IMPORTANT POINT
The discontinuance with effect from 1.4.94 of HRA and CCA to employees of Mangalore University is neither violative of Article 14 of the Constitution nor against principles of natural justice. But no recovery shall be effected from any employee for excess payment upto 31.3.1997.

Headnote:Service Jurisprudence-State Govt. discontinuing with effect from 1.4.94 the payment of HRA and CCA to the employees of Mangalore University and action take to recover the excess payment made after 1.4.94 in instalments-Respondents challenged in writ petition-Dismissed-In appeal, High Court allowed it on grounds that it is violative of Article 14 and on account of in-fraction of principles of natural justice-Appeal to Supreme Court-Whether Appellate Bench was right ? (No)-Appeals allowed but protection given not to recover excess amount paid upto 31.3.1997.
Held : We are unable to concur with the view expressed by the Appellate Bench of the High Court that the same yard-stick should have been applied to the employees residing within the limits of Bangalore City Corporation and Mangalore City Corporation both of whom are posted to work outside the Urban Agglomeration. The contention that the criterion of 8 Kms. limit from the periphery of municipal limits should be uniformly applied in the case of all urban areas irrespective of their categorization fails to take note of ground realities. Such extension upto 8 Kms., be it noted, is peculiar to Bangalore city only. Bangalore which is the capital of State of Karnataka is classified as A class city. It cannot stand in comparison with Mangalore city. The manner of spread-over of offices, the pattern of development and the problems relating to housing and habitation will not be the same. If 8 Kms. yard-stick is prescribed in the case of Bangalore city, it does not mean that the same criterion should be applied for all other cities in the State of Karnataka. The complaint based on Article 14 of the Constitution cannot be judged by adopting a doctrinaire approach or by having regard to individual cases. It is not prudent or pragmatic to insist on a mathematically accurate classification covering diverse situations and all possible contingencies in view of the inherent complexities involved in fixing the scales of allowances based on the places of work. It is pointed out in the additional ground filed in S.L.P. that the State Government has adopted Central Government s policy with regard to the pattern of regulation of HRA and CCA in respect of the employees working beyond the Corporation/City municipal limits. While formulating such rules it is difficult to envisage all situations and facts peculiar to a few places here and there. A legislative provision or an executive order of general application does not become unconstitutional merely because, in its actual application, it turns out to be disadvantageous or inequitable to certain individuals or a small section of people. That is not to say that the Government should not take note of individual cases of hardship and afford relief wherever such relief is genuinely needed; but the rule or the provision does not become bad or obnoxious to Article 14 for the reason that the criterion adopted in the case of A class city is not extended to B or C class city. If, as stated, by the learned senior counsel for Respondents, some of the members of University staff are compelled to reside outside the Campus by reason of non-availability of residential quarters, the Respondents have a genuine grievance and on the University authorities or Respondent-Association approaching the Government, we have no reason to think that the Government will not give earnest consideration to the problem. The only other question to be considered is whether the Government Orders impugned in the Writ Petitions are liable to be quashed on account of infraction of principles of natural justice. It is true, in a case of this nature where the payment already made is sought to be recovered, thereby visiting the employees with adverse monetary consequences, the affected employees should have been put on notice and their objections called for. But, it is by now well settled that in all cases of violation of principles of natural justice, the Court exercising jurisdiction under Article 226 of the Constitution need not necessarily interfere and set at naught the action taken. The genesis of the action contemplated, the reasons thereof and the reasonable possibility of prejudice are some of the factors which weigh with the Court in considering the effect of violation of principles of natural justice. When undisputably the action taken is within the parameters of the Rules governing the payment of HRA and CCA and moreover the University authorities themselves espoused the cause of employees while corresponding with the Government, it is difficult to visualize any real prejudice to the respondents on account of not affording the opportunity to make representation. We cannot, therefore, uphold the view of the Appellate Bench of the High Court on this aspect of this case. Though the above discussion merits the dismissal of the Writ Petitions and the denial of relief to the respondents, we are of the view that on the special facts of this case, the employees of the University have to be protected against the move to recover the excess payments upto 31.03.1997. When the concerned employees drew the allowances on the basis of financial sanction accorded by the Competent Authority i.e. the Government and they incurred additional expenditure towards house rent, the employees should not be penalized for no fault of theirs. It would be totally unjust to recover the amounts paid between 1.4.1994 and the date of issuance of the G.O. No.42 dated 13.2.1996. Even thereafter, it took considerable time to implement the G.O. It is only after 5th March, 1997 the Government acted further to implement the decision taken a year earlier. Final orders regarding recovery were passed on 25.3.1997, as already noticed. The Vice-Chancellor of the University also made out a strong case for waiver of recovery upto 31.3.1997. That means, the payments continued upto March 1997 despite the decision taken in principle. In these circumstances, we direct that no recovery shall be effected from any of the University employees who were compelled to take rental accommodation in Mangalore City limits for want of accommodation in University Campus upto 31.3.1997. The amounts paid thereafter can be recovered in instalments. As regards the future entitlement, it is left to the Government to take appropriate decision, as we already indicated above. Subject to the above direction and observation, the appeals are allowed. No costs. (Paras 10, 11 & 12)

