ORDER
K. Jagannath Shetty, J.
1. This writ petition is referred to the Division Bench by the learned single Judge, Justice Rajendra Babu, J. under Section 9 of the Karnataka High Court Act.
2. The question involved in the writ petition for our consideration is short and simple 'Whether the Food Corporation of India, respondent No. 1 herein, had power and authority to treat the Dearness Allowance (D. A) upto 320 points of twelve months average ... of All India Average Consumer Index for Industrial Workers (General) (1960-100) as on January 1, 1978 (hereinafter referred to as 'CPI') to its employees working in Bangalore, which is classified as 'A' Class City and pay such allowances at the rate payable to the Central Government employees.'
3. The conspectus of facts are that the petitioner is an employee of the first respondent Corporation and is working at Regional Office of the Food Corporation of India, Bangalore. The first respondent is a statutory Corporation created by the Government of India and respondents 2 and 3 are the authorities of the Food Corporation of India. Respondent No. 4 is the Union of India.
4. There are mainly four class of cities in India as per the classification of the Central Government for the purpose of payment of House Rent Allowance (HRA) to Central Government employees. They are 'A' Class, 'B' Class (B-1 and B-2) 'C' Class and non-classified cities and places. The Food Corporation of India, by its Circular, dated May 19, 1976 has adopted the pattern of classification of cities of the Central Government for the purpose of payment of HRA and CCA to its employees. Till August 1, 1982 Bangalore City belonged to B-1 Class City category.
5. The Government of India by its order dated February 7, 1983, has classified / re-classified the cities/towns on the basis of the population figures of 1981 census for the purpose of payment of Compensatory City Allowance and House Rent Allowance with effect from August 1,1982. As per that order, Bangalore City has been classified and promoted as 'A' Class City for the purpose of payment of HRA/CCA. The Food Corporation of India by its Circular No. 49 of 1983, dated June 28, 1983 in principle has accepted the classification/re-classification of cities on the basis of population figures of 1981 census made by the Central Government. It is further pointed out that out of all the 'A' Class Cities in India, Bombay and Delhi have been specially recognised and the Food Corporation of India is paying 30 % HRA to its employees in these cities. In the remaining 'A' Class Cities like Calcutta, Madras and Hyderabad 25 % HRA has been paid to the employees working those cities. To this effect, the Food Corporation of India had issued a Circular, dated may 19, 1976, accepting the classification made by the Central Government on the basis of 1971 census. It has been given effect to from May 1, 1976 onwards. The copy of the same is produced as Annexure-B.
6. The Government of India by its order, dated October 30, 1982 has merged DA/ADA upto the average Index level of 320 points with basic pay for the payment of HRA and CCA and the same has been accepted and implemented by the first respondent FCI as per their Circular No. 30 of 1983, dated April 23, 1983 with effect from February 1, 1982 and is being paid at present treating Bangalore as B-1 Class City. The copy of Government Order dated October 30, 1982 is produced as Annexure-D. The Circular issued by the first respondent-Corporation accepting the merger of DA/ADA with basic pay for the purpose of payment of HRA/CCA is enclosed as Annexure-E.
7. In fact, the first respondent-Corporation in principle has accepted Bangalore City as 'A' class City adopting the Government classification dated February 7, 1983 which is mentioned earlier. But it has not paid the HRA at the rate of 25 % which it is liable to pay to the petitioner along with other employees in Bangalore, which is the 'A' Class City. The Union functioning in FCI demanded the FCI authorities by addressing letters/telegrams to pay HRA at the rate of 25 % on basic pay plus merged DA/ADA upto 320 points, to all its employees working in Bangalore including the petitioner. Further, it is also brought to their notice that they are paying HRA at the rate of 25 % (basic pay plus merged DA/ADA upto 320 points) to other employees working in other 'A' Class Cities like Calcutta, Madras and Hyderabad.
8. Inspite of repeated request and representation made by the Unions, representing the employees working in Food Corporation of India at Bangalore, to the FCI authorities, the first respondent-Corporation has not accepted the demands of its employees at Bangalore. It is stated, that the FCI has adopted double standard regarding the recognition of Bangalore City. While for the purpose of payment of CCA, FCI has recognised Bangalore City as 'A' Class City, for the purpose of payment of HRA it is treated as B-1 Class City, which on the face of it is arbitrary and baseless.
9. The petitioner has therefore approached this court contending that the employees of respondent 1-Corporation working at Bangalore should be paid HRA at the rate applicable to 'A' Class cities and that for the purpose of payment of HRA, DA upto 320 points of CPI should be added to the basic pay.
