Supreme Court of India

THE STATE OF KARNATAKA AND ANR.versusMANGALORE UNIVERSITY NON-TEACHING EMPLOYEES ASSOCIATION AND ORS.

Citation: 2002 INSC 109
Decided: 28 February 2002
Disposal: Appeal(s) allowed
Bench: S RAJENDRA BABU

Holding

The withdrawal of HRA and CCA for employees at Konaje does not violate Article 14, and although the orders are valid, recovery of excess payments made up to 31 March 1997 is prohibited.

Summary

Mangalore University employees at Konaje were receiving House Rent Allowance (HRA) and City Compensatory Allowance (CCA) at rates applicable to a ‘C’ class city, although the campus lay in an ‘E’ class area. The Karnataka Government ordered the withdrawal of these allowances from 1‑April‑1994 and directed recovery of excess payments, which the employees challenged under Article 226 alleging violation of Article 14 and principles of natural justice. The Supreme Court held that the classification scheme for HRA/CCA is a valid legislative rule and its application to Konaje does not breach Article 14, and that the orders were within the parameters of the governing rules. While the violation of natural‑justice norms did not automatically invalidate the orders, the Court found no real prejudice to the employees. Consequently, the Court barred recovery of the allowances paid up to 31 March 1997 but allowed recovery of amounts thereafter, and dismissed the writ petitions, allowing the State’s appeal.

Issues considered

The withdrawal of HRA and CCA for Mangalore University employees violates Article 14 of the Constitution.
Whether the Government’s orders to recover excess HRA/CCA payments contravene principles of natural justice by denying a hearing.
Whether the 8‑km yard‑stick rule applicable to Bangalore can be uniformly applied to other cities such as Mangalore.
Whether HRA and CCA constitute conditions of service that can be altered unilaterally by the Government.
Whether recovery of excess allowances paid between 1‑April‑1994 and 31‑March‑1997 is permissible.

Subjects

service lawHouse Rent AllowanceCity Compensatory AllowanceArticle 14natural justiceequalityadministrative lawKarnatakaclassification of citiesrecovery of excess payment

Judgment

THE STATE OF KARNATAKA AND ANR. A
v.
MANGALORE UNIVERSITY NON-TEACHING EMPLOYEES
ASSOCIATION AND ORS.

FEBRUARY 28, 2002
B
[S. RAJENDRA BABU AND P. VENKATARAMA REDD!, JJ.)

Service Law :

AllowafiCes-House Rent Allowance and City Compensatory Allowance- C
Grant of-To 'E' class city based employees at par with 'C' class city based
employees-Withdrawal of such allowance-Order for recovery of excess
payment-Held, withdrawal justified, since 'E' class city based employees not
entitled to draw HRAICCA at the rates applicable to 'C' class city based
employees-However, in the circumstances of the case order of recovery of D
excess payment not justified

Constitution of India. 1950--Article 14--Criterion adopted in 'A' class
city not extended to 'C' class city-Held, does not violate the provision--
legislative provision or executive order of general application does not become
unconstitutional n1erely because in its actual application it is disadvantageous E
or inequitable to certain individuals.

Administrative law-Principles ofNatural Justice-Violation of-Held,
violation itself is not sufficient to set at naught the action taken-In considering
the effect of violation, genesis and reason of action taken and possibility of
prejudice are to be taken into account-In the instant case the principle not F
violated, since ,action iaken was within the parameters of rules-Hence no
prejudice caused by not affording opportunity of hearing.

Mangalore University was located in 'E' category town, 5 kms. away
from Mangalore, a 'C' category city/town. Due to inadequate housing facilities
in the campus of the University, its employees were allowed payment of House G
Rent Allowance (HRA) and City Compensatory Allowance (CCA), at par with
the employees working within limits of Mangalore City Corporation Area.

After objections from Accountant General Government ordered to
discontinue such payment of HRA and CCA w.e.f. 1.4.1994 on the ground H
121
122 SUPREME COURT REPORTS [2002) 2 S.C.R.

A that the place where the University was situated, did not fall under the City
Corporation Area. University was directed to recover the excess amount paid
from 1.4.1994. However, notwithstanding Government Orders status quo with
regard to payment of allowances continued upto 31.3.1997.

The legality of the Government orders withdrawing such payment of
B HRA and CCA and directing the University to recover excess amount, were
challenged in writ petition under Article 226 of the Constitution, and direction
was sought to pay HRA and CCA at the same rate as applicable to 'C'
category city. It was contended that Government should have treated the
University employees at par with Government employees posted at a place
C within 8 k.m. from the periphery of Bangalore City Corporation Limits; and
that opportunity of being heard was ~ot afforded to them. The petition was
dismissed by Single Judge of the High Court.

