Rabindra Nath Sengupta v. Financial Commissioner and Secretary Govt. of West Bengal — 1994 DIGILAW 172 (CAL)

JUDGMENT Bhagabati Prasad Banerjee, J. 1. This is an appeal against the judgment and order dated 3rd June, 1992 passed by the Learned trial Judge dismissing the writ application. The question involved in the writ application was whether the writ petitioners who occupy government accommodation were entitled to house Rent allowance or not. The contentions of the writ petitioners were that they were to pay house rent in respect of the accommodation occupied by them and they were entitled to house rent allowances. It is not in dispute that prior to issue of Notification No.432F dated 12th January. 1990 issued by the Secretary, Department of Finance, Government of West Bengal, in connection with the West Bengal Government Service (Revision of pay and allowances) Rules, 1990 all the government employees were equally entitled to and were getting house rent allowances. It is stated that before 1st February, 1977 employees living in accommodation namely, flats/quarters and/or premises provided by the State Government were required to pay house rent either at a fixed standard rate or on percentage of pay basis by option and those employees were not allowed to draw house rent allowance. It is stated that the other two categories of employees living in their own house or in private rented house were allowed to draw house rent allowance at the rate of 10% of basic pay subject to certain terms and conditions. But in case of employees living in government accommodations they 'were asked to exercise option either to pay the assessed rent that may be fixed by the government in accordance with the accepted principles and draw the admissible house rent allowances or to pay a fixed percentage of their salary as rent and forego the house rent allowances. By memorandum dated 2nd May 1984 the government of West Bengal 'issued the following rules:- "Subject: Compensatory House Rent Allowance. Under the existing provisions as continued in para 6 of Finance Department Memorandum No. 1925-F, dated 21.10.1984 as amended, read with Memorandum No. 46-F, dated 3.1.1975, house rent allowance is admissible to both husband and wife so long as pay withdrawn by each of them does not exceed Rs. 500/- per month. The allowance is payable to only one of them when the pay of one or both exceeds Rs. 500/- per month. 2. 500/- per month. The allowance is payable to only one of them when the pay of one or both exceeds Rs. 500/- per month. 2. The matter has been further reviewed by the Government and the Governor has been pleased to decide, in supersession of para 6 of Memorandum No. 1925-F, dated 21.10.1984 as amended, and Memorandum No. 46-F, dated 3.1.1975, as follows: (a) (i) In a case where husband or wife is a State Government employees and the spouse is, an employee either of the State Government or of the Central Government or any other State Government or of an undertaking of a State' or Central Government or of an educational institution or a local body etc.. the allowance at usual rate will be admissible to both of them without reference to there certificate provided the total pay of husband and wife taken together does not exceed Rs. 1000/- per month. (ii) If the total pay of the husband and wife taken together exceeds Rs. 1000/- per month, the allowance as usual rates will be admissible to both, the total H.R.A. drawn by them being subject to a maximum of 15% of pay of both husband and wife taken together or both Rs. 275/- p.m. whichever is less. However for claiming total H.R.A. at a rate higher than Rs. 150/- p.m. rent certificate will have to be produced and in such cases, the total H.R.A. shall be limited to the actual rent paid. (b) (i) Where both husband and wife are State Government employees both of them will furnish joint declaration to their respective Heads of offices. Each Head of Office will determine the H.R.A. admissible to the Government employees under his control in accordance with the provisions contained in para 2(a) of this memorandum. (ii) Where the husband or wife of a State Government employee is an employee of the Central or any other State Government or of undertaking of a State or Central Government or of an educational institution or a local body etc. the State Government employee will submit a declaration jointly with his/her wife/husband to the concerned Head of Office, who will determine the HRA admissible to the State Government employee in accordance with para 2(a) of this memorandum. The declaration as mentioned above must be obtained by the Head of Offices in January and July of every year. the State Government employee will submit a declaration jointly with his/her wife/husband to the concerned Head of Office, who will determine the HRA admissible to the State Government employee in accordance with para 2(a) of this memorandum. The declaration as mentioned above must be obtained by the Head of Offices in January and July of every year. All Head of Offices should strictly ensure that no house rent allowance is drawn in respect of a Govt. from whom such declaration has not been received. A model declaration form is enclosed. 3. In partial modification of para 10(a) of Memorandum No.1925-F, dt. 21.10.1984 as substituted by Memorandum No. 111745-F, dated 19.11.82 the Governor is further pleased to direct that for the purpose of drawal of house rent allowance, documentary evidence will not be required upto basic pay including special pay, if any' of Rs. 1000/- p.m. i.e. the dearness pay will not be taken into account for this purpose unless house rent allowance is claimed on an amount more than Rs. 1000/-. 4. The Governor is also pleased to decide that in respect of employees occupying accommodation owned/leased or requisited by government and paying a fixed percentage of pay as house rent, house rent shall be deducted on their basic pay (including special pay if any) only and D.P. shall not be taken into account for this purpose. 5. The other conditions for drawal of house rent allowance as contained in Memorandum No. 1925-F, dated 21.10.1984 as amended, shall apply. 