10. The respondent 1-Corporation has filed its objection statement and took the stand, that they have no objection to pay HRA, as claimed by the petitioner, but they cannot do so unless such payment is approved by the Central Government. It is stated, that the Corporation has accepted the classification of Bangalore City as 'A' Class City as adopted by the Central Government. The question of payment of HRA at 25 % of pay plus DA/ADA upto 320 points has however been under consideration of the Corporation and when the matter was referred to the Central Government for approval of payment of HRAs as above, the Department of Food has instructed, that HRA at Bangalore should be paid at 25 % of the basic pay only and not on the basic pay plus DA/ADA upto 320 points. It is stated, that HRA is being paid, as above, in other cities like Calcutta, Madras and Hyderabad in respect of the employees of the first respondent-Corporation. It has paid 25 % of the basic pay plus merged DA/ADA upto 320 points. It is further contended by the Corporation that it had already taken up the matter with the Department of Food, for permitting the Corporation to allow HRA to its employees working not only in Bangalore but also in Ahmedabad at enhanced rate of 25 % on basic pay plus DA upto 320 points. It is further submitted that the first respondent-Corporation had no power to pay HRA, on basic pay plus DA upto 320 points, unless such payment is approved by the Central Government. It is not disputed that classification of Banglore City as Class A city made by respondent-Corporation is approved by the Central Government; but the respondent 1-Corporation is permitted to pay HRA at 25 % of basic pay and not basic pay plus DA as stated above. It is further contended that since the Central Government has not approved payment of HRA at 25 % of basic pay plus DA as aforesaid, respondent 1-Corporation cannot pay HRA as claimed by the petitioner.
11. It is in the background of the aforesaid stand taken by respondent 1-Corporation and the Central Government, that the question arises, whether respondent 1-Corporation has power and authority to pay HRA of the relevant rates of basic pay plus DA upto 320 points CPI.
12. To consider and decide this question, it is necessary to refer to the provisions of the Food Corporation Act, which empowers respondent 1-Corporation to make regulations and the other relevant provisions thereof. Section 45 of the FCI Act reads thus :-
'45. Power of Food Corporation to make regulations. - (1) A Food Corporation may, with the previous sanction of the Central Government by notification in the Official Gazette, make regulations not inconsistent with this Act and the Rules made thereunder, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such regulations may provide for -
(a) the methods of appointment, the conditions of service and the scales of pay of the officers and employees of a Food Corporation, other than the Secretary of the Food Corporation of India.
(b) the duties and conduct of officers and employees of a Food Corporation, other than the Secretary aforesaid.
13. In exercise of power under Section 45 of the Act, the first respondent-Corporation has framed Regulations, called 'Staff Regulations. 1971' with the sanction of the Central Government. Regulation 78 of these Regulation relates to allowances and advances and it reads as under :-
'78. Allowances and advances :
The Corporation may prescribe from time to time :
(i) The rates at which and the conditions subject to which travelling allowances may be paid to the employees in connection with journeys undertaken by them on tour or transfer in the service of the Corporation.
(ii) The rates at which and the conditions subject to which conveyance allowance may be paid to the employees for the maintenance of different types of conveyance for use on official duties.
(iii) The kinds and rates of any other allowances and the terms and conditions on which such allowances may be granted.
(iv) The rates at which and the conditions subject to which medical charges and insurance premia may be reimbursed to the employees of the Corporation; and
(v) The types of advances that may be granted to the employees and the terms and conditions on which such advances may be granted.'
14. From clause (iii) of Regulation 78 it is clear, that respondent 1-Corporation is empowered to prescribe from time to time the kinds and rates of allowances other than those referred to in clauses (i) and (ii) and the terms and conditions on which such allowances may be granted. It is in exercise of the powers conferred by clause (iii) of Regulation 78 the respondent 1-Corporation is granting HRA to its employees. It is not disputed, that respondent 1-Corporation blindly follows the scheme or provisions made by the Central Government for payment of HRA to its employees. As noticed above, respondent 1-Corporation issued circular Annexure-B, dated May 19, 1976, accepting the classification of cities by the Central Government and prescribing the rates at which HRA was admissible.
15. Respondent 1-Corporation had in fact issued circular, dated May 19, 1976 making classification of cities and prescribing the rates at which the HRA was admissible. This circular was no doubt issued with the concurrence of the Central Government classifying Bangalore City as B-1 Class City. The records produced in this case clearly establish that the City of Bangalore including the area coming under its agglomeration is classified as 'A' Class City by the Central Government. The order of classification came into effect from August 1, 1982. However, before this reclassification of cities was made by Office Memorandum, dated March 25, 1982 issued by the Ministry of Finance, Government of India, a part of DA was merged into the basic pay for the purpose of payment of HRA. The combined reading of the said Office Memorandum with the Office Memorandum, dated February 7, 1983 with regard to re-classification of cities, further establishes that the Central Government employees in Bangalore City became entitled to HRA upto 320 points.
