Punjab-Haryana High Court
Nirmal Singh Dhanoa And Others vs Additional Chief Secretary To … on 8 April, 2026
CWP-7291-2026,
2026, CWP-9514-2026
CWP &
CWP-10301-2026
2026
1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
112
Date of decision: 08.04.2026
1. CWP-7291-2026
2026 (O&M)
Nirmal Singh Dhanoa and others
....Petitioners
Versus
Additional Chief Secretary to Government of Punjab, Department of Finance,
Punjab Civil Secretariat, Chandigarh
....Respondent
2. CWP-9514-2026
2026 (O&M)
Arun Kumar and others
....Petitioners
Versus
State of Punjab and others
....Respondents
3. CWP-10301--2026 (O&M)
Gagandeep Sharma and another
....Petitioners
Versus
State of Punjab and others
....Respondents
CORAM: HON'BLE MR. JUSTICE HARPREET SINGH BRAR
Present: Mr. Sunny Singla, Advocate and
Ms. Ritti Aggarwal, Advocate
for the petitioner(s) (in CWP-7291-
CWP -2026).
Mr. Kanwar Abhay Singh, Advocate
for the petitioner(s) (in CWP-9514-
CWP -2026).
Mr. Rashpinder Singh Sohi, Advocate
for the petitioner(s) (in CWP-10301
CWP 10301-2026).
MOHD YAKUB
Ms. Anu Chatrath, Addl. A.G., Punjab/Senior Advocate with
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -2-
Mr. Maninder Singh, Addl. A.G., Punjab/Senior Advocate and
Mr. Vikas Arora, DAG, Punjab assisted by
Dr. V.N. Zade, IAS, Secretary (Expenditure).
Mr. Neeraj Sharma, Advocate
for respondent No.4 (in CWP-9514-2026).
Mr. Rahul Sharma, Senior Advocate with
Mr. Karundeep Singh, Advocate
for respondent No.4 (in CWP-10301-2026).
Mr. Raman B. Garg, Amicus Curiae with
Mr. Mayank Garg, Advocate,
Ms. Komal Parveen, Advocate and
Mr. Ajay Sharma, Advocate.
***
HARPREET SINGH BRAR J. (Oral)
A. INTRODUCTION
1. This common judgment shall dispose of all 03 of the
abovementioned writ petitions. An identical stance has been taken by the
respondent(s)-Corporations in all the aforementioned writ petitions that the
payment of pay scales, pension, leave encashment, as well as Dearness
Allowance (DA)/Dearness Relief (DR), is made and regulated strictly in
accordance with the instructions issued by the Government of Punjab. The
respondent(s)-Corporations have assumed a clear position that any decision
taken by the Government of Punjab in this regard will be acted upon by them
accordingly. As such, it becomes incumbent upon this Court to solicit a
response from the Government of Punjab and scrutinise the same.
B. PRAYER(S)
CWP-7291-2026 a) Quashing the order dated 18.11.2025 (Annexure P-
16)passed by the respondent/Additional Chief
Secretary to Government of Punjab, Department of
Finance, whereby the claim of the petitioners is kept
in abeyance till the Government of Punjab takes a
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -3-
decision for grant of DA/DR.
b) Direct the respondent to grant the relief of DA/DR
@ 31% 01.07.2021 instead from 01.11.2021, @
34% w.e.f. 01.01.2022 instead from 01.10.2022, @
38% w.e.f. 01.07.2022 instead from 01.12.2023, @
42% w.e.f. 01.01.2023 instead from 01.11.2024 and
@ 46% w.e.f. 01.07.2023, @ 50% w.e.f.
01.01.2024, @ 53% w.e.f. 01.07.2024, @ 55%
w.e.f. 01.01.2025, @ 58% w.e.f. 01.07.2025 and to
revise the subsequent DA/DR in accordance with the
recommendations of the 6th Punjab Pay Commission
and in accordance with the installments granted to
the Central Government employees on the basis of
All India Consumer Price Index (hereinafter referred
to as ‘AICPI’) as accepted and approved by Cabinet
on 18.06.2021 (Annexure P-12).
c) Further direct the respondent to grant the arrear of
revised DA/DR and further subsequent increase in
DA/DR onwards at par with the Government of
India pattern alongwith interest @ 12% per annum
on the delayed payment of enhanced DA/DR.
CWP-9514-2026 a) Direct the respondents to grant the benefit of
Dearness Allowance/Dearness Relief @ 125%
w.e.f. 01.01.2016, @ 31% w.e.f. 01.07.2021 instead
of 28% from 01.11.2021, @ 34% w.e.f. 01.01.2022
instead from 01.10.2022, @ 38% w.e.f. 01.07.2022
instead from 01.12.2023, @ 42% w.e.f. 01.01.2023
instead from 01.11.2024 and @ 46% w.e.f.
01.07.2023, @ 50% w.e.f. 01.01.2024, @ 53%
w.e.f. 01.07.2024, @ 55% w.e.f. 01.01.2025 and @
58% w.e.f. 01.07.2025 and to revise the subsequent
Dearness Allowance in accordance with the
recommendations of 6th Punjab Pay Commission
and in accordance with the installments granted to
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -4-
the Central Government Employees on the basis of
AICPI vide F.No.1-3/2015-E-II(B) dated
23.09.2015 (Annexure P-1) as accepted and
approved by Cabinet on 21.06.2021.
b) Further to quash the letter dated 18.02.2025
(Annexure P-29) issued by respondent No.2, to the
extent the payment of arrears of revised
pay/pension/family pension/leave encashment
including Dearness Allowance/Dearness Relief for
the period 01.01.2016 to 30.06.2021 as per the 6th
Punjab Pay Commission to the
employees/pensioners/family pensioners.
c) Direct the respondents to pay the
employees/pensioners/family pensioners below 75
years of age, arrears of revised pay/pension/family
pension/leave encashment including Dearness
Allowance/Dearness Relief for the period
01.01.2016 to 30.06.2021, in not more than 12
monthly installments and along with interest, in
parity with employees/pensioners/family pensioners
above 75 years of age.
d) Further direct the respondents to release the arrears
of revised pensionary benefit of Dearness
Allowance/Dearness Relief for the period i.e,
01.07.2021 onwards, @ 31% w.e.f. 1.7.2021 instead
of 28% from 01.11.2021, @ 34% w.e.f. 01.01.2022
instead from 01.10.2022, @ 38% w.e.f. 01.07.2022
instead from 01.12.2023, @ 42% w.e.f. 01.01.2023
instead from 01.11.2024, and further release the
arrears of revised pensionary benefit of Dearness
Allowance/Dearness after granting the installment
@ 46% w.e.f. 01.07.2023, 50% w.e.f. 01.01.2024,
@ 53% w.e.f. 01.07.2024 & @ 55% w.e.f.
01.01.2025 and after further revising the subsequent
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -5-
installments of Dearness Allowance in accordance
with the recommendations of the 6th Punjab Pay
Commission and in accordance with the
installments granted to the Central Govt. Employees
on the basis of AICPI vide F.No.1-3/2015-E-II(B)
dated 23.09.2015 (Annexure P-1) as accepted and
approved by Cabinet on 21.06.2021.
CWP-10301-2026 a) Direct the respondents to grant the benefit of
Dearness Allowance/Dearness Relief to the
employees working with respondent No.4 @ 31%
w.e.f. 01.07.2021 instead from 01.11.2021, @ 34%
w.e.f. 01.01.2022 instead from 01.10.2022, @ 38%
w.e.f. 01.07.2022 instead of 01.12.2023, @ 42%
w.e.f. 01.01.2023 instead from 01.11.2024 & @
46% w.e.f. 01.07.2023, 50% w.e.f. 01.01.2024, @
53% w.e.f. 01.07.2024, @ 55% w.e.f. 01.01.2025,
@ 58% w.e.f. 01.07.2025 in accordance with the
installments granted to the Central Government.
Employees on the basis of AICPI.
b) Further direct the respondents to grant the arrears of
Dearness Allowance/Dearness Relief at par with
Government pattern along with interest @ 12% p.a.
on the delayed payment of arrears.
C. FACTUAL BACKGROUND
CWP-7291-2026 & The petitioners are retired/current employees of the
CWP-10301-2026 Punjab State Power Corporation Ltd.
(PSPCL). The retired employees were allowed revision
of pension following orders of the Government of
Punjab implementing the 6th Punjab Pay Commission
(hereinafter ‘6th Pay Commission’) recommendations.
However, the benefit of DA/DR was not granted to the
current/retired employees, respectively.
The respondent- Additional Chief Secretary to
Government of Punjab, Department of Finance passed
MOHD YAKUB
2026.04.19 14:09
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -6-
the impugned order dated 18.11.2025 (Annexure P-16
in CWP-7291-2026) which states that the matter of
arrears of pay/pension, leave encashment from
01.01.2016 to 30.06.2021 as well as arrears of DA/DR
from 01.07.2021 to 31.03.2024 was discussed in the
Cabinet meeting. In furtherance of the same, a Cabinet
Sub Committee was constituted for a holistic analysis.
Further, the Council of Ministers held a Meeting on
13.02.2025 where the liquidation plan recommended by
the Cabinet Sub Committee was duly approved for
payment of relevant arrears from 01.01.2016 to
30.06.2021 as per the 6th Pay Commission.
Further still, instructions dated 18.02.2025 were
issued by the Government of Punjab which provided
that after liquidation of arrears of 6th Pay Commission,
any arrears on account of DA/DR from 01.07.2021 to
31.03.2024 will be considered for payment in
installments. The said instructions have been adopted
by PSPCL vide Finance Circular No. 03/2025 dated
03.04.2025. Since the PSPCL follows the decision of
the Government of Punjab in this regard, the legal
notice dated 28.05.2025 served by the petitioners was
disposed of by respondent-ACS noting that the
Government of Punjab is yet to take a decision
regarding grant of four installments of DA/DR from
42% to 55%.
CWP-9514-2026 The petitioners are retired employees of Municipal
Corporation, Ludhiana and are aggrieved by the failure
of respondent-Municipal Corporation, Ludhiana to
grant the DA/DR in terms of Central Government
pattern based on AICPI. Furthermore, vide
letter/liquidation plan dated 18.02.2025 (Annexure P-29
in CWP-9514-2026), the Government of Punjab has
directed payment of arrears of revised pension
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -7-
(including DR) from 01.01.2016 to 30.06.2021 in 42
monthly installments without interest for pensioners
below 75 years of age. Different disbursement plans
have been provided by creating artificial categories
within the homogenous class of pensioners. The
Municipal Corporation, Ludhiana, in its reply, has
stated that its employees are governed by the rules and
statutory instructions issued from time to time by the
Government of Punjab in this regard and in absence of
a decision regarding grant of four installments of
DA/DR from 42% to 55%, the Corporation cannot grant
the said benefits.
D. SUBMISSIONS ON BEHALF OF THE PETITIONER(S)
2. Learned counsel for the petitioners (in CWP-7291-2026) inter alia
contends that the petitioners are retired employees of PSPCL, who are currently
in their sunset years. The petitioners were receiving pension along with
Dearness Relief (DR) which is revised twice a year on the basis of AICPI.
Notably, in the Meeting of the Council of Ministers held on 18.06.2021
(Annexure P-12), the Government of Punjab has approved the recommendation
of the 6th Pay Commission to grant DA/DR on the Central Government pattern.
However, despite such approval, the Government of Punjab has failed to grant
the subsequent installments of DA/DR to the petitioners on Central
Government pattern. Learned counsel contends that the failure to grant the
benefit of DA/DR, on the pattern adopted by the Central Government, is not
only violative of Articles 14 and 16 of the Constitution of India, but also
contrary to the approval granted to the recommendations of the 6th Pay
Commission by the Council of Ministers in its Meeting held on 18.06.2021.
3. Learned counsel argues that the petitioners have been subjected to
hostile discrimination as the more privileged All India Service Officers
MOHD YAKUB
2026.04.19 14:09
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -8-
(IAS/IPS/IFS) and Judicial Officers serving in the State of Punjab are receiving
the DA regularly on the Central Government pattern; whereas the petitioners
who are more necessitous due to their comparatively meagre pension, are being
subjected to step-motherly treatment. Further, more than 35,000 pensioners
have died since 01.01.2016 while awaiting the release of their legitimate
benefits in terms of the recommendations of the 6th Pay Commission.
4. Learned counsel for the petitioners further refers to Annexures P-6
and P-7 and submits that in Para 7.10, the 6th Pay Commission has made a
specific recommendation regarding continuation of grant of DA on the Central
Government pattern. In Para 7.11, the 6th Pay Commission has also emphasised
that there should be no time lag in release of the DA and it should be
implemented as soon as the DA is enhanced by the Government of India. The
rationale behind the immediate implementation, as provided in Para 7.11, is
that the efficacy of DA as a hedge against inflation is eroded if there are delays
in its timely release. Learned counsel also refers to Annexures P-3, P-4, P-8, P-
9 and P-10 and submits that approval of the recommendations of the 6th Pay
Commission regarding grant of DA w.e.f. 01.01.2016 by the Government of
Punjab is clearly discernible. He also drew the attention of this Court to the
letter dated 21.06.2021 (Annexure P-12), and further refers to the Agenda Item
No.147 of the Meeting of the Council of Ministers held on 18.06.2021 and
submits that at Page 58 of the paperbook, the recommendations of the 6th Pay
Commission regarding DA are clearly discernible, along with comments of the
Department of Finance. The approval of the recommendations of the 6th Pay
Commission as brought out in Para 1.8 to 1.13 by the Government of Punjab is
discernible from para 2.1 at Page 77 of the paperbook. In terms of the aforesaid
approval, a Notification dated 05.07.2021 (Annexure P-13) was issued by the
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -9-
Government of Punjab, notifying the Punjab Civil Services (Revised Pay)
Rules, 2021 (hereinafter referred to as ‘Rules of 2021’).