On appeal, Division Bench held that on the analogy of the benefit given
to the employees working within the peripheral area of the Bangalore City
D Corporation, the University employees should have been given the same
benefit and not doing so would be violative of Article 14 of the Constitution;
that the allowance being part of service condition, employees should not have
been deprived of the benefits which have accrued to them; and that
opportunity to show cause should have been afforded to the affected employees
as their accrued rights were being curtailed. Hence these appeals.
E
Allowing the appeals, the Court

HELD : 1.1. The impugned orders of the Government do not, by
themselves, fall foul of Article 14. These orders were issued only to rectify
the mistake that was committed in extending the benefit of HRA and CCA
F applicable to 'C' class city to the Mangalore University employees. The
employees ofMangalore 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.(129-H; 130-A)

G 1.2. 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. 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
H should not take note of individual cases of hardship and afford relief wherever
STATE v. MAN GALORE UNI. NON-TEACHING EMPLOYEES ASSO. 123

such relief is genuinely needed, but, the rule or the provision does not become A
bad or obnoxious to Article 14 for the reason that the criterion adopted in
the case of 'A' class city is not extended to 'B' or 'C' class city.
(130-G; 131-B-C]

2. URA and CCA, which are components of total salary undoubtedly
form part of conditions of service and it may not be accurate to describe them B
as concession. But the fact that URA and CCA are part of conditions of service
does not lead the respondents anywhere for the simple reasons that the
conditions of service can be unilaterally altered so long as such action is in
conformity with legal and constitutional provisions. (129-D-E]
3. It is true, where the payment already made is sought to be recovered, C
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 Article 226 of the
Constitution need not necessarily interfere and set at naught the action taken. D
The genesis of the action contemplated, the reasons thereofand the reasonable
possibility of prejudice are some of the factors which weigh with the Cou'1
in considerating the effect of violation of principles of natural justice. When
undisputably the action taken is within the parameters. of the Rules governing
the payment of BRA and CCA and moreover the University authorities.
themselves espoused the cause of employees while corresponding with the E
Government, it is difficult to visualize any real prejudi_ce to the respondents
on account of not affording the opportunity to make representation.
(131-E-G]
4. On the special facts of this case, the employees of the University have
to be protected against the move to recover the excess paymeats upto p
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 incurred additional expenditure towards house rent, the
employ..,s should Hot be penalized for no fault of theirs. (132-A-R]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6247- G
6250 of 2000.

From the Judgment and Order dated 3.9.99 of the Karnataka High
Court in W.A. Nos. 3274-77 of 1999.

N. Ganpathi for the Appellants. H
124 SUPREME COURT REPORTS [2002] 2 S.C.R.

A K. Subba Rao, S. Ravindra Bhat, Naveen R. Nath, Ms. Hetu Arora,
Vinod Kumar and Shiv Kumar Suri, Advs. with him for the Respondents.

The Judgment of the Court was delivered by

P. VENKATARAMA RED DI, J. The decision taken by the State
B Government to discontinue with effect from 1.4.1994 the payment of House
Rent Allowance (hereinafter referred to as 'HRA') and City Compensatory
"Allowance (hereinafter referred to as 'CCA') to the employees ofMangalore
University and the consequential action taken by the State Government and
the University to recover the excess payments made after 1.4.1994 in
c instalments was called in question by the respondents herein by filing Writ
Pet\tions under Article 226. The learned Single Judge of the Kamataka High
Court declined to grant relief and dismissed the Writ Petitions. However, on
an intra-court appeal by the aggrieved employees/association of employees,
the Division Bench of the High Court reversed the order of the learned Single
Judge and set aside the impugned orders of the Government, thereby allow:ing
D the Writ Petitions. It is against this judgment of the Divisions Bench, these
appeals are preferred by the State of Karnataka.

