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The petitioner/Food Corporation of India is a statutory body. The members of the first respondent trade union are its employees. The petitioner introduced two schemes granting special increments which are known as "Small Family Norms and Acquiring Additional Professional Qualification". The said increments were paid in the form of personal pay. From the time of introduction of the schemes, the above special increments granted under the schemes were added to the basic pay of an individual employee for the purpose of calculating quantum of House Rent Allowance and City Compensatory Allowance (HRA & CCA). Subsequently, the Government of India issued a clarification to the effect that the said increments should not be added to the basic pay for the purposes of calculating HRA & CCA. Based on the said clarification, the petitioner Corporation issued Circular No.37/92 dated 21.12.1992, thereby withdrawing the proportionate HRA & CCA paid to the employees on the special increments. The HRA & CCA paid already was proportionately ordered to be recovered.

4.In the counter filed before the Industrial Tribunal, the petitioner Corporation mainly contended as follows:-

(i)The incentives granted to the employees under the above schemes do not form part of the basic pay and therefore, the same should not be added to the basic pay while calculating HRA & CCA.

(ii)However, the petitioner Corporation inadvertently added the special pay granted under the schemes to the basic pay for the purpose of calculating HRA & CCA.

(iii)When the Government of India clarified that the same should not have been done, in order to rectify the above mistake committed, the impugned circular was issued withdrawing the proportionate HRA & CCA and also ordering to recover the proportionate HRA & CCA paid already.

10.Admittedly, HRA & CCA are based on the basic pay of an individual employee. But after introduction of these schemes, the special pay paid under these schemes was added to the basic pay while calculating HRA & CCA. As a result, the employees were getting more than HRA & CCA for which they are entitled to, it is contended by the petitioner.

11.But the contention of the first respondent is that HRA & CCA form part of the basic pay and therefore, all these years, it was rightly added to the basic pay for the purpose of calculating HRA & CCA. When the dispute so remains, a clarification came to be issued by the Central Government in respect of its employees thereby clarifying that the special pay paid under the schemes shall not be added to the basic pay for the purpose of calculating HRA & CCA. Though the said clarification is not binding on the petitioner Corporation, taking clue from the same, the petitioner Corporation issued the impugned circular.

12.Now the following questions emerge for consideration:-

(i)Whether the special pay forms part of the basic pay;

(ii)Whether for the purpose of calculating HRA & CCA, the same could be added to the basic pay and

(iii)Whether discontinuance of HRA & CCA on the above special pay would amount to change in the condition of service requiring notice under Section 9-A of the Act.

13.Clause (1) of IV Schedule to the Industrial Disputes Act would make it clear that the payment of wages would fall within the conditions of service and for change of the same, notice under Section 9-A of the Act is required. Section 2(rr) of the Act would define that HRA shall fall within the definition of wages. Similarly, Clause 8 of IV Schedule to the Industrial Disputes Act would show that a customary concession or privilege is also a condition of service falling within the ambit of Section 9-A of the Act. CCA is such a privilege given to an employee. Therefore, to change the said privilege and to change the HRA which is a wage, notice under Section 9-A of the Act is mandatory. In the case on hand, no such notice under Section 9-A of the Act, was issued and therefore, the impugned circular is void under law.