Gujarat High Court
Rathod Nareshbhai Mansukhbhai vs State Of Gujarat on 30 July, 2025
NEUTRAL CITATION
C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025
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Reserved On : 11/07/2025
Pronounced On : 30/07/2025
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NEUTRAL CITATION
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NEUTRAL CITATION
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FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
==========================================================
Approved for Reporting Yes No ========================================================== RATHOD NARESHBHAI MANSUKHBHAI & ORS.
Versus STATE OF GUJARAT & ORS.
========================================================== Appearance:
MR PERCY KAVINA SENIOR ADVOCATE WITH VIRAL K SALOT, MR V V Page 6 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined GOHEL, MS KHUSHI P JADAV, MR RAJA RAM BAJPAI, MS KHUSHBU D CHHAYA, MR ANKIT SHAH, MR DK CHAUDHARI, MR NP CHAUDHARI, MS VILAS A PURANI, MR VICKY B MEHTA, MR PR ABICHANDANI, MR RUTUL P DESAI, MR JAYPRAKASH UMOT, MR HARDIK D MUCHHALA, MR BIREN J PANCHAL, MR CHIRAG B UPADHYAY, MR NARENDRA L JAIN, MR SP KOTIA, MR KV SHELAT, MR DIPAK B PATEL, MR PARTH A PATEL, MR RR VAKIL, MR NJ KOTHARI, MR ANKIT B PANDYA, MR VAIBHAV A VYAS, MR UM SHASTRY, MR DAIFRAZ HAVEWALA, MR MM TIRMIZI, MR NV GANDHI, MR KAIVAN K PATEL, MR GOPAL M PANDYA, MR GAYATRIBA B JADEJA, MR ASHOK L RAVAL, ADVOCATES for the Petitioners.
MR MITESH AMIN, ADDITIONAL ADVOCATE GENERAL WITH MR KM ANTANI, AGP AND MS MANISHA LAVKUMAR, ADDITIONAL ADVOCATE GENERAL WITH MR RAJ TANNA, AGP for the Respondent(s)-State MR HS MUNSHAW, MR RB THAKOR, MS RV ACHARYA, MR KRUTIK A PARIKH, MR MP PRAJAPATI, MR RAVI B SHAH, for the Respondent(s)- Authorities ========================================================== CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT COMMON CAV JUDGMENT
1. All these petitions are filed under Article 226 of the Constitution of India and the prayers in this group of petitions are identical, involves common question of facts and law and therefore, with the consent of learned advocates for the parties, they are disposed of by this common judgment.
2. At the request of learned advocates for the parties, Special Civil Application No.7651 of 2018 and 7388 of 2018 are considered as lead matters for the sake of adjudicating all these petitions. Rule. Respective learned advocates waive service of notice of rule for respective respondents in each of the petitions.Page 7 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
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3.. The prayers of Special Civil Application No.7651 of 2018 are as under:
"20(A) The Hon'ble Court may be pleased to issue a writ of mandamus and/or writ of Certiorari declaring the impugned report of the High Power Committee dated 08/03/2018 and resolution dated 03/04/2018 as illegal, unjust, arbitrary and non application of mind and thereby, quash and set aside the report of the high Power Committee dated 08/03/2018 and the resolution dated 03/04/2018.
(B) The Hon'ble Court be pleased to declare that the decision taken by the High Power Committee is in a mechanical manner and the same is required to be quashed and set aside and further direct the respondent authority to pay HRA at 20% and CLA as per basic salary of the petitioners from the date of their appointment and HRA at 20% as per norms of the Sixth Pay Commission with effect from 01.04.2009 and further be pleased to hold that the petitioners are serving at a place covered under Bhavnagar Urban Agglomeration which includes the extended limits of Bhavnagar Municipal Corporation and the peripheral limits of 8 Kms as per the definition of Urban Agglomeration in the interest of justice.
(C) Pending hearing and final disposal of the present petition the Hon'ble Court be pleased to suspend further implementation/execution of the impugned resolution dated 03/04/2018 and refrain the respondents from making any Page 8 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined recovery from the respective petitioners forthwith in the interest of justice.
(D) Pending hearing and final disposal of the present petition the ad-interim relief granted earlier by this Hon'ble Court in Special Civil Application No.1791 of 2007 and allied matters may be continued till the final disposal of the petition in the interest of justice.
(E) xxxxx"
3.1 The facts of this petition, as stated in the petition, are such that by a general resolution dated 15.12.1975, the government had laid down a policy that if any employees serving in a village is not in a position to get accommodation in such village because of non-availability of suitable accommodation in such village and because of that, if he has to reside in a city which is within 8 kms., of the place of employment, he is entitled to House Rent Allowance (HRA) at 15%; by a detailed resolution dated 20.1.1998, the State Government had laid down the policy and the employees stationed at `A' class city are entitled to get 15% HRA and CLA as per their basic salary and the said circular is applicable to the employees serving in primary, secondary, higher secondary and non-governmental schools and therefore entitled to get HRA at 15% and CLA as per their basic salary; the Finance Department of Government of Gujarat has Page 9 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined passed a resolution dated 25.2.2000 and withdrew the benefits of HRA to the employees who are serving outside the periphery of 8 Kms of classified city and the said benefit of HRA was sought to be reduced from 15% to 5% of the salary, as the District Primary Education Officer misinterpreted the Government Resolution dated 25.2.2000 and decided that the petitioners are not entitled for 15% HRA and CLA but only entitled to 5% HRA and no CLA at all; the Finance Department of State of Gujarat, vide resolution dated 16.5.2008, had prepared a list of boundaries of various cities showing agglomeration areas on the basis of census report of 2001; the Finance Department, Government of Gujarat, vide its resolution dated 27.2.2009 accepted the recommendations of the Sixth Pay Commission and increased the HRA from 15% to 20% with effect from 1.4.2009; that petitions involving similar facts and identical issues for grant of 20% HRA and proportionate CLA, came to be decided by common judgment dated 5.7.2016 passed in Special Civil Application No.1791 of 2007 directing the State Government to constitute High Power Committee and to adjudicate the grievance of the petitioner in reference to granting benefits of HRA and CLA; pursuant to the same, the High Power Committee was constituted and the committee submitted its report to the State Government by observing that as suggested by the Hon'ble Deputy Chief Minister the final Page 10 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined decision in reference to grant of HRA in proportionate to CLA would be left open for the sub-committee constituted under the 7th Pay Commission; pursuant to the said report, the Finance Department vide resolution dated 3.4.2018 directed the concerned authorities to initiate recovery proceedings against respective writ petitioners with effect from 8.5.2018. Hence, this petition is filed.
3.2 The prayers of Special Civil Application No.7388 of 2018 are as under:
"30(A) The Honourable Court be pleased to issue writ of Mandamus or any other appropriate writ, order or direction by quashing and setting aside the report dated 08/03/2018 passed by the High power committee constituted in pursuance to the order dated 05/07/2016, passed by this Honourable Court and consequent circular dated 03/04/2018 of the respondent no.2 by declaring the same as illegal, arbitrary, result of non application of mind, and violative of Article 14 of the Constitution of India and be further pleased to direct the respondent authorities to pay the HRA @ 20% and CLA as per basic salary of the petitioners by holding that the petitioners are serving at a place covered under the Ahmedabad Urban Agglomeration in the interest of justice;
(B) Pending hearing and final disposal of the present Page 11 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined petition the Honourable Court be pleased to stay the implementation, operation and execution of the report dated 08/03/2018 passed by the High power committee constituted in pursuance to the order dated 05/07/2016, passed by this Honourable Court and consequent circular dated 03/04/2018 of the respondent no.2 and be further pleased to direct the respondent authorities to continue to pay HRA @ 20% and CLA as per the basic salary of the petitioners in the interest of justice.
(C) The Honourable Court be pleased to grant prayer in terms of Prayer [B] on such condition which the Honourable Court may deem fit in the interest of justice. (D) xxxx"
3.3 The facts, in brief, as stated in the petition are such that the Government has laid down a policy by resolution dated 15.12.1975 that if any employee serving in a village is not in a position to get accommodation in such village because of non-availability of suitable accommodation in such village and because of that, if he has to reside in a place which is within 8 kms., from the place of employment, he is entitled to House Rent Allowance (HRA); on the basis of the recommendations of the Fifth Pay Commission (Central), the state government has adopted revisions of Pay Rules w.e.f. 01.01.1996 and the provisions with regard to HRA came into existence w.e.f. 01.08.1997; by a resolution Page 12 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined dated 25.02.2000, it has been resolved that the employees serving within 8 kms of classified cities are not entitled to get HRA at the rate prescribed for the classified city and that they are entitled to get HRA at the rate of 5% as specified for the non-classified city; the resolution dated 18.5.2000 passed by the State Government whereby it is clarified that the resolution dated 25.02.2000 is not applicable to the employees serving within the classified cities and its Urban Agglomeration (UA) and for deciding the UA of any city, the base would be census data of the government, at relevant point of time, the base would be census data of 1991; thus, the employees serving in an institution situated within UA of a particular classified city as `A', B1 and B2 are entitled to get 15% HRA plus CLA as per norms and classified city as `A1' are entitled to get HRA @ 30%; by a resolution dated 16.05.2008, the state government has changed the base of urban agglomeration from census data of 1991 to census data 2001 and continued the benefit of HRA and CLA as per the notification dated 20.1.1998; by resolution dated 12.2.2009, the state government has accepted the recommendation of sixth pay commission, and the earlier classification as `A-1', `A', `B-2', and `C' are re-classified as `X', `Y' and `Z' and that the employees of `X' city are entitled to get HRA @ 30% and employees of city `Y' are entitled to get HRA @ 20% w.e.f. 01.04.2009; by government Page 13 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined resolution dated 27.2.2009, revised pay structure under the Gujarat Civil Service (Revision of Pay) Rules, 2009 came to be introduced, whereby the resolution dated 20.1.1998 came to be amended and the HRA for classified city X is increased to 30% and for Y class increased to 20%.