16. It is an admitted fact, that consequent upon the Central Government decision to merge DA upto 320 points CPI, as pay for the purpose of payment of HRA to the Central Government employee, the respondent 1 Corporation by its Circular No. 36 of 1982, dated April 3, 1982 decided to extend the said benefits to its employees on the same terms and conditions as applicable to its Central Government employees, and respondent 1-Corporation sought approval of Central Government for payment of HRA as per its Circular No. 36 referred to above. The Central Government by its letter dated February 20, 1984 had informed the respondent 1-Corporation that it approved payment of HRA to the employees of Corporation posted at Ahmedabad and Bangalore at 25 % of basic pay only with effect from August 1, 1982 only. The proposal of respondent 1 to give HRA at the prescribed rate not only of basic pay but also as DA, Additional DA upto 320 points of CPI was not accepted by the Central Government. The petitioner has pointed out that in the earlier Writ Petition No. 1500 of 1974, which came to be disposed of by this court leaving liberty to approach this court if the relief sought for payment of HRA as per its Circular No. 36 of Corporation is denied. Respondent 1-FCI had filed statement to the effect that 'it is a fact that HRA as above (25 % of the basic pay plus DA/ADA upto 320 points), is however being paid in other cities like Calcutta, Madras and Hyderabad in respect of the employees of the respondent 1 Corporation. 'Thus, the respondent 1-Corporation on adopting the aforesaid Official Memorandum has granted the HRA at 25 % of the basic pay plus DA/ADA upto 320 points to all its employees serving at Calcutta, Madras and Hyderabad. Therefore, denial of benefit of payment of HRA at 25 % of the basic pay plus DA/ADA upto 320 points really amounts to discrimination.
17. As already pointed out, that clause (iii) of Regulation 78 of the Staff Regulations, 1981 which are framed with the sanction of the Central Government, clearly empowers respondent 1 Corporation to prescribe from time to time, the kinds and rates of allowances other than those referred to in clauses (i) and (ii) and the terms and conditions on which such allowances may be granted. HRA does not fall under clauses (i) and (ii) of Regulation 78. Clause (iii) of the Regulation is very clear, that the Corporation could grant the HRA in which case obtaining of approval of the Central Government by it in exercise of the aforesaid power does not arise. We are not inclined to accept the contention of the learned counsel appearing for respondent 4 that whenever any change in the HRA is made by respondent 1 Corporation, it would amount to an amendment of Regulation 78 framed under Section 45 of the Food Corporation Act, for the amended Regulation cannot be framed except with the previous sanction of the Central Government and such amendment will not become effective or enforceable unless Central Government sanctions it. This contention, on the face of it, is unsustainable, since respondent 1-Corporation is vested with the power to prescribe from time to time kinds and rates of allowances other than those covered by clauses (i) and (ii) of Regulation 78, it is open to it to allow grant of HRA at rates decided by it. One other submission was made by the learned counsel for the Central Government, that, under Section 26 of the Act, the Food Corporation of India shall have to submit the statement of activities and its financial estimates during the forthcoming years for the Central Government approval. As such, the Regulations 78 which gives power to FCI to fix the allowances from time to time would amount to overriding the provision of Section 26 of the Act. A plain reading of Section 26 read with Regulation 78, which has been made in exercise of power under Section 45 of the FCI Act, do not warrant such interpretation and to say that previous sanction of the Central Government is necessary even for enhancement of any allowances, payable to the employees of the respondent 1-Corporation. In our opinion, it is not necessary for respondent 1 Corporation to approach the Central Government for sanction whenever it makes any alteration in the rate of HRA to be paid to its employees. Such change would not amount to alteration or amendment of Regulation 78 as contended on behalf of the Central Government. It was, therefore, within the powers of respondent No. 1 Corporation to classify Bangalore City as 'A' Class City for the purpose of payment of HRA and prescribe the rate at which such allowance would be payable to its employees; and to add part of DA to the basic pay for the purpose of grant of HRA. In fact, it has been submitted on behalf of respondent 1 Corporation, that it has no objection to pay its employees HRA at the rate of 25 per cent of basic pay plus DA upto 320 points of CPI provided it has power to do so without the sanction of the Central Government. Since, in our opinion, it is not necessary for respondent 1 Corporation to obtain sanction of Central Government before granting HRA as stated above, it is open to it to grant HRA at the above rate. Petition is, therefore, entitled to succeed.
18. In the result, this petition is allowed. Respondent 1-Corporation and respondents 2 and 3 are directed to extend to the employees of respondent 1-Corporation the HRA benefits as per Circular No. 30 of 1983, dated April 23, 1983 produced as Annexure-E and in the same manner as those benefits are extended by the FCI to its employees serving at Calcutta, Madras and Hyderabad with effect from August 1, 1982. Rule made absolute. No costs.