S. Siri Jagan, J.@mdashBy 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 redefining the Metropolitan areas in the Districts of Thiruvananthapuram, Ernakulam and Kozhikode 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, bipartitte 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 20th June, 1990 with effect from Ist 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.
(ii) Places with population of
2 lakhs and over (other 10%
than places in (i) above)
and State Capitals of
Union Territories
(iii) Places with population of
10,000 and over but 9 1/2
below 2 lakhs
(iv) places with population of 8 1/2
less than 10,000
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 Ist November, 1993 the City Compensatory Allowance shall be payable as per the following revised rates:
A. Clerical Staff
(i) At the higher CCA 4 1/2% 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 1/2% 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 Centres 4 1/2% of basic pay Max. Rs. 125/- P.M.
including the State Goa
(ii) At the lower CCA 3 1/2% of basic pay Max. Rs: 75/-
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 243(c) thereof. Thereupon, apparently assuming that the metropolitan areas so reconstituted 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 pat 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 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 me Constitution of India and shall be known by the name mentioned against each in column (4) thereof, shall be known by the name mentioned against each in column (4) thereof, namely:
------------------------------------------------------------------------------------
Serial No. District Territorial areas Names of Metropolitan
covered by areas
Municipalities
Panchayats
------------------------------------------------------------------------------------
1. 1. Thiruvananthapuram Thiruvananthapuram Thiruvananthapuram
Corporation
2. Thiruvananthapuram Nedumangad Municipality Thiruvananthapuram
3. Thiruvananthapuram Neyyattinkara Municipality Thiruvananthapuram
4. Thiruvananthapuram Attipra panchayat Thiruvananthapuram
5. Thiruvananthapuram Kazhakuttam Panchayath Thiruvananthapuram
6. Thiruvananthapuram Sreejaryam Panchayat Thiruvananthapuram
7. Thiruvananthapuram Kadakampally Panchayat Thiruvananthapuram
8. Thiruvananthapuram Chetticilakom Panchayat Thiruvananthapuram
9. Thiruvananthapuram Ulloor Panchayat Thiruvananthapuram
10. Thiruvananthapuram Vattiyoorkavu Panchayat Thiruvananthapuram
11. Thiruvananthapuram Pallichal Panchayat Thiruvananthapuram
12. Thiruvananthapuram Viappil Panchayat Thiruvananthapuram
13. Thiruvananthapuram Vilavoorkal Panchayat Thiruvananthapuram
14. Thiruvananthapuram Nemom Panchayat Thiruvananthapuram
15. Thiruvananthapuram Kaliyoor Panchayat Thiruvananthapuram
16. Thiruvananthapuram Vizhinjam Panchayat Thiruvananthapuram
17. Thiruvananthapuram Venganoor Panchayat Thiruvananthapuram
18. Thiruvananthapuram Thiruvallom Panchayat Thiruvananthapuram
19. Thiruvananthapuram Karakulam Panchayat Thiruvananthapuram
20. Thiruvananthapuram Aruvikara Panchayat Thiruvananthapuram
21. Thiruvananthapuram Balaramapuram Panchayat Thiruvananthapuram
22. Thiruvananthapuram Kottunkal Panchayat Thiruvananthapuram
23. Thiruvananthapuram Marukil (Malayinkil) Thiruvananthapuram
24. Thiruvananthapuram Maranalloor Panchayat Thiruvananthapuram
25. Thiruvananthapuram Kattakada Panchayat Thiruvananthapuram
II. 1. Ernakulam Kochi Corporation Kochi
2. Ernakulam Thrippunithura Municipality Kochi
3. Ernakulam Perumbavoor Kochi
4. Ernakulam Kalamasserv Municipality Kochi
5. Ernakulam Paravur Municipality Kochi
6. Ernakulam Aluva Municipality Kochi
7. Ernakulam Angamaly Kochi
8. Ernakulam Eloor panchayat Kochi
9. Ernakulam Pallipuram Panchayat Kochi
10. Ernakulam Kuzhupilly Panchayat Kochi
11. Ernakulam Edavanakkd Panchayat Kochi
12. Ernakulam Nayarambalam Panchayat Kochi
13. Ernakulam Mulavukad Panchayat Kochi
14. Ernakulam Njarakkal Panchayat Kochi
15. Ernakulam Cheranallur Panchayat Kochi
16. Ernakulam Kadamakudy Panchayat Kochi
17. Ernakulam Varapuzha Panchayat Kochi
18. Ernakulam Kottuvally Panchayat Kochi
19. Ernakulam Ezhikkara Panchayat Kochi
20. Ernakulam Kodungallur Panchayat Kochi
21. Ernakulam Alengad Panchayat Kochi
22. Ernakulam Churnikkara Panchayat Kochi
23. Ernakulam Edathala Panchayat Kochi
24. Ernakulam Kizhmadu Panchayat Kochi
25. Ernakulam Sreemolanagaram Panchayat Kochi
26. Ernakulam Chenganamadu Panchayat Kochi
27. Ernakulam Nedumbasserry Kochi
28. Ernakulam Kanjoor Kochi
29. Ernakulam Vazhakulam Kochi
30. Ernakulam Chellanam Kochi
31. Ernakulam Thrikkakara Kochi
32. Ernakulam Vadavukodu Kochi
Puthencruz
33. Ernakulam Thiruvankulam Kochi
34. Ernakulam Chottanikkara Kochi
35. Ernakulam Mulamthuruthy Kochi
36. Ernakulam Maradu Kochi
37. Ernakulam Udayamperur Kochi
38. Ernakulam Kumbalam Kochi
39. Ernakulam Kumbalangy Kochi
40. Ernakulam Elamkunnapuzha Kochi
III 1. Kozhikode Kozhilide Corporation Kozhikode
2. Kozhikode Elathur Panchayat Kozhikode
3. Kozhikode Beypore Panchayat Kozhikode
4. Kozhikode Cheruvannur Kozhikode
5. Kozhikode Feroke Kozhikode
6. Kozhikode Kadalundy Kozhikode
7. Kozhikode Ramanattukara Kozhikode
8. Kozhikode Kakkodi Kozhikode
9. Kozhikode Kunnamangalam Kozhikode
10. Kozhikode Olavanna Kozhikode
11. Kozhikode Karuvattur Kozhikode
12. Kozhikode Peruvayal Kozhikode
13. Kozhikode Koduvally Kozhikode
14. Kozhikode Thalakkulathu Kozhikode
15. Kozhikode Nanmanda Kozhikode
16. Kozhikode Kakkur Kozhikode
17. Kozhikode Narikunni Kozhikode
18. Kozhikode Kizhakkoth Kozhikode
19. Kozhikode Chathamangalam Kozhikode
20. Kozhikode Mavoor Kozhikode
21. Kozhikode Chelannur Kozhikode
22. Kozhikode Madavoor Kozhikode
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.
xxxxxxx xxxxxxx xxxxxx
(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. Gong 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 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 Personal and HRD Department of State Bank of India, Local Head Office, Ahemedabad. Clause 10.6.1 read 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 Uran 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 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 Bank''s 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 the 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 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 to me a copy of a clarification dated 9-9-1988 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 243P 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.
12. 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
population criteria in the pay band +
grade pay + MSP + NPA
-----------------------------------------------------------------------------------
50 lakhs and above X (earlier classified as A-1) 30
50-5 lakhs (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 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 classification of cities/places as shown below:
-------------------------------------------------------------------------------
Pay Range B Class C Class Town Other
Rs. City City/Town not in B & C places
Rs. Rs. 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, Chanaganacherry, Kanhangad, Kannur, Kasaragod, Kayamkulam, kunnamkulam, Kollam, Kottayam, Malappuam, Manjeri, Nedumangad, Neyyattinkara, Palakkad, Manjeri, Nedumangad, Neuuattinkara, Palakkad, payannur, 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.
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 1/2% 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 problems of accommodation and transportation. Specific allowances in from of House Rent allowance (HRA) and Transport Allowance already exist to address these problems. The classification of regions for the purpose of CCA is mainly based 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/Bi/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 Allowances 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.
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.
