R.C. Mankad, J.
1. A short question which arises for my consideration in this petition is whether Food Corporation of India, respondent No. 1 herein, had power and authority to treat the dearness allowance (D.A. for short) upto 320 points of twelve monthly average of the All India Average Consumer Price Index for industrial workers (general)(1960-100) as on January 1, 1978 (hereinafter referred to as 'C.P.I.') as pay for the purpose of payment of House Rent Allowance 'H.R.A.' for short) to its employees working in Ahmedabad which is classified as 'A' class city and pay such allowance at the rate payable to the Central Government employees.
2. Petitioner No. 1 is a union registered under the Trade Unions Act, 1926 and is recognised by respondent No. 1 Corporation. Petitioner No. 2 is the Secretary of petitioner No. 1 Union. Petitioner No. 3 is an Association registered under the Trade Unions Act, 1926, and is also recognised by respondent No. 1 Corporation. Petitioner No. 4 is the Secretary of petitioner No. 3 Association The employees of respondent No. 1 Corporation are members of petitioner No. 1 Union and petitioner No. 3 Association,
3. The Central Government was paying H.R.A. to its employees which was equal to certain percentage of basic pay depending upon classification of city in which the employee was working. Central Government has been classifying various cities and urban agglomerations into four different categories, namely A, B1, B2, and C. for the purpose of granting H.R.A. As pointed out above. H.R.A. was certain percentage of the basic pay and the percentage varied according to the classification of the city. This classification is made on the basis of the Census figures. Prior to 1981 Census, Ahmedabad city was classified as B1 class city. After 1981 Census, Ahmedabad city has been Classified as 'A' class city. This reclassification has been done by office Memorandum No. 11016/5/B2.E.II(B) dated February 7, 1983, Annexure 'B' to the petition, issued by the Ministry of Finance and this reclassification was made with effect from August 1, 1982 for the purpose of H.R.A. Before this reclassification was made, the Central Government by Office Memorandum No 13016/2/B1-E.H(B) dated March 25, 1982, Annexure 'A' to the affidavit in reply filed on behalf of the Central Government, decided that D.A. sanctioned upto 320 points of C.P.I, would be treated as pay for the purpose of payment of H.R.A. to the Central Government employees,. Respondent No. 1 Corporation is paying H.R.A. to its employees at the same rate at which the Central Government is paying H.R.A. to its employees. Classification of the cities by the Central Government for the purpose of paying H.R.A. to its employees has been adopted by the respondent No. 1 Corporation for granting H.R.A. to its employees.
4. Circular Annexure 'A' to the petition dated May 19, 1976 issued by respondent No. 1 Corporation specifically lays down that the classification of cities was made as per classification made by the Central Government for the purpose of payment of H.R.A. to the Central Government employees. In the said circular, Bombay, Delhi, Calcutta, Madras and Hyderabad were classified as A class cities and Ahmedbabad as B1 class city. Rates at which H.R.A. was admissible in different cases of cities were also mentioned in table set out in the circular. Consequent upon reclassification of various cities and reclassification of Ahmedabad city as 'A' class city by the Control Government, respondent No. 1 Corporation issued Circular No. 49 of 1983, dated June28, 1983 Annexure 'D' to the petition. However, by this circular, respondent No. 1 Corporation classified Ahmedabad city as 'A' class city only for the purpose of City Compensatory Allowance with effect from August 1, 1982. In other words, the circular did not classify Ahmedabad city as 'A' class city for the purpose of H.R.A., though as pointed out above, under circular Annexure 'A' classification of various cities made by the Central Government for the purposes of H.R.A. was adopted, by respondent No. 1 Corporation for the purpose of payment of H.R.A. to its employees. There was no explanation as to why the reclassification of cities made by the Central Government after 1981 Census was adopted only for the purpose of City Compensatory Allowance departing from past practice of adopting classification or reclassification by the Central Government both for the purpose of H.R.A. and City Compensatory Allowance.
5. The employees of respondent No. 1 Corporation made several representations to respondent No. 1 Corporation, to declare Ahmedabad as 'A' class city for the purpose of H.R.A. also. However, no action has so far been taken by respondent No. 1 Corporation for declaring Ahmedabad city as 'A' class city for the purpose of H.R.A. also. It further appears that respondent No. 1 Corporation has taken decision to treat D.A. upto 320 points of C.P.I, as pay for the purpose of payment of H.R.A. and it pays H.R.A. on that basis to its employees working in Bombay, Delhi, Hyderabad and other cities. However, so far as its employees working in Ahmedabad city are concerned they are paid H.R.A. only on the basic pay. In other words, D.A. upto 320 points of C.P.I. is not added to the basic pay for the purpose of computing H.R.A. so far as its employees working at Ahmedabad are concerned. Petitioners have, therefore, approached this Court contending that the employees of respondent No. 1 Corporation working at Ahmedabad should be paid H.R.A. at the rate applicable to 'A' class cities and that for the purpose of payment of H.R.A., D.A. upto 320 points of C.P.I., should be added to the basic pay.