The campus of the Mangalore University which was established in the
year 1980 is situated at a place called 'Konaje' which is at a distance of about
5 Kms. from the boundary of the Mangalore City Corporation. The payment
E
of allowances - HRA and CCA to the teaching and non-teaching staff of
University is regulated by· the various Government orders issued from time
to time. The State Government makes the fund available to the University for
meeting the expenditure towards pay and allowances of the employees. It \._
appears that on account of inadequate housing facilities in the campus, the
F Government by a G.O. dated 30.11.1984 allowed the HRA and CCA to be
paid to the employees residing within the City Corporation area on par with
the employees working within the limits of the Corporation. Sanction for
such payment was given for three years. The payment was being made in
terms of the Government Order dated 30.11.1984, even after the expiry of
three years. The Government by an order dated 12.10.1993 extended the
G
benefit ·for one year from 1.4.1993. It is not in dispute that the payment
towards HRA and CCA was made even thereafter at the same rate till the
impugned orders came to be passed during the year 1996/1997 to which
reference will be made a little later. While so, on the basis of the objection .
raised by Accountant-General, the Government reconsidered the issue and
H passed orders on 13.2.1996 in G.O. No. ED:42:UDK:93. It is stated therein
STATE v. MANGALORE UNI. NON-TEACHING EMPLOYEES ASSO. [REDD!, J.] 125
that "since Konaje is not under the jurisdiction of Mangalore City Corporation A·
area, HRA and CCA cannot be paid at the same rates from 1.4.1994 onwards".
Accordingly the following order was passed by the Government :-

"Employees of Mangalore University at Konaje have been
exempted from the recovery of HRA and CCA paid from 1988-89 to
1992-93 only if they have been resident in the jurisdiction of B
Mangalore City Corporation Area

This is subject to the condition that employees of Mangalore
Universily at Konaje shall not be paid HRA and CCA from 1.4.1994
at the rates applicable in the Mangalore City Corjioration area."
c
Though in the first para extracted above, recovery was waived upto
1992-93, actually such waiver was"itpto 31.3. 1994 as is evident from what is
stated in the subsequent G.O. No. ED:l31;UDV:96 dated 24.5.1997. By that
, G.O. dated 24.5.1997 as well as earlier G.O. dated 5.3.1997 the Government
directed the University authorities to recover the excess amount of HRA and D
CCA paid to the employees of Mangalore University w.e.f. 1.4. 1994 in
compliance with G.0. No. ED:42:UDK:93 dated 13.2.1996 in JOO monthly
instalmentS as proposed by the Vice-Chancellor of Mangalore University.
The suggestion of the Vice-Chancellor to reconsider the decision in the light
of inclusion of Konaje within the extended area of Mangalore Urban
Development Authority w.e.f. 2.12.1996 was not accepted by the Government: E
This led to the fili!1g of Writ Petitions in the High Court. The legality of the
orders issued by the Government on 13.2.1996, 05.03.1997 and 24.5.1997
was assailed in the Writ Petitions and a direction was sought to pay HRA and
CCA to teaching and non-teaching employees of the University at the same
rate as is applicable to the 'C' category city/town. It may also be mentit;med
at this juncture that the Vice Chancellor. of the University by his F
communication dated 5.3.1997 addressed to the Chief Secretary requested
the Government to waive the excess payment upto 31.3.1997 and continue to
pay the HRA at the same rate. It indicates that notwithstanding the G.O.
dated 13.2.1996, status quo in regard to the payJllent of the allowances
continued upto 31.3.1·997 and that was the position till the date of filing of G
the Writ Petitions in the year 1997.
.
The learned Single Judge of the High Court held that the action of the
State Government in withdrawing the concession extended to the University
employees on a re-examination of the matter did not suffer from any legal
infirmity'. The learned Judge negatived the contention that the Government f!:
126 SUPREME COURT REPORTS [2002] 2 S.C.R.

A should have treated the University employees of Mangalore on par with the
Government employees posted at a place within 8 Kms. from the periphery
of Bangalore City Corporation limits. The learned Judge observed that such
comparison was misconceived. Further, the learned Judge took the view that
the Notification issued on 28.11.1996 under the Karnataka Urban and Rural
B Planning Act, 1961, including Konaje village within the purview of the
Mangalore Urban Development Authority is not relevant and does not enure
to the benefit of the writ petitioners. The learned Judge then held that on the
facts of the case, the question of affording opportunity to the aggrieved
employees to have their say does not arise.

C The Division Bench was of the view that on the analogy of the benefit
given to the employees working within the peripheral area of the Bangalore
City Corporation, the University employees of Mangalore too should have
been given the same benefit and not doing so will be violative of Article 14.
The Divis.ion Bench also faulted the observation of the learned Single Judge
that the grant of HRA and CCA is a concession. It was then observed that
D these allowances are part of service conditions and the employees should not
be deprived of the benefits which have accrued to them. The learned Judges
were also of the view that opportunity to show cause should have been
afforded to the affected employees as their accrued rights were being curtailed.

