P S E B Vs. SORM NATH
LAWS(SC)-2006-5-30
SUPREME COURT OF INDIA (FROM: PUNJAB & HARYANA)
Decided on May 18,2006

P.S.E.B. Appellant
VERSUS
SOM NATH Respondents

JUDGEMENT

R.V.RAVEENDRAN, J. - (1.)THESE appeals are filed against the judgments of the Punjab and Haryana High Court in the following cases : JUDGEMENT_2726_AIR(SCW)_2006Html1.htm 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.
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 : JUDGEMENT_2726_AIR(SCW)_2006Html2.htm 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/Towns, 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."

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/ Towns.

(3.)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 ad- missible 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."

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, permuting 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.



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