5. Learned counsel for the petitioners further refers Rule 3 (c) and (j)
of Rules of 2021 which define ‘existing emoluments’ and ‘revised
emoluments.’ A perusal thereof clearly demonstrates that the ‘revised
emoluments’ includes Dearness Allowance. Rule 3(c) and (j) read as under:-
“(c)”existing emoluments” means the sum of-
(i) existing basic pay as on the 31st day of December, 2015;
and
(ii) dearness allowance appropriate to the pay in the
existing basic pay;
(j) “revised emoluments” means the pay in the Level of a
Government employee in the revised pay structure and includes
dearness allowance.”
6. The Government of Punjab has not only adopted the
recommendations of the 6th Pay Commission but has also acted upon it by
releasing some of the installments of the DA/DR. Thus, the unilateral denial of
DA/DR by the PSPCL to the petitioners and its other employees and
pensioners, is contrary to the decision taken by the Council of Ministers on
18.06.2021 as well as Rule 3(c) and (j) of the Rules of 2021. Learned counsel
for the petitioners relies upon the order passed by this Court in CWP-29-2023,
titled as Kuljit Singh and others vs. State of Punjab and others, decided on
10.01.2023 (Annexure P-5) and by referring to Paras 5 and 6, submits that the
aforesaid writ petition was disposed of on the statement made by learned
Additional Advocate General, Punjab appearing on behalf of the State of
Punjab to the effect that all the employees of the Government of Punjab are
entitled to the grant of Dearness Allowance. Further, it was undertaken that all
other similarly situated employees shall be granted the said benefit within a
MOHD YAKUB
2026.04.19 14:09
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -10-
period of 03 months as there cannot be any discrimination amongst identically
situated employees. He further refers to Paras 13 and 14 of the judgment
rendered by the Constitution Bench of the Hon’ble Supreme Court in
Purshottam Lal and others vs. Union of India and another, (1973) 1 SCC 651
and contends that after acceptance of the recommendations of the 6th Pay
Commission by the Government of Punjab, it becomes binding and denial of
relief flowing therefrom to employees and pensioners, while granting the same
to All India Service Officers, would amount to an act of discrimination.
7. Moreover, he relies upon Paras 21 to 25 of the judgment of the
Division Bench of this Court in CWP-15554-2007 and connected cases, titled
as Gian Chand and others vs. State of Punjab and others, decided on
23.12.2025 and submits that the employees and pensioners cannot be deprived
of their fundamental entitlements on the ground of financial constraints. The
Division Bench has not only rejected the ground of financial constraints but
also adversely commented on the fiscal discipline and lack of financial
prudence of the Government of Punjab. The relevant part of the said judgment
reads as follows:-
“21. The State has estimated a figure of Rs. 839.85 Cr. by
assuming that all 44,163 retirees would opt for pension
commutation at an interest rate of 4.75%. However, there is no
supporting data to prove that the State exchequer would have
incurred financial consequences from this large amount.
22. Moreover, the State has miserably failed to demonstrate
that its financial condition significantly improved in 2006, which
led to restoring the interest rate to 4.75%. The State has not
provided any data on the number of retirees who chose to
commute their pensions at the reduced interest rate of 4.75% in
subsequent years and the resulting financial impact on the State
treasury.
23. It should be remembered that the Commutation of
Pension is a statutory welfare scheme and an essential part of a
retiree’s pension benefits, especially for those who have dedicated
most of their lives serving the State and have diligently paid their
annual taxes for its development. It is the duty of the Welfare State
MOHD YAKUB
to support its retired citizens by at least offering them
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -11-Commutation of Pension at lower interest rates, so they can plan
the next chapter of their lives with pride and dignity.
24. The State remains completely silent about what other
measures were taken to ease the financial burden and help the
State recover from the crisis. It seems that the entire
responsibility for the so-called self-made financial crisis was
unfairly placed on retirees at the end of their careers, when they
needed financial support the most.
25. Moreover if the State of Punjab was in a financial
crisis, it could have definitely reduced their spending on
unnecessary advertisements, billboards, and wasteful schemes,
which only appeal for votes by the ruling party. However, they
imposed cuts on employees who had completed their service, and
if they had been wealthy, they would surely not have taken
pension commutation, which itself indicates they have limited
means.”
(Emphasis supplied)
8. Furthermore, learned counsel for the petitioners has produced a
notification dated 30.10.2014 issued by the Government of Punjab, which is
taken on record as ‘Mark X’. Referring to the same, learned counsel submits
that keeping in view the welfare of the entire workforce, the Government of
Punjab took a conscious decision to release Dearness Allowance to all its
employees, even prior to its release to officers of the All India Services
(IAS/IPS/IFS). However, this practice was discontinued in the year 2019 when
the payment of Dearness Allowance to All India Service officers was de-linked
from that of other employees vide notification dated 14.10.2019, which was
produced in Court and is taken on record as ‘Mark Y’. It is thus submitted that
the past practice of the Government of Punjab reflects an informed policy
decision prioritising its own employees, particularly those at the lower rungs,
over the relatively privileged class of All India Service officers, a position
which now stands reversed to the detriment of State Government employees.
9. Learned counsel for the petitioners (in CWP-9514-2026) submits
that the petitioners after serving the Government of Punjab, retired from
Municipal Corporation, Ludhiana, and their grievance is two-fold: firstly, the
MOHD YAKUB
2026.04.19 14:09
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -12-
respondents have not granted the pending installments of DA/DR; secondly,
vide impugned letter/liquidation plan dated 18.02.2025 (Annexure P-29) the
payment of the arrears of the revised pension/family pension and DR has been
wrongly decided to be made in 42 monthly installments and that too without
any interest. The pensioners have been separated into three different classes on
the basis of their age, creating artificial class legislation for the purpose of the
payment of revised benefits. The pensioners in the first two categories have
already received their revised benefits, as per the 6th Pay Commission, in 02
and 12 installments, respectively, whereas the payment of revised benefits to
the pensioners in the third category has been divided into 42 monthly
installments. As such, the act and conduct of the Government of Punjab is
violative of Article 14 of the Constitution of India.
10. Learned counsel appearing for the petitioners in CWP-10301-
2026 submits that the petitioners are employees of the PSPCL and adopts the
arguments advanced by learned counsel for the petitioners in CWP-7291-2026.
E. ASSISTANCE RENDERED BY LEARNED AMICUS
CURIAE
11. Learned Amicus Curiae, at the very outset, emphasizes that
Dearness Allowance has consistently formed a part of ‘salary’ since the
implementation of the applicable Service Rules in the year 1973. He submits
that tracing the historical genesis and progressive institutionalization of
Dearness Allowance indicates that it is neither a discretionary benefit nor a
matter of executive largesse; rather, the concept of DA has been evolved to
safeguard employees against the corrosive effects of inflation. Originating as a
response to abnormal price rise, over the decades, DA has crystallized into a
uniform and objective component of wage structure, anchored to the AICPI and
MOHD YAKUB
2026.04.19 14:09
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -13-
consistently applied across public employment through successive Pay
Commission recommendations and is a consistent executive practice. Its
evolution reflects a conscious shift from ad hoc relief to a legally enforceable
facet of fair wages. He further submits that over time, it has been integrated
within the broader framework of social welfare, economic justice and
constitutional governance, thereby bringing it within the sweep of Articles 14,
16, 21 and 43 of the Constitution of India.
12. Learned Amicus Curiae further contends that the concept of
Dearness Allowance is distinctly Indian. It is structured, formula-driven, and a
legally recognized right which reflects India’s commitment to protection of real
wages in a developing, inflation-prone economy. As such, DA plays a crucial
role in protecting employees from inflation shocks, maintaining industrial
peace, ensuring social justice in wage policy and acting as an automatic
stabilizer in any prevailing economic conditions.
13.1. In order to explain the judicial evolution of the concept of
Dearness Allowance, learned Amicus Curiae has referred to a number of
judgments, starting with the judgment rendered by a four-Judge bench of the
Hon’ble Supreme Court in Hindustan Times Ltd. vs. Their Workmen AIR
1962 INSC 385, wherein, speaking through Justice K.C Das Gupta, the
following was observed:
“13. …It is, in our opinion, proper and desirable that the
dearness allowance should not remain fixed at this figure but
should be on a sliding scale. As was pointed out in Workmen of
Hindusthan Motors v. Hindusthan Motors, (1962)2 L.L.J. 352the
whole purpose of dearness allowance being to neutralise a portion
of the increase in the cost of living, it should ordinarily be on a
sliding scale and provide for an increase on rise in the cost of
living and a decrease on a fall in the cost of living….”
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -14-
13.2. Further, he refers to the judgment of the Constitution Bench of the
Hon’ble Supreme Court in Hindustan Antibiotics Ltd. vs. The Workmen 1966
INSC 195, wherein, speaking through Justice Subba Rao, the following was
opined:
“10. Let us now consider the constitutional, legislative, executive
and opinion trends in that regard. Article 39 of the Directive
Principles of State Policy says that the State shall direct its policy
towards securing equal pay for equal work for both men and
women and Article 43 thereof enjoins on the State to endeavour to
secure, by suitable legislation or economic organisation or in any
other wages to all workers, agricultural, industrial or otherwise,
work, a living wage, conditions of work ensuring a decent
standard of life and full enjoyment of leisure and social and
cultural opportunities. This Constitutional directive will certainly
be disobeyed if the State attempts to make a distinction between
the same class of labourers on the ground that some of them are
employed by a company financed by it and the others by
companies floated by private enterprise. These Articles do not
countenance the invidious distinction which is now sought to be
made on the basis of the character of the employer. The
Legislatures in India even before the coming into force of the
Constitution passed Acts regulating industries such as the
Industrial Disputes Act, 1938, Industrial Employment (Standing
Orders) Act, 1946 and Industrial Disputes Act, 1947. In these Acts
no distinction is made between industries in public and private
sectors vis-a-vis the service conditions of the labour. Under
Section 2(g) of the Industrial Disputes Act, ’employer’ means in
relation to an industry carried on by or under the authority of any
department of the Central Government or a Government of Punjab
the authority prescribed in this behalf the head of the department
and under Clause (j) ‘industry’ means any business, trade,
undertaking, manufacture or calling of employers and includes
any calling, service, employment, handicraft, etc. Section 2,
Clause(s) defines workman to mean any person employed in any
industry to do work for hire or reward.
xxx xxx xxx
27. ….The doctrine of dearness allowance was only evolved in
India. Instead of increasing wages as it is done in other countries,
dearness allowance is paid to neutralise the rise in prices. This
process was adopted in expectation that one day or other we
would go back to the original price levels. But, when it was found
that it was only a vain hope or at any rate, it could not be expected
to fall below a particular mark, a part of the dearness allowance
was added to the basic wages, that is to say, the wages, to that
extent, were increased. While the Tribunal increased the wages, in
fixing the dearness allowance, it looked into the overall picture,
namely, whether the total wage packet would approximate to the
MOHD YAKUB
total packet wages in comparable industries. There is no question,
2026.04.19 14:09
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Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -15-therefore, of paying dearness allowance on dearness allowance,
but it was only a payment of dearness allowance in addition to the
increased wages. Even on the basis of the increased wages,
dearness allowance was necessary to neutralise the rise in prices.
…”
13.3. He further refers to the judgment rendered by a three-Judge Bench
of the Hon’ble Supreme Court in Bengal Chemical and Pharmaceutical
Works Ltd. vs. Its Workmen and another 1968 INSC 242,wherein, speaking
through Justice C.A. Vaidialingam, the following was held:
“23. The following principles broadly emerge from the above
decisions:
1. Full neutralisation is not normal given, except to the very
lowest class of employees.
2. The purpose of dearness allowance being to neutralise a
portion of the increase in the cost of living, it should
ordinarily be on a sliding scale and provide for an increase
on the rise in the cost of living and a decrease on a fall in
the cost of living.
3. The basis of fixation of wages and dearness allowance is
industry-cum-region.
4. Employees getting the same wages should get same
dearness allowance, irrespective of whether they are
working as clerks or members of subordinate staff or factory
workmen.
5. The additional financial burden which a revision of the
wage structure or dearness allowance would impose upon
an employer, and his ability to bear such burden, are very
material and relevant factors to be taken into account.”
13.4. A reference has also been made to the judgment of a three-Judge
bench of the Hon’ble Supreme Court in Management of Shri Chalthan
Vibhag Khand Udyog Sahakari Mandli Ltd. vs. G. S. Barot and another
1979 INSC 168,wherein, speaking through Justice P.S. Kailasam, the following
was observed:
“9. The law is thus clear that dearness allowance is intended to
neutralise a portion of the increase in the cost of living. Though
100 per cent neutralisation is not advisable as it will lead to
inflation, full neutralisation may be permissible only in the case of
the lowest class of employees. The management is entitled to
complain if the neutralisation is more than 100 per cent.
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -16-
10. The purpose of grant of dearness allowance is to neutralise
the increase in the cost of living due to rise in prices.
Neutralisation may be such as to neutralise fully the increase in
cost of living or may be restricted to neutralise only a portion of
the increase. Full or cent per cent neutralisation can be achieved
if the increase in the cost of living is fully compensated so that the
pay of the worker is not adversely affected. But an award of more
than 100 per cent of an increase in the cost of living would be
more than neutralisation and would in effect give the worker an
increased wage. The result would be the worker would be getting
an increased wage packet whenever there is a price rise a result
which would not have been envisaged in making provision for
grant of dearness allowance.”