E As already noticed, it is the stand of the appellant - State Government
that under the relevant rules/orders the respondents do not have the entitlement
to draw HRA/CCA applicable to the employees working within the Corporation
limits of Mangalore area or within the specified places adjacent to the
Corporation area. For those employees who have the place of work within \.,.,_
the Mangalore City Corporation or the contiguous areas specified in G.O.,
F the HRA/CCA applicable to a 'C' class city is payable, whereas according to
the stand of the Government, the Mangalore University employees will be
entitled to get the said allowances at the rate applicable to 'E' class station
which is only 3 per cent of the basic pay. We shall, therefore, tum our
attention first to the relevant Government Order urider which the payment of
G HRA and CCA is regulated. G.O. No. FD 67 SRP 89 dated 4.5.1990 deals
with reclassification of places for purposes of HRA and CCA and revision of
rates of these allowances. This Government Order was issued as a sequel to
the recommendations of the Karnataka State Third Pay Commission. The
.relevant paragraphs in the Government Order are extracted hereunder :-

H "2.2. For the purposes of HRA and CCA, cities and other places in
ST ATE v. MAN GALORE UNI. NON· TEACHING EMPLOYEES ASSO. [REDD!, J.] J27

the State are classified into six groups as shown below with reference A
to their population according to 1981 census :-

Population of city/other places Classification
(i) 16 lakhs and above 'A'
(ii) 8 lakhs and above but not exceeding 16 lakhs 'Bl' B
(iii) 4 lakhs and above but not exceeding 8 lakhs 'B2'
(iv) 50,000 and above but not exceeding 4 lakhs 'C'
(v) 25,000 and above not exceeding 50,000 'D'
"' (vi) Other places 'E' c
2.4. Details of the places under each of the six groups mentioned
above and the areas which form part of the City urpan
agglomeration are given in annexures I and II respectively.
2.5. Government servants shall be entitled to HRA and CCA with D
reference to their basic pay at the rates shown below :-
Tabular statement omitted (According to the table the HRA/CCA
is fixed with reference to the basic pay and the class of city or
other place).
Para 2.6. on which the respondents - writ petitioners placed much E
reliance is as follows :-

The orders issued in G.O. No. FD 4 SRP 80 22nd March 1980
regarding admissibility of HRA and CCA for the employees who are
posted to any place which is situated within a distance of eight
kilometers from the periphery of the municipal limits of the Bangalore F
City Corporation and which is not included in the Bangalore Urban
Agglomeration area, but who reside within the limits of Bangalore
City Corporation, shall continue to be in force.

2.8. HRA and CCA are payable with reference to the place of duty,
irrespective of the place of residence of a Government servant. G
3.1. A Government servant will not be eligible for HRA, if he is
provided with rent free accommodation.

5.1. These orders shall be applicable to all full-time Government
servants, who are governed by the provisions of the Karnataka Civil H
128 SUPREME COURT REPORTS (2002] 2 $.C.R.

A Service Rules and who are on time-scales of pay.

S.2 .. These orders are extended to (i) full-time employees borne ott
work-charged or contingent establishment of Government,. on time
scales of pay;- (ii) full-time employees of the aided educational
institutions and non-teaching staff of the Universities, who are on
B time-scale of pay and to (iii) staff of the µniversities/Engineering
colleges who are drawing pay in the UGC scales ofpay/AICTE scales
of pay.

6.1. The HRA and CCA sanctioned by this order shall be payable in
cash from the month of April 1990 and onwards until further orders. ·
c
In Annexure I, 'A' class city which is Bangalore Urban Agglomeration,
'B2' cities, 'D' towns and 'E' places with a population of less than 25,000
are mentioned. Mangalore (Urban Agglomeration) is one amongst 'C' cities.
Items VI of Annexure II pertains to Mangalore Urban Agglomeration; Konaje
is not one of the· places specified therein.
D
It is clear from para 2.8 that HRA and CCA is determ.ined with reference
to the place of duty. The place of duty in the instant case is Konaje where
the University campus is located. The village Konaje is outside the City
Corporation limits. It is said to be at.a distance of S kms. from the outer
E limits of the Mangalore City Corporation. However, if it falls under Mangalore
Urban Agglomeration, the rate of HRA/CCA applicable for 'C' class city
employees is payable because under classification 'C' in Annexure I,
Mangalore Urban Agglomeration is included. The next step is to identify
what is Mangalore Urban Agglomeration. We need not determine this question
with reference to the enactment in which the expression 'Urban Agglomeration'
F or an equivalen~ expression occurs. The answer is provided by the very GO
in Annexure IL Para 2.4 makes it explicit that the areas which form part of
the city urban agglomeration are given in Annexure H. As per item VI of
Annexure II, Mangalore Urban Agglomeration consists of (a) Aple; (b)
Derebail (i) Derebail, (ii) Bangrakalur; (c). Kankanadi; (d) Kavuru; (e)
G Kotekare; (t) Mangalore (i) Mangalore (ii) Kadri (iii) Maroli. It appears that
the places which are included in Mangalore Urban Agglomeration are either
situate in Corporation limits or within the close proximity to the Corporation
area. Konaje, as already mentioned, is at a distance of S kms. from the ·
Corporation limits and it is not included in Mangalore Urban Agglomeration.
The G.O. dated 4.5.1990 governs the drawal of HRA and CCA during the
H relevant period. It is brought to our notice that on August 10, 1999, a fresh
STA TE v. MANGALORE UNI. NON-TEACHING EMPLOYEES ASSO. [REDD!, J.] J29

