Leave encashment exemption parity rejected where Government and bank employees were held to be in different service classes.

Differential exemption treatment for leave encashment under section 10(10AA) was examined for Government employees and bank employees. The exemption framework operated in different factual settings, and employees under different employers and service conditions could not claim parity merely because the benefit related to retirement. On the material available, no hostile discrimination was established, and the classification was upheld as valid. The challenge to the ceiling applicable to the petitioner therefore failed.

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Issues: Whether the different exemption treatment under section 10(10AA) for leave encashment of Government employees and bank employees was discriminatory and entitled the petitioner to parity.

Analysis: The exemption structure under clause (i) and clause (ii) was held to operate in different factual settings. Government employees were not shown to receive leave encashment beyond the limits recognised for them, while the petitioner retired from a nationalised bank governed by different service conditions. The Court found that employees working under different employers and in different sectors could not claim parity merely on the basis of a common retirement benefit, and the material was insufficient to establish hostile discrimination.

Conclusion: The challenge to the ceiling applicable to the petitioner failed, and the classification was upheld as valid. The petition was rejected.

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