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CASE NO.: Appeal (civil)  7567 of 2002

PETITIONER: P. S. E. B. & Anr.                                       

RESPONDENT: Som Nath & Ors.                                  

DATE OF JUDGMENT: 18/05/2006

BENCH: K. G. Balakrishnan & R. V. Raveendran

JUDGMENT: J U D G M E N T WITH

CA Nos. 7569/2002, 7600-01/2002, 7607/2002, 7606/2002,  2323/2004, and 2987/2004  

RAVEENDRAN,  J.

       These appeals are filed against the judgments of the  Punjab & Haryana High Court in the following cases :  S.No.

Civil Appeal No. Case No. before High  Court Date of  Judgment of  High Court

i) 7567/2002 CWP 12606/1995 14.5.1998 ii) 7569/2002 RSA 2990/1996 22.1.1999 iii) 7600-01/2002 CWP 12810/1995 14.5.1998 iv) 7607/2002 RSA 3237/1996 22.1.1999 v) 7606/2002 CWP 12830/1995 14.5.1998 vi) 2323/2004 CWP 3752/2002 3.11.2003 vii) 2987/2004 CWP 4903/2002 3.11.2003

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These appeals involve a common question, as to protection of  higher House Rent Allowance drawn upto 31.8.1988 by the  employees of Punjab State Electricity Board, after the revision  of such allowance with effect from 1.9.1988.  

2.      The appellant is the Punjab State Electricity Board  (hereinafter referred to as ’the Board’). The respondents  are/were the employees of the Board. At the relevant point of  time, the Respondents were posted at Ajnala, Ramdas, Patti,  Khem Karan in the district of Amritsar and at Ferozepur, in  places within a radius of 16 kms from the international border.  As employees posted in the border areas within a radius of 16  km from the international border, they were paid HRA  applicable to I class or A class cities in Punjab, by taking note  of the special problems relating to border areas. Thus all the  Respondents were getting the higher rate of HRA applicable to  I Class/’A’ Class cities.  

3.      The State Government revised the rates of HRA vide  circular dated 30.8.1988, implementing the recommendations  of the Third Pay Commission. The Board adopted the revised  rates of HRA introduced by the State Government. By Order  No.142/FIN.PRC-1988 (Finance Circular No. 11/89) dated  7.3.1989, it classified cities and towns in Punjab into four  classes [Class A, Class B, Class C and Class D] and revised  the rates of house rent allowance for various pay ranges  admissible in different classes of cities/towns. We extract  below the relevant portion of the said order dated 7.3.1989 :-  

"(ii)   The rates of house rent allowances for various pay  ranges admissible in different classes of cities/towns  shall be as under :  

Pay Range Class ’A’  City Class ’B’  City Class ’C’  City Class ’D’  Town  

Rs. Rs. Rs. Rs.  750-1249 200 150 100 75 1250-1749 300 225 150 100 1750-2249 400 300 200 150 2250-2749

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500 375 250 175 2750-3249 600 450 300 225 3250-3749 700 525 350 250 3750-4249 800 600 400 300 4250-4749 900 675 450 325 4750-5249 1000 750 500 375 5250  onwards 1000 750 500 375

The amount of house rent allowance being drawn under  the existing orders by the employees at higher rates than  those specified above shall be protected till their rate of  house rent allowance gets adjusted in their revised rates.   (iii)   The house rent allowance shall no longer be admissible at  the places falling within 8 kms radius of the  municipal/outer limits of the classified cities/downs, save  in those cases where house rent allowance is admissible at  the place of posting itself.  

(iv)    The eligibility of house rent allowance of an employee  shall be determined with reference to the place of posting  of the employee.  

The other existing terms and conditions regarding the grant of  house rent allowance shall continue to be in force.  

4.      By circular dated 10.5.1989, the Board ordered that its  employees who are entitled to rent free accommodation, when  not provided or allotted with such accommodation, shall be  allowed 5% of the basic pay in addition to the normal HRA  admissible at the place of posting. By another circular dated  10.5.1989, clause (iii) in the order dated 7.3.1989 was  substituted with effect from 1.9.1988 to the effect that house  rent allowance of the employees is also admissible to the  places falling within 8 km radius of the periphery  municipal/outer limits of the classified cities/downs.

