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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.77 OF 2014

(@SPECIAL LEAVE PETITION (CIVIL.) NO. 16382 OF 2009)

KICHHA SUGAR COMPANY LIMITED

TH. GEN. MANG.

… APPELLANT

VERSUS

TARAI CHINI MILL MAJDOOR

UNION, UTTARKHAND

…RESPONDENT

J U D G M E N T

CHANDRAMAULI KR. PRASAD, J.

Kichha Sugar Company Limited aggrieved by the

order dated 24^th of June, 2008 passed by the

Uttarakhand High Court in WPMS No. 3717 of 2001,

affirming the award dated 12^th of November, 1992

directing payment of Hill Development Allowance

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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 5^th 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

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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

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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 12^th 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.”

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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

othe