13.5. Reliance has also been placed on the judgment rendered by a
three-Judge bench of the Hon’ble Supreme Court in TheWorkmen employed by
M/s. Indian Oxygen Ltd. vs. M/s Indian Oxygen Ltd. 1985 INSC 119,
wherein, speaking through Justice D.A. Desai, the following was opined:
“7. …Dearness allowance is directly related to the erosion of
real wages by constant upward spiralling of the prices of basic
necessities and as a sequel to the inflationary input, the fall in
purchasing power of the rupee. It is a notorious phenomenon
hitherto unquestioned that price rise varies from centre to centre.
Dearness allowance is inextricably intertwined with price rise, it
being an attempt to compensate loss in real wages on account of
price rise considered as a passing phenomenon by compensation.
That is why it is called variable dearness allowance…
xxx xxx xxx
9. What materials and statistical information enter into the
compilation of consumer price index number may be briefly
noticed.
10. The consumer price index number for industrial workers
(base 1960 : 100) are being compiled and published by the Labour
Bureau, Simla every month in respect of 50 industrial centres
scattered all over the country. Amongst them is Kanpur. The
material collected is through the family surveys of working class
families. There are six main groups for which indices for each
Centre are being compiled besides the general index. They are:
(i) Food
(ii) Pan, Supari, Tobacco and intoxicants
(iii) Fuel and light
(iv) Housing
(v) Clothing, bedding and footwear, and
(vi) Miscellaneous.
Consumer price index numbers are intended to measure
relative temporal (overtime) changes in the price of a fixed basket
of goods and services consumed by the index population in a
MOHD YAKUB
current period in relation to the base period. The index numbers
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -17-
are compiled by using Laspeyers’ Formula. Broadly stated this
formula takes note of base and current prices for a particular item
quantity consumed of that item during the base period. It would
appear that for the compilation of an index, there are three
essential requirements namely : (1) weighting diagram which is
the relative percentage share of the total consumption expenditure
‘as revealed by the basic family budget enquiry in respect of
different item, (2) base prices of the different items which go into
the index basket and (3) current prices in respect of each one of
the items featuring in the index basket. The weighting diagram for
a Centre is. derived on the basis of the data Collected through
family budget enquiries which were conducted in the 1958-59 at
each one of the 50 centres. The survey was conducted by taking all
samples of working class families in each of the 50 centres and the
data was collected by interviewing these families. Based on the
results of the family budget enquiries, the average expenditure of a
family per month on different items of consumption was arrived at.
All-India average consumer price index number is a weighted
average of the 50 centres’ indices. This is compiled and published
along with the index number for each centre (Source: Consumer
Price Index : An anatomy published by Labour Bureau, Simla).
11. It would appear at a glance that there would be a noticeable
difference between the consumer price index number for a centre
and its weighted average for 50 centres which would be the all-
India average consumer price index number, the latter would
generally be lower than the former in some cases.”
14. Further still, learned Amicus Curiae highlights the historical
perspective of the Government of Punjab in granting Dearness Allowance and
reads out all the Pay Commission Reports i.e. from the 1st Pay Commission up
to the 6th Pay Commission. He explains that consistently and historically the
Government of Punjab has adopted the Central Government pattern in granting
DA/DR to its employees and pensioners. The Rules have been amended from
time to time and DA was made part of the revised pay scales in terms of the
recommendations of the respective Pay Commissions which were duly adopted
by the successive Governments of Punjab. Learned Amicus Curiae has
incorporated the extracts of the Pay Commission Reports in a written note
which is submitted before this Court and taken on record as ‘Mark A.’ The
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -18-
relevant extracts of the Pay Commission reports have been taken from the Mark
‘A’ and reproduced as under:
PUNJAB PAY COMMISSION REPORTS/SERVICE RULES OR
INSTRUCTIONS:
1st Punjab Pay Learned Amicus Curiae submits that in Para 8.3, three
Commission elements of emoluments of Government servants in the
Report 1967-68 Punjab have been provided i.e., Basic Pay, Dearness Pay
and Dearness Allowance at Central Government rates.
Further, the 1st Pay Commission traced the purpose of
dearness allowance in Chapter 8 of its report and found
that the Dearness Allowance has been available to
employees of Government of Punjab from the year 1947
onwards and the same was increased from time-to-time
on various dates including on 01.04.1958, 01.01.1965
etc. as mentioned in para 8.4 and table therein. In its para
8.1, the following was provided:
“8.1 the level of prices or the cost of living is one of the
most important factors to be taken into account in
determining the emoluments of Government servants. A
rational pay structure is one in which salaries are
determined with reference to a base price level at
which the prices are expected to get stabilized and
below which the price level is unlikely to fall. The cost
of living is, to that extent, supposed to be met by the
pay scales so determined. Any short-term changes in
the prices have to be compensated by what is termed as
‘Dearness Allowance’ which is a device to protect, to a
greater or lesser extent, the real income of wage
earners and salaried employees from the effects of
rising prices. In other words, the concept of Dearness
Allowance is only in the way of a balancing factor
which serves the purpose of neutralizing temporary
increase in prices above a certain level. If the
balancing element is itself a disproportionately large
element in the emoluments, the structure is itself
irrational.”
Further, in para 8.11, the Government of Punjab had
itself decided that rates of Dearness Allowance are
based on the Central Government pattern, which is as
under:
“8.11 The Government have during the term of
the Commission, decided that in future as well, the
MOHD YAKUB
rates of Dearness Allowance of their employees will
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -19-be linked to the Dearness Allowance at the Centre, in
accordance with the recommendations of the
Gajendragadkar Commission. The demand of the
State employees for parity with the rates of Dearness
Allowance prevailing at the Centre and their
automatic revision along with the revision of the same
by the Centre have thus been fully met. The merger of
the Dearness Allowance with the basic pay scales, if
now recommended by the Commission, will throw
them out of line with the rates of Dearness Allowance
prevailing at the Centre. As discussed earlier in this
chapter, while recommending the abolition of the
element of Dearness Pay, the Commission has evolved
the revised grades treating the existing pay to be basic
pay plus Dearness Pay. The Commission is of the
considered view that Punjab Dearness Allowance
being linked with the Central Dearness Allowance, the
rates of Dearness Allowance in Punjab should
continue to remain separate till such time as a part or
whole of it is merged at the Centre and meanwhile the
base year should continue the same as at the Centre
and the pay scales for the various services may be
determined on their own merits.”
Pay Revision Rules Accordingly, learned Amicus Curiae highlighted that the
w.e.f. 01.01.1968 Punjab Civil Services (Revised Scales of Pay) Rules,
1969 were notified and published on 30.01.1969 vide
notification dated 21.01.1969 and thereby revised the
pay scales of the employees of the Government of
Punjab w.e.f. 01.01.1968.
Policy Instructions Further, the Government of Punjab revised the Dearness
15.01.1974 Allowance from time to time, including vide following
letters:
letters dated 11.5.1967 & 15.12.1967 w.e.f. 1.5.1967,
letter dated 11/15.10.1968 w.e.f. 1.11.1967, letters
dated 7.11.1968 & 13.3.1969 w.e.f. 1.2.1968, letter
dated 14.7.1971 w.e.f. 1.7.1971, letter dated 18.4.1972
granting Additional Dearness Allowance (in addition to
DA already prescribed) on different rates w.e.f.
1.3.1971, 1.10.1971 and 17.3.1972; letter dated
12.10.1972 letter dated 6.12.1973 w.e.f. 1.9.1973 w.e.f.
1.8.1972, letter dated 15.1.1974 w.e.f. 1.5.1973,
1.8.1973 & 1.10.1973 (All letters issued by Finance
Department, Punjab)Moreover, in letter No. 346-5FR-74/885 dated
15.01.1974 issued by the Department of Finance, the
commitment of the Government of Punjab to grant
Dearness Allowance to its employees on Central
MOHD YAKUB
government pattern is clearly discernible. The following
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -20-
was expressed:
“Punjab Government is committed to grant dearness
allowance to its employees on the pattern adopted by
the Government of India from time to time. The last
instalment of dearness allowance granted to the State
employees with effect from the 1st September, 1968, was
at par with that sanctioned by the Government of India
for payment to its employees. The three installments of
Interim Relief granted by the Central Government to its
employees, on the recommendations of the Third
Central Pay Commission with effect from 1st March,
1970, 1st October, 1971 and 1st August, 1972, were also
given to the Punjab Government employees as
additional relief with effect from 1st October, 1971,
17th March, 1972 and 1st August, 1972. The
commitment of the Government of Punjab was
restricted to the dearness allowance portion only of this
additional relief.”
2nd Punjab Pay Thereafter, in para 84.1 of its report, the 2nd Pay
Commission Commission noted that the Government of Punjab is
Report of 1978 following sanction of Dearness Allowance on Central
Government pattern, which is reproduced as under:
“84.1. On the recommendations of the first Punjab Pay
Commission the Government of Punjab had decided
that on the revised pay structure effective from 1st
February, 1968, the employees would continue to get
Dearness Allowance at the rates on the pattern evolved
by the Government of India for its employees from time
to time. It was in pursuance of this policy decision that
the Punjab Government have been allowing
D.A./A.D.A. and have recently sanctioned the payment
of Additional Dearness Allowance to its employees on
Central Pattern with effect from 1st January, 1978 and
1st December, 1978. The last two installments were
allowed while this Commission was dealing with the
revision of pay-structure and the rates and the pattern
of various allowances.”
Learned Amicus Curiae further submits that in para 84.2,
the rates of DA/Additional DA are based on the pay
structure as per Consumer Price Index=200 (1960=100)
as on 01.01.1973 and the new pay structure is evolved
with reference to Consumer Price Index=320 as on
01.01.1978 and accordingly recommended to continue to
grant Dearness Allowance on the Central Government
pattern in the following words:
“84.2. The rates of D.A./A.D.A. fixed by the
MOHD YAKUB
Government of India for its employees are based on the
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -21-pay structure evolved on the basis of Consumer Price
Index-200 (1960=100) as effective from 1st January,
1973. We have evolved the new pay-structure after
aggregating the total emoluments as on 1st January,
1978 with reference to Consumer Price Index =320. In
other words, the pay in the revised scale would include
basic pay, dearness allowance, dearness pay,
additional dearness allowance, and additional relief.
Earlier the A.D.A. on the Central pattern was
admissible only on the basic pay plus dearness
allowance plus dearness pay plus additional relief. The
Government of Punjab is already committed to allow
additional dearness allowance to its employees on the
Central pattern. We have not considered it necessary
to evolve a new formula for the grant of A.D.A. in the
future. This is also in accordance with the demands of
the employees who have pressed for continuance of
admissibility of D.A. according to the pattern and scale
allowed in Government of India. In the overall view of
the matter the Commission recommends that the
commitment made by the Government of Punjab
should continue to be honoured. As mentioned earlier,
we have now pegged at higher level the basic pay in the
revised scales in respect of each employee. It would,
therefore, necessitate the revision of percentages for
the calculation of the Additional Dearness Allowance.
If Additional Dearness Allowance were to continue to
be paid in Central rates calculated on revised
consolidated pay-ranges, the quantum of Additional
Dearness Allowance to each employee of State will
substantially increase in excess of the commitment
made by the Government of Punjab. Therefore, it
would be appropriate for the Government of Punjab
to review the percentages of Additional Dearness
Allowance allowed to its employees on Central pattern
and consider suitable reduction therein keeping in
view the increase in the basic pay in the revised scales
of pay.”
Implementation 49. The existing practice Endorsed.
Committee of applying the
decision on 2nd Pay Government of India's
Commission policy for the grant of
Report and its dearness allowance to the
approval on Government of Punjab
03.11.1979 by the employees, will continue.
Council of Payment of the 7th
Ministers of installment and
Punjab restoration of cut of the
6th installment, recently
sanctioned by the
MOHD YAKUB
Government of Punjab
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -22-
with effect from 1st
December, 1978, will
continue.
50. For the purpose of (1) Government of India
calculating the D.A./ devised scales of pay with
A.D.A., the percentages reference to CPI 200 with
adopted by the effect from 1st January,
Government of India will 1973. The Dearness
need to be modified Allowance sanctioned by
related to the new pay the Government of India
structure evolved with upto C.P.I. 320 and allowed
reference to C.P.I. 320 as to the Government of
the Central rates of Punjab employees has been
D.A./A.D.A. refer to their merged in the revised scales
pay structure evolved of pay as devised by the
earlier on the basis of C. Commission with effect
P. 1.200 (1960-100). from the Ist January, 1978.
With the rise of C.P. I. to
328, the Government of
India granted another
installment of A.D.A. with
effect from the
IstDecember. 1978 @ 4%
of pay to the employees
drawing pay uptoRs. 400/-
per mensem and @ 3% of
pay to employees drawing
pay above Rs. 400/- and
upto Rs. 1000/- with
marginal adjustments upto
Rs. 1030/-. The Government
of India simultaneously
granted Dearness
Allowance to employees in
the higher pay ranges
covering employees
drawing pay above Rs.
2400/- also with effect from
1st December, 1978. The
Government of India had
also increased the rate of
the Last installment
sanctioned with reference
to C.P.I. 320 with effect
from the 1st December,
1978 by 0.5% to all the
employees drawing pay
upto Rs. 2400/-, subject to a
maximum of Rs. 7/- which
has not been merged in the
MOHD YAKUB
revised scales devised by
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -23-
the Punjab Pay
Commission.
