) INSC 123
Judges: Ranjan Gogoi, J., R. Banumathi, J.
Can a company be compelled to provide long-term housing leases to its retired employees? The Supreme Court of India recently addressed this question in a case involving the Steel Authority of India Limited (SAIL) and its retired employees. This case clarifies the extent of an employer’s obligations regarding housing for former employees. The judgment was delivered by a two-judge bench comprising Justice Ranjan Gogoi and Justice R. Banumathi.

Case Background

In 1999, the Rourkela Steel Plant (RSP), a unit of SAIL, introduced a Voluntary Retirement Scheme (VRS) for employees with at least 15 years of service or those over 40 years of age. Following this, RSP launched a scheme allowing employees who opted for VRS to retain their official quarters on a license basis for 22 months. The respondents, 53 in number, were employees of RSP who opted for VRS and were allotted quarters, which they were allowed to occupy for 22 months, a period that was later extended.

In 2002, SAIL introduced a new scheme called “Sail Scheme for Leasing of Houses to Employees, 2002,” which offered long-term leases (33 years) to *serving* employees, excluding ex-employees like the respondents. The respondents challenged this exclusion in a writ petition before the High Court of Orissa.

Timeline

Course of Proceedings

The High Court of Orissa directed SAIL to consider allotting quarters to the respondents on a long-term sub-lease basis, as per the 2002 scheme. The High Court also stipulated that the cost of the quarters would be computed at the rate prevalent when the 2002 scheme came into force, along with 9% interest. The respondents were also required to pay any unpaid house rent, electricity duty, and water charges, but were exempted from penal rent.

Aggrieved by this order, SAIL appealed to the Supreme Court of India.

Legal Framework

The case revolves around the “Scheme for Allotment of Quarters to Ex-employees Separating under the SAIL VRS Scheme, 1999” and the “Sail Scheme for Leasing of Houses to Employees, 2002.” The 1999 scheme allowed ex-employees to retain quarters on a license basis for 22 months, while the 2002 scheme offered long-term leases to *serving* employees only.

The lease deed between the State of Orissa and SAIL stipulated that the land could only be used for the steel plant and ancillary purposes, and any other use required prior sanction from the government.

The “Sail Scheme for Leasing of Houses to Employees, 2002” was valid for a period of three months and its operation had not been extended.

Arguments

Appellant (SAIL) Arguments:

• SAIL argued that the High Court’s order was not feasible due to subsequent developments.
• SAIL stated that it is undergoing a major expansion and modernization project, which requires additional accommodation for employees and various government agencies.
• SAIL submitted that long-term leases are currently prohibited by the Union Cabinet Secretariat.
• SAIL contended that the available quarters are insufficient, with most already occupied and some in dilapidated condition.
• SAIL argued that the 2002 scheme was not applicable to ex-employees and that the lease agreement with the State of Orissa restricts land use.

Respondents (Ex-employees) Arguments:

• The respondents disputed SAIL’s claims about the shortage of quarters, arguing that RSP is a loss-making concern that is reducing its workforce.
• They contended that a large number of quarters are vacant, and even with the proposed expansion, there would be a surplus of accommodation.
• The respondents pointed to a 2017 circular inviting applications for one-room quarters on a 33-month license basis, which they said contradicted SAIL’s claims of a shortage.

State of Odisha Arguments:

• The State of Odisha stated that SAIL is free to make its own decisions, subject to the terms of the lease agreement.

Submissions of Parties

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the ex-employees had a right to long-term leases of the official quarters under the “Sail Scheme for Leasing of Houses to Employees, 2002”.

Treatment of the Issue by the Court

Authorities

The Court considered the following:

• “Scheme for Allotment of Quarters to Ex-employees Separating under the SAIL VRS Scheme, 1999” – This scheme allowed ex-employees to retain quarters on a license basis for 22 months.
• “Sail Scheme for Leasing of Houses to Employees, 2002” – This scheme offered long-term leases to serving employees only.
• Lease deed between the State of Orissa and SAIL – This deed specified that the land could be used for the steel plant and ancillary purposes only.

Authorities Considered by the Court

Judgment

The Supreme Court allowed the appeal by SAIL, setting aside the High Court’s order. The Court held that the ex-employees had no legal right to long-term leases under the 2002 scheme, which was meant only for serving employees. The Court also considered the subsequent developments, including SAIL’s expansion plans and the prohibition on long-term leases.