3.4. That the petitioners are serving in a school situated within Gandhinagar including AUDA limit, which can be a part of the Ahmedabad Urban Agglomeration; that though the central government has upgraded the Ahmedabad as metro city and classified a `X' city w.e.f. 01.04.2015, with benefit of 30% of HRA, the state government has not extended such benefit to the employees of the state government, by not declaring the area of the petitioners as urban agglomeration of the Greater Ahmedabad and therefore, petitioners preferred various petitions before this Court and after hearing the parties, the interim orders were passed directing the respondents to give HRA at the rate of 20% and proportionate CLA, subject to filing of undertaking before this Court; thereafter, all the petitions were taken up for final hearing and on a suggestion made on behalf of the state government that entire issue may be asked to be looked into by the High Power Committee which may be constituted by the State Government, this Court, without entering into the merits of the matters, referred the matter Page 14 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined to the committee constituted by the State Government and the interim relief granted in favour of the respective petitioners was extended till an appropriate decision is taken by the committee and two months thereafter; in furtherance to the said order, the representatives of the petitioners appeared before the committee and submitted detailed written submissions, the committee of the State Government has declined to entertain the issue and passed a report dated 8.3.2018, which is accepted by the State Government in toto;
on the basis of the said report, the Finance Department issued a circular dated 3.4.2018, whereby it is directed to start recovery of the amount of HRA received by the respective petitioners by virtue of interim orders of this Court. Hence, this petition is filed.
4. The initial order passed in these petitions is as under:
"Notice, returnable on 09th July, 2018. Time granted as per clause (V) of paragraph 38 of the order dated 05.07.2016 passed in Special Civil Application Nos.1791/2007 and allied matters shall stand extended till the next date of hearing. However, it is clarified that the decision taken by the State Government is not stayed.
Direct service is permitted."Page 15 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
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5. The said interim order which is dated 29.10.2007 passed in the lead matter being Special Civil Application No.27842 of 2007 reads as under:
"5. There shall be ad interim relief in terms of para 19(C) on a condition that the petitioners shall have to file an undertaking to the effect that in the event they lose in the petition, then, they will refund the amount of 15% HRA as well as the CLA to the respondent authority with interest thereon at the rate of 9 per cent per annum. Petitioners are also directed to supply copy of such undertaking to the School Management and the office of the District Education Officer."
The said order is continued from time to time.
6. At the outset, a reference to the observations made by the coordinate Bench of this Court (J.B.Pardiwala, J (as His Lordship then was), while disposing of the Special Civil Application no.1791 of 2007 with allied matters, would be relevant:
"4. The writ applications have been filed seeking the benefits of the rate of House Rent Allowance (for short, 'H.R.A.') and Compensatory Local Allowance (for short, 'C.L.A.') in view of Page 16 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the various amendments to the Gujarat Civil Services (Revision of Pay) Rules, 1998 with effect from 1st January 1996, which are statutory in nature and the consequent resolution of the State Government dated 20th January 1998.
23. Thus, it appears from the judgment of this Court referred to above that the State Government was directed to carry out the exercise within three months to identify the villages falling within the radius of eight kilometers from the Municipal limits.
● SUBMISSIONS ON BEHALF OF THE WRIT
APPLICANTS:
24. It has been vehemently submitted by the learned counsel appearing for the writ applicants that the writ applicants are entitled to the H.R.A. and C.L.A. and the denial thereof is not justified in law.
25. The crux of the matter is the interpretation of the Government Resolution and the definition of urban agglomeration i.e. whether the village, where the school is situated, is within the urban agglomeration or not.
26. According to the learned counsel, had the State Government would not have undertaken the necessary Page 17 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined exercise, as directed by the Division Bench in the judgment and order referred to above, then probably, by now, this issue would have stood resolved.
27. The State Government has accepted the Fifth Pay Commission and Sixth Pay Commission recommendations, wholly by making the appropriate amendment in the Gujarat Civil Services (Revision of Pay) Rules, 2009, and have accepted even the revised classification with effect from 1st April 2009. Thus, principally agreeing to pay 30% H.R.A. to the cities and urban agglomeration with more than 50 lac population, and therefore, the State Government is bound to pay the decided rate of the H.R.A. since it forms the part of the Gujarat Civil Services (Revision of Pay) Rules, 2009.
28. Even the Government of Gujarat, Finance Department, showing the revised rates of the H.R.A. and C.L.A., at Annexure : 'G', page 39, entitles the writ applicants - employees to get the benefit of classification of cities - urban agglomeration and when 2001 census is accepted and the said urban agglomerations are acted upon, there is no reason why the urban agglomerations decided on the basis of 2011 census should be included which the writ applicants are getting as of now.Page 18 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined
29. In view of the Government of India changing the classification of Ahmedabad city from A1 category to "X"
category of cities with effect from 1st April 2015, on the basis of census 2011, and thereby, the employees having their place of services within the Ahmedabad urban agglomeration as per census 2011 with Ahmedabad urban agglomeration as "X" classified city, shall get 30% H.R.A. and C.L.A. from 1st April 2015 and the Central Government employees serving in the Ahmedabad urban agglomeration, being "X" category classified city, have been getting 30% H.R.A. and proportionate C.L.A. since 1st April 2015.
● STANCE OF THE STATE GOVERNMENT:
30. According to the State Government, the different rates for the different classified cities has been fixed at the minimum rate of 10% and maximum 30%. It has been accepted by the State Government that the earlier classification from A1, B1, B2 has been changed to "X", "Y"
and "Z" categories. However, in view of the existing policy, the writ applicants are not justified to seek any relief beyond the policy of the State Government on the basis of the 2001 census. To put it in brief, according to the resolution dated 27th February 2009, modifying the Government Resolution dated 20th January 1998, the writ applicants are not entitled to the H.R.A. and C.L.A. Page 19 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined
31. The petitioners, in the present proceedings, are seeking directions for payment of the H.R.A. and C.L.A. as per the circular of the State Government. In this regard, the case of the State Government, according to the existing policy, is that the cities are classified under the urban agglomeration, by which, a government, employee would be entitled for the H.R.A. and C.L.A. In this regard, those cities not falling under the classified urban agglomeration would not get any benefit of the H.R.A. and C.L.A. It is submitted that the cities, which are not falling under the radius of the eight kilometers, would not be qualified in the urban agglomeration.
32. On behalf of the State Government, it is submitted that the cities are classified into the different categories and based on the classification of cities under the different categories, the payment of the H.R.A. and C.L.A. would be decided. Therefore is no provision in the policy of the State Government for making up and down and that the writ applicants are required to stay at the place of occupation.
33. On behalf of the State Government, it is submitted that a huge burden to the public exchequer would follow once the payments of H.R.A. and C.L.A. are increased. Even though the writ applicants have produced undertakings on record, it Page 20 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined would be difficult for the respondents - State to decide the entitlement of each of the Teachers as many have retired.
34. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is whether the writ applicants are entitled to the reliefs prayed for in these writ applications.
35. In the course of the hearing of the matters, it was suggested on behalf of the State Government that the entire issue may be asked to be looked into by a High Power Committee that the State Government may constitute. All the learned counsel appearing for the writ applicants agreed to this and submitted that six or seven persons amongst the writ applicants shall appear before the committee for the purpose of submissions and they will also file written representation in this regard with the necessary materials. I am also of the opinion that the State Government will have to reconsider the entire issue a fresh, more particularly, in the wake of the recent developments, and for that purpose, the decision of the State Government, to constitute a High Power Committee, appears to be quite just and proper. I could have adjudicated the controversy on merits without referring the issue for being considered by a High Power Committee, but as the State Government itself wants to have a relook or reconsider the issue in the wake of Page 21 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined subsequent developments, then I should permit the State Government to adopt the course of action they have proposed.
36. It is understood that the State Government will constitute a committee consisting of the following members:
(i)Chief Secretary of the State.
(ii)Principal Secretary - General Administration Department
(iii)Principal Secretary - Education Department
(iv)Principal Secretary - Finance.
(v)An Educationist familiar with the subject that the State may choose.
37. The list of representatives, who would be appearing before the committee, is as under:
Sr.N Name of Representatives appearing before the o. Committee on behalf of the writ applicants Narehdra gohel President, Ahmedabad District P.T.F. 1 (Primary Teachers Federation) Bareja Primary School, Daskroi.
2 Ashvinbhai R Patel Teacher's Representative Cluster Research Centre (CRC) Co-ordinator Page 22 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined CRC Dhamatran Taluka, Daskroi.
Hareshbhai G. Patel Principal, Higher Secondary 3 Sharda Shikshan Tirth High School, Paldi, Kankaj, Taluka Daskroi, Member of Principal Federation Jagjivanbhai Patel Secretary, 4 Ahmedabad District Primary Teachers' Federation Garodiya Primary School, Sanand, Ahmedabad.