6. This order takes effect from 1st April, 1984. Sd/- P.K. Sarkar Secretary to the Govt. of West Bengal." With effect from 1st January, 1988 the house rent allowance was made 15% of basic pay subject to a maximum of Rs. 800/- per month and the said house rent allowances at the said rate was paid without reference to the quantum of the rent paid, by all government employees (other than those provided with accommodation owned/hired by government). The Learned Trial Judge on consideration of the matter held that the classification, between those enjoying accommodation and those not, was reasonable and had a nexus to the object sought to be achieved, viz., to provide for accommodation or at least the ability to obtain and maintain the accommodation in keeping with an officer's status. The Learned Trial Judge on consideration of the matter held that the classification, between those enjoying accommodation and those not, was reasonable and had a nexus to the object sought to be achieved, viz., to provide for accommodation or at least the ability to obtain and maintain the accommodation in keeping with an officer's status. It was further held that the amount of house rent allowance to be paid was a matter of policy and the question of policy could not be interferred with by the Court unless the same could be shown blatantly unreasonable. It was also held that the policy was reasonable and could not be interferred with. 2. The only question involved in this case is whether the withholding of the housing rent allowances to the employees who are occupying flats in Government Housing Estates on payment of rent and as a licensee is discriminatory or not. Originally the house rent allowance was given to all categories of government employees at a fixed rate. Subsequently, it was decided to give house rent allowances to the employees of the State Government who are not occupying any tenanted premises but owners of their respective premises for which they have not to pay any rent. The house rent allowances were given to the employees of the State Government who are tenant and pay rents to their respective landlords but the exception was made to the employees of the State Govt. who are occupying the housing flats owned by the Govt. for which they are also paying rents. It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be founded namely (a) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (b) that the differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different basis namely geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. The classification may be founded on different basis namely geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. (See Ram Krishna Dalmia vs. Justice Tendolkar, AIR 1958 SC 538 and other case laws 'in which this consistent view has been taken by the Supreme Court). 3. The learned trial Judge has found that the persons who are occupying flats in Govt. Housing estates from a different class but that is not the sole criterion for determining the question whether the classification is valid or not. What is important is that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group-The notification in question has specified three groups of State Government employees. The first group includes the persons who are occupying their own residential houses and for which they have not to pay any rent but they are allowed to draw house rent allowances. The second group includes the government employees who are tenants in other residential premises paying rents. They are entitled to draw house rent allowances-irrespective of the amount of such rent payable by them for their use and occupation of the tenanted premises. The third category which has been denied the benefit of house rent allowances is the employees who occupy the flats constructed and owned by Housing Directorate. They are also paying rents. But this class has been deprived of getting any benefit of house rent allowances. In the pleadings of the State, only a statement has been made that the rents payable by the employees of the State Government in rental housing estates are assessed in a different manner. It is admitted that the housing estates were also let out to the members of the general public who are not the employees of the State Government. It is stated that in their cases, while assessing rents, some other factors are also taken into consideration, namely, the cost of the land and the maintenance of the same are taken into consideration whereas, it is stated, in case of assessment of rent of the employees of the State Government it is not taken into consideration who are occupying the flats in question. If it had been the case that the government was providing official quarters in that event, it would have been a good ground for withholding the house rent allowances inasmuch as the house rent al10wances are ordinarily given for the purpose of meeting the expenses for getting accommodation. The housing flats are occupied by the government employees on condition that they have to remain there as a mere licensee and not as a tenant. The state has not disclosed how much benefit or concession is given in the matter of fixation of rents to the employees of the State Government who are occupying the housing flats. The case that has been made out by the appellant-petitioner is that there was no rational basis for making such a classification. According to them, all government employees form a class and that denying the house rent allowances to a particular group of the class which has been picked up amounts to a naked discrimination. There is always a presumption in favour of constitutionality of a provision and the burden is upon them who attacks it to show that there has been a clear transgression of the constitutional principles. There is also a presumption that the legislature understand and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds 'and that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest. In the instant case the petitioners have made out a clear case that there was no rational basis for making such classification, All the employees of the State Government stands at par and there is no basis for picking one group for making such naked discrimination. 