However, the Court directed that the respondents (53 in number) or their legal heirs could remain in occupation of their quarters for 33 months from the date of the judgment, after which they must hand over vacant possession to the RSP.

Treatment of Submissions

How Authorities Were Viewed

The Court considered the “Sail Scheme for Leasing of Houses to Employees, 2002” and held that it was not applicable to ex-employees. The lease deed between the State of Orissa and SAIL was also considered to determine the permissible use of the land.

What Weighed in the Mind of the Court?

The Supreme Court’s decision was primarily influenced by the changed circumstances since the introduction of the 2002 scheme. The Court emphasized that SAIL’s expansion plans, the need for additional accommodation, and the prohibition on long-term leases made it unfeasible to grant the respondents’ request. The Court also noted that the 2002 scheme was not intended for ex-employees.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The Court stated, “In a situation where no legal right can be understood to have been vested in the respondents – writ petitioners under the Scheme of 2002 and operation of the said Scheme of 2002 today is not considered feasible or necessary by the appellant on account of the reasons stated in the additional affidavit dated 22nd January, 2018, as noticed herein above, we do not see how the appellant can be compelled to grant any long-term lease of the official quarters in the RSP to the respondents – writ petitioners who are its ex-employees.”

The Court further stated, “Such subsequent facts and developments that have taken place during the interregnum would certainly be material in moulding the relief(s) and answering the issues arising before this Court.”

The Court also mentioned, ““Sail Scheme for Leasing of Houses to Employees, 2002” was valid for a period of three months. The operation of it had not been extended.”

Key Takeaways

• Ex-employees do not have an automatic right to long-term leases on company housing.
• Company policies and schemes regarding employee housing are subject to change based on operational needs and government directives.
• Courts will consider subsequent developments and changed circumstances when deciding such cases.

Directions

The Supreme Court directed that the respondents (53 in number) or their legal heirs could remain in occupation of their quarters for 33 months from the date of the judgment, after which they must hand over vacant possession to the RSP.

Development of Law

The ratio decidendi of this case is that ex-employees do not have a vested right to long-term leases of company quarters, especially when company policies and operational needs change. This judgment clarifies that the courts will consider subsequent factual developments when deciding on such matters, and that schemes for employees are not static.

Conclusion

The Supreme Court’s decision in Steel Authority of India Ltd. vs. Choudhary Tilotama Das & Ors. (2018) clarified that ex-employees do not have an inherent right to long-term leases on company housing. The Court considered the changed circumstances and SAIL’s operational needs, allowing the ex-employees to stay for 33 months before vacating the premises. This judgment underscores that employee housing schemes are subject to change and that subsequent developments can significantly influence legal outcomes.

Category

• Parent Category: Labour Law
  • Child Category: Employee Housing
  • Child Category: Voluntary Retirement Scheme
  • Child Category: Company Policy
• Parent Category: Contract Law
  • Child Category: Lease Agreements
• Parent Category: Steel Authority of India Limited
  • Child Category: Housing Scheme

FAQ

Q: Can my former employer evict me from company housing after I retire?
A: Yes, your former employer can generally evict you, especially if the housing scheme was not meant for ex-employees or if the company’s operational needs have changed. The Supreme Court’s decision in Steel Authority of India Ltd. vs. Choudhary Tilotama Das & Ors. (2018) supports this.

Q: Does my company have to provide me with housing after I retire?
A: No, there is no automatic legal obligation for a company to provide housing to its retired employees. Any housing benefits are usually governed by specific schemes or policies that may have a limited duration.

Q: What factors will the court consider in a case about company housing for ex-employees?
A: The court will consider the specific terms of any housing schemes, the company’s operational needs, and any subsequent developments that may have changed the circumstances.

Q: What does it mean when a Court says “subsequent developments”?
A: Subsequent developments refer to changes in the company’s plans, operational needs, or any other relevant factors that have occurred after the initial housing scheme was introduced.

Q: What is the meaning of “ratio decidendi” in this case?
A: The ratio decidendi is the legal principle or rule upon which the court’s decision is based. In this case, it is that ex-employees do not have a right to long-term leases, especially when company policies and needs change.