Karansinh Bihola 5 Head Clerk, Shrimati Manekba Krushi Vidhyalaya, Adalaj, Dist: Gandhinagar Jayendrabhai Bhatt 6 Clerk, Sarvajanik Vidhyalaya, Kanbha, Taluka : Daskroi, Ahmedabad 38 In view of the above, I pass the following order:
(I) The State Government will constitute a committee, as noted above, at the earliest, and the committee shall make all possible endevours to see that an appropriate decision is taken within a period of six months from the date of the constitution of the committee.Page 23 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined (II) The representatives of the writ applicants shall appear before the committee and make their submissions.
(III) The committee shall hear those representatives on behalf of the writ applicants.
(IV) It shall be open for the representatives to file their written submissions with the necessary materials in that regard.
(V) The adinterim relief, which is operating in favour of each of the writ applicants, shall continue till an appropriate decision is taken by the committee, and the report is filed before the State Government. The adinterim relief shall also continue thereafter i.e. after the report of the committee for a further period of two months.
(VI) The undertakings given earlier by the writ applicants shall continue to operate till the decision is taken by the committee.
(VII) The committee shall give detailed reasons in support of its conclusion.
39. With the above observation and directions, all these writ applications are disposed of in the above terms. It is Page 24 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined clarified that if ultimately the writ applicants are dissatisfied, in any manner, with the decision of the State Government, which may be taken, on the basis of the report of the committee, then it shall be open for the writ applicants to once again avail of an appropriate legal remedy before the appropriate forum in accordance with law. I clarify that I have otherwise not gone into the merit of the matter."
7. Pursuant to the above order passed by this Court, the State Government has constituted a High Power Committee, the report of which, translated into English, reads as under:
"Report of the committee constituted under the chairmanship of the Chief Secretary by the Resolution dated 30/07/2016 of the Finance Department as directed by the judgment dated 05/07/2016 of the Hon'ble High Court in SCA No. 4272/2016 and other petitions filed regarding the payment of Compensatory Local Allowance (CLA)/ House Rent Allowance (HRA) to the State Government employees.
(1) The Cities/Urban Agglomerations re-classified on the basis of Census-2001 are taken into consideration for the payment of Compensatory Local Allowance (CLA)/House Rent Allowance (HRA) to the State Government employees as per the Page 25 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Resolution dated 16/05/2008 of the Finance Department referred above. The Compensatory Local Allowance/House Rent Allowance is paid as per the revised rates fixed by the Resolution dated 27/02/2009 of the Finance Department after the implementation of the Sixth Pay Commission, but considering the Cities/Urban Agglomerations classified on the basis of Census-2001 as per the Resolution dated 16/05/2008 of the Finance Department. The Central Government has re-
classified cities for the payment of House Rent Allowance to Central Government employees on the basis of Census-2011 as per the Office Memorandum dated 21/07/2015 of the Government of India. No decision has been taken by the State Government regarding the re-classification of cities for the payment of House Rent Allowance to State Government employees on the basis of the Census-2011.
(2) Recently, a large number of petitions were filed in the Hon'ble High Court regarding the payment of Compensatory Local Allowance/ House Rent Allowance to the employees/teachers of educational institutions and employees of certain offices, as per the revised rates fixed by the resolution dated 27/2/2009 of the Finance Department, but considering the cities/urban agglomerations classified by the resolution dated 16/5/2008 of the Finance Department on the basis of Census- 2001 upon their inclusion in the list of the above-mentioned cities, and to pay the Compensatory Local Allowance/ House Rent Allowance as per the rates applicable to them from Page 26 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined 01/04/2015 upon their inclusion in new urban agglomerations considering the facts of the census-2011. Wherein, the Hon'ble High Court has passed various orders by way of Conditional Interim Orders for the payment of compensatory local allowance/house rent allowance at the rates applicable to the urban agglomerations revised as per census-2011. Vide the judgment dated 05/07/2016 in SCA No. 4272/2016 and other petitions, the Hon'ble High Court has directed to constitute a committee of Superior Officers of the State Government to take an appropriate decision within six months and submit the report to the State Government.
(3) In view of the directions issued by the Hon'ble High Court vide Judgment dated 05/07/2016, the State Government has constituted a committee of the following officers by resolution dated 30/07/2016 to take an appropriate decision regarding the payment of compensatory local allowance/house rent allowance payable to State Government employees.
1) The Chief Secretary - Chairman
2) The Additional Chief Secretary - Finance Department
3) The Additional Chief Secretary (Personnel) - General Administration Department
4) The Principal Secretary - Education Department
5) Dr. Pankaj Jani, Vice Chancellor / Baba Saheb Ambedkar Open University, Gujarat State. (As recommended by the Education Department) Page 27 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined (4) As per the order of the Hon'ble High Court, six representatives appointed to represent the petitioners submitted a joint written representation to the committee on 10/09/2016. A meeting of the committee was held on 07/12/2016 presided by the Chief Secretary and six representatives of the petitioners suggested by the Hon'ble High Court were also communicated vide letter dated 03/12/2016 of the Finance Department to remain present before the committee for representation in person. Mr.Narendra Gohel, President, Ahmedabad District Primary Teachers Federation and Mr.Ashwin R. Patel remained present before the said committee and their representation was heard by the Chairman of the committee.
(5) Background - and details of resolutions passed in stages.
1) The Local allowance (CLA) and House Rent Allowance (HRA) are provided under Rule-334 of the Mumbai Civil Services Rules, 1959. HRA/CLA is paid considering the place of duty of the employees. Generally, if the place of duty of an employee is within the limits of the municipality of a particular city or urban agglomerations, the HRA/CLA is paid accordingly. The HRA/CLA was not admissible earlier in the cases of unclassified cities.
2) The HRA/CLA was being paid according to the place of duty of the employee within the Municipality limits of Page 28 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined a particular city, and in cases where cities were not classified, the HRA/CLA was not admissible. Making minor modification therein, it was held by the Government vide Provision-1(3) of the Resolution dated 15/12/1975 of the Finance Department that if the place of duty of a government employee is near the limits of a city classified for payment of HRA/CLA and the employee has to reside in the classified city, then House Rent Allowance will be payable at the rate admissible to the classified city under the following conditions:
(a) The distance between the place of duty and the municipal limits of the classified city should not be more than eight kilometers.
(b) The employee has to reside in the classified city due to the unavailability of residential accommodation near the place of duty.
Thus, the HRA/CLA was admissible at the rate of the classified city to the employees, having the place of duty within the radius of eight kilometers of the municipality area per the provisions of the said resolution of the Finance Department. However, at that time also, the HRA/CLA was not admissible in the cases of unclassified cities.
3) Upon implementation of Fifth Pay Commission for the State Government Employees w.e.f. 01/01/1996, revising Page 29 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the rates of HRA and CLA vide Resolution dated 20/01/1998 of the Finance Department, list of classified cities was annexed with the said resolution vide Annexure-1 for the CLA and list of classified cities was annexed with the said resolution vide Annexure-2 for the HRA. Following has been provided for the classification of the cities and rates thereof. (As per the list of classified cities on the basis of Census- 1991).
Compensatory Local Allowance:
Amount of CLA in class of cities Pay Range (in Rs. P.M.) (Basic Pay) B-
A-1 A B-2 1 Below Rs.3000/- 90 65 45 25 P.M. Rs.3000/- P.M. to 125 95 65 35 Rs.4499/- Rs.4500 to 15 10 200 65 Rs.5999 0 0 Rs.6000 and 24 18 300 120 above 0 0 House Rent Allowance: Page 30 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined A-1 30% of actual basic pay drawn A, B-1, 15% of actual basic pay drawn B-2 C 7.5% of actual basic pay drawn Unclassif 5% of actual basic pay drawn ied
Thus, it was provided that besides the classified cities, HRA is admissible to the employees in unclassified cities at the rate of 5% of the basic pay drawn as mentioned above vide resolution dated 20/01/1998 of the Finance Department.
4) Thus, it has been provided vide resolution dated 20/01/1998 mentioned above that HRA is admissible at the rate of 5% of the basic pay drawn at unclassified places of duty and therefore, the condition of the resolution dated 15/12/1975 mentioned in paragraph-2 above, which was providing that employees whose places of duty was outside the municipal limits of a classified city but the distance between the place of duty and the municipal limits was not more than eight kilometers, would be granted HRA/CLA at the rate applicable to classified cities, was canceled vide Resolution dated 25/02/2000 of the Finance Department.
Thus, it becomes apparent that the provision that the Page 31 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined HRA/CLA is admissible to the employees working within the radius of eight kilometer of any municipal limit as per the municipal rates of the classified city is no longer to be taken into consideration after the resolution dated 25/02/2000 of the Finance Department.
5) Moreover, it has been clarified regarding the aforesaid matter vide resolution dated 18/05/2000 of the Finance Department that HRA and CLA, as mentioned in the resolution, are admissible to the employees of the government offices situated in urban agglomerations of classified cities as per the resolution dated 20/01/1998. In other unclassified areas, only House Rent Allowance at 5% will be admissible. In addition, for the information of concerned offices, a list of Urban Agglomerations (U.A.) issued by the District Census Handbook Unit on the basis of census-1991, was also enclosed. Thus, HRA/CLA was now admissible to only the urban agglomerations mentioned in the said list as per the provisions of the resolution.
6) For the employees of Central Government, the Expenditure Division of the Finance Ministry of Central Government had issued the office-note dated 18/11/2004 and 15/01/2007 on the basis of the revised classification of cities based on the Census 2001. On the basis of the said Office-Note, vide the Resolution Page 32 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined dated 16/05/2008 of this Department, the revised List of Classification of Cities as per Census 2001, as shown in the resolution, was published vide Schedule 1, 2 and 3. However, the rates of H.R.A. as well as C.L.A. were kept unchanged as shown in the Resolution dated 20/01/1998, i.e. as per the above para-
3. The rates as per the revised List of Classification of Cities were made applicable with effect from the date of resolution, i.e. 16/05/2008. Thus, pursuant to the Finance Department Resolution dated 16/05/2008, the revised List of Classification of Cities as per Census 2001 was applicable and H.R.A./ C.L.A. is being paid accordingly, however, as shown at Para-3 above, its rates were kept unchanged.
7) As the Sixth Pay Commission was implemented with effect from 01/01/2006, on the basis of the recommendations of the Pay Commission, even the State Government, vide its resolution dated 27/02/2009 of the Finance Department, as a part of implementation of the Sixth Pay Commission, has revised the rates of H.R.A. / C.L.A. as well as Classification of Cities, i.e. the earlier four categories - A1/A, B1, B2/C and Unclassified, as shown in the table below, which came to be implemented at the time of Fifth Pay Commission vide the Finance Department Resolution dated 20/01/1998.
Page 33 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined House Rent Allowance Housing Rent Revised Classification of Allowance Cities Rate X (Earlier A1) (Population of 30% 50 lakh and more) Y (Earlier A, B1, B2) (Population more than five 20% lakh and less than 50 lakh) Z (Earlier C, Unclassified) (Population less than five 10% lakh) Compensatory Local Allowance Amount of CLA in class of Grade Pay Cities (in Rs. P.M.) Y X (earlier (earlier Classificati classification -
on A, B1 A1) & B) Rs.2400/-
300 240 and above Rs. 1800 & 200 150 Page 34 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined above & below Rs. 2400 Below Rs. 125 95 1800 It is to clarify here that, the Revised
Classification of Cities based on Census 2001, as shown at Schedule 1, 2 and 3 of the Resolution, was published by the Finance Department vide the Resolution dated 16/05/2008, wherein no change was made vide the Resolution dated 27/02/2009 post implementation of the Sixth Pay Commission. It means, with regard to classification of cities, the list as determined vide the above stated resolution was applicable. Whereas, the rates of H.R.A. and C.R.A. which became applicable post the Sixth Pay Commission and the method of Classification of Cities as X, Y and Z were determined vide the Resolution dated 27/02/2009. (Post implementation of the Sixth Pay Commission, the Central Government has discontinued C.L.A.)
8) Now, the revised list of urban agglomerations as per the re-classification on the basis of Census 2011 has been Page 35 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined issued by the Government of India for the purpose of H.R.A. and 01/04/2015 has been determined as the effective date.
9) Now, Ahmedabad (Urban Agglomeration) is to be included in the category X (earlier A-1), only if the State Government resolves to implement the said Revised List and consequently, H.R.A. at the rate of 30% becomes payable to the employees working in the area. Moreover, as per the Revised Classification, for the 'Y' Category Cities (earlier A, B1, B2), i.e. newly added Urban Agglomerations to Rajkot (Urban Agglomeration), Jamnagar (Urban Agglomeration), Bhavnagar (Urban Agglomeration), Vadodara (Urban Agglomeration and Surat (Urban Agglomeration), will be entitled to the benefits of H.R.A./C.L.A. at the rate of 20%.
(6) The main issues of the common representations made by the Petitioners are as under.
1) A List of Areas included in the Ahmedabad Urban Agglomeration as per Census 2011, has been obtained from the Deputy Director, Directorate of Census Operations, by the Convener of the Gandhinagar District Education Union Co-ordination Committee. As mentioned in the said List, henceforth, 65 urban agglomerations have been included in the Ahmedabad Urban Agglomeration as per Census 2011 and it is Page 36 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined submitted that as Ahmedabad (Urban Agglomeration) has been included under Category 'X', the employees working therein are entitled to H.R.A. at the rate of 30%.
2) In view of the Office Memorandum dated 21/07/2015 of the Government of India, the revised urban agglomerations shall be re-categorized as per Census 2011 and, henceforth, Ahmedabad (Urban Agglomeration) is to be included in Category X and accordingly, employees of about 65 urban agglomerations included therein shall be given benefits of H.R.A. at the rate of 30% with effect from 01/05/2015.
3) It has been represented that, the employees of C.B.S.E. affiliated schools of the Central Government in Ahmedabad are receiving H.R.A. at the rate of 30% as per 'X' category since May 2015 and when the State Government has, in principle, agreed to pay H.R.A. at the rate of 30% for 'X' Category cities vide its Resolution dated 27/02/2009, there is no reason for the State Government to discriminate between the two employees by not giving benefits to its employees in Ahmedabad, accordingly. Not giving such benefits to the employees of State Government is likely to violate Article 14, 16 and 21. The State Government should Page 37 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined include Ahmedabad (Urban Agglomeration) in Category 'X' as per the Census 2011 and employees working therein should be given the benefits of H.R.A. at the rate of 30% with effect from 01/05/2015.
4) As per the Finance Department Resolution dated 16/05/2008, Ahmedabad and Surat have been included under Category 'A' Cities. As per the Resolution dated 27/02/2009 of the Finance Department, classification of cities have been revised wherein the earlier A1 has been replaced with 'X' and Categories A, B1 and B2 have been replaced with category 'Y' and accordingly, henceforth, cities of Ahmedabad and Surat have been included in Cateogry 'Y'. As the places of duty of the Petitioners are included in Ahmedabad, Surat Urban Agglomerations as per Census 2011, they too are entitled to the benefits of H.R.A. at the rate of 20% and accordingly, approval should be given.
5) The employees of Central Government have been given the benefits of H.R.A. after the re-classification of cities as per the revised urban agglomerations as per Census 2011 vide the Office Memorandum dated 21/07/2015 of the Government of India. The Petitioners have submitted that as per the Office Memorandum of the Central Government, Ahmedabad is included in Category 'X' and the State Government has also agreed, in principle, to 30% H.R.A. for its employees in Page 38 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Category 'X' vide the Resolution dated 27/02/2009 of the Finance Department and accordingly, such benefits should be given with effect from 01/05/2015.
(7) State Government's stand:
1) The State Government, in exercise of the powers conferred under Article 309 of the Constitution of India, has laid various provisions, to regulate H.R.A./C.L.A., under Chapter-IV of the Gujarat Civil Services (Additions to Pay) Rules, 2002. The provisions as to terms and conditions and rates for paying H.R.A./C.L.A., classification of cities etc. have been laid by the State Government vide the stated rules. The stated provisions, with regard to the rates and classification of cities, have been revised from time to time on the basis of various Pay Commissions and Census. Thus, the State Government is required to pay H.R.A./C.L.A. only in accordance with the Rules framed by itself.
2) As the Fifth Pay Commission came in effect from 01/01/1996 for the employees of State Government, the Finance Department, vide the Resolution dated 20/01/1998, revised rates of H.R.A. as well as C.L.A. and issued List of Classification of Cities at Annexure-
1 for C.L.A. and List of Classification of Cities at Annexure-2 for H.R.A., as appended to the Resolution. As it has been provided vide the Resolution dated Page 39 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined 20/01/1998 that Housing Rent Allowance is payable at the rate of five percent of basic pay even for the unclassified places of duty, vide the Finance Department Resolution dated 25/02/2000, the condition was revoked which provided, vide the Resolution dated 15/12/1975, that an employee is entitled to H.R.A./C.L.A. on the basis of respective category of the city, in the instances, where his place of duty is outside municipal limit of a categorized city but the distance between the place of duty and the municipal limit is not more than 8 km. Thus, it is very much clear that after the Finance Department Resolution dated 25/02/2000, the provision is not required to be taken into consideration which stipulated that in instance of an employee having place of duty in an area within 8 km of any municipal limit is entitled to H.R.A./C.L.A. at the rate applicable to respective classification of the municipal area. Thus, the submission, that the petitioners having their place of duty within the radius of eight Km. of a municipal limit should be paid H.R.A./C.L.A. at the rate applicable to the respective municipality, cannot be accepted.
3) In various petitions, one of the submissions of the petitioners is that the Government of India's website, http://www.censusindia.gov.in/, defines the Gujarat-
Page 40 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Ahmadabad Urban Agglomeration under Item No. 4, wherein it has been stated as "Ahmedabad Urban Agglomeration - 5 km (a) Ahmedabad Municipal Corporation." This implies that the area within a five- kilometer radius from the limit of the Ahmedabad Municipal Corporation becomes part of the Ahmedabad Urban Agglomeration of the Ahmedabad Corporation. Therefore, various villages/areas falling within five kilometers of the Corporation's limit should also be considered part of the Ahmedabad Urban Agglomeration, making them eligible for 20% H.R.A. benefit from 01/04/2009 as per the Finance Department's resolution dated 27/02/2009.
The definition of "Urban Agglomeration" provided on the website is likely for census purposes or to aid in its understanding. After the census, the central government mentions the districts of the respective States, the name of the urban agglomeration under that district, the parts of the urban agglomeration included in that urban agglomeration, and thus, in a phased manner, its parts are mentioned separately for each urban agglomeration. It means that, specific names are given as to how many parts of an urban agglomeration are included in which urban agglomeration. The State Government then issues the necessary resolutions, including a list of names for Page 41 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined HRA/CLA purposes based on this census data only. Thus, after mentioning the urban agglomeration included based on the census data, the submission of the petitioners to include the parts included within an area of five km from the corporation based on the said definition, even though they are not mentioned in the urban agglomeration, is in no way acceptable.
4) The petitioners submit that since May-2015, the employees of the Central Government schools affiliated to CBSC in Ahmedabad are getting 30% HRA as per X category. Whereas the State Government, by its resolution dated 27-02-2009, has in principle accepted to pay 30% HRA for the X category city, and by not giving the same benefit to its employees of Ahmedabad city, the State Government is creating discrimination between the two employees. Not giving such benefit to the employees of the State Government is tantamount to violation of Articles 14, 16 and 21.
The Government of India, vide O.M. dated 21-07-2015, has reclassified the cities as per the new urban agglomerations as per Census-2011 and has given the benefit of HRA to the employees of the Centre accordingly. As per the said decision of the Government of India, its employees are entitled to get 30% HRA as per the rules and therefore, payment is Page 42 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined made accordingly in their case. In such circumstances, as such decision has not been taken by the State Government in the case of its employees, there is no question of giving the benefit accordingly. The Centre has the power to decide on HRA/CLA for Central Government employees whereas in the case of State Government employees, that power lies with the State Government. Thus, since State and Central employees are entitled to get HRA/CLA under different rules, not giving the benefit to the State Government employees accordingly does not amount to violation of Articles 14, 16 and 21.
5) The second submission of the petitioners is that it has been accepted in principle vide the Finance Department's resolution dated 27-02-2009 to provide 30% HRA for X category and 20% HRA for Y category cities. Considering this fact, as the place of duty of the petitioners now falls in the urban agglomerations of Y category as per the census-2011, they are entitled for 20% HRA as per the resolution dated 27-02-2009. It is to be clarified here that after the implementation of the Sixth Pay Commission, keeping in mind the recommendations of the Pay Commission, the Finance Department, by its resolution dated 27-02-2009, changed the classification structure of the cities in accordance with the Central Government and replaced Page 43 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the previous classifications of A-1 with X and A, B-1, B-2 with Y and C and Unclassified with Z. Along with this, as per the new classification, the rates of HRA were fixed as 30% for X category, 20% for Y category and 10% for Z category. Considering the Annexure-2 of the said resolution, it appears that not a single city of Gujarat is included under Category X, while Ahmedabad, Surat, Vadodara, Rajkot, Jamnagar and Bhavnagar (urban agglomeration) are included under Category Y. Even after the resolution dated 27-02-2009 for the urban agglomerations of the concerned cities, the implementation of the list of cities classified vide Annexure-1, 2 and 3 based on Census-2001 as mentioned in the resolution of the Finance Department dated 16-05-2008 is also in effect. Therefore, as per the submission of the petitioners, although their place of duty has been included in the Ahmedabad urban agglomeration after Census-2011, the place of duty of the petitioners has not been included in the resolution of the State Government dated 16-05-2008 for the classification of cities, and therefore, their demand cannot be accepted as per the rules.
6) Keeping in view the Census-2011, the Central Government has announced new classification of urban agglomerations for its employees vide O.M. dated 21- 07-2015. As per the said classification, since Page 44 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Ahmedabad city is included as 'X' category, the petitioners have demanded to pay 30% HRA accordingly from 01-05-2015. In the classification of cities for the purpose of HRA under Annexure-2 of the resolution of the Finance Department dated 16-05-2008, no city of the State is included under "A-1". Ahmedabad (Urban Agglomeration) and Surat (Urban Agglomeration) are included under 'A' category and the rate of HRA has been fixed at 15% of the basic salary for 'A' category and is being paid accordingly. After the implementation of the Sixth Pay Commission, the previous 'A-1' classification was changed to 'X' category by the resolution dated 27-02-2009 and it was decided to pay it the HRA at the rate of 30%. However, since no city of the State was included in the said category, the question of payment of HRA at the rate of 30% does not arise. The identity of the previous 'A' category was changed and given the name "Y" and the rate of HRA for this category was fixed at 20% of the basic pay. This "Y" category included Ahmedabad, Surat, Vadodara, Rajkot, Jamnagar and Bhavnagar (urban agglomeration) and they are paid HRA at the rate of 20%. Thus, the submission of the petitioners that, though the Government has accepted in principle the payment of HRA at 30% to the cities classified as "X" category by the resolution dated 27-02-2009, it is not being implemented by the State Government, cannot be Page 45 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined accepted. Because in the said resolution dated 27-02- 2009, not a single city has been included in the "X" category. Until the classification of cities is revised by the State Government keeping in mind the Census- 2011, the petitioners are entitled to HRA/CLA only as per the provisions of the existing resolutions.
7) After the decision to implement the Seventh Pay Commission from 01-01-2016, a Sub-Committee of the Cabinet has been constituted by the State Government under the chairmanship of Hon'ble Deputy Chief Minister vide resolution dated 10/10/2016 to consider the necessary revision of all allowances other than Dearness Allowance. Since the existing HRA/CLA Committee has decided that in order to take necessary decisions regarding payment of HRA/CLA as per new urban agglomerations based on the Census-2011, this matter will be placed before the said Committee and appropriate decision will be taken, now the necessary decision in that regard will be taken by the Committee constituted in connection with the Seventh Pay Commission.
(8) Thus, as per the decision of the Hon'ble High Court dated 05- 07-2016, the Committee constituted under the Chairmanship of the Chief Secretary has considered the written submission dated 10-09-2016 of the six representatives nominated by the Page 46 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Hon'ble High Court on behalf of all the petitioners regarding payment of HRA/CLA and all the points of submissions made by Shri Narendra Gohel and Shri Ashwin R. Patel who were present in person in the meeting of the Committee on 07-12-2016 and considering 1 to 6 detailed reasons mentioned under paragraph (7) above, the Committee has rejected the demand of the petitioners for HRA/CLA as it is not in accordance with the existing resolutions.
Since the existing HRA/CLA Committee has decided that in order to take necessary decisions regarding payment of HRA/CLA as per new urban agglomerations based on the Census-2011, this matter will be placed before the Sub-Committee of the Cabinet as mentioned in the said paragraph-7 and appropriate decision will be taken, now it is decided that the necessary decision in that regard will be taken by the Committee constituted in connection with the Seventh Pay Commission.
=================================== R.P.A.D. No.VLBh/102016/O-86-Ch Finance Department, Government of Gujarat, Sachivalay, Gandhinagar.
Date:
To, (1) Mr. Narendra Gohel President, Ahmedabad District Primary Teachers Fedaration, Page 47 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Bareja Primary School, Bareja.
Taluka - Daskroi, District - Ahmedabad.
(2) Mr. Ashwinbhai R. Patel Cluster Research Centre (C.R.C.) Co-ordinator, Dhamtran, Taluka - Daskroi, District - Ahmedabad.
(3) Mr. Hareshbhai G. Patel Principal, Higher Secondary, Sharda Shikshan Tirth High School, Paldi - Kankaj, Taluka - Daskroi, District - Ahmedabad.
(4) Mr.Jagjivanbhai Patel Secretary, Ahmedabad District Primary Teachers Federation, Gerodiya Primary School, Sanand, District - Ahmedabad.
(5) Mr. Karansinh Bihola Head Clerk, Smt. Manekba Krishi Vidhyalay, Adalaj, District - Gandhinagar.
(6) Mr. Jayendrabhai Bhatt Clerk, Sarvajanik Vidhyalay, Kanbha, Taluka - Daskroi, District - Ahmedabad.
Page 48 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Subject: Regarding payment of Compensatory Local Allowance/ House Rent Allowance.
Sir, In respect of S.C.A. No.4272/2016 and other petitions filed regarding payment of Compensatory Local Allowance (CLA)/House Rent Allowance (HRA) to State Government employees, as per the judgment dated 05/07/2016 of the Hon'ble High Court, a copy of the report of the Committee constituted under the Chairmanship of the Chief Secretary by the resolution of the Finance Department dated 30-07- 2016 is hereby sent to you for your necessary information.
Sd/-(Illegible) (Shailesh V. Parmar) Deputy Secretary, Finance Department.
=================================== Doc. Reg. No.444/2025
8. In this background, now the arguments advanced by learned advocates for the parties are looked into, which are as under:
8.1 Learned advocates for the petitioners have firstly referred to the submissions made before the Committee, which are to the effect that pursuant to the census of 2011, Page 49 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the areas included within the urban agglomeration put the Ahmedabad UA in the highest category namely `X' (former category A), based on the various criteria including population, non-agricultural activities and other social indicators; that pursuant to the Central Government OM dated 21.7.2015, the classification of Ahmedabad UA as X category was made and benefit of HRA and other allowances for X category were made admissible to all employees in the Greater Ahmedabad UA; it was also pointed out that CBSE employees located in Ahmedabad are paid their allowances as per X categorization; the government has acknowledged that the classification of city is time to time revised on the basis of the census, the emoluments to the employees would be governed by the extant pay rules; in paragraph 3, a reference is made to the census of India website and Greater Ahmedabad agglomeration is acknowledged. The government, however, disregards the census by saying that it might have been for counting the population or to understand the same and asserts that there is no reason to accede to the demand of the employees that an area within 5km of the UA should also be included in the category in which the city itself is placed; the state government has asserted that in 2015, the centre may have decided to give its employees allowances with the new categorization and as the state government has not decided, the employees demand cannot be granted. The Page 50 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined resolution no.AIS-20.2008-430965-G dated 27.2.2009 acknowledges that those urban areas having population of fifty lakhs or more would be categorized as category X and immediately, thereafter, Ahmedabad, Surat and Vadodara are put in Y category; that in the census of 2011 itself, the population of Greater Ahmedabad which includes the work area of the petitioners was more than 50 lakhs; that it is argued that "employees of the state cannot demand a particular rate of HRA and CLA or for that matter any aspect related to policy for the grant of HRA and CLA"
which is not the correct statement of law in India; that every decision, policy or rule making has to stand the test of valid classification and be subject to scrutiny of the Court. The petitioners have complained about (a) incorrect classification (b) ignoring increased population as shown in succeeding census and (c) the manifest arbitrariness in excluding teachers while granting the same benefits to similarly situated other employees (IAS cadre). The petitioners are not demanding any particular rate of HRA/CLA, the petitioners demand is that having fixed the rates the state government has misapplied the principles of law and the facts (population number) to deprive the petitioners of the benefits; the petitioners are not asking for an increased rate of HRA but are asking that having fixed 30% as applicable to UA in are X, petitioners are wrongly excluded therefrom; Page 51 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the petitioners had submitted that notwithstanding the GRs of 2008 and 2009, the reality as gathered from and after the census of 2011 could not be ignored and that the petitioners' entitlement should be fixed taking the census figures of 2011 into consideration; and the GRs of 2008 and 2009 should not be held to be governing the field in light of new census figures; instead of deciding the question which was raised in the petition, the demands of the petitioners were brushed aside adhering to and asserting the validity of the resolutions of 2008 and 2009; therefore, the committee's decision is not in compliance with the mandate of the court and needs to be set aside and declared as illegal; the issues in the main petition have not been answered and appropriate orders of this Court are necessary.
8.2 Now, learned advocates for the petitioners have submitted with regard to the petitions, which is in continuity with the above referred proceedings before this Court, thereafter before the State Government, that these petitioners seek quashing of the HPC report and recovery circular as ultra vires and a direction to the State to extend to them the HRA at the rate applicable to an `X' city (30%) or at least `Y' city (20%) along with CLA, from the date such benefits became due, without any discrimination; that the grant of HRA is tied to decennial census data prepared by Page 52 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined the Registrar General of India, this principle was exemplified by the Government of India's OM No.2/8/2014-E.II(B) dated 21.7.2015, which superseded all previous city classifications and re-classified cities/towns on Census-2011 data for HRA that OM took effect on 1.4.2015, upgrading numerous cities - Ahmedabad included - to higher HRA tiers, Gujarat having historically aligned its HRA to central norms after 1991 to 2001. It is submitted that the Government Resolution dated 18.5.2000 explicitly stated that "for deciding the urban agglomeration of any city, the base would be census data"
and therefore when the Census 2011 data became available and communicated in 2015 by GOI, it is incumbent on the state to update the HRA eligibility list. That, the areas that are de facto part of the Ahmedabad metropolis (Greater Ahmedabad) continued to be treated as "non-classified" for HRA because the State did not issue a notification similar to the 16.5.2008 notification. That, though by Notification dated 16.3.2010, the entire Gandhinagar notified area was declared as `larger urban area' (municipal corporation) under the Constitution, yet for HRA purposes, Gandhinagar city (and surrounding villages within AUDA/GUDA) were not accorded the status of being within the Ahmedabad-Gandhinagar UA and the same has been used to deprive the petitioners of HRA at the Ahmedabad/Surat rate.
Page 53 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined 8.3 It is submitted that though the Court, in its previous order, had expected the Committee to consider whether areas like the petitioners' (within Ahmedabad expanded UA) should be granted higher HRA, in light of the 2011 census and the Government of India's reclassification, the Committee has not given a fresh look to the matter. The Committee took position that since the State Government "has not decided the urban agglomeration on the basis of Census 2011", the petitioners are not entitled to HRA/CLA at higher rates; By ignoring the Census 2011 data and the GOI OM dated 21.7.2015 altogether, the HPC failed to answer the core question, should Gandhinagar (and its vicinity) be treated as part of the Ahmedabad UA for HRA in view of the 2011 census showing a contiguous urban spread? That the HPC has erroneously relied on the old resolution dated 25.2.2000 (which had removed the 8km allowance) to conclude that employees within 8 km of a city are not entitled to city HRA which is misplaced and contrary to record, because the 2000 resolution was effectively modified by subsequent resolutions (18.5.2000, 2008, 2009). He submitted that it is observed in one part of the report of the HPC that no city in Gujarat has been classified in `X' category by the State and that Ahmedabad, Surat, Vadodara, Rajkot, Jamnagar, Bhavnagar (urban agglomeration) are categorized as `Y' with entitlement of 20% HRA i.e. by its own findings, the Page 54 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined petitioners serving in Ahmedabad UA fall under `Y' category and should get 20% HRA, yet the ultimate stance denied them even that 20% and the interim HRA was ordered to be recovered and without concluding the issue, the Committee decided to refer the HRA question to yet another committee.
8.4 Learned advocate for the petitioners has submitted that the whole HPC's process does not highlight the specific issues underscored in the interim order (1) State cannot deny HRA for lack of its own notification if Census/Central data include the area; (2) Daskroi (for example) is included in Census 2011 UA, so interim relief must be granted; (3) as per State's 2009 Rules, areas of population 5-15 lakh get 20% HRA; and the HPC has taken an opposite view of the said points.
8.5 As regards the recovery circular issued by the Finance Department, learned advocate for the petitioners has submitted that this action is extremely harsh and inequitable;
that the petitioners had received 20% HRA in good faith under judicial orders for work already done and had likely structured their finances accordingly; that the Supreme Court has consistently held that excess payments made to employees due to no fault of their own should not be Page 55 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined recovered when the employee has limited means, especially if the overpayment was pursuant to an interim or administrative order. The interim HRA was a lifeline that partially mitigated the high rent these petitioners pay to live near their school, snatching it back, particularly when the HPC process is under challenge is unjust enrichment by the State.
8.6 He submitted that the petitioners are similarly situated to other government employees who receive higher HRA - be it Central Government employees in Ahmedabad, or State Government employees working in officially recognized city areas - yet the petitioners have been carved out as a separate class.
8.7 He submitted that the object of providing higher HRA/CLA is to compensate for high house rent and living costs in urban agglomerations and denying that allowance to someone who does serve in an urban agglomeration defeats the very object and therefore there is a negative nexus between the classification (not updating UA status) and the object (offsetting urban living expenses). That Gujarat did not deny 30% HRA to say, Secretariat staff in Gandhinagar (who continue to draw CLA and other perks applicable to their Page 56 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined city category) and denying the petitioners-school staff thus smacks unequal treatment. Thus, they cannot refuse the benefit to one qualifying city while giving it to others, absent an express, lawful modification of the criterion applied uniformly and any selective deviation such as claiming a `policy decision' to exclude one city despite its meeting the announced form - amounts to arbitrary discrimination. In conclusion, it is submitted that the HPC's report is procedurally improper, ignores critical evidence, misstates the law, and defies the High Court's directions and therefore it should be set aside in its entirety, and the issue of HRA/CLA entitled should be adjudicated by this Court on merits and on the basis of the current urban status of Ahmedabad-Gandhinagar. Therefore, it is prayed that these petitions be allowed by granting the prayers as prayed for.
8.8 Learned advocate for the petitioners have relied on the following citations:
(1) D.S.Nakara V/s Union of India reported in (1983) 1 SCC 305 laid down that "Article 14 forbids class legislation but permits reasonable classification" and that any permissible classification "must satisfy the twin tests of (i) intelligible differentia which distinguishes those grouped from others, and Page 57 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined
(ii) rational nexus to the object sought to be achieved. In the present case, the State's treatment of the petitioners fails both tests.
(2) Mohinder Singh Gill V/s Chief Election Commissioner reported in (1978)1 SCC 405 - orders must contain reasons, and grounds cannot be supplemented later), here, the only discernible ground - State hasn't declared UA (2011)" is not a valid ground.
(3) Ramana Dayaram Shetty V/s International Airport Authority reported in (1979(3) SCC 489), the Supreme Court underscored that the Government is not free to "act arbitrarily at its sweet will" in dealing with the public. When the State sets terms for jobs, contracts, quotas, licenses or any public benefit, its discretion "must be confined and structured by rational, relevant and non-discriminatory standards or norms."
(4) J.N.Patel, President of Sankalan Samiti Class V/s State of Gujarat reported in 2014(1) GCD 694 - it is held that the college premises situated outside limits of the city where residential accommodation was not available - held, venue of the place of work of petitioner was not on account of choice Page 58 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined of petitioners - as transfer was treated as local transfer by the authorities, petitioner appellants entitled to HRA at the rate at par with employees who are residing in the municipal limits of city of Bhavnagar and therefore allowed the appeal.
9. Per contra, learned AAG before making submissions in the petitions, has taken this Court through the policies governing HRA since the year 1975 till date, which travelled as under:
9.1 The State Government vide its Government Resolution dated 15.12.1975 envisaged drawal of House Rent Allowance and under the said policy, HRA was admissible to places of duty that were within the limits of the locality of qualified Municipalities or Corporations including any other declared sub-urban/notified-areas/cantonments as were contiguous to such qualified Municipalities or Corporations notified by the State Government. However, there was an exception carved out to the above which reads as under:
".....(iii) Government servants whose place of duty is in the proximity of a qualified city, and who of necessity have to reside within the city may be granted House Rent Allowance admissible in that city provided that:-
(a) The distance between the place of duty and the Page 59 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined periphery of the municipal limits of the qualified cities does not exceed 8 kms."
9.2 Thereafter, vide Government Resolution dated 20.1.1998 of the Finance Department of the State Government, the revision of HRA and CLA occasioned with adoption of the recommendations of 5th pay commission and the HRA was made admissible to all cities, towns across the State of Gujarat and these cities/towns were classified under the Government Resolution dated 20.1.1998 as A-1, A, B-1, B-
2, C and unclassified and the rates admissible to each of such classification differed as is provided in the said Government Resolution.
9.3 Thereafter, vide Government Resolution dated 25.2.2000, the Finance Department in the State Government revoked the exception carved by Government Resolution dated 15.12.1975 pertaining to 8 KM. Radius.
9.4 Thereafter, vide Government Resolution dated 16.5.2008, the Finance Department of the State Government updated the classification of cities based upon the census of 2001; the rates and classification as prescribed under Government Resolution dated 20.1.1998 were maintained, Page 60 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined however, the constituting cities within such classifications were updated based upon their revised demographics appearing in Census 2001;
9.5 Thereafter, vide Government Resolution dated 27.2.2009, the Finance Department redesignated the classes of cities to which HRA was applicable and also revised the rate at which HRA/CLA was paid to the employees of the State Government with the adoption of recommendations of 6th Central Pay Commission i.e. the earlier classification A-1 was redesignated as X, the earlier classification A, B1 and B2 were redesignated as Y and Class C was unclassified cities were redesignated as Z with their revised rates of HRA to be 30%, 20% and 10% respectively.
9.6 Thereafter, the Finance Department of the State Government vide Government Resolution dated 24.9.2022 adopted the recommendations of 7th pay commission thereby revising the rates of HRA and also updated the constituent cities within the classifications X, Y and Z based upon their demographics as provided for under Census 2011.
9.7 Learned AAG has submitted that the exception of Government Resolution of 1975 of 8 kms. became redundant Page 61 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined and stood expressly revoked vide Government Resolution dated 25.2.2000. The said resolution was upheld by this Court in the case of Shri N.R.Parikh V/s State of Gujarat reported in 2002(2) GLH 657. Thus, the contention of the petitioners pertaining to such exception or even a suggestion for the continuance of the aforestated exception in any form deserved to be rejected. That the State Government has, from time to time, vide Government Resolutions dated 16.5.2008, 27.2.2009 and 24.9.2022, updated the policy pertaining the grant of HRA and the right to claim HRA/CLA, though they are statutory allowances, are subject to the prescriptions of the policy of the State Government and cannot be heard to claim such allowance as a matter of right.
9.8 The classification of cities to which HRA is admissible and the rates at which the HRA is available at such classified cities are expert functions and more particularly, policy decisions which are best left within the domain of executive and therefore, a challenge to such economic policy of the State Government deserves to be dealt with circumspection and the scope of judicial review would also therefore be limited.
9.9 He submitted that there is no mandate of law Page 62 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined binding the State Government to make such updations and revisions no sooner they are made by the Central Government; the State Government and Central Government are constitutionally distinct authorities and their decisions pertaining to financial and economic policy matters fall within their respective domains and decision of neither can bind the other. Even while comparing the policy of the Central Government for grant of HRA, it may be noted that the said policy follows a progressive rate of grant of HRA whereas there is no CLA available to the employees of the Central Government. Contradistinctively, the state government applies a static rate for grant of HRA and also grants CLA to its employees. That there is no discrimination in the applicability of policy of both the members of the All India Service and the officials/employee of the State Government as is stated on oath in the affidavit. That a comparable consideration of the Government Resolution dated 24.9.2022 and the Government Resolution dated 14.10.2022 issued by GAD for All India Service Officers will indicate that as was the position in 2009, the same is in the position in 2022 when there is a revision in the policy of HRA for State Government employees which revision is mutatis mutandis made applicable to All India Service through Government Resolution dated 14.10.2022 of the General Administrative Department.
Page 63 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined He submitted that vide the policy of 2022, the Finance Department in the State Government has brought its policy of HRA in sync with the recommendations of 7th Central Pay Commission so far as the rates at which HRA is granted to its employees including members of All India Service and the classification of cities is also now based upon the demographics provided for in the census of 2011 and therefore the grievance of the petitioners, in the form of their dissatisfaction with the policy prescriptions of the State as also the reasoning of the report dated 8.3.2018, can be said to have become academic in the wake of the extant policy pertaining to HRA; even if if the said argument is appreciated, then also the decision of the HPC of continuing with the prevalent policy given in its report cannot be touted as arbitrary or irrational for the reasons that while a larger question of adapting the recommendations of 7th Central Pay Commission, with respect to all the allowances which included HRA, was already under consideration, taking a singular call with respect to HRA, would not have served any real purpose and even the question of adopting the recommendations of 7th pay commission or adapting census 2011 for the purpose of grant of HRA would have immense financial repercussion.
9.10 He submitted that through Government Resolution Page 64 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined dated 16.8.2016, the State Government has resolved to only adapt the recommendations of the 7th Central Pay Commission qua `pay' which would include basic and dearness allowance and as for revision of other components to be drawn/granted by employees of the state government as a part of their salary, the decision was deferred. The assessment and evaluation of the various factors as would command, guide and limit the adapting of the recommendations of the 7th Central Pay Commission by the State Government was entrusted to a committee constituted for the said purpose and more recently, in the year 2022, it was resolved that allowances such as Transport Allowance, House Rent Allowance, Compensatory Local Allowance and others be also revised as per the recommendations of the 7th Central Pay Commission. He, therefore, prayed to dismiss/dispose of these petitions.
9.11 In support of his submissions, learned AAG has relied on the following citations:
(1) Mrs.Jayanti Das & Anr. V/s The State of West Bengal & Ors. Decided on 16.1.2025 in WPA No.22104 of 2009 by the Calcutta High Court.
(2) State of Punjab and Others V/s Amar Nath Goyal and Page 65 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Others, reported in (2005)6 SCC 754.
(3) N.R.Parikh V/s State of Gujarat, reported in 2002(2) GLH 657.
10. I have considered the rival submissions made at the bar, relevant G.Rs. as well as judgments cited at the bar. I have also perused the minutes of the meeting of the Committee which is held pursuant to the order of this Court and the decision taken by the Committee which is the subject matter of challenge in the present petitions. I have also considered the various judgments cited at the bar. I have also considered all the relevant aspects of the issues involved in these matters with a view to run the gamut.
11. The original petitions are of the years ranging from 2007 to 2016, therefore, the position of that dates is required to be seen, as these petitions are filed in continuity to those petitions, which were disposed of in the year 2016 thereafter, HPC was appointed by virtue of the order of this Court passed in Special Civil Application No.1791 of 2007 with cognate matters and the Committee gave its report in the year 2018.
12. The GR dated 15.12.1975 is revoked vide order Page 66 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined dated 25.2.2000 and therefore reliance placed on the said GR of 1975 cannot sustain. Further, by way of GR dated 20.1.1998, the classification of the towns and cities was done by segregating the towns and cities into A-1, A, B-1, B-2, C and unclassified and the rates were fixed accordingly by taking the census of 1991. Thereafter, vide GR dated 16.5.2008, the base was changed from 1991 to the census of 2001 and continued the benefit as per 20.1.1998. The list of boundaries was prepared on the said basis and the same was published. Thereafter, vide GR dated 27.2.2009, the classes of the cities to which HRA was applicable was again classified.
The position as of today is that vide GR dated 24.9.2022 and the payment of HRA to the employees is clarified and implemented. Merely because the IPS and IAS who are as such empanelled by the Central Government are granted 30% HRA in the `X' category and 20% in the `Y' category and 10% in Z category itself is not good ground to come to the conclusion that there is arbitrariness or discrimination for the reason being that the rights of HRA are decided for the employees of the Central Government on the basis of increase of DA and the related rates of DA.
13. At this stage, it is fruitful to refer to some of the judgments for consideration of the issue in question.
Page 67 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined (1) The Hon'ble Bombay High Court, in the case of Union of India and others V/s M.M.Rangari and others reported in 2011 SCC Online Bom 1279, it is observed in paragraph 5 as under:
"5. Thus it appears that HRA is a statutory right, and can be subjected to restrictions which are reasonable. Furthermore, it appears clear that the employee must have a right to get House Rent Allowance (HRA ) as per existing Rules or Decisions of The Government of India which have binding force or a contract. It is not a matter of right, it is an compensatory allowance given by an employer to an employee towards the rental accommodation expenses of the employee when Government is unable to provide residential accommodation suitable for the residence of it's employee. The employee if own his property he may not be entitled to claim the HRA, because HRA is paid to Central Govt. employees to compensate them partly for the especially higher rents which they have to pay for hired or rented residential accommodation in big cities, but not as a source of profit. HRA is paid at different slab rates in different cities and for this purpose cities have been classified with reference to their growth and population. For the drawl of HRA, a Govt. servant has to incur some expenditure on rent/contribute towards rent or pay/contribute towards house or property tax and furnish a certificate to that effect as per Page 68 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined Annexure-II in Para.8 of Swamy's Compilation of FR & SR, Part-V HRA and CCA. In our opinion the Central , government regulations which are in force unless they are declared as arbitrary or illegal would govern the Central government Employees. In our opinion unless a binding law or specific Regulation governing is pointed out for payment of HRA to the respondents employees of Ordanance Factories the Petitioner-Union of India, (viz.,the Ordanance factory Board ) the respondents are not entitled to claim House Rent Allowance (HRA) as a matter of right after they had constructed their own respective houses by arranging loans and after shifting to their own accommodation without obtaining the 'No Accommodation Certificate' (NAC) from the Estate officer concerned. Prima facie in our opinion the pre- requisite of NAC as laid down in the office memorandum as operative in city of Nagpur when Central government accommodation is available in surplus and Central government is required to spend huge amounts towards Construction and maintenance Of Government buildings is neither arbitrary nor malafide .The policy decision in this regard must be left to the Government's sound discretion. The Court ought not to substitute the judgment of the executive by it's own opinion merely because another view may be possible. The interference in writ jurisdiction may be justified only if the administrative authority concerned transgressed it's constitutional limits or statutory power."Page 69 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025
NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined (2) The Hon'ble Apex Court, in the case of State of Karnataka and Another V/s Mangalore University Non-
Teaching Employees' Association and Others reported in 2002(3) SCC page 302, it is observed in paragraphs 10, 11 and 12 as under:
"10. In considering the question from the standpoint of Art. 14, it is to be borne in mind that the impugned orders of the Government dated 13-2-1996, 5-3-1997 and 24-5-1997 do not, by themselves, fall foul of Art.
14. These orders were issued only to rectify the mistake that was committed in extending the benefit of HRA and CCA applicable to 'C' class city to the Mangalore University employees. As already noticed, the entitlement to HRA/CCA arose essentially from G.O. No. FD:67:SRP:89, dated 4-5- 1990. Applying the rules contained in that G.O., the employees of Mangalore University will only be entitled to draw the said allowances at the meagre rate applicable to 'E' class station because the place where Mangalore University is located comes under 'E' class. To repeat, Konaje is not included in Mangalore Urban Agglomeration. The grievance of the respondents, therefore, arises on account of that. However, the respondents have not assailed the G.O. dated 4-5-1990 on the ground that non-inclusion of Konaje in Mangalore Urban Agglomeration ('C' class) is an instance of inequality arising from lack of proper classification or that there is an element of arbitrariness in Page 70 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined specifying the places comprised in Mangalore Urban Agglomeration. The limited challenge to the G.O. of 1990 which received approval of the Division Bench of the High Court was on the ground that there was a discrimination as between the employees working in peripheral area of Mangalore City Corporation and Bangalore City Corporation. In other words, the respondent-writ petitioners have built up their plea of violation of Art. 14 by taking the limited ground that the same benefit as was conferred by para 2.6 on the employees posted to work in any place situated within a distance of 8 Kms. from the periphery of Bangalore City Corporation limits (though not part of Bangalore Urban Agglomeration) ought to have been extended to the employees working within the same peripheral area of Mangalore City Corporation, even if their place of work was outside the Mangalore Urban Agglomeration. 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 categorisation fails to take note of ground realities. Such extension up to 8 Kms. be it noted, is peculiar to Bangalore city only. Bangalore which is the capital of State Page 71 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined of Karnataka is classfied 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 Art. 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' led 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 Page 72 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined needed, but, the rule or the provision does not become bad or obnoxious to Art. 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.
11. 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 Art. 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 Page 73 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined 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.
12. 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 31-3-1997. 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 5/03/1997 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 Page 74 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined 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."
(3) The Hon'ble Apex Court, in the case of The State of Maharashtra & Anr. V/s Bhagwan 7 Ors. Being Civil Appeal Nos.7682-7684 of 2021 with other matters decided on 10.1.2022, it is observed in paragraph 10.4 as under:
"10.4 As per the settled proposition of law, the Court should refrain from interfering with the policy decision, which might have a cascading effect and having financial implications. Whether to grant certain benefits to the employees or not should be left to the expert body and undertakings and the Court cannot interfere lightly. Granting of certain benefits may result in a cascading effect having adverse financial consequences."
14. From the above mentioned judgments, there is no Page 75 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined dispute that the HRA is a statutory right, however, such right can be subjected to restrictions which can be reasonable. The employee may have a right to get HRA as per the existing rules and policy or decisions of the State Government which have binding force. It is not a matter of absolute right. It is compensatory allowance given by the employer to an employee towards the rental accommodation for residence of the employee when the government is unable to provide residential accommodation suitable for the residence of its employees.
15. Considering this aspect and considering the aspect that granting or fixing the rate of HRA/CLA are the part of some policy of the government concerned and it is now well settled law that the Court should refrain itself from interfering in such policy decision which might have cascading effect, looking to the decision which is taken after full consultation with the representative of the employees of statement government and after considering the pros and cons. In view of the above background, the decision taken by the State Government, more particularly, the committee concerned cannot be faulted in entirety, however, there are certain aspects which are still found indecipherable and needs to be redressed by the state authorities as per the demand or entitlement of the petitioners employees which, it is Page 76 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined expected that they can be considered by the state authorities in appropriate manner by considering the averments made in the petitions as well as the documents relied on and judgments cited by the petitioners.
16. One more aspect which is required to be considered is that the employees of the central government are not getting the benefit of CLA whereby the employees of the state governments are getting benefit of CLA. Moreover, from the various circulars/decisions which are pointed out by learned AAG, it cannot be said that the state government is not trying to give some more financial advantage to the employees, however, with a view to avoid any heart burning, and as the employees of the state government are very important part of the administration, it is also the duty of the state government to redress their reasonable grievances in appropriate manner. Though this Court is of the opinion that the interference in the impugned decision will amount to interference in the policy decision, considering the wider repercussion of the decision of the committee which can be considered as a policy decision, this Court is not granting any final relief as prayed for in the petitions by taking into consideration that the present petitioners who are residing in Gandhinagar area are otherwise granted 24% HRA as `X' category which they are entitled to get and therefore the Page 77 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined state government may also consider this aspect that now Ahmedabad and Gandhinagar are considered twin cities.
17. As regards the recovery aspect, by aggrandizing the subsequent census also, the case of the petitioners can be considered sympathetically but in accordance with law and relevant policies, by not insisting for immediate recovery.
Regarding the other group of employees of Bhavnagar in other group of petitions, there the facts are little bit different from the facts of the case of Gandhinagar employees.
18. On going through the entire material on record like the previous petitions, the order passed by this Court in that group of petitions, the report of the Committee and the present petitions, this Court is of the opinion that the point regarding the residence of the petitioners fall in which category at the relevant point of time is required to be considered by the Committee, which has been left out. It is aporetic to note that generalize opinion which is given by the Committee cannot help the case of the petitioners.
Subsequently, by ameliorating the situation, vide GR of the year 2022 has clarified much on the said aspect of payment of HRA of different places, the same may not salubrious for the petitioners as these petitions are of back date i.e. Page 78 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025 NEUTRAL CITATION C/SCA/7651/2018 CAV JUDGMENT DATED: 30/07/2025 undefined ranging from 2007 to 2016. Hence, in view of the same and in view of the fact that though the Government of Gujarat has adopted the revision of pay rules as per the Central Government most of the time, the HRA is not an absolute right which can be claimed as a matter of right at par with the Central Government employees, which may exacerbate the budgetary provisions of the State, these petitions are disposed of with the following directions by considering the provisions of Article 226 of the Constitution of India, in larger interest of justice.
19. The present petitions can be considered as representations of the petitioners.
20. With a view to cut the Gordian knot, let the committee be formed by the State Government within a period of two weeks from the date of receipt of this order, consisting of Chief Secretary to Government of Gujarat, Principal Secretary of Finance Department, Principal Secretary of General Administrative Department, Secretary of Panchayat, Rural Housing and Rural Development Department and Secretary, Urban Development and Urban Housing Department, Director of Census Operations of Gujarat, to look into the details about various issues pending for appropriate consideration arising in these matters.
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21. The decision can be taken by such High Level Committee within sixteen weeks from the date of formation of the committee and the same be communicated to the petitioners within two weeks thereafter or/and by issuing appropriate circulars or by government resolution within same time limit.
22. As regards the recovery part, though the order impugned is passed for recovery as all the petitioners have filed undertaking that they will refund the amount with 9% interest as directed in the earlier proceedings, since this Court is directing the state government to consider various aspects raised in the present petitions sympathetically by considering the case of the petitioners, the material annexed with these petitions and also the other aspects like financial burden and also cascading effect of the said decision, till the authorities take decision on the representation and inform the said decision to the respective petitioners about the outcome of such decision immediately after such decision is taken by the state as directed earlier, by registered post AD, there shall not be any recovery of the respective amounts from any of the petitioners and after communicating the said decision also, the authority may not recover the said amount for further four weeks thereafter.
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23. With the above directions, without much expressing opinion on merits and about the rival contentions raised in the present petitions, as discussed earlier, these petitions and civil applications are required to be disposed of. Accordingly, disposed of. Notice/Rule stands discharged.
(SANDEEP N. BHATT,J) SRILATHA Page 81 of 81 Uploaded by U. SRILATHA(HC00185) on Wed Jul 30 2025 Downloaded on : Wed Jul 30 23:17:58 IST 2025