Keeping the afore-
mentioned in view specific
recommendations are made
as follows:-
(2) (i) The pay of the
employees drawing
emoluments upto Rs. 400/-
as defined in
Punjab Government,
Finance Department letter
No.346-5FR-74/885, dated
15.1.1974 with reference to
C.P.I. 200 works out to be
Rs.600/- with reference to
C.P.I. Accordingly the
Committee recommends the
grant of Dearness
Allowance (earlier known
as A.D.A. on Central
pattern) to employees
drawing pay upto Rs.600/-
@ 2.75% of their pay in the
revised scales with a
maximum of Rs. 16/- as
against 4% allowed by the
Government of India.
Similarly, the pay of the
employees drawing
emoluments ranging from
Rs. 401/- to Rs. 1000/- as
worked out with reference
to C.P.I. 206 ranges from
Rs. 601/- to Rs. 1400/- and
they are recommended to
be allowed Dearness
Allowance @ 2.25% of
their pay in the revised
scales with a minimum of
Rs. 16/- and maximum of
Rs. 30/- with marginal
adjustments equal to the
amount by which pay plus
D.A. falls short of Rs.
1430/-. With the adoption of
these percentages for the
grant of D.A. neither the
employees lose nor gain
unduly with reference to
MOHD YAKUB
what they have drawn, as
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -24-
will be seen from the
statement at Annexure I.
(ii) For the increase in
the installment sanctioned
by the Government of India
with reference to C.P.I. 320
the employees drawing pay
upto Rs. 600/- be given
0.5% with a maximum of
Rs. 2/- and the employees
drawing pay from Rs. 601/-
to Rs. 2399/- 0.5% with a
maximum of Rs. 7/-.
(iii) In the higher pay
ranges the Dearness
Allowance be sanctioned as
under:-
Rs. 2400/- Rs. 70/-
Rs. 2500/- Rs. 300/-
Rs. 2600-2650 Rs. 200/-
Rs.2651 and above Rs.150/-
(iv) The aforementioned
rates/ amounts of Dearness
allowance will be effective
from 1.12.1978.
(3) (i). The Government of
India have sanctioned
another installment of D.A.
with reference to 336 with
effect from the 1st August,
1979 at the same rate upto
the pay ranges of Rs. 1600/-
which now works out to
Rs.2000/- with reference to
C. P. I. 320. Accordingly
Punjab Government
employees be allowed
Dearness Allowance with
effect from 1.8.1979 at the
following rates :-
Upto 5.5% subject to
Rs.600 a maximum of
Rs. 32/- plus
0.5% subject to
a maximum of
Rs.2/- on
MOHD YAKUB
Rs.601 account of
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -25-
to 2000 restoration of
cut.
4.5% subject to
a minimum of
Rs. 32/- and a
Rs.2001- maximum of Rs.
2060 60/- plus 0.5%
subject to a
maximum of Rs.
7/- on account
of the
restoration of
cut.
The marginal
adjustments to
the extent of
amount by
which pay plus
D.A. falls short
of Rs. 2060 plus
Rs. 7/- on
account of the
restoration of
cut.
(ii) These rates will be
inclusive of the amount
sanctioned with effect from
1.12.1978. The employees
drawing pay of Rs. 2400/-
and above will continue to
draw Dearness Allowance
at the rates already
sanctioned with effect from
01.12.1978.
Pay Revision Rules As such, Punjab Civil Services (Revised Scales of Pay)
w.e.f. 01.01.1978 Rules, 1979 were notified by notification dated
18.10.1979 and published on 18.10.1979 w.e.f.
01.01.1978. The relevant provisions of these rules are as
under:
“3. Definitions.- In these rules, unless there is anything
repugnant in the subject or context,-
(d) “existing emoluments” means aggregate of –
(i) basic pay of a Government employee in the
existing scale on the appointed day ;
(ii) Dearness allowance, Dearness Pay,
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -26-
Additional Relief, Additional Dearness
Allowance sanctioned upto 12 monthly average
consumer price index-320 (1960= 100) i.e. upto
and including the installment of Additional
Dearness Allowance sanctioned with effect from
the first day of January, 1978 ;
(iii) adhoc pay, if any, where such ad hoc pay is
abolished with effect from the appointed day; and
(iv) special pay or part of special pay, if any,
which was granted in lieu of a higher time scale
and has been abolished as a separate component
in the revised scale with effect from the appointed
day.
Note: Normal increment due and granted to any
employee w.e.f. the first day of January, 1978 shall also
be treated as part of existing emoluments for the purpose
of these rules.
(e) “revised pay” means basic pay of a Government
employee in the revised scale appropriate to the existing
emoluments;
6. Fixation of pay in the revised scales: (1). The initial
pay of a Government employee in the revised scale shall,
unless in any case it is otherwise directed, be fixed
separately in respect of his substantive pay in the
permanent post on which he holds a lien or would have
held a lien had it not been suspended and in respect of
his pay in the officiating post or posts, as the case may
be, held by him in the following manner:-
(i) Where a single existing scale has been replaced by a
single revised scale, the pay in the revised scale in which
a Government employee is placed shall be fixed at the
stage next above the existing emoluments on the
appointed day. In case the benefit so accruing is less
than the amount equal to the rate of increment at the
relevant stage in revised scale, the employee may be
granted another increment in the revised scale of pay :
Provided that, in all cases where the benefit still falls
short of twenty rupees per month the employee be given
further increments) in the revised scale so as to give him
a minimum benefit of twenty rupees per month :
Provided further that where the revised pay fixed at such
stage exceeds the existing emoluments by more than
seventy-five rupees the pay shall be fixed at the highest
stage in the revised scale at which the revised pay, so
fixed, does not exceed the existing emoluments by more
MOHD YAKUB
2026.04.19 14:09
than seventy-five rupees and the difference between the
I attest to the accuracy and authenticity of
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -27-existing emoluments plus seventy-five rupees and the
revised pay shall be allowed as personal pay to be
absorbed in the pay at the time of next increment.
(ii) Where more than one existing scale has been
replaced by a single revised scale, the initial pay in the
revised scale shall be fixed in the manner indicated in
clause (i), as if each of such existing scales had been
singly replaced by the revised scales.
(iii) Where an existing scale has been replaced by two
revised scales, initial pay of the person fitted in the
lower or higher revised scale shall be fixed in the
manner indicated in the clause (1), as if the existing
scale had been replaced by a single lower or higher
revised scale, as the case may be, Provided that if the
existing emoluments plus the benefit permissible in
Clause (i) or (ii) or (iii) work out to be less than the
minimum of the revised scale, the pay shall be fixed at
the minimum of revised scale:
Provided further that if the existing emoluments plus the
benefit permissible in clause (i) or (ii) or (iii)exceeds the
maximum of the revised scale, the pay shall be restricted
to the maximum thereof, and the difference shall be
treated as personal pay.
(iv)Where a Government employee is holding a
permanent post and is officiating in a higher post and
the scales of pay applicable to those two posts are
merged into one scale, the pay shall be fixed under
clause (ii) with reference to the officiating post only
provided he has continuously officiated in that post for
not less than one year and the pay so fixed, shall be
treated as substantive pay. Where such a Government
employee has not completed one year’s continuous
service in the higher officiating post on the appointed
day, his pay in the revised scale shall be fixed separately
with reference to his substantive pay and officiating pay
in the existing scale and his pay in the revised scale as
fixed with reference to the officiating pay shall be
treated as substantive pay in that scale after rendering
service for the period by which it fell short of one year
on the appointed day, provided it is certified by the
appointing authority that he would have continued to
officiate in the higher officiating post during this period,
had the revised scales not been introduced. If, however,
the appointing authority certifies that he would have
reverted to the lower post during this period, his pay in
the revised scale would from the date on which he would
have reverted be regulated on the basis of the pay fixed
on the appointed day with reference to his substantive
MOHD YAKUB
pay in the lower post.
2026.04.19 14:09
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -28-
(v) Where two pay scales in the same line of promotion
are replaced by a single revised scale, the revised pay of
the Government employee working in the higher scale
will not be fixed at a stage in the revised scale lower
than that admissible to a Government employee working
in the lower existing scale drawing basic pay at the same
or lower rate as the employee working in the higher
scale is drawing.
(2) If pay as fixed in higher officiating post under sub-
rule (1) is equal to or lower than the pay as fixed in
substantive post or a lower officiating post, officiating
pay shall be refixed at the stage next above the
substantive pay or the lower officiating pay, as the case
may be.
(3)Where a Government employee continues to draw his
pay in the existing scale and comes over to e revised
scale from a date later than the appointed day, his pay in
the revised scale from such later date shall so fixed as if
he had elected to be governed by these rules with effect
from the appointed day:
Provided that such a Government employee shall
not be required to refund the benefit derived by him the
existing scale till the date of his coming over to the
revised scale.”
(4) A Government employee who has officiated in a post
prior to the appointed day but was not holding that post
on that day and who on subsequent appointment to that
post draws pay in the revised scale of pay shall be
allowed the benefit of the previous officiating
appointment in the same manner as it would have been
admissible to him had he been holding that post on the
appointed day and elected the revised scale of pay on
that day.”
Implementation The Dearness Allowance The Committee approved
Committee should continue to be the recommendation that
decision on 3rdPay given to the Government dearness allowance may
Commission of Punjab employees on continue to be given to the
Report dated the pattern of the Government of Punjab
11.07.1988 and its Government of India. employees on the pattern
approval on in Further that after every of Government of India.
August, 1988 by interval of three years, the As regards the
the Council of Dearness Allowance recommendation to treat
Ministers of admissible should be the Dearness Allowance,
Punjab treated as Dearness Pay after every interval of
for the purpose of three years as Dearness
retirement benefits only. pay for retirement benefits,
MOHD YAKUB
There is no rationale in the Committee
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -29-
having a separate recommended that this
classification for the aspect may be brought for
Secretariat offices in the consideration before the
state. Recommended Committee along with
abolition of distinctions as part-II of the report of the
among different Commission in due course.
Directorates and between
sub offices and Head Approved that this
offices of the Directorates. recommendation may be
Further expressed the view referred to the Department
that functional of is Personnel and A.R.
differentiation between for detailed examination,
Secretariat and other as proposed in the Agenda
offices to the extent it exists Note.
would be adequately met
by the grant of special pay
to specified categories in
the Secretariat regarding
which it has made
recommendations
separately.
Pay Revision Rules The relevant provisions of these Rules are as under:
w.e.f. 01.01.1986
“3. Definitions. In these rules, unless there is anything
repugnant in the subject or context,-
(d) “existing emoluments” means aggregate of,-
(i) basic pay and ex gratia biennial increments in the
existing scale on the appointed day;
(ii) the personal pay or special pay with the existing
scales wherever merged in the revised scale;
(iii) Dearness Allowance and ad hoc Dearness
Allowance admissible on basic pay, non-practising
allowance and ex gratia biennial increments upto the
Consumer Price Index 608 sanctioned with effect from
the first day of January, 1986; and
iv) Interim Relief allowed under the Punjab Civil
Services (Grant of Interim Relief) Rules, 1986;
Explanation.- The increment due and granted in normal
course or on account of promotion or on account of
grant of biennial increments with effect from the
appointed day shall form part of basic pay;
(f) “revised pay” means basic pay of an employee in the
revised scale appropriate to the existing emoluments;
7. Fixation of initial pay in revised scale.-The initial
pay of a Government employee who opts or is deemed to
have opted for the revised scale in terms of the
provisions of these rules shall, unless in any case the
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -30-
Government by Special order otherwise directs, be fixed
in the following manner, namely :-
(i) an amount representing ten percent of the basic pay
in the existing scale, subject to a minimum of rupees fifty
shall be added to the existing emoluments of the
Government employee ;
(ii) after the existing emoluments have been so
increased, the pay shall thereafter be fixed in the revised
scale at the stage next above the amount of the existing
emoluments so computed, if it falls between two stages :
Provided that,–
a) if the minimum of the revised scale is more than the
amount so arrived at, the pay shall be fixed at the
minimum of the revised scale;
*(b) if the amount so arrived at is more than the
maximum of the **revised scale and it falls in between
two stages, the pay shall be fixed at the stage next above
the amount of the existing emoluments so arrived at in
the Master Scale and the amount of pay exceeding the
maximum of the revised pay shall be treated as the
amount of pay earned by way of ex gratia increments.
Note.–In the case of a Government employee on
deputation out of India or within India or on leave or on
foreign service or one who would have officiated in one
or more lower posts but for his officiating in a higher
post existing scale as defined under clause (c) of rule 3
shall include the scale applicable to the office which he
would have held but for his being on deputation or on
leave or on foreign service or but for officiating in a
higher post.”
Pay Revision Rules He further submits that the Government of Punjab had
w.e.f. 01.01.1996 revised the pay structure of its employees on the basis of
the recommendations made by the 4th Pay Commission
by notifying the Punjab Civil Services (Revised Pay)
Rules, 1998 by notification dated 16.01.1998 published
on the same day, made applicable w.e.f. 01.01.1996. The
relevant provisions of these Rules are as under:
“3. Definition:- In these rules, unless there is anything
repugnant in the subject or context,–
(c) “existing emoluments” means aggregate of–
(i) basic pay in the existing scale as on the First day of
January, 1996 or on the date of option under rule 6;
(ii) dearness allowance appropriate to the basic pay
MOHD YAKUB
admissible at the All-India Consumer Price Index
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Punjab & Haryana High Court,
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -31-
average of 1,510 (1960-100) as on the First day of
January, 1996;
(iii) amount of first installment of Interim Relief at the
rate of rupees one hundred and fifty for those drawing
basic pay of less than rupees three thousand and five
hundred and rupees two hundred for those whose basic
pay is rupees three thousand and five hundred and
above; and
(iv) amount of second installment of Interim Relief at the
rate of ten per cent of the basic pay in the existing scale
as on the First day of January, 1996.”