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5.      In view of different interpretations of the HRA orders by  different offices, the State Government issued a clarificatory  Circular dated 19.9.1990 (adopted by the Board by Finance  Circular No. 25/1992 dated 29.5.1992), relevant portions of  which are extracted below :  

"a)     Government employees entitled to rent free  accommodation when not provided/allotted such  accommodation shall be allowed payment equal to the  house rent charged by the Government from the employees  for Government accommodation i.e. 5% of the basic pay in  addition to the normal house rent allowance, if admissible  at the place of posting. This implies that the employees  posted at the place in the belt of 16 kms. from the  International Border who are entitled to rent free  accommodation as also other employees who are otherwise  entitled to rent free accommodation will get 5% of the basic  pay in addition to the house rent allowance if the place of  posting of the employees falls, in Class A, Class B, Class C,  and Class D Cities, as the case may be in accordance with  the instructions contained in the Department of Finance  letter No. 10/77/88/FPI/8014 dated 30th Aug. 1988. It is  made clear that the amount of house rent allowance of First  class cities admissible before 1.9.1988, to the employees  posted in the belt of 16 kms. from the International Border  is not covered within the protection of the House Rent  Allowance, as this amount of House Rent Allowance was  admissible in lieu of rent free accommodation only.

b)      In the rural area, house rent is not admissible to the  Government employees who, prior to 1.9.1988, were  entitled to house rent allowance of first class cities or  second class cities, as the case may be. The Govt.  employees posted in the rural areas who are entitled to rent  free accommodation when not provided such  accommodation are entitled to 5% of the basic pay, in  addition to rural area allowance and nothing more. In view  of this position, the employee posted in rural area, who,  prior to 1.9.1988, were drawing house rent allowance in  accordance with the earlier instructions in lieu of rent free  accommodation are not entitled to be given any protection  of amount of house rent allowance which they were  claiming previously."

6.      Some of the respondents filed writ petitions before the  Punjab and Haryana High Court alleging that they were not  being extended the benefit of protection of higher HRA drawn  upto 31.8.1988, granted under the Circular dated 7.3.1989 and  seeking a direction to the Board to pay them the protected  (higher) HRA as drawn by them as on 31.8.1988. The High  Court   disposed of the writ petition, permitting the petitioners  therein to file representation/s, and to treat the writ petition  itself as the representation, if no separate representation was  filed, and to dispose of the claims by a speaking order. The  High Court also directed that till such orders were made,  deduction of HRA shall remain stayed and no recovery shall  be made from the employees. It further directed that if the  representations were decided against the affected employees,  the amount drawn on the basis of the said orders shall be  recoverable in future.  

7.      The Board, accordingly, considered the representations  of the Respondents and rejected the same by order dated  13.7.1995 holding that they were not entitled to the benefit of

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protection as per the Circulars dated 7.3.1989 in view of the  clarificatory instructions contained in the Government Circular  dated 19.9.1990 adopted by the Board on 29.5.1992. The  respondents herein challenged the said order dated 13.7.1995  in several writ petitions with a further prayer that the HRA that  was being paid to them up to 31.8.1988, should be protected.  The said writ petition was allowed by the impugned orders  dated 14.5.1998 and 3.11.2003 with a direction that the HRA  that was admissible to respondents prior to 31.8.1988 shall be  protected. The High Court followed the decision of this Court  in Mohinder Singh v. State of Punjab [SLP (c) No.9149 of  1992 decided on 21.4.1995], while allowing the writ petitions.  Some employees of the Board had also filed civil suits for a  declaration that they are entitled to protection of higher HRA  which they receiving till 31.8.1988 and those suits were  decreed and those decreed were affirmed by the first Appellate  Court as also by the High Court on 22.1.1999. The said orders  dated 14.5.1998 and 3.11.2003 in the writ petitions and the  judgment and decrees dated 22.1.1999 in the second appeals  are challenged by the State in these appeals by special leave.  

