JUDGMENT

CHANDRAMAULI KR. PRASAD, J.

Kichha Sugar Company Limited aggrieved by the order dated 24th of June, 2008 passed by the Uttarakhand High Court in WPMS No. 3717 of 2001, affirming the award dated 12th of November, 1992 directing payment of Hill Development Allowance after taking into account the amount received as “leave encashment and overtime wages”, has preferred this special leave petition.

Leave granted.

Facts lie in a narrow compass;

The Government of Uttar Pradesh, by its order dated 5th of January, 1981, had directed for payment of Hill Development Allowance to its employees working at specified hill areas at the rate of 15% of the basic wage. Kichha Sugar Company Limited, the appellant herein (hereinafter referred to as ‘the employer’), being a unit of a subsidiary of U.P. Government Corporation, adopted the same and started paying Hill Development Allowance at the rate of 15% of the basic wage. The workmen demanded calculation of 15% of the said allowance by taking into account the amount paid as overtime, leave encashment and all other allowances. When the employer did not agree to the calculation of the Hill Development Allowance as suggested by the workmen, a dispute was raised. It was referred to conciliation and on its failure, the competent Government made the following reference.

Whether the exclusion of payment of overtime, leave encashment, bonus and retaining allowance while calculating the Hill Development Allowance by the Employer is legal and justified? If not, to what relief, the workmen concerned are entitled to get?

It is common ground that while calculating Hill Development Allowance, the employer has not taken into account any other amount including amount received as bonus, leave encashment, retaining allowance or overtime wages. It is the claim of the workmen that 15% of the Hill Development Allowance is to be calculated and paid after taking into account the payments made under the aforesaid headings. The employer repudiated their claim and according to it, the workmen shall be entitled to 15% of the basic wages as Hill Development Allowance. The Industrial Tribunal gave opportunity to both the employer and the workmen to file their claim and produce material and on consideration of the same, gave award dated 12th of November, 1992 directing the employer to “give Hill Development Allowance to their permanent and regular workers on the amount received regarding leave encashment and overtime wages.” However, the Tribunal observed that “Hill Development Allowance shall not be payable on bonus and retaining allowance or on any other allowances”. The employer, aggrieved by the award preferred writ petition before the High Court, which affirmed the same without any discussion or assigning any reason in the following words:

“9. After going through the aforesaid finding recorded by the tribunal concerned, I find no infirmity or illegality in the impugned award passed by the tribunal concerned and the same is hereby confirmed.”

Before we enter into the merit of the case, it is apt to understand what Hill Development Allowance is. In our opinion, Hill Development Allowances is nothing but a compensatory allowance. A compensatory allowance broadly falls into three categories; (i) allowance to meet the high cost of living in certain, specially costly cities and other local areas; (ii) allowance to compensate for the hardship of service in certain areas, e.g. areas which have a bad climate and/or difficult to access; and (iii) allowances granted in areas, e.g. field service areas, where, because of special conditions of living or service, an employee cannot, besides other disadvantages, have his family with him. There may be cases in which more than one of these conditions for grant of compensatory allowance is fulfilled. It seems that taking into account bad climate and remote and difficult access, the decision was taken to grant the Hill Development Allowance at the rate of 15% of the basic wage.

We have