(f) “revised pay” means basic pay of a Government
employee in the revised scale appropriate to the existing
emoluments;
7. Fixation of pay in the revised scale.–The pay of a
Government employee who opts or is deemed to have
opted for the revised scale in terms of the provisions of
these rules shall, unless in any case the Government by
special order otherwise directs, be fixed in the following
manner, namely:–
(i) an amount representing forty per cent of the basic
pay in the existing scale shall be added to the “existing
emoluments” of the employee; and
(ii) after the existing emoluments have been so
increased, the pay shall thereafter be fixed in the revised
scale at the stage next above the amount of the existing
emoluments so computed, if it falls between two stages:
Provided that–
(a) if the minimum of the revised scale is more than the
amount so arrived at, the pay shall be fixed at the
minimum of the revised scale;
(b) if the amount so arrived at is higher than the
maximum of the revised scale, the amount in excess of
the maximum of the revised scale shall be treated as
personal pay which shall be absorbed in future
increments and shall be reckoned as pay for all
purposes:
Provided further that where in the fixation of pay, the
pay of Government employees drawing pay at more than
three consecutive stages in an existing scale gets
bunched, that is to say, gets fixed in the revised scale at
the same stage, the pay in the revised scale of such of
those Government employees, who are drawing pay
beyond the first three consecutive stages in the existing
MOHD YAKUB
scale shall be stepped up by the grant of increment (s) in
2026.04.19 14:09
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -32-the revised scale in the following manner, namely:–
(a) for the Government employees drawing pay from the
fourth upto the sixth stage in the existing scale – by one
increment;
(b) for the Government employees drawing pay from the
seventh upto the ninth stage in the existing scale, if there
is bunching beyond the sixth stage – by two increments;
(c) for the Government employees drawing pay from the
tenth upto the twelfth stage in the existing scale, if there
is bunching beyond the ninth stage – by three
increments;
(d) for the Government employees drawing pay from the
thirteenth upto the fifteenth stage in the existing scale, if
there is bunching beyond the twelfth stage by four
increments;
If by stepping up the pay as above, the pay of a
Government employee gets fixed up at a stage in the
revised scale which is higher than the stage at which the
pay of a Government employee who was drawing more
pay in the same existing scale is fixed, the pay of the
latter shall also be stepped up to the level at par with the
former:
Provided further that the fixation thus made shall ensure
that every Government employee shall get at least one
increment in the revised scale for every three increments
inclusive of ex gratia increment(s), if any in the existing
scale:
Note. See Illustrations 1 to 7 appended to these rules for
guidance.
Provided further that in the case of a Government
employee who is in receipt of Special Pay or Special
Allowance attached to a post in addition to pay in the
existing scale which has been revised without Special
Pay or Special Allowance, as the case may be, such a
Government employee shall draw Special Pay or Special
Allowance at the existing rate of amount as a measure
personal to him so long as he holds that post:
Provided further that in the case of a Government
employee who is in receipt of Special Pay, Special
Allowance or Non-Practising Allowance (NPA) in
addition to pay in the existing scale which has been
revised with Special Pay, Special Allowance or Non-
MOHD YAKUB
Practising Allowance (by whatever name it may be
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -33-called) at the same rate or at different rate, such a
Government employee shall draw Special Pay, Special
Allowance or Non- Practising Allowance at the rate
allowed with the revised scale.
Note 1.–Where the increment of a Government
employee falls on the First day of January, 1996, he
shall have option to draw the increment in the existing
scale or the revised scale.
Note2.–Where a Government employee is on leave on
the First day of January, 1996, he shall become entitled
to pay in the revised scale from the date he joins duty. In
case of Government employee under suspension, he shall
continue to draw subsistence allowance based on
existing scale and his pay in the revised scale will be
subject to final order on the pending disciplinary
proceedings.”
Recommendations Further, the recommendations of the 5th Pay Commission
of 5th Punjab Pay qua Dearness Allowance are as under:
Commission dated
30.04.2021 “6.2 The need for payment of Dearness Allowance
stems from the fact that there is usually an erosion in
the real value of Basic Pay on account of inflation.
Consequently, the Dearness Allowance is positively
correlated to the level of inflation. In Punjab, it is
currently paid on the Government of India pattern.
6.3 Government of India calculates the level of
inflation for purposes of grant of DA on the basis of All
India Consumer Price Index for Industrial Workers (IW)
called AICPI (1982=100). The twelve monthly average
of AICPI (1982=100) as on Ist January and Ist July of
each year is used for calculating the Dearness
Allowance. On 1st January 1996, the index was 306.33.
6.10 The Commission, therefore, recommends that
(a) we continue to follow Central pattern regarding
grant of Dearness Allowance. This is desirable and
rational approach as otherwise each State will have to
devise its own separate mechanism for working out the
price rise, and
(b) Dearness Allowance should be converted into
Dearness Pay each time CPI increases by 50% and be
counted for all purposes including retirement benefits.”
Pay Revision Rules Accordingly, the Punjab Civil Services (Revised Pay)
w.e.f. 01.01.2006 Rules 2009 were notified by notification dated
27.05.2009 and made applicable w.e.f. 01.01.2006. The
relevant provisions of these rules are as under:
MOHD YAKUB
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -34-“3. Definitions: – In these rules, unless there. is anything
repugnant in the subject or context ;
(c) “existing emoluments” means the sum of ;
i. basic pay in the existing scale as on the first day
of January, 2006 or on the date of option under rule
6;
ii. dearness pay appropriate to the existing basic
pay;
iii. interim relief calculated at the rate of five per
cent of the existing basic pay plus dearness pay; and
iv. dearness allowance appropriate to the existing
basic pay plus dearness pay plus interim relief.
(j) “revised emoluments” means the pay in the pay band
plus the grade pay of a Government employee in the
revised pay structure and includes dearness allowance.
7. Fixation of pay in the revised pay structure – The
pay of a Government employee, who opts or is
deemed to have opted under sub-rule (3) of rule 6
to be governed by the revised pay structure in
terms of the provisions of these rules, shall, unless
in any case, the Government by special order
otherwise directs, be fixed in the following
manner, namely:
…………………………………………..
Note 4. Where the existing emoluments exceed the
revised emoluments in the case of any
Government employee, the difference shall be
allowed as personal pay to be absorbed in future
increases in pay.”
Recommendations Learned Amicus Curiae submits that the
th
of 6th Punjab Pay recommendations of the 6 Pay Commission regarding
Commission the Dearness Allowance (DA) are contained in the
following manner:
“7.7 Dearness Allowance is paid to all the
Government of Punjab employees as a payment to
compensate the erosion in the real value of their pay
package on account of inflation. It was on the
recommendation of the First Punjab Pay Commission
that the Government of Punjab decided to grant DA to
its employees at the rates and pattern followed by the
Government of India from time to time. The basic
formula for working out the entitlement of DA for the
Government of Punjab employees remains the same as
followed by the Government of India. All the previous
State Pay Commissions in Punjab have been
MOHD YAKUB
supporting adherence to this time tested arrangement.
2026.04.19 14:09
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -35-It is noted that the Government of India arrives at the
level of inflation for the purpose of grant of DA on the
basis of the All India Consumer Price Index for
Industrial Workers (AICPI). The twelve monthly
average of AICPI as on 1st January and 1st July of each
year is used for calculating DA.
7.8 The Seventh CPC in its report has commented that
the present formulation of DA has worked well over the
years and as such recommended continuance of the
existing formula and methodology for its calculation. It
may be observed that, by and large, both the employees
and the employer are satisfied with the effectiveness of
this system. The rates of DA entitlement to the Punjab
Government and the Central Government employees
during the period 1.1.2006 to 1.1.2016 were as follows:
Date from which payable Rate of DA (per cent)
01.01.2006 No DA
01.07.2006 2
01.01.2007 6
01.07.2007 9
01.01.2008 12
01.07.2008 16
01.01.2009 22
01.07.2009 27
01.01.2010 35
01.07.2010 45
01.01.2011 51
01.07.2011 58
01.01.2012 65
01.07.2012 72
01.01.2013 80
01.07.2013 90
01.01.2014 100
01.07.2014 107
01.01.2015 113
01.07.2015 119
01.01.2016 1257.10 The Commission is, therefore, of the view that
the Central pattern for grant of DA should be
continued and that it should be converted into dearness
pay to be counted for all purposes including retirement
benefits each time the index increases by 50%.
7.11 The Commission would further urge that there
should be no time lag in its implementation and that as
soon as a DA increase is announced by the GoI, it
should ideally be implemented for Government of
Punjab employees as well. The Commission is aware
MOHD YAKUB
that this is critically linked to the ways and means
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -36-position of the Government of Punjab. However, it must
be noted that the efficacy of DA as a hedge against
inflation is eroded if there are delays in its timely
release.”
Proposal of Furthermore, the Department of Finance made the
Finance following comments for approval of the Council of
Department, Ministers:
Punjab dated
17.06.2021 “1.9.2. The allowance-wise recommendation and
Comments of the department of finance (FD) alongwith
financial implications in tabulated below :
a) Dearness Allowance (DA)
Recommendation Financial Comments of
Implication FD
a. The Included A. The
Commission is of Financial Government
the view that the Impact of Pay. may accept this
Government of recommendatio
India pattern for n.
grant of DA should
be continued. B. The
Government
b. It should be may not accept
converted into this
dearness pay to be recommendation
counted for all . Government of
purposes including India does not
retirement benefits allow the
each time the index merger.
increases by 50%.
C. The
c. DA of Government
Government of may endeavour
Punjab employees to do so.
be enhanced as
soon as DA
increase is
announced by
Government of
India- No time lag
in implementation
2. The approval of the Council of Ministers is sought
on the following:
2.1 Consider the recommendations of the 6th Punjab
Pay Commission alongwith the Comments of the
Department of Finance on each of the
recommendations as brought out in Para 1.8 to 1.13
MOHD YAKUB
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -37-
and approve the recommendations as per the contents
of the Department of Finance.”
15. Learned Amicus Curiae further submits that a bare perusal of the
aforesaid recommendations regarding Dearness Allowance makes it as clear as
daylight that the payment of Dearness Allowance has been made to the
employees of Government of Punjab on the Central Government pattern. The
DA is enhanced on 1st of January and 1st of July of each year on the basis of
inflation determined by the prevalent AICPI. Learned Amicus Curiae further
refers to the following sequence of events regarding implementation of the
recommendations of the last Pay Commission:
Decision of Council of Ministers of the Government of Punjab
Council of approved the proposals as contained in paragraphs 2.1
Ministers dated to 2.6 including the proposal of Pay Commission that
18.06.2021 the Government of India Pattern for grant of DA
should be continued.
Policy Instruction The Government of Punjab issued policy instructions
dated 07.09.2021 dated 07.09.2021 (Annexure P-3/Pg. 33 of CWP
7291/2026) implementing the recommendations of 6th
Pay Commission by granting Dearness Allowance
from 01.07.2016 to 01.07.2019 @ 2%, 4%, 5%, 7%,
9%, 12% & 17% w.e.f. 01.07.2016, 01.01.2017,
01.07.2017, 01.01.2018, 01.01.2019 & 01.07.2019
respectively on the pattern of the Central Government.
Pay Revision Rules He further submits that accordingly, the Punjab Civil
w.e.f. 01.01.2016 Services (Revised Pay) Rules 2021 were notified by
notification dated 05.07.2021 and published on the
same day revising pay scales w.e.f. 01.01.2016. The
relevant provisions of these rules are as under:
“3. Definitions.- In these rules, unless there is
anything repugnant in the subject or context,
(c) “existing emoluments” means the sum of-
(i) existing basic pay as on the 31st day of December,
2015; and
(ii) dearness allowance appropriate to the pay in the
existing basic pay;
MOHD YAKUB
2026.04.19 14:09
(j) “revised emoluments” means the pay in the Level
I attest to the accuracy and authenticity of
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -38-
of a Government employee in the revised pay structure
and includes dearness allowance;”
15.1. From the tabulated information extracted above, learned Amicus
Curiae submits that the Government of Punjab has approved the
recommendations of the 6th Pay Commission on the Central Government
pattern in the Meeting of the Council of Ministers held on 18.06.2021. The
approved resolution of the agenda of the aforesaid meeting shows that the
proposal of the 6th Pay Commission, as contained in paragraphs 2.1 to 2.6
including the proposal regarding continuation of grant of DA on the Central
Government pattern, was duly approved. As such, it is clear that the Central
Government pattern regarding grant of DA to its employees with effect from 1st
of January and 1st of July of each year on the basis of the increase in the AICPI
shall be followed for grant of DA to the employees of the Government of
Punjab. Further, ‘to make endeavour,’ as per the comments of the Department
of Finance, would mean the enhancement of DA within a reasonable period on
the Central Government pattern. Thus, it cannot be construed that payment of
enhanced DA would be kept in limbo for an indefinite period, at the discretion
of the Government of Punjab.
16. Learned Amicus Curiae has relied upon the statutory mandate of
the applicable Rules and submits that as per Rule 2.13 of the Punjab Civil
Services Rules Volume I (Part I), the Dearness Allowance is defined as
compensatory allowance in the following words:
“2.13. Compensatory allowance means an allowance granted to
meet personal expenditure necessitated by the special
circumstances in which duty is performed. It includes traveling
allowance, dearness allowance but does not include a sumptuary
allowance nor the grant of a free passage by sea to or from any
place outside India.”