6. Respondent No. 1 Corporations stand is that they have no objection to pay H.R.A. as claimed by the petitioners but they cannot do so unless such payment is approved by the Central Government. The contention which is raised on behalf of the Central Government is that respondent No. 1 Corporation can pay to its employees H.R.A only at the rate approved by the Central Government and since the Central Government had not approved the inclusion of D.A. upto 320 points of C.P.I., in the pay for the purpose of payment of H.R.A. could not be paid on the basis claimed by the petitioners, It is submitted that the Central Government has approved the payment of H.R.A. at the rate of 25 per cent of the basic pay with effect from August 1, 1982. It is further submitted that respondent No. 1 Corporation has no power to pay H.R.A. on pay plus D.A. at upto 320 points of C.P.I., unless such payment is approved by the Central Government. It is not disputed that classification of Ahmedabad city as Class 'A' city made by respondent No. 1 Corporation is approved by the Central Government but the respondent No. 1 Corporation is permitted to pay H.R.A. at 25 per cent of basic pay and not basic pay plus D.A. as stated above. It is contended that since the Central Government has not approved payment of H.R.A. at 25 per cent of basic pay plus D.A. as aforesaid, respondent No. 1 Corporation cannot pay H.R.A. as claimed by the petitioners. It is in the background of the aforesaid stand taken by respondent No. 1 Corporation and the Central Government that the question arises whether respondent No. 1 Corporation has power and authority to pay H.R.A. at the relevant rate on the basic pay plus D.A. upto 320 points of C.P.I.
7. Section 45 of the Food Corporations Act, 1964 empowers respondent No. 1 Corporation to make regulations and the relevant provisions thereof read as under:
45. Power of a Food Corporation to make regulation. (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 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;
Respondent No. 1 Corporation in exercise of the powers conferred on it by Section 45 of the Act, has framed Regulations called 'Staff Regulations, 1971,' with the sanction of the Central Government. Regulation 78 of these regulations relates to allowance 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 traveling allowance 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.
8. It is clear from clause (iii) of Regulation 78 that respondent No. 1 Corporation is empowered to prescribe from time to time the kinds and rates of the 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 that respondent No. 1 Corporation is granting H.R.A. to its employees. It is not dispute that respondent No. 1 Corporation broadly follows the scheme or provisions made by the Central Government for payment of H.R.A. to its employees. As pointed out above, respondent No. 1 Corporation issued circular Annexure A dated May 19, 1976 making classification of cities and prescribing the rates at which H.R.A. was admissible. This circular which was no doubt issued with the concurrence of the Central Government, classified Ahmedabad city as B1 class city for the purpose of payment of H.R.A.
9. The Central Government by Office Memorandum Annexure 'B' referred to above, reclassified cities for the purpose of payment of H.R.A. and Ahmedabad city was classified as 'A' class city for that purpose. The order of reclassification of cities, came into effect from August 1, 1982, but payment including arrears due on account of the orders was to be made on or after April 1, 1983. 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 D.A. was merged into the based pay for the purpose of payment of H.R.A. It was laid down that the D.A. sanctioned upto 320 points of C.P.I, as on January 1, 1978 would be treated as pay for the purpose of H.R.A. to the Central Government employees. The combined reading of the said Office Memorandum with the Office Memorandum, dated February 7, 1983 in regard to reclassification of cities shows that the Central Government employees in Ahmedabad city became entitled to H.R.A. at the rate applicable to 'A' class city on the basic pay plus D.A. upto 320 points of C.P.I.