4. It was submitted by Mr. Arun Prakash Chatterjee that those employees of the State Government who are not tenants but owners of their respective premises owned and acquired by them and who have not to pay any rent are also given benefit of house rent allowances. In their cases, they are getting the house rent allowances as a part of the remuneration as he had no obligation to pay any rent to anybody. Similarly, Mr. In their cases, they are getting the house rent allowances as a part of the remuneration as he had no obligation to pay any rent to anybody. Similarly, Mr. Chatterjee submitted that in case of the employees of the State Government who are in private accommodation and paying rents, they are entitled to house rent allowances irrespective of the amount of rent payable by them. In, their cases, they might have paid a smaller amount as rents but they are getting a larger amount as house rent allowances. And such private tenancies are heritable but in case of the Govt. employees who occupy rental Housing fiats, they are only licensees evict able summarily on transfer or retirement. On the basis of this fact, it was submitted by Mr. Chatterjee that it cannot be the purpose or the object of the classification to make rich richer and the poor poorer. Admittedly, the persons who are occupying housing fiats are not the owner of any premises and they have no place to stay and for that reason, they have been given accommodation in the housing estates. They are also paying rents. There may be little difference between the rents payable by them and the rents payable by members of general public. The object of payment of house rent allowances on the basis of the state of affairs cannot be said to be linked with payment of rents for use and occupation, Futhermore, such house rent allowance is not given proportionately or in proportion to the rent payable by them. A person who is not paying any rent 'is given house rent allowances. If that be so, an employee of the State Government is paying also rent but may be at a lesser amount than that of the others occupying housing estates, They have to pay the rents and for paying rents, can they be deprived of the house rent allowances? 5. In S.K. Dutta, Income Tax Officer vs. Lawrence Singh Ingty, AIR 1968 SC 658 a question arose whether the exemption granted to the members of the scheduled tribes u/s. 4(3)(xxi) of the Income Tax Act, 1922 as well as s. 10(26) of the Income Tax Act, 1961 to the extent they excluded government servants from the benefit of the exemption given thereunder are void, as offending Art. 14 of the Constitution. The relevant portion of s. 4(3)(xxi) reads thus :- Section 4(3) : "any income, profits or gains falling within the following classes shall not be included in, the total income of the person receiving them. . . . . " (xxi) "Any income of a member of a Scheduled Tribe as defined in clause (25) of Art. 366 of the Constitution, residing in any area specified in Part A or Part B of the table appended to paragraph 20 of the Sixth Schedule to the Constitution, provided that such member is not in the service of Government." Section 10(26) of the Income Tax Act of 1961 which corresponds to s. 4(3)(xxi) of the Income Tax Act, 1922, reads thus :- "In the case of member of Scheduled Tribe as defined in clause (25) of Art. 366 of the Constitution, residing 'in any area specified in Part A or Part B of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the Union Territories of Manipur and Tripura, who is not in the derive of Government, any income which accrues or arises to him, (a) from any source in the area or Union Territories aforesaid, or (b) by way of dividend or interest or securities. "In this case it was the contention of the learned Solicitor-General that exemption from income-tax was given to members of certain scheduled tribes due to their economic and social backwardness: it is not possible to consider a government servant as socially and economically backward and hence the exemption was justly denied to him. According to Solicitor-General, once a tribal becomes a government servant he is lifted out of his social environment and assimilated into the forward sections of the society and therefore he needs no more any crutch to lean on. The Supreme Court in this connection observed that: "The argument appears to us to be wholly irrelevant. The exemption is question was not given to individuals either on the basis of their social status or economic resources. It was given to a class. Hence individuals as individuals do not come into the picture. We fail to see in what manner the social status and economic resources of a government servant can be different from that of another holding a similar position in a corporation or that of a successful medical practitioner, lawyer, architect, etc. It was given to a class. Hence individuals as individuals do not come into the picture. We fail to see in what manner the social status and economic resources of a government servant can be different from that of another holding a similar position in a corporation or that of a successful medical practitioner, lawyer, architect, etc. To over-paint the picture of a government servant as the embodiment of all power and prestige would sound ironical. Today his position in the society to put it at the highest is no higher than that of others who in other walks of life have the same income. For the purpose of valid classification what is required is not some imaginary difference but a reasonable and substantial distinction having regard to the purpose of the law". Supreme Court also observed at part 13 of this judgment," we know of no legislative practice or history treating government servants as a separate class for the purpose of income tax, The government servants' income has all along been treated in the same manner as the income of other' salaried officers. We do not know under what circumstances the notifications dated 6.6.1890 and 21.3.1922, referred to earlier, came to be issued. But they are insufficient to prove a well established legislative practice. At the time those notifications were issued the power of the legislature to grant or withhold any exemption from tax was not subject to any constitutional limitation. Hence the validity of the impugned provisions cannot be tested from what our legislatures or governments did or omitted to do before the Constitution came into force. If that should be considered as a true test then Art. 13(1) would become otiose and most, if not all, of our constitutional guarantees would lose their contents. Sri Setalvad, learned counsel for the respondent is justified in his comment what classification based on past legislative practice and history does not mean that because in the past