MOHD YAKUB
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -39-
17. He emphasized that in view of the above Rules, it is crystal clear
that the existing emoluments included Dearness Allowance and the same is also
admissible in the revised emoluments as defined in the Rule 3 (c) and (j) of
Rules of 2021. As such, the Government of Punjab has bound itself by the
aforesaid Rules and cannot delay or deny the payment of DA/DR to its
employees and pensioners on the Central Government pattern. However, the
Government of Punjab has delayed the enhancement of subsequent installments
w.e.f. 01.07.2021. The details are as under:
Subsequent Government of India Punjab Government
Dearness 21% w.e.f. 1.1.2020 Yet to be granted
Allowance 24% w.e.f. 1.7.2020
enhancements 28% w.e.f. 1.1.2021
(deferred due to Corona
effect and granted only to
the retiring employees for
the limited purpose of
calculation of Leave
encashment and Gratuity
only)
28% w.e.f. 1.7.2021 28% granted w.e.f.
1.11.2021 vide letter dated
9.11.2021 (P-8 with CWP
7291/26)
34% w.e.f. 1.1.2022 34% granted w.e.f.
1.10.2022 vide letter dated
21.10.2022 (P-9 with CWP
7291/26)
38% w.e.f. 1.7.2022 38% granted w.e.f.
1.10.2023vide letter dated
20.12.2023 (P-10 with
CWP 7291/26)
42% w.e.f. 1.1.2023 42% granted w.e.f.
1.11.2024vide letter dated
30.10.2024 (P-11 with
CWP 7291/26)
46% w.e.f. 1.7.2023 Not granted till date
50% w.e.f. 1.1.2024
53% w.e.f. 1.7.2024
55% w.e.f. 1.1.2025
58% w.e.f. 1.7.2025
MOHD YAKUB
2026.04.19 14:09
I attest to the accuracy and authenticity of
this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -40-
18. Learned Amicus Curiae further submits that the issue involved in
the present petitions is squarely covered by the judgment rendered by a two-
Judge bench of the Hon’ble Supreme Court in State of West Bengal vs.
Confederation of Government of West Bengal Employees, 2026 INSC 123,
wherein, speaking through Justice Sanjay Karol, the following was observed:
“1. The idea of a welfare state casts a positive duty upon the State
to ensure the social and economic well-being of its citizens. The
role of the State is as such not limited to maintaining law and
order or facilitating markets, but extends to creating or easing the
way for conditions in which individuals can live with security,
dignity, and a reasonable standard of living. One of the most
persistent threats to this objective that has become a
permanent ‘bad penny’, is inflation, which steadily erodes
purchasing power, thereby placing a disproportionate burden on
salaried and lower-income groups. In this context, Dearness
Allowance emerges as a practical instrument of protection in the
hands of the welfare state, which protects its employees from the
adverse effects of rising prices.
2. Dearness Allowance is designed to neutralise the impact of
inflation. When the cost of essential goods increases, salaries that
do not account for the same and remain in a bygone era, often fail
to meet the basic needs, leading to a decline in living standards.
By way of periodic adjustment to salaries in response to changes
in the cost of living, the State attempts to ensure that employment
continues to provide economic security. This reflects a core
concern of the welfare state that its employees should not be
pushed into hardship due to economic forces beyond their control.
Put differently, Dearness Allowance is not an additional benefit
but a means to maintain a minimum standard of living.
3. The importance of preserving a reasonable standard of
living is closely tied to the constitutional idea of dignity. Human
dignity does not mean mere physical survival. Access to food,
clothing, healthcare, shelter and the ability to participate
meaningfully in social life are crucial aspects. Dignity is
compromised when individuals are unable to meet these basic
needs. This link is recognized in our Constitution under Article 21,
which guarantees the right to life and personal liberty. Judicial
interpretation has consistently held that the right to life includes
the right to live with human dignity, encompassing livelihood,
adequate nutrition, shelter, and basic amenities. This right, under
Article 21, would lose its substantive meaning without a minimum
standard of living.
MOHD YAKUB
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CWP-10301-2026 -41-
4. PN Bhagwati J. (as his Lordship then was) felicitously
captured this constitutional diktat in the following words
in Francis Coralie Mullin v. Administrator, Union Territory of
Delhi (1981) 1 SCC 608:
“8. But the question which arises is whether the right to life
is limited only to protection of limb or faculty or does it go
further and embrace something more. We think that
the right to life includes the right to live with human dignity
and all that goes along with it, namely, the bare necessaries
of life such as adequate nutrition, clothing and shelter and
facilities for reading, writing and expressing oneself in
diverse forms, freely moving about and mixing and
commingling with fellow human beings. Of course, the
magnitude and content of the components of this right would
depend upon the extent of the economic development of the
country, but it must, in any view of the matter, include the
right to the basic necessities of life and also the right to
carry on such functions and activities as constitute the bare
minimum expression of the human-self. Every act which
offends against or impairs human dignity would constitute
deprivation pro tanto of this right to live and it would have
to be in accordance with reasonable, fair and just
procedure established by law which stands the test of other
fundamental rights….”
(Emphasis Supplied)
A bench of three judges, nearly two decades later, echoed a
similar sentiment. In Common Cause v. Union of India (1999) 6
SCC 667, it was observed:
175. “Right to Life”, set out in Article 21, means something
more than mere survival or animal existence. (See: State of
Maharashtra v. Chandrabhan Tale [(1983) 3 SCC 387 :
1983 SCC (L&S) 391 : 1983 SCC (Cri) 667 : AIR 1983 SC
803 : (1983) 3 SCR 337] .) This right also includes the right
to live with human dignity and all that goes along with it,
namely, the bare necessities of life such as adequate
nutrition, clothing and shelter over the head and facilities
for reading, writing and expressing oneself in different
forms, freely moving about and mixing and commingling
with fellow human beings….”
(Emphasis Supplied)
5. The Preamble of the Constitution, right at the outset of our
founding charter, establishes this connection between dignity and
material conditions of life. By committing the State to social and
economic justice, equality, and fraternity assuring the dignity of
the individual, the Preamble sets the philosophical foundation of
the Indian welfare state. With large sections of the population still
been unable to achieve and maintain basic standards of living, it is
clear that much is left to be desired when it comes to the ideals of
socio-economic justice. Inequality and deprivation attack the very
core of social cohesion. Thus, the constitutional vision of dignity
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necessarily presupposes policies that protect living standards.
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6. The strongest justification for Dearness Allowance in India,
though statutory in nature, lies in its constitutional grounding,
especially in the Directive Principles of State Policy. Articles 38,
39 and 43 thereof implore upon the State to promote social and
economic justice, reduce inequalities, and secure a living wage
and decent conditions of work. Dearness Allowance gives
practical effect to the above-mentioned stipulations of the
Constitution providing a barrier against salaries being
compromised in value beyond sustenance. It is, as such, a tool for
the realization of lived economic reality, ensuring that the promise
of a living wage retains its substance.
7. Dearness Allowance represents a clear intersection of
principles of welfare state and those enshrined by the
constitutional vision. By protecting standards of living, it furthers
the right to live with dignity under Article 21 and advances the
goals articulated in the Preamble thereby being a concrete
expression of the State’s constitutional responsibility.
xxx xxx xxx
22. What flows from the above, and other judgments of this
Court is that the concept of DA is a distinctly Indian response to
the problem of inflation and its impact on wages, developed to
safeguard employees against the steady erosion of their real
income caused by rising prices. Different from the position in
other countries where the wages and salaries themselves undergo
a periodic adjustment, India introduced a DA as a compensatory
measure to address rises or jumps in the cost of living. While
originally conceived as a short-term arrangement, it acquired a
sense of permanence, given that it was almost within the realms of
certainty that the prices would not return to their original state.
When this expectation proved unrealistic and inflation appeared to
be a continuing feature of the economy, a portion of the DA was
absorbed into basic wages. Even after such wage revisions,
however, the need for DA persisted, as prices continued to rise
and purchasing power continued to decline.
23. At its core, DA is not intended to provide complete
neutralisation of price rise for all employees, except in the case of
the lowest paid categories. Its purpose is to offer partial
compensation for increased living costs through a variable and
flexible mechanism, usually linked to a cost-of-living index. This
explains why DA is commonly structured on a sliding scale, rising
alongside prices.
xxx xxx xxx
30. It may be argued that since DA is subject to regular change
to meet its basic purpose, the number as is given under Rule
3(1)(c), cannot be statically applied, and so, the subsequent
memoranda were intended to obviate the repeated necessity of
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amending the RoPA Rules. This, however, was not advanced as an
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argument. Instead, there appeared to be an adaptation of
contrarian stands by the appellant – State. In the course of
submissions, initially, the learned senior counsel appearing for the
appellant – State submitted that DA is a static concept and that the
index average as stipulated in the Rules has to be followed without
change and therefore, the State cannot according thereto, grant
DA as per the rules or numbers currently followed by the Central
Government. In subsequent oral argument as also the written
arguments, however, the staticity of DA as a limb of argument was
given up. In our considered view though, even if such an argument
had been made, it was liable to be rejected. In rules specifically
designed to be for the purpose of revision of pay and allowances,
the understanding of ‘existing emoluments’ and the particulars
supplied thereunder, cannot by any stretch of imagination be
termed to be a gap or a void since the same is undoubtedly the
mainstay of the rules and when particular intention has been
demonstrated by inserting the definition, same as the Central
Government Rules. To say that the number that has been explicitly
put there is nothing more than a starting point or reference point,
after which the State is free to do as it wishes under the garb of
financial and fiscal policy, cannot be countenanced.
31. When the State did set up a Pay Commission for the
purposes of revision of the pay rules nothing stopped the State
from undertaking its own exercise to determine what the
appropriate rate would have been, keeping in view its own
financial resources and ability to pay. It is nobody’s case that such
a study had been undertaken, and an independent finding had been
arrived at. The Pay Commission in its wisdom adopted a stand
and in consideration thereof, the appellant-State exercises its
discretion to lay down a set of rules which would henceforth
govern matters connected or incidental to the payment of its
employees. Once it is so laid down, it is difficult to accept
discretion overshadowing legislative exercise. In Mahatama
Gandhi Mission v. BhartiyaKamgarSena (2017) 4 SCC 449:
“61. Once the Government of India accepted the
recommendations of the Pay Commission and issued orders
signifying its acceptance, it became the decision of the
Government of India. That decision of the Government of
India created a right in favour of its employees to receive
pay in terms of the recommendations of the Sixth Pay
Commission and the Government of India is obliged to
pay.”
In effect, memoranda which are a product of discretion, in the
current set up, trump Rules having legislative force. The only way
possible, as it appears to us, for the State to deviate from what has
been provided by the Rules is through a formal amendment
thereto. The impact of this, it is made clear, cannot be taken to
mean that the number as mentioned in the rule sets the
emoluments to be paid thereunder, in stone. That would be going
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directly against its purpose, object and intent. It is not so much the
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particular number or base year which is important, since that is
itself, by its very nature, fluid and subject to change, [See:
Hindustan Workmen (supra, Pharmed (P) Ltd. V. Workmen (1969)
3 SCC 745] but it is the statutory recognition of AICPI and the
method for calculating existing emoluments, which is essential.
32. …This methodology ensures that the AICPI remains both
statistically sound and policy-relevant. By grounding the index in
real consumption data and periodically revising its base year and
weights, the Labour Bureau ensures that the AICPI continues to
accurately capture shifts in living costs and inflationary pressures
faced by industrial workers across India.
33. What the above primer on the calculation of AICPI shows is
that it is a number that comes together after taking into account a
complex web of factors and variables, duly calculated by a body
entrusted to do so. It is the diktat of logic then, that when a State is
to grant DA, and it has not, on its own, carried out a study to
determine rates, it ought to follow the rate as determined by a
body that is otherwise authorized to do so. Logic is the lifeblood of
law. It is not only judicial action that is to be supported by logic
and reason. The issuance of memoranda is an administrative
action. These actions also must be governed by reason. If a State
decides to grant DA at a particular rate, it ought to be able to
show itself to have ‘done its homework’ in arriving at that
particular number. The respondents had made reference to the
State of Kerala, and its procedure for granting the same,
emphasising that the number adopted by the State had been
arrived at by its own centers having undertaken the requisite
study.
xxx xxx xxx
37. The legislative exercise carried out provided for a clear
basis on which existing emoluments were to be calculated by
incorporating AICPI into the framework. Thereafter, when there
are no perceivable or justifiable gaps present, it was not open for
the appellant-State to deviate from the mechanism so provided,
more so when such deviation is by means of an otherwise inferior
form, i.e., executive memoranda. …
xxx xxx xxx
Question 10: Does Paucity Of Funds Defeat A Legal Right?