10. Consequent upon Central Governments decision to merge D.A. upto 320 points of C.P.I, as pay for the purpose of payment of H.R.A. to its employees, respondent No. 1 Corporation by circulation No. 36 of 1982, dated April 3, 1982, decided to extend the same benefits to its employees on the same terms and conditions as applicable to the Central Government employees. The said circular provides that the employees of respondent No. 1 Corporation may be allowed enhanced H.R.A. after merging D.A. upto 320 points with effect from August 1, 1982 as per the guidelines/procedure contained in the Ministry of Finance, Office Memorandum referred to above. The enhance amount of H.R.A. for the period from August 1, 1982 to February 28, 1983 was directed to be credited to respective Provident Fund Accounts of the employees and payment in cash was made admissible from April 1, 1983. It was clarified that all other terms and conditions for the grant of H.R.A. to the employees of respondent No. 1 Corporation as in vogue at that time would remain unaltered. It appears that respondent No. 1 Corporation sought approval of the Central Government for payment of H.R.A. as laid down in Circular No. 36 of 1982 referred to above. The Central Government, however, by its letter dated February 20, 1984 Annexure 'C to the affidavit in reply filed on behalf of the Central Government addressed to the Managing Director of respondent No. 1 Corporation stated that the Central Government had approved payment of H.R.A. to the employees of respondent No. 1 Corporation posted at Ahmedabad and Bangalore at 25 per cent of basic pay only with effect from August 1, 1982. It was further stated that the proposal of respondent No. 1 Corporation for allowing H.R.A. to its employees at the prescribed rates not only of basic pay but also on D.A. Additional D.A. upto 320 points of C.P.I. could not be acceded to. The Central Government, therefore, directed respondent No. 1 Corporation to pay H.R.A. to its employees at all places at the prescribed rates only with reference to the basic pay and no portion of D.A. Additional D.A. was to be taken into account for that purpose. It was in view of this direction given by the Central Government that respondent No. 1 Corporation is paying H.R.A. to its employees at Ahmedabad at 25 per cent of the basic pay. Since no reference was made to City Compensatory Allowance ('C.C.A.' for short) in the directions given by the Central Government, C.C.A., I am told, is continued to be paid at the rate applicable to 'A' class city since Ahmedabad city has been classified as stated above. Petitioners who represent employees of respondent No. 1 Corporation at Ahmedabad contend that respondent No. 1's employees working at Ahmedabad are entitled to be paid H.R.A. at 25 per cent of the basic pay plus D.A. upto 320 points of C.P.I.
11. As already observed above clause (iii) of regulation 78 of the Staff 'Regulations 1981 which are framed with the sanction of the Central Government, clearly empowers respondent No. 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 allowance may be granted. H.R.A. does not fall under clauses (i) and (ii) of Regulation 78. In view of this clear provision contained in regulation 78, there is no question of obtaining the approval of the Central Government while, granting H.R.A. by respondent No. 1 Corporation in exercise of the aforesaid power conferred on it. I am not inclined to accept the contention of Mr. S.D. Shah, learned Counsel appearing for respondent No. 3 that whenever any change in the H.R.A. is made by respondent No. 1 Corporation, it would amount to amendment of regulation 73 framed under Section 45 of the Food Corporations Act and since the regulations cannot be framed except with the previous sanction of the Central Government, such amendment will not become effective or enforceable unless Central Government, sanctions it. Since full power has been given to respondent No. 1 Corporation 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 H.R.A. at the rates decided by it. In my opinion it is not necessary for respondent No. 1 Corporation to approach the Central Government for sanction whenever it makes any alteration in the rate of H.R.A. 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 (i) to classify Ahmedabad city as 'A' class city for the purpose of payment of H.R.A. and prescribe the rate at which such allowance would be payable to its employees; and (ii) to add part of D.A. to the basic pay for the purpose of H.R.A. It is stated on behalf of respondent No. 1 Corporation that respondent No. 1 Corporation has no objection to pay to its employees H.R.A. at the rate of 25 per cent of basic pay plus D.A. upto 320 points of C.P.I., provided it has power to do so without the sanction of the Central Government. Since in my opinion, it is not necessary, for respondent No. 1 Corporation to obtain sanction of the Central Government before granting H.R.A., as stated above, it is open to it to grant H.R.A. at the above rate. Petition must, therefore, succeed.
12. In the result, this petition is allowed. Respondent No. 1 Corporation and respondent No. 2 are directed to pay to the employees of respondent No. 1 Corporation working or employed at Ahmedabad, H.R.A. at the rate of 25 per cent of the basic pay plus D.A. upto 320 points of C.P.I., with effect from August 1, 1982 and to implement the circular No. 36 of 1982 dated April 3, 1982, Annexure 'B' to the affidavit in reply dated July 23, 1984 filed on behalf of the Central Government. Respondent No. 1 Corporation is directed to carry out the above directions on or before October 31, 1985.
13. Rule made absolute accordingly to the extent stated above with no order as to costs.