the legislature was enacting arbitrary laws it could do so now". Supreme Court in the case of Kamal Hotel & Restaurant Asson. Vs. State of Kerala, AIR 1990 SC 913 held that reasonableness of the classification has to be decided with reference to the realities of life and not in the abstract. Supreme Court in the case of Kamal Hotel & Restaurant Asson. Vs. State of Kerala, AIR 1990 SC 913 held that reasonableness of the classification has to be decided with reference to the realities of life and not in the abstract. The discernible dissimilarity between those grouped together and those excluded is a pragmatic test, if there be a rational nexus of such classification with the object to be achieved, It is the substance and not form alone which must be seen. 6. Whether the classification is reasonable or not must depend upon the facts of each case and circumstances obtained at the relevant time. But the Supreme Court has laid down that the classification must be in tune with the preamble and Part-IV of the Constitution of India in Atam Prokash vs. State of Haryana, AIR 1986 SC 859 . What Art. 14 prohibits is a class legislation and not reasonable classification for the purpose of legislature. If the legislature takes care to reasonably classify person for legislative purpose and deals equally with all persons belonging to a well-defined class, it is not open to the party to allege a denial of equal protection on the ground that the law does not apply to other persons but in order, however, to pass the test of permissible classification, the conditions must be fulfilled. The first condition is that the classification must be based on intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and the second condition is that the differentia must have a rational relation to the object sought to be achieved by the statute in question. Applying these principles in the facts and circumstances of the case, we are of the view that the categories of the State Government employees living in their own house and in private rented house and the categories of the employees living in the accommodation provided by the State Government on payment of rent do not satisfy the test, that is to say, these differentia have no rational relation with the object sought to be achieved by such classification. Giving of some concessions in the fixation of rent to the second category is wholly irrelevant. Giving of some concessions in the fixation of rent to the second category is wholly irrelevant. The purpose and object of granting house rent allowances to the employees of the Government occupying their own houses where they have not to pay any rent for such accommodation and those living 'in a private rented house have to give them some monetary benefit irrespective of the fact whether they have any obligation to pay rent on receipt of the house rent allowances and this has no connection with the payability of the rent. If payability of the rent is not the factor for the purpose of granting of houses rent allowances in that event, making some concession in the matter of assessment of rent payable by the second category of the state government employees is not at all a relevant consideration for the purpose of making a discrimination. If the object of granting house rent allowances was intended to re-imburse the house rent paid or payable by the employees wholly or in part, in that event this classification could have been said to be reasonable and such classification could have some nexus with the object sought to be achieved. But those who have not to pay any rent and those who have no liability to pay any rent and those who pay a nominal amount as a rent and on the contrary, get a lumpsum amount as house rent allowances, which is not a compensation nor re-imbursement cannot be said to be a different group from the other. The preamble of the Constitution gives security to all its citizens, inter alia, social, political and economic justice. Part-IV of the Constitution particularly, Art. 39 is also aimed at paying equal pay for equal work and that is a Constitutional goal. If the classification made by the state is upheld in that event persons residing in their own houses having no obligation to pay any rent at all will get more financial benefit than persons residing in a rented accommodation provided by the State Government paying rent. And this is the net result of such classification. The object of such classification could not be to give more benefit to the persons who are economically sound or superior. Economic justice does not and cannot mean that the rich should be made richer and the poor poorer. Converse may be true. And this is the net result of such classification. The object of such classification could not be to give more benefit to the persons who are economically sound or superior. Economic justice does not and cannot mean that the rich should be made richer and the poor poorer. Converse may be true. While introducing the House Rent Allowances, it was not the policy of the object of the state government that the same should have any relation or connection with the actual payment of rent but it is clear that it is a payment which is in substance an extra allowance and such allowance is given to all irrespective of the flats whether or not they have to pay for their accommodation. 7. Accordingly, the petitioners and other government employees who are occupying accommodation in rental Housing Estate by the Government are equally entitled to house rent allowances. The order of the Learned Trial Judge is set aside for the foregoing reasons. The writ application is allowed. Let a writ in the nature of Mandamus do issue directing the respondents to withdraw and/or cancel and/or forbear to give any effect to clause (1) in the second sub-paragraph of paragraph 8 of the said Notification No. 432-F, dated 12th January, 1990 and not to make any discrimination between the Government employees in the matter of payment of house rent allowances aforesaid. In order to avoid any complication and liability to pay the arrears we direct that this order will be effective from 1st June, 1994. Let Xerox copies of this Judgment be given to the Learned Advocates for the parties on the usual undertaking. Nikhil Nath Bhattacharya, J.: I agree. Order of Learned Trial Judge set aside. Order of Learned Trial Judge set aside Writ application allowed.