50. One of the implications of accepting the respondent’s
contention as submitted by the appellant – State is that it will lead
to an incidence of thousands of crores on the State, thereby having
a great negative impact on the economy and financial security of
the State. We find this position difficult to accept. This is so
because once a legal right has been established, as is the
undoubted position in this case by virtue of the ‘Judgment In
Round One’, as also our discussion supra, irrespective of whether
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it pertains to salary, pension, gratuity or other statutory benefits, it
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is not within the realm of permissible actions for the State to
refuse payment of the same on account of financial
inability/paucity of funds. The least that is expected of a State in a
democracy is that it honours its obligations and commitments,
arising from a legislation or judicial decisions, for such
obligations are not discretionary in any way, shape or form. This
clear position protects such statutory obligations for, if such a
ground of limited financial ability was readily available to the
Government of Punjab, which may undoubtedly in certain
situations face tough times, it would render these obligations
illusory. When it comes to employees’ dues, this proposition would
be extremely dangerous and stifling since the amounts received
thereby are not handouts or acts of charity but are earned
compensation / consideration for services given, and denial of
such consideration would have a direct impact on the right to life
and livelihood enshrined in Article 21 of the Constitution. …
51. It has often been recognized that the State must set an
example for other employers in the country by behaving as
a ‘model employer’. Such a position should not be difficult to
attain given all the advantages that it has. Its power lies in the
volume of employment, its sovereign/constitutional authority to
tax, ability to borrow and manage public finances. In embodying
the ‘model employer’ the State not only fulfils its obligation but
also instils and maintains public confidence in the rule of law,
governance and administration of justice. Leading by example,
fulfilling its financial duties in times of fiscal strain, gives it the
moral authority to wield the sword of law against private entities,
should they not do so. …
52. In that view of the matter, it is not open for the appellant-
State to shirk away from its responsibility from paying DA on the
count of financial difficulty that it may face in doing so. It is an
obligation arising out of the statute of its own creation and it must
be met.
xxx xxx xxx
55. … It has been noted above that the question of DA being a
legally enforceable right has already been put to rest. The time
period in question is 2008 to 2019 that is approximately a period
of eleven years. Each month that the requisite DA was not paid, is
a wrong committed against the respondents. Certainly, when that
is the case ‘fiscal policy’ cannot grant a cloak of protection to the
appellant – State. Should such an argument be accepted, the very
concept of judicial review would be shaken. No one denies that it
is within the State’s power to make decisions regarding payments
to its employees but once such a decision has been made, it cannot
deviate therefrom. It is this deviation which is a subject matter of
judicial review.”
(Emphasis supplied)
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19. Lastly, the learned Amicus Curiae highlights that as of today, the
employees and pensioners of the Government of Punjab are being paid 16%
less DA than All India Service Officers (IAS/IPS/IFS), who have been paid at
the Central Government pattern. Such iniquitous disparity exists despite the fact
that the Government of Punjab has duly adopted the recommendations of the 6th
Pay Commission regarding the grant of DA on Central Government pattern.
F. SUBMISSIONS ON BEHALF OF THE RESPONDENTS
20. Learned counsel for respondent No.4 has filed a reply on behalf of
respondent No.4 (in CWP-9514-2026) in the Court today, which is taken on
record. Learned Senior counsel has filed the written submissions on behalf of
respondent/State of Punjab in the Court today, which are taken on record as
‘Mark B’. Learned Senior counsel appearing for the State of Punjab has raised
the following arguments:
● Non-Applicability of the judgment of Hon’ble Apex Court in
Confederation of Government of West Bengal Employees (supra),
the same being Per Incuriam
21. At the outset, she submits that the judgment rendered by the
Hon’ble Apex Court in Confederation of Government of West Bengal
Employees (supra) is not applicable to the present case as there exist no
statutory provision in the Punjab Civil Services (Revised Pay) Rules, 2009 (5th
Pay Commission) or in the Revised Pay Rules, 2021 (6th Pay Commission)
providing for the grant of DA/DR as and when announced by the Government
of India for Central Government employees or otherwise. Furthermore, the
employees of the Governments of Punjab and West Bengal, respectively, are
governed by different sets of Service Rules and their service conditions are
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distinguishable from each other. Learned Senior counsel further submits that
the judgment of the Hon’ble Supreme Court in Confederation of Government
of West Bengal Employees (supra) is per incuriam since the specific argument
raised by learned State counsel therein regarding the earlier decision of the
Hon’ble Apex Court in Tamil Nadu Electricity Board vs. Tneb-Thozhilalar
Aykkiya Sangam 2019 INSC 192 was not even dealt with. Reliance in this
regard was placed on the judgment of the Hon’ble Supreme Court inSundeep
Kumar Bafna vs. State of Maharashtra 2014 INSC 218.
● There is no mandatory obligation on the Government of Punjab to
pay Dearness Allowance to its employees on the Central Government
pattern.
22. Furthermore, the Council of Ministers had consciously decided
that the Government of Punjab may ‘endeavor’ to follow the Central
Government pattern with respect to DA/DR but the same does not create any
binding or absolute obligation on it to mirror the Central Government rates.
Reliance in this regard was placed on the judgment of the Hon’ble Supreme
Court in Tamil Nadu Electricity Board (supra) wherein it has been held that
each Government is competent to determine its own rate of Dearness
Allowance payable to its employees. While a State may choose to adopt the
revised Dearness Allowance on the Central Government pattern, there exists no
obligation upon the Government of Punjab to do so. The fixation or revision of
Dearness Allowance is thus dependent upon the financial position and policy
considerations of the Government of Punjab.
● Mere adoption of the recommendation of the 6th Pay Commission will
not bind the Government of Punjab to release DA/DR at a specific
frequency, especially in view of its financial position.
23. Learned Senior counsel for the State submits that the Council of
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Ministers has approved the recommendation of the 6th Pay Commission only to
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the extent that the employees of the Government of Punjab shall be granted DA
on the Central Government pattern. However, the Government of Punjab is not
obligated to enhance DA/DR rates in tandem with the Central Government.
Moreover, there is no provision in the Rules of 2021 which provides for the
release of DA/DR at a specific frequency or definite intervals. It is the
prerogative of the Government of Punjab to determine the frequency and rate at
which DA/DR installments are to be released, keeping in view its financial
capacity and fiscal priorities. Further, the approval of the Council of Ministers
was never intended to create any automatic, mandatory or time-bound parity
with the Central Government.
● The Government of Punjab is bound by the Letter/Liquidation Plan
dated 18.02.2025 adopted by the Council of Ministers in its Meeting
held on 13.02.2025, which was also approved by the Division Bench of
this Court in CACP No.47 of 2024.
24. Learned Senior counsel for the State of Punjab further submits that
keeping in view the financial health of the Government of Punjab, the Council
of Ministers adopted a systematic liquidation plan in its Meeting held on
13.02.2025 whereby the Government has decided to pay the arrears of revised
pay, pension/family pension, leave encashment and DA/DR for the period of
01.01.2016 to 30.06.2021 in scheduled installments, in terms of the
recommendations of the 6th Pay Commission. The total financial implication for
the payment of the aforesaid arrears is approximately Rs.14,191/- crores. The
year-wise planned expenditure in this regard is as follows:
2024-25 Rs. 500/- Crores
2025-26 Rs. 2,694/- Crores
2026-27 Rs. 2,922/- Crores
2027-28 Rs. 4,261/- Crores
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2028-29 Rs. 3,814/- Crores
25. Further, the aforesaid liquidation plan dated 18.02.2025 has been
approved by the Division Bench of this Court in CACP-47-2024, titled as Ajoy
Kumar Sinha, IAS, Principal Secretary, Department of Finance, Punjab
Civil Secretariat, Chandigarh vs Balwant Singh and others, decided on
21.02.2025. The relevant part of the same was also reproduced in the affidavit
dated 08.04.2026 submitted on behalf of the State of Punjab, and it reads as
under:-
“11. In the wake of what have been stated above, after allowing
the present contempt appeal and after taking on record the
affidavit sworn by Sh. Ajoy Kumar Sinha, Principal Secretary,
Government of Punjab, Department of Finance, this Court passes
a mandamus upon the concerned to comply with the plans detailed
in the affidavit, hence, for resolving and mitigating the grievances
of the writ petitioners.”
● The scope of Judicial Review in policy matters is extremely narrow.
26. Learned Senior counsel, while relying on the judgment of the
Hon’ble Apex Court in Tamil Nadu Electricity Board (supra), argues that the
scope of judicial review in matters of economic and fiscal policy is extremely
limited as the decision regarding grant of DA/DR involves complex financial
considerations and prioritization of public expenditure, which squarely falls
within the domain of the Executive. The Courts have consistently held that such
policy decisions ought not to be interfered with unless they are patently
arbitrary or violative of statutory provisions, which is not the case herein.
However, learned Senior counsel submits that the Government of Punjab would
make every effort to release the pending installments in due course, which is
strictly contingent upon the prevailing financial health and resources of the
State.
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● There exists no parity between the All India Service officers and the
employees and pensioners of the Government of Punjab.
27. Learned Senior counsel for the State of Punjab submits that All
India Services, Judicial Services and State services are constitutionally and
statutorily on different pedestals. The All India Services derive their origin
from Article 312 of the Constitution of India and are included at Entry No. 70
of the Union List (List-I) of Seventh Schedule of the Constitution of India. The
service conditions, including pay and allowances of the Members of All India
Services are governed by the All India Services Act, 1951. Furthermore, the
grant of DA/DR to such officers is governed by the All India Services
(Dearness Allowance) Rules, 1972 (Annexure-R-1 in CWP- 7264-2026). Rule
3 of the aforesaid Rules specifically provides that every member of the All
India Services is entitled to draw the Dearness Allowance at such rate and
subject to such conditions as may be specified by the Central Government from
time to time.
28. Lastly , learned Senior counsel for the State of Punjab submits that
the Government of Punjab is conscious of the fact that the DA/DR installments
payable to its employees are due and, efforts are being made to release the same
keeping in view the financial fortitude of the Government of Punjab. As a
matter of fact, a Cabinet Sub-Committee, headed by the Finance Minister, has
been constituted vide Notification dated 07.04.2026 (Annexure R-3 attached in
CWP-7264-2026) which has been tasked with undertaking a comprehensive
evaluation of financial feasibility and to recommend an appropriate course of
action with respect to release of the pending arrears.
29. Learned counsel for the respondent(s)-Corporations, have
reiterated the grounds taken in their respective replies and submit that the
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respondent(s)- Corporations are bound by the decision taken by the
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Government of Punjab for the purpose of grant of pay, allowances, pensions,
leave encashment and Dearness Allowance. The employees of these
Corporations are governed by the executive instructions issued by the
Government of Punjab from time to time and as and when any decision is taken
by the Government of Punjab regarding payment of Dearness Allowance, the
same would be implemented by the respective Corporations.
G. ISSUES FOR DETERMINATION
30. Having heard learned counsel for the parties and after perusing the
record with their able assistance, the following legal issues arise for
adjudication in the present controversy:
i. Whether the scope of judicial review is completely restricted in
policy matters?
ii. Whether the State of Punjab is obligated to grant Dearness
Allowance to its employees on the ‘pattern’ as applicable to the
Central Government employees?
iii. Whether the Government of Punjab can deny payment of
Dearness Allowance on the ground of financial constraints?
iv. Whether the letter/liquidation plan dated 18.02.2025 (Annexure
P-29 in CWP No. 9514 of 2026) is violative of Article 14 of the
Constitution of India, inasmuch as it creates an impermissible
classification within a homogenous class of pensioners on the
basis of age?
v. Whether the Government of Punjab is not bound to maintain
parity in grant of Dearness Allowance to all the employees
receiving their emoluments from the same Consolidated Fund of
the State of Punjab?
31. Keeping in view the consistent stand of the respondent-
Corporations that the DA/DR would be paid to its employees in terms of the
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decision taken by the Government of Punjab, it is necessary to examine the
Government’s stance in this regard.
32. In that context, this Court vide order dated 25.03.2026, had
directed the Principal Secretary, Department of Finance, Government of
Punjab, to file an affidavit addressing the following points:
“(1) Up to which date have the installments of Dearness
Allowance, on the pattern applicable to Central Government
employees, been paid to All India Service officers and Judicial
Officers serving within the State of Punjab?
(2) Whether the emoluments of All India Service officers and
Judicial Officers serving in the State of Punjab are being
disbursed from the same Consolidated Fund of the State from
which the salaries of other State employees are paid?
(3) Whether any installments of Dearness Allowance are due and
payable to the employees of the Government of Punjab, including
the petitioners, for the period from 01.07.2023 to 01.07.2025?”
33. In compliance with the orders passed by this Court, 03 affidavits
have been filed on behalf of the Government of Punjab. A perusal thereof
indicates that the All India Service Officers (IAS/IFS/IPS) and Judicial Officers
serving within the State of Punjab have been paid all up-to-date installments of
Dearness Allowance on the Central Government pattern, from the Consolidated
Fund of the State of Punjab while all other employees and pensioners of the
Government of Punjab have not been paid installments of DA/DR w.e.f.
01.07.2021.
H. ANALYSIS AND FINDINGS
ISSUE 1: Scope of Judicial Review in Policy Matters
34. The power of judicial review is one of the basic features and forms
the core of the Constitution. However, in the matters of policy, the Courts
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ordinarily adopt a hands-off approach, recognizing that policy formulation lies
within the domain of the Executive. Be that as it may, when a policy decision is
arbitrary, violates fundamental rights, suffers from the vice of irrationality or is
contrary to statutory or constitutional provisions, the Courts can invoke the
power of judicial review to ensure constitutional supremacy and accountability
for all organs of the State. [See: Kesavananda Bharti vs. State of Kerala 1973
INSC 91; Indira Nehru Gandhi vs. Raj Narain 1975 INSC 272; Raja Rampal
vs. Hon’ble Speaker, Lok Sabha 2007 INSC 22, I.R. Coelho vs. State of
Tamil Nadu AIR 2007 INSC 28 and L. Chandra Kumar vs. Union of India
1997 INSC 288].
34.1. A two-Judge bench of the Hon’ble Supreme Court in Monarch
Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal
Corporation 2000 INSC 299, speaking through Justice S. Rajendra Babu, held
as follows in this regard:
“11. Broadly stated, the Courts would not interfere with the
matter of administrative action or changes made therein, unless
the Government’s action is arbitrary or discriminatory or the
policy adopted has no nexus with the object it seeks to achieve or
is mala fide.”
(Emphasis supplied)
34.2. In Col. A.S. Sangwan vs. Union of India AIR 1981 SC 1545, a
two-Judge Bench of the Hon’ble Supreme Court, speaking through Justice V.R.