JUDGMENT

P. Venkatarama Reddi, J.-The decision taken by the State Government to discontinue with effect from 1.4.1994 the payment of House Rent Allowance (hereinafter referred to as HRA ) and City Compensatory Allowance (hereinafter referred to as CCA ) to the employees of Mangalore University and the consequential action taken by the State Government and the University to recover the excess payments made after 1.4.1994 in instalments was called in question by the respondents herein by filing Writ Petitions under Article 226. The learned Single Judge of the Karnataka High Court declined to grant relief and dismissed the Writ Petitions. However, on an infra-court appeal by the aggrieved employees/association of employees, the Division Bench of the High Court reversed the order of the learned Single Judge and set aside the impugned orders of the Government, thereby allowing the Writ Petitions. It is against this judgment of the Division Bench, these appeals are preferred by the State of Karnataka.

2. The campus of the Mangalore University which was established in the year 1980 is situated at a place called Konaje which is at a distance of about 5 Kms. from the boundary of the Mangalore City Corporation. The payment of allowances - HRA and CCA to the teaching and non-teaching staff of University is regulated by the various Government orders issued from time to time. The State Government makes the fund available to the University for meeting the expenditure towards pay and allowances of the employees. It appears that on account of inadequate housing facilities in the campus, the Government by a G.O. dated 30.11.1984 allowed the HRA and CCA to be paid to the employees residing within the City Corporation area on par with the employees working within the limits of the Corporation. Sanction for such payment was given for three years. The payment was being made in terms of the Government Order dated 30.11.1984, even after the expiry of three years. The Government by an order dated 12.10.1993 extended the benefit for one year from 1.4.1993. It is not in dispute that the payment towards HRA and CCA was made even thereafter at the same rate till the impugned orders came to be passed during the year 1996/1997 to which reference will be made a little later. While so, on the basis of the objection raised by Accountant-General, the Government reconsidered the issue and passed orders on 13.2.1996 in G.O. No. ED : 42 : UDK : 93. It is stated therein that "since Konaje is not under the jurisdiction of Mangalore City Corporation area, HRA and CCA cannot be paid at the same rates from 1.4.1994 onwards". Accordingly, the following order was passed by the Government :-

"Employees of Mangalore University at Konaje have been exempted from the recovery of HRA and CCA paid from 1988-89 to 1992-93 only if they have been resident in the jurisdiction of Mangalore City Corporation Area.

This is subject to the condition that employees of Mangalore University at Konaje shall not be paid HRA and CCA from 1.4.1994 at the rates applicable in the Mangalore City Corporation area."

3. Though in the first para extracted above, recovery was waived upto 1992-93, actually such waiver was upto 31.3.1994 as is evident from what is stated in the subsequent G.O. No. ED :131:UDV:96 dated 24.5.1997. By that G.O. dated 24.5.1997 as well as earlier G.O. dated 5.3.1997 the Government directed the University authorities to recover the excess amount of HRA and CCA paid to the employees of Mangalore University w.e.f. 1.4.1994 in compliance with G.O. No. ED:42:UDK:93 dated 13.2.1996 in 100 monthly instalments as proposed by the Vice-Chancellor of Mangalore University. The suggestion of the Vice-Chancellor to reconsider the decision in the light of inclusion of Konaje within the extended area of Mangalore Urban Development Authority w.e.f. 2.12.1996 was not accepted by the Government. This led to the filing of Writ Petitions in the High Court. The legality of the order

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2002 Supreme(SC) 285

IMPORTANT POINTThe discontinuance with effect from 1.4.94 of HRA and CCA to employees of Mangalore University is neither violative of Article 14 of the Constitution nor against principles of natural justice. But no recovery shall be effected from any employee for excess payment upto 31.3.1997.

IMPORTANT POINT
The discontinuance with effect from 1.4.94 of HRA and CCA to employees of Mangalore University is neither violative of Article 14 of the Constitution nor against principles of natural justice. But no recovery shall be effected from any employee for excess payment upto 31.3.1997.