•" G.O. was issued revising the rates of HRA and CCA based on 1991 census. A
Annexure I a 1most remains the same. In Annexure II, under the head
'Mangalore Urban Agglomeration' we find some changes and inclusion of
three more localities. Even here, Konaje stands omitted. As rightly held by
the learned Single Judge, when there is definite identification of the Mangalore
Urban Agglomeration in the relevant notification relating to HRA/CCA, it is B
riot open to the Court to look into the notification issued for a different
purpose under a different enactment. The mere fact that the Government of
Karnataka extended the peripheral area falling within the purview ofMangalore
Urban Development Authority so as to cover several out-lying areas including
Konaje does not ipso facto entitle the university employees to draw HRA/
CCA at the rates applicable to 'C' class city-based employees. At best, the C
notification issued under Karnataka Urban and Rural Planning Act could
only pave the way for appropriate decision to be taken by the State Government
afresh.

Before dealing with the argument based on Article 14, we may advert
to the comment of the Division Bench that the payment of HRA and CCA D
is llot in the nature of concession as opined by the learned Single Judge.
-"'I
True, as pointed out by the Division Bench, the HRA and CCA, which are
components of total salary undoubtedly form part of conditions of service
and it may not be accurate to describe them as concession. Probably, the
learned Single treated it as a concession for the reason that the benefit was E
being given over and above what was contemplated by the rules embodied
in G.O. 67 dated 4.5.1990. Be that as it may, the fact that HRA and CCA are
part of conditions of service does not lead the respondents anywhere for the
simple reason that the conditions of service can be unilaterally altered so
long as such action is in conformity with legal and constitutional provisions.
Ultimately, therefore, the issue turns on the question whether Article 14 is F
violated for not extending the benefit of higher scale of allowances admissible ·
to 'C' class city employees or by withdrawing a benefit which was being
given under the ad hoc orders issued from time to time.

In considering the question from the stand point of Article 14, it is to G
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 Article 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. ED:67:SRP:89 dated 4.5.1990. Applying the rules H
130 SUPREME COURT REPORTS [2002] 2 S.C.R.

A 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
B of that. However, the respondents have not assailed the G.O. dated 4.5.1990
on the ground that non-inclusion of Konage 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 specifying
the places comprised in Mangalore Urban Agglomeration. The limited
challenge to the G.O. of 1990 which received approval of the Division Bench
C of the High Court was on the ground that there was a discrimination as
between the employees working in peripherial area of Mangalore City
Corporation and Bangalore City Corporation. In other words, the respondent
- writ petitions have built up their plea of violation of Article 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.
D 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
E 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 categorization fails
F to take note of ground realities. Such extension upto 8 Kms., be it noted, is
peculiar to Bangalore city only. Bangalore which is the capital of State of
Kamataka is classified 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
G 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 ofKamataka. The complaint based on Article 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
H in view of the inherent complexities involved in fixing the scales of allowances
ST A TE v. MAN GALORE UNI. NON-TEACHING EMPLOYEES ASSO. [REDD!, J] 131
based on the places of work. It is pointed out in the 'additional ground' filed A
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 B
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 genuipely needed; but, the rule or the provision
does not become bad or obnoxious to Article 14 for the reason that the C
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 D
will not give earnest consideration to the problem.

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. [t is true, in a case of this nature E
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 Article 226 of the Constitution need
not necessarily interfere and set at naught the action taken. The genesis of the F
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 parameters of the Rules governing the payment of
HRA and CCA and moreover the University authorities themselves espoused G
the cause of employee_s 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 ibis case.

Though the above discussion merits the dismissal of the Writ Petitions
132 SUPREME COURT REPORTS (2002] 2 S.C.R.

A and the denial of relief to the respondents, we are of the view that on the
special facts of the 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
B 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 5th March 1997 the Government acted further to implement
the decision taken a year earlier. Final orders regarding recovery were passed
C 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 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
D 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.
E
K.K.T. Appeals allowed.

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