8.      The appellant contends that the benefit of the protection  clause in the order dated 7.3.1989 is not available to the  respondents, in view of the clarification contained in the  Circular dated 19.9.1990 issued by the State Government  which was adopted by the Board on 29.5.1992. It is submitted  that the HRA admissible before 31.8.1988 to employees posted  in areas falling within 16 km international border are not  covered by the protection clause as what was being paid was  not HRA but an allowance in lieu of rent free accommodation.  It is contended that the decision of this Court in Mohinder  Singh (supra) is inapplicable as it did not consider the circular  dated 19.9.1990 of the State Government and adoption  Circular dated 29.5.1992 of the Board.   

9.      The contention of the appellant that the decision of this  Court in Mohinder Singh (supra) was inapplicable, as the  Circular dated 19.9.1990 adopted by the Board on 29.5.1992  was not considered, is incorrect and untenable. We have  secured and examined the records of C.A. No.5124/1995  [Mohinder Singh v. State of Punjab]. That petition related to  the employees of the State Government working in Patti,  Amritsar District, situated within the 16 km from the  international border. Relying on the Circular dated 19.9.1990,  on identical contentions, the State Government refused to  extend the benefit of the HRA protection. That decision was  challenged by the government servants in W.P. No.7734/1992  and the said writ petition was dismissed by the Punjab High  Court vide order dated 12.2.1992 following the decision dated  4.2.1992 in LPA No.895/1991. The said decision in LPA  No.895/1991 considered the very same contentions with  reference to the Government Circular dated 19.9.1990 and  upheld the stand the State Government. It was the said decision  in favour of the State Government, that was challenged before  this Court in C.A. No.5124/1995 which was allowed by the  following order dated 21.4.1995 : "Leave granted.

These appeals impugn a common judgment and order of the  High Court of Punjab and Haryana. The only question  urged in these appeals is in relation to the house rent  allowance (H.R.A.) payable by the State of Punjab to its  employees classified in the A, B, C, D categories of a  circular dated 30th August, 1998.The rates of H.R.A. were  thereby revised. A proviso stated that the HRA.being drawn

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by employees at rates higher than those specified in the  circular "shall be protected, till their rate of HRA. gets  adjusted in these revised rates".  It is not in dispute that this  proviso protects the HRA. that is being drawn if it is at a  rate higher than that prescribed by the circular. The  protection enures until the rate specified in the circular is  enhanced to a rate higher than that presently drawn.

In view of this undisputed position, the appeals are allowed  and the judgment and order of the High Court is set aside to  the extent aforesaid. The State Government shall give such  protection to its appellant employees."

Thus the decision in Mohinder Singh (supra) squarely and  directly applies to the facts of these cases. Therefore,  the High  Court was justified in allowing the writ petitions filed by the  Board employees in terms of the decision in Mohinder Singh.   

10.     The Order dated 7.3.1989, clearly protects the higher  House Rent Allowance drawn by the employees of the Board  under the existing orders, upto 31.8.1988. The clarificatory  Circular dated 19.9.1990 of the State Government, adopted by  the Board by Circular dated 29.5.1992, does not cancel or  delete the protection clause in regard to the higher HRA  extended under the order dated 7.3.1989. The fact that those  posted in places falling within 16 km radius of international  border were paid a higher HRA as in the case of Class I or  Class ’A’ cities on account of special circumstances, is not a  ground to exclude them from the protection of higher HRA,  available under the order dated 7.3.1989. It is unfortunate that  the Board having given protection of higher HRA drawn by its  order dated 7.3.1989, has tried to avoid the obligation on  untenable grounds. The alleged clarification contained in the  letter dated 19.9.1990 in no way assists the Board to avoid  liability to protect the higher HRA of Respondents in terms of  the order dated 17.3.1989. At all events, the matter being  squarely covered by the decision in Mohinder Singh, it is not  open to the Board to contend otherwise.  

13.     We, therefore, find no reason to interfere with the  impugned orders/judgments. The appeals are, therefore,  dismissed.