Krishna Iyer, observed as under:
“4……..A policy once formulated is not good for ever; it is
perfectly within the competence of the Union of India to change
it, rechange it, adjust it and readjust it according to the
compulsions of circumstances and imperatives of national
considerations.We cannot, as Court, give directives as to how the
Defence Ministry should function except to state that the
obligation not to act arbitrarily and to treat employees equally is
binding on the Union of India because it functions under the
Constitution and not over it. In this view, we agree with the
MOHD YAKUB
submission of the Union of India that there is no bar to its
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weighty reasons for doing so. We are far from suggesting that a
new policy should made merely because of the lapse of time, nor
are we inclined to suggest the manner in which such a policy
should be shaped. It is entirely within the reasonable discretion of
the Union of India. It may stick to the earlier policy or give it up.
But one imperative of the Constitution implicit in Article 14 is
that if it does change its policy, it must do so fairly and should
not give the impression that it is acting by any ulterior criteria or
arbitrarily. …..”
(Emphasis supplied)
34.3. A two-Judge Bench of the Hon’ble Supreme Court inFederation
of Railway Officers Association vs. Union of India 2003 INSC 178, speaking
through Justice S. Rajendra Babu, made the following observations:
“12. In examining a question of this nature where a policy is
evolved by the Government judicial review thereof is limited.
When policy according to which or the purpose for which
discretion is to be exercised is clearly expressed in the statute, it
cannot be said to be an unrestricted discretion. On matters
affecting policy and requiring technical expertise Court would
leave the matter for decision of those who are qualified to
address the issues. Unless the policy or action is inconsistent
with the Constitution and the laws or arbitrary or irrational or
abuse of the power, the Court will not interfere with such
matters”.
(Emphasis supplied)
34.5. Furthermore, a two Judge Bench of the Hon’ble Supreme Court
inDirectorate of Film Festivals vs. Gaurav Ashwin Jain 2007 (4) SCC 737,
speaking through Justice R.V. Raveendran, has observed as follows:
“14. The scope of judicial review of Governmental policy is now
well defined. Courts do not and cannot act as Appellate
Authorities examining the correctness, suitability and
appropriateness of a policy nor are courts Advisors to the
Executive on matters of policy which the Executive is entitled to
formulate. The scope of judicial review when examining a policy
of the Government is to check whether it violates the
fundamental rights of the citizens or is opposed to the
provisions of the Constitution, or opposed to any statutory
provision or manifestly arbitrary. Courts cannot interfere with
policy either on the ground that it is erroneous or on the ground
that a better, fairer or wiser alternative is available. Legality of
the policy, and not the wisdom or soundness of the policy, is the
subject of judicial review…”
MOHD YAKUB
(Emphasis supplied)
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34.6. While considering the policy of the Central Government regarding
the principle of ‘One Rank One Pension,’ a three-Judge Bench of the Hon’ble
Supreme Court in Indian Ex-Servicemen Movement and others vs. Union of
India and others2022 INSC 315, speaking through Dr. Justice Dhananjaya Y.
Chandrachud, has observed as under:
“46 …Most questions of policy involve complex considerations
of not only technical and economic factors but also require
balancing competing interests for which democratic reconciliation
rather than adjudication is the best remedy. Further, an increased
reliance on judges to solve matters of pure policy diminishes the
role of other political organs in resolving contested issues of
social and political policy, which require a democratic
dialogue.This is not to say that this Court will shy away from
setting aside policies that impinge on constitutional rights.
Rather it is to provide a clear eyed role of the function that a
court serves in a democracy….”
(Emphasis supplied)
● Constitutional Supremacy, Rule of Law and the Constitutional
Mandate of Social Justice
35. In a constitutional democracy, governance must be by rule of law
and not by the whims and caprice of those who wield power. The Constitution
does not permit sic volo, sic jubeogovernance where the will of the authority
substitutes the mandate of law. Furthermore, where discretion degenerates into
arbitrariness, equality under Article 14 immediately stands violated. Under the
principle of constitutional supremacy, all organs of the State derive their
authority from the Constitution and are bound by its limitations. The
Legislature, while vested with legislative power, must act within its
competence and in accordance with constitutional rights and principles. Not
only are the Courts empowered to review the validity of an executive action,
their interpretation of the Constitution is also final and binding. Recently, the
MOHD YAKUB
Hon’ble Supreme Court in Confederation of Government of West Bengal
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Employees (supra), while dealing with a similar controversy regarding
payment of Dearness Allowance,rejected the argument that judicial review in
such policy matters is limited. The said principle is applicable to the facts of the
present lis on all fours.
35.1. Further, a Constitutional Bench of the Hon’ble Supreme Court in
Kalpana Mehta and others vs. Union of India and others2018 INSC 470,
reiterated the importance of constitutional supremacy.
“13. …The Constitution is the fundamental document that provides for
constitutionalism, constitutional governance and also sets out morality,
norms and values which are inhered in various articles and sometimes
are decipherable from the constitutional silence. Its inherent dynamism
makes it organic and, therefore, the concept of ‘constitutional
sovereignty’ is sacrosanct. It is extremely sacred and, as stated earlier,
the authorities get their powers from the Constitution. It is the source.
Sometimes, the constitutional sovereignty is described as the supremacy
of the Constitution
xxx xxx xxx
23. Thus, the three wings of the State are bound by the doctrine of
constitutional sovereignty and all are governed by the framework of the
Constitution. The Constitution does not accept transgression of
constitutional supremacy and that is how the boundary is set.
xxx xxx xxx
182….The Constitution does not allow for the existence of absolute
power in the institutions which it creates. Judicial review as a part of the
basic features of the Constitution is intended to ensure that every
institution acts within its bounds and limits…”
(Emphasis supplied)
35.2. At this juncture, it would be apt to quote the judgment rendered by
a Constitution Bench of the Hon’ble Supreme Court in Minerva Mills Ltd. and
others vs. Union of India and others1980 INSC 142, wherein, speaking
through Justice Y.V. Chandrachud, it was held as under:
“91. …But then the question arises as to which authority must
decide what are the limits on the power conferred upon each
organ or instrumentality of the State and whether such limits are
transgressed or exceeded. Now there are three main departments
of the State amongst which the powers of Government are divided;
the Executive, the legislature and the Judiciary………..The
MOHD YAKUB
Constitution has, therefore, created an independent machinery
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the judiciary which is vested with the power of judicial review to
determine the legality of executive action and the validity of
legislation passed by the legislature….”
(Emphasis supplied)
35.3. Moreover, the importance of rule of law was also highlighted in
the judgment rendered by a two-Judge bench of the Hon’ble Supreme Court
in H.C. Puttaswamy and others vs. The Hon’ble Chief Justice of Karnataka
High Court, Bangalore and others 1990 INSC 338, wherein, speaking through
Justice K. Jagannatha Shetty, the following was opined:
“11……….But the Chief Justice or any other Administrative Judge
is not an absolute ruler. Nor he is a free wheeler. He must operate
in the clean world of law, not in the neighbourhood of sordid
atmosphere. He has a duty to ensure that in carrying out the
administrative functions, he is actuated by same principles and
values as those of the Court he is serving. He cannot depart from
and indeed must remain committed to the constitutional ethos and
traditions of his calling. We need hardly say that those who are
expected to oversee the conduct of others, must necessarily
maintain a higher stands of ethical and intellectual rectitude. The
public expenses do not seem to be less exacting.”
36. In view of the foregoing discussion, this Court is of the considered
opinion that where a policy decision is found to be arbitrary, discriminatory,
and violative of constitutional guarantees, it becomes incumbent upon the
Courts to exercise its power of judicial review. Thus, Issue No.1 is answered
accordingly.
ISSUE 2: Grant of DA to Employees of Government of Punjab on
the Central Government ‘pattern’
37. Learned Senior counsel for the State of Punjab has contended that
the State is not bound to grant Dearness Allowance, in terms of the
recommendations of the 6th Pay Commission, at the same rate or frequency as
applicable to Central Government employees. It is submitted that the
recommendations were accepted only to a limited extent, namely, the adoption
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of the Central Government pattern for payment of Dearness Allowance, and
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were never intended to create an automatic or time-bound parity with Central
Government employees. It is further argued that, in the absence of any specific
provision in the applicable Rules, the petitioners do not possess an enforceable
legal right to claim such parity.
37.1 As noted above, insofar as the recommendation of the 6th Pay
Commission regarding the acceptance of the Central Government ‘pattern’ for
grant of DA is concerned, the Finance Department, vide its proposal dated
17.06.2021, commented that the Government of Punjab may “accept” the
same. However, with respect to the recommendation pertaining to the “absence
of time-lag” in the implementation of Dearness Allowance, it was proposed
that the Government may only “endeavour” to achieve such parity. Notably,
these proposals were duly approved by the Council of Ministers in its Meeting
held on 18.06.2021. Thus, it appears that while the Government of Punjab has
consciously accepted the principle of granting DA on the “Central Government
pattern,” it only undertook to “endeavour” to eliminate any time-lag in its
implementation. In other words, as soon as enhancement of DA is announced
by the Central Government, the Government of Punjab would “endeavour” to
increase it for its employees as well.
● Interpreting ‘Central Government Pattern’
38. At this juncture, this Court finds it relevant to interpret the phrase
‘Central Government Pattern.’ The term ‘pattern’ has been defined in the
Black’s Law Dictionary as:
“a mode of behavior or series of acts that are recognizably
consistent.”
38.1 The Merriam-Webster Dictionary provides as many as 11
definitions of ‘pattern’ as a noun, the most relevant of which read as under:
MOHD YAKUB a) “form or a model proposed for imitation”;
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b) “something designed or used as a model for making things;”
c) “Discernible, coherent system based on intended inter
relationship of component parts;”
d) “Frequent or widespread incidence.”
38.2 Further, the Cambridge Dictionary defines ‘pattern’ (noun) as:
“a particular way in which something is done, is organized or
happens.”
39. A perusal of the aforementioned definitions suggests that ‘pattern’
in the present context, refers to the method, structure, and formula used by the
Central Government for granting DA to its employees. This Court finds merit
in the argument of learned Amicus Curiae that adoption of the ‘Central
Government pattern’ by the Government of Punjab necessarily means that the
State is aligning its approach to grant of DA with that of the Central
Government in the following key aspects:
a. Rate of Dearness Allowance: The Government of Punjab will
grant DA at the same percentage rate as applicable to Central
Government employees. For instance, if the Central Government
grants DA at the rate of 50%, the State Government will also grant
it at the rate of 50%.
b. Formula for Calculation: The formula adopted by the
Government of Punjab to calculate DA is based on the All India
Consumer Price Index (AICPI), akin to the Central Government.
c. Frequency of Revision: The Central Government has historically
carried out the revision of DA biannually i.e. on the 1st of January
and 1st of July. The Government of Punjab has also historically
mirrored this practice and followed biannual revisions under the
same ‘pattern.’
MOHD YAKUB
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Government of Punjab has agreed to mirror the Central Government’s system
regarding DA i.e. its rates, formula, timing, and structure. This Court is of the
considered view that a ‘pattern’ in the context of inflation-indexed allowances
is not merely a mathematical formula; rather, it is a temporal system. If the
Government accepts the pattern but ignores the timing, it has effectively
rejected the pattern. Thus, upon acceptance of the ‘Central Government
pattern’, the Government of Punjab has waived its right to treat DA as a
discretionary bounty.
39.2. Furthermore, the 6th Pay Commission explicitly states that the
efficacy of DA as a “hedge against inflation is eroded if there are delays in its
timely release.” If inflation occurs in January and the State pays the adjustment
in July, the employee has suffered an uncompensated loss for six months. The
State’s commitment to ‘endeavour’ to implement the same without a time lag
must be interpreted in light of the Commission’s warning about ‘erosion’. An
‘endeavour’ that results in a consistent failure to protect employees from
inflation is a failure of the Government’s duty to maintain the ‘hedge’.
40. Moreover, as highlighted by learned Amicus Curiae, historically,
the term ‘pattern’ has been understood exactly in the above-stated manner by
the previous Pay Commissions and the successive Governments of Punjab. It
was on the recommendation of the 1st Pay Commission that the Government of
Punjab originally decided to grant DA to its employees from time to time, on
the Central Government pattern. All subsequent Punjab Pay Commissions have
supported adherence to this “time-tested arrangement.” Specifically, the 5th
Pay Commission had recommended that once an enhancement in DA is
announced by the Central Government, the Government of Punjab should
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implement it within a period of 03 months. This consistent historical practice
reinforces that the ‘pattern’ operates as a binding benchmark for both structural
and temporal uniformity, thereby giving rise to a legitimate expectation that
such uniformity will be maintained in respect of all similarly situated
employees. Thus, in light of the established practice of the Government of
Punjab in granting Dearness Allowance at rates linked to the AICPI, in
accordance with the recommendations of successive Pay Commissions, the
petitioners have a legitimate expectation of continued adherence to this
framework. In this regard, a reference may be made to the judgment of the
Hon’ble Supreme Court in Confederation of Government of West Bengal
Employees (supra), wherein a catena of judgments on the doctrine of
legitimate expectation has been considered.
● Upon acceptance of the recommendations of the Pay
Commission, the Government becomes bound to implement it in
substance
41. The issue regarding enforceability of the recommendation of the
Pay Commission after its approval by the respective Governments is no longer
res integra. This Court is of the considered opinion that once the Government
has accepted the recommendation of the Pay Commission, the benefits arising
from the said recommendations cannot be denied to the petitioners. The
Constitution Bench of the Hon’ble Supreme Court in Purshottam Lal (supra),
speaking through Justice S.M Sikri , has held as under in this regard:
“15. Mr. Dhebar contends that it was for the Government to
accept the recommendations of the Pