IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 995 of 1999(R)
1. STATE BANK'S STAFF UNION(CHENNAI CIRCLE)
... Petitioner
Vs
1. STATE BANK OF INDIA
... Respondent
For Petitioner :SRI.P.RAMAKRISHNAN
For Respondent :SRI.GEORGE THOMAS
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :05/03/2009
O R D E R
S. Siri Jagan, J.
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O.P. Nos. 995, 1356 & 2032 of 1999
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Dated this, the 5th March, 2009.
J U D G M E N T
By these three original petitions, three unions of employees of
two nationalised banks, who represent the highest paid section of
employees in the Public sector, have come up with a claim for
enhanced House Rent Allowance (HRA) and City Compensatory
Allowance (CCA) relying upon a Notification issued by the
Government of Kerala re-defining the Metropolitan areas in the
Districts of Thiruvananthapuram, Ernakulam and Kozikode for the
purpose of Part IXA of the Constitution of India, in exercise of powers
conferred by clause (c) of Article 243P of the Constitution of India,
claiming that for the purpose of calculating HRA and CCA, that
notification should be the basis, meaning thereby that population of
the entire metropolitan area so defined shall be the basis for payment
of HRA and CCA to employees working in any one of the branches
situated in any of the places included in the metropolitan area so
defined.
2. The service conditions of staff and officers of Banks in India
are governed by the Sashri and Desai awards, bipartite settlements
and agreements. According to the petitioners, presently, the criteria
for payment of HRA is as under.
“8.House Rent Allowance
In substitution of Clause 3 of the Bipartite Settlement dated 29th June,
1990 with effect from 1st November, 1992 the house rent allowance payable
shall be as under
———————————————————————————————————————
Area Rate as
percentage of pay
———————————————————————————————————————–
(No Minimum/No
Maximum)
(i) Places with population of more than
12 lakhs . 12
O.P.. No. 995/99 etc. -: 2 :-
(ii) Places with population of 2 lakhs and 10 =
over [other than places in (i) above] and
State Capitals of Union Territories.
(iii) Places with population of 10,000
and over but below 2 lakhs 9 =
(iv) Places with population of less than 10,000 8 =
Note
(1)Where quarters are provided, HRA shall not be payable, and the rent to be
recovered shall be 4% of the first stage of the new Scales of Pay or the quantum
recovered for the month of October, 1994, whichever is higher. No adjustment,
however, shall be made in respect of the House Rent recovered for the period
1.11.1992 to 31.10.1994.
(2)All other existing provisions relating to House Rent Allowance shall remain
unchanged”
The criteria for payment of CCA is as under:
“City Compensatory Allowance
In substitution of Clause 6 of the Bipartite Settlement dated 10th April, 1989,
with effect from 1st November, 1993 the City Compensatory Allowance shall be
payable as per the following revised rates:
A. Clerical staff
(i) At the higher CCA 4 =% of basic pay Min. Rs.100/-p.m.
Centres including the Max.Rs.200/- p.m.
State of Goa
(ii) At the lower CCA 3 =% of basic pay Min. Rs.75/- p.m.
Centres i.e. places with Max.Rs.150/- p.m.
population of 5 lakhs and
over, State Capitals,
Chandigarh, Pondicherry
and Port Blair.
B. Subordinate staff
(i) At the higher CCA 4 =% of basic pay Max.Rs.125/- p.m.
Centres including the
State Goa.
(ii) At the lower CCA 3 = % of basic pay Max. Rs. 75/- p.m.
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Centres i.e., places with
population of 5 lakhs and over,
State Capitals, Chandigarh,
Pondicherry and Port Blair
Note
All other existing provisions relating to City Compensatory Allowance shall
remain unchanged”.
3. On 14-11-1995, the Government of Kerala issued S.R.O.No.
1435/95 redefining the territorial areas of the Districts of
Thiruvananthapuram, Ernakulam and Kozhikode constituting
metropolitan areas for the purpose of Part IXA of the Constitution of
India, in exercise of powers under Article 243P(c) thereof.
Thereupon, apparently assuming that the metropolitan areas so re-
constituted to be the ‘places’ for the purpose of calculating HRA and
CCA, the Banks issued orders in August 1998, revising the HRA and
CCA for the award staff and supervising staff at all branches
established in centres under Thiruvananthapuram Metropolitan area,
with effect from 14-11-1995. Later on, in January, 1999, the orders
so issued were cancelled on the ground that the notification by Kerala
Government is not meant for extension of the limits of urban
agglomeration of Thiruvananthapuram and therefore the higher rate
of HRA and CCA cannot be extended to the branches in areas
included as part of the Trivandrum metropolitan area, as per the
notification. Those orders cancelling the enhanced HRA/CCA to the
additional centres added as part of the Trivandrum metropolitan area
are under challenge in these original petitions.
4. The petitioners want the terms ‘place’, ‘urban
agglomeration’ and ‘Metropolitan area’ to be read synonymous with
each other. Therefore, they would argue that once the areas
O.P.. No. 995/99 etc. -: 4 :-
constituting the ‘Metropolitan area’ is declared, the metropolitan area
so declared would constitute the ‘place’ for the purpose of HRA/CCA
and therefore employees of all the branches in the areas included in
the metropolitan area should be paid HRA/CCA in accordance with
the population of that metropolitan area taken as a whole.
5. In answer, the Banks would argue that for the purpose of
HRA and CCA, what is relevant is the urban agglomeration in which
the branch is situate and not the ‘metropolitan area’ as defined in the
Constitution. Since the metropolitan area of Thiruvananthapuram as
constituted by the notification issued by the Government does not
form the ‘urban agglomeration’ for the purpose of grant of HRA and
CCA, the same cannot be the basis for sanctioning of HRA and CCA is
the contention raised by the Banks.
6. I have considered the rival contentions in detail.
7. Since the issue arose on the basis of the notification issued
by the Government of Kerala under Article 243P, I shall first extract
that notification. It reads thus:
“NOTIFICATION
G.O.(MS)No.256/95/LAD Dated, Thiruvananthapuram,14th November, 1995.
S.R.O.No.1435/95.- In excise of the powers conferred by clause (c) Article 243P
of the Constitution of India, the Governor of Kerala having regard to the
population of the area, is pleased to notify the territorial areas for the time
being covered by the Municipalities and Panchayats specified in column 3 of the
schedule below against each District mentioned in column thereof to be a
Metropolitan area for the purpose of Part IX-A of the Constitution of India and
shall be known by the name mentioned against each in column (4) thereof,
namely:-
O.P.. No. 995/99 etc. -: 5 :- Serial Territorial areas Name of Metropolitan No. covered by areas District Municipalities/ Panchayats I Thiruvananthapuram Thiruvananthapuram 1 ThiruvananthapuramCorporation Nedumangad '' Municipaity 2 '' Neyyattinkara '' 3 '' Munciapality Attipra Panchayat '' 4 '' 5 '' Kazhakuttam Panchayat '' 6 '' Sreekaryam '' '' 7 '' Kadakampally '' '' 8 '' Chettivilakom '' '' 9 '' Ulloor '' '' 10 '' Vattiyoorkavu '' '' 11 '' Pallichal '' '' 12 '' Vilappil '' '' 13 '' Vilavoorkal '' '' 14 '' Nemom '' '' 15 '' Kalliyoor '' '' 16 '' Vizhinjam '' '' 17 '' Venganoor '' '' 18 '' Thiruvallom '' '' 19 '' Karakulam '' '' 20 '' Aruvikara '' '' 21 '' Balaramapuram '' '' O.P.. No. 995/99 etc. -: 6 :- Serial Territorial areas Name of Metropolitan No. covered by areas District Municipalities/ Panchayats 22 '' Kottukal '' '' Marukil '' 23 '' (Malayinkil) 24 '' Maranalloor '' '' 25 '' Kattakada '' '' II 1 Ernakulam Kochi Corporation Kochi 2 '' Thrippunithura '' Municipality 3 '' Perumbavoor '' '' 4 '' Kalamassery '' '' 5 '' Paravur '' '' 6 '' Aluva '' '' 7 Ernakulam Angamaly ' '' '' 8 '' Eloor Panchayat '' 9 '' Pallipuram '' '' 10 '' Kuzhupilly '' '' 11 '' Edavanakkad '' '' 12 '' Narayambalam '' '' 13 '' Mulavukad '' '' 14 '' Njarakkal '' '' 15 '' Cheranallur '' '' 16 '' Kadamakudy '' '' 17 '' Varapuzha '' '' 18 '' Kottuvally '' '' 19 '' Ezhikkara '' '' 20 '' Kodungallur '' '' 21 '' Alengad '' '' 22 '' Churnikkara '' '' 23 '' Edathala '' '' O.P.. No. 995/99 etc. -: 7 :- Serial Territorial areas Name of Metropolitan No. covered by areas District Municipalities/ Panchayats 24 '' Kizhmadu '' '' 25 '' Sreemoolanagaram '' '' 26 '' Chenganamadu '' '' 27 '' Nedumbasserry '' '' 28 '' Kanjoor '' '' 29 '' Vazhakulam '' '' 30 '' Chellanam '' '' 31 '' Thrikkakara '' '' Vadavukodeu '' 32 '' PuthenCruz '' 33 '' Thiruvankulam '' '' 34 '' Chottanikkara '' '' 35 '' Mulamthuruthy '' ' 36 '' Maradu '' '' 37 '' Udayamperur '' '' 38 '' Kumbalam '' '' 39 '' Kumbalangy '' '' 40 '' Elamkunnapuzha '' '' III 1 Kozhikode Kozhikode Corporation Kozhikode 2 '' Elathur Panchayat '' 3 '' Beypore '' '' 4 '' Cheruvannur '' '' 5 '' Feroke '' '' 6 '' Kadalundy '' '' 7 '' Ramanattukara '' '' 8 '' Kakkodi '' '' 9 '' Kunnamangalam '' '' 10 '' Olavanna '' '' O.P.. No. 995/99 etc. -: 8 :- Serial Territorial areas Name of Metropolitan No. covered by areas District Municipalities/ Panchayats 11 '' Karuvattur '' '' 12 '' Peruvayal '' '' 13 '' Koduvally '' '' 14 '' Thalakkulathu '' '' 15 '' Nanmanda '' '' 16 '' Kakkur '' '' 17 '' Narikunni '' '' 18 '' Kizhakkoth '' '' 19 '' Chathamangalam '' '' 20 '' Mavoor '' '' 21 '' Chelannur '' '' 22 '' Madavoor '' ''
That notification has been issued by virtue of powers conferred boy
Article 243P(c) of the Constitution of India, which Article reads thus:
“243(P). Definitions- In this part, unless the context otherwise
requires.-
xxxx xxxx xxxxx
(c) 'Metropolitan area' means an area having a population of
ten lakhs or more, comprised in one or more districts and consisting of
two or more Municipalities or Panchayats or other contiguous areas,
specified by the Governor by public notification to be Metropolitan area
for the purpose of this Part;”
8. Going by the provisions of the settlement by which HRA is
paid, the same is based on the population of the ‘place’ where the
branch is situate. The word ‘place’ is not defined or explained in the
same. The counsel for the State Bank of India has made available to
O.P.. No. 995/99 etc. -: 9 :-
me photocopies of the relevant pages from the “Reference Book on
Staff Matters Volume II – Award Staff,” 2nd Edition, updated up to 30-
9-2001 published by the Personnel and HRD Department of State
Bank of India, Local Head Office, Ahemedabad. Clause 10.6.1 reads
thus:
“10.6.1 Basis for sanctioning House Rent Allowance (HRA)
i) For the purpose of sanction of House Rent Allowance at any
centre, the 1991 Census figures should be considered. Claims made on
the basis of certificates issued by local authorities should not be
considered unless these are supported by the authenticated 1991
Census figures.
ii) All places constituting an Urban Agglomeration should be
treated as one Unit and the House Rent Allowance should be paid on
the basis of the population of the Urban Agglomeration given in the
1991 Census.
iii) When the Government by Notification, declares a place as
joining part of the town, municipality on the basis that the population of
the place as per 1991 Census is above 10,000 all places coming within
such municipality should be taken together for the purpose of payment
of House Rent Allowance.
iv) The claims submitted for sanction of House Rent Allowance must
be supported by the following information/evidence:-
a) Name of the place and name of the Village Panchayat or
Municipality.
b) Name of the banks having branches thereat.
c) Population as per Census of India 1991.
d) Basis of the claim for population (e.g. Reserve Bank of
India, Directory of Bank Offices/District Census Handbooks)
e) Government Notification regarding formation of
Municipality or declaring the place as being part of town
(claims supported by certificate from local authorities are not
acceptable).
v) The following points should also be taken into consideration
while submitting the proposals.
a) A village is to be considered the smallest administrative
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unit.
b) When a claim is made for payment of House Rent
Allowance at a place, it is necessary to determine whether
the place falls within the area of a village, municipality, or
the Urban Agglomeration.
c) A village/panchayat ceases to exist on the formation of a
municipality.
d) The decision whether Panchayat or Nagar Panchayat can
be taken as an administrative unit, would depend upon the
statute governing the place. However, the guiding factor
will be whether on the formation of such a Panchayat or
Nagar Panchayat, the Government has by Notification
declared in terms of a statute that the village/panchayat
ceases to exist. In such an event the population of the
Panchayat or Nagar Panchayat can be taken as a unit and
the rate of HRA determined accordingly. However,
nothing short of a Government Notification is acceptable
for this purpose.
e) As regards the Urban Agglomeration, we have also to be
guided by the Notification issued by the Government
forming an Urban Agglomeration. On such formation of
an Urban agglomeration all places falling within the urban
Agglomeration will be considered as one unit.
f) No place will be considered as part of a City on the basis
of contiguity unless the same is accepted by the Indian
Banks’ Association. The Branch Manager will make out a
case and submit their reasoned recommendations to the
controlling authorities whenever such claims are to be
made for treating a place as part of a city on the basis of
contiguity.”
The same also does not clearly define the term ‘place’. On the other
hand, it first speaks about ‘urban agglomeration’ as the unit for
payment of HRA and thereafter goes on to speak about ‘town’,
‘municipality’, ‘village Panchayat’ and ‘village’. Then it goes on to say
that for payment of HRA, it is necessary to determine whether place
falls within the area of a village, municipality or the urban
agglomeration.
9. Going by Parts IX and IXA, the Constitution of India classifies
O.P.. No. 995/99 etc. -: 11 :-
places in India into three as ‘Panchayats’, ‘Municipalities’ and
Municipal Corporations, which entities are clearly defined. Going by
the definition of “Metropolitan Area’, and the notification issued by
the Government of Kerala, it is clear that the same includes Municipal
Corporations, Municipalities and Panchayats. HRA is being given to
employees to compensate part of their expenses for residential
accommodation. Different rates of HRA for different places are
prescribed based on the undisputable fact that in places having lesser
density of population, the cost of residential accommodation would be
less and for places having greater density of population, cost of
residential accommodation would be higher. It is common knowledge
that in rural areas, the cost of accommodation is lower and the same
increases as we go to towns and cities. From the notification issued
by the Government of Kerala and the definition of ‘Metropolitan area’,
it is clear that metropolitan area includes Municipal Corporations,
Municipalities and Panchayats. Therefore, the same cannot, by any
stretch of imagination, be the basis for deciding the cost of residential
accommodation and consequently HRA. As is clear from the areas
comprised of the metropolitan area, it is clear that if HRA is to be
determined taking metropolitan area as a unit then there would be no
difference between a city, town or village since the metropolitan area
covers all the three. Then, the very purpose of classification of the
places for paying different rates of HRA for different places would be
defeated. If the argument of the employees is accepted, it would
result in the same rate of HRA for employees in a branch in a city and
a remote village which cannot be countenanced. It would also be
discriminatory since employees of branches identically situated, but
not included in the metropolitan area would not get the same benefit.
11. The counsel for the State Bank of India has made available
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to me a copy of a clarification dated 9-9-1998 issued by the Secretary
to the Chief Manager (PER & HQ), State Bank of India,
Thiruvananthapuram, in this regard, which reads thus:
“With reference to the above, I am directed to inform you
that the cities of Thiruvananthapuram, Kochi and Kozhikode are
not declared as Metropolitan cities, but the three City
Corporations along with adjacent Municipalities and Panchayats
are declared as Metropolitan area to satisfy the provision under
clause (C) of Article 243 P of the constitution of India. The
population of each area is about 10 lakhs and exact details are not
readily available. A copy of G.O(MS) 256/95/LAD dated 14.11.95 is
also enclosed for reference.”
11. In Central Government Service and State Government
Service also, different rates of HRA are fixed for Cities and Towns.
Formerly, in Central Government Service, Cities and Towns were
classified and grouped as ‘A1’, ‘A, B-1 & B2’, ‘C’ and ‘unclassified’ for
deciding the rate of HRA, based on population. As per the latest Pay
Commission Recommendations, the same has been revised thus:
Revised classification of Revised Classification of Rates of HRA as a
Cities and Towns on Cities/Towns percentage of Pay in the
Population Criteria pay band + Grade Pay +
MSP* + NPA*
50 lakhs and above X
(Earlier classified as A-1) 30
50-5 lakhs Y
(Earlier classified as A, B-1
& B-2) 20
Below 5 lakhs Z
(Earlier classified as C and
Unclassified) 10
In Kerala Government Service also, HRA is paid on the following basis
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as is clear from the Pay Revision Order:
“House Rent Allowance
14.(1) House Rent Allowance will be paid at the revised rates based
on pay ranges and classifications of cities/places as shown below:
Pay Range BClass C Class Town Other
Rs. City City/Town not in Places
Rs. Rs. B & C
Class Rs.
Rs.
4300-4589 250 190 190 150
4590-7299 400 280 280
7300-13699 600 390 340
13700-17099 750 500 380
17100-20199 1000 680 380
20200& above 1200 790 380
(2) The State Government employees working in New Delhi and other
States will be eligible for HRA at GOI rates as applicable at that place.
Note: (1) For the purpose of this clause, B Class City means the
cities of Thiruvananthapuram, Kochi and Kozhikode.
(2) “C Class City/Town” means the cities/towns of Alappuzha,
Changanacherry, Kanhangad, Kannur, Kasaragod,
Kayamkulam, Kunnamkulam, Kollam, Kottayam,
Malappuram, Manjeri, Nedumangad, Neyyattinkara,
Palakkad, Payyannur, Ponnani, Quilandy, Taliparamba,
Thiruvalla, Thrissur, Tirur and Vadakara.
(3) “Towns not in B&C Class” means all other Municipal
areas and townships as well as District and
Taluk Head quarters not coming under B&C
Class City/Town.
(4) The rates will apply only to the offices situate within the
City/Municipal, etc limits.”
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There is no reason why for the Bank staff alone a different criterion
should be adopted, which would be discriminatory anyway. In fact, I
am of opinion that there must be uniformity in the pattern of
calculation of HRA and CCA in all Government and public sector
services, since the expenses necessary for house accommodation in
whatever service would be the same.
12. The above discussion shows that for Bank employees also
the unit for deciding HRA should be city/town/village, based on
population of the city/town/village where the branch is situate. I am
unable to find any justification for giving a different meaning for the
term ‘place’ used for prescribing HRA for Bank Staff. Therefore, for
the purpose of HRA to Bank employees the term ‘place’ would mean
Corporation, Municipality and Panchayat where the branch is
situated. That means, if a particular branch is situated in a
Corporation/Municipality/Panchayat where population is more than 12
lakhs, the HRA would be 12% of the basic pay; if the branch is in a
Corporation/Municipality/Panchayat where the population is 2 lakh
and above, HRA would be 10 =% and so on. Any other meaning
given to the term ‘place’ would lead to totally unjust, unreasonable,
discriminatory and anomalous results.
13. City Compensatory Allowance, by the very meaning of the
expression, is meant for compensating a part of the higher costs of
living in cities. The latest Central Pay Commission has made the
following recommendations:
“4.2.7 The present rates of CCA work out to approximately
1% to 5% of the Basic Pay. For most of the employees, the rates
vary between 1 to 2% of the Basic Pay. Big cities usually have
probolems of accommodation and transportation. Specific
allowances in form of House Rent Allowance (HRA) and Transport
Allowance already exist to address these problems. The
classification of regions for the purposes of CCA is mainly basedO.P.. No. 995/99 etc. -: 15 :-
on the size of the population. It has been contended that size of
the population cannot be an adequate index of the expensiveness
of the localities. The Commission also notes that the Consumer
Price Index Numbers measure the changes in the price level over
a period of time at given place and do not indicate variations in
the price levels from place to place at one time. The index,
therefore, does not provide any criteria for classifying cities on the
basis of relative expensiveness.
4.28 Facts discussed in preceding paragraphs may reveal
that CCA does not really address the problem of providing proper
compensation for relative expensiveness of a particular
region/city. The Commission also notes that, apart from the
problems of Housing and Transportation, larger cities and town
have much better facilities than smaller places. As such, no
rationale may now exist for compensating any other factor other
than accommodation and transportation in order to meet the high
cost of living in large cities designated as A1/A/B1/B2 localities.
The Commission is recommending adequate revised rates of HRA
and Transport Allowance separately. Consequently, no rationale
exists for continued payment of City Compensatory Allowance.
Rates of Transport Allowance are being increased substantially
and will subsume the element of CCA. Accordingly, the
Commission recommends abolition of City Compensatory
Allowance. The Commission is aware that as per the extant rules,
not all employees are eligible for Transport Allowance. The
Commission has recommended certain liberalization in the rules
relating to payment of Transport Allowance. This may not,
however, benefit all the employees and there could still be some
isolated cases where the employee remains ineligible for
Transport Allowance. This category of employees will face a loss
in terms of withdrawal of CCA. Such loss, however, cannot be
termed iniquitous as these employees are already well-placed and
most of these will already be enjoying the facility of Government
transport. Further, the loss will be notional as the adequate
increase being recommended by the Commission in salaries and
other allowances will more than make up the loss on account of
withdrawal of CCA in respect of this category of employees.”
In Kerala State Government Service, City Compensatory Allowance is
given only to employees working in offices located within the city
limits of Thiruvananthapuram, Kochi and Kozhikode. I am of opinion
that in Kerala City Compensatory Allowance, if at all, can only be
given to employees of branches situated within city limits of the said
three cities and not to any employees of any other branches.
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14. The Bank employees are a pampered lot. Although Banks
are making profit using money deposited by people and do not
produce anything of their own, because of the position Banks enjoy
in the economy, the bank employees through their unions, enjoy
indefeatable bargaining power and therefore they always get what
they want with the mere threat of a strike, which would paralyse the
economy. They use that bargaining power to gain monetary benefits,
much more than they really deserve, while others who are engaged in
more productive sectors get a far less bargain. In fact, giving of
much higher salary to Bank employees than employees employed in
comparable jobs, tend to create discontentment in other employees in
the public sector. I am of opinion that it is high time the Government
thinks of bringing parity in service benefits between employees of
various sectors doing comparable jobs so that such discontentment
would not lead to uncontrollable situations in future. That being so, I
am of opinion that the petitioners are too avaricious in their claims in
these original petitions.
For all the above reasons, I find absolutely no merit in these
original petitions and accordingly, they are dismissed.
S. Siri Jagan, Judge.
Tds/
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S. Siri Jagan, J.
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O.P. Nos. 995, 1356 & 2032 of 1999
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J U D G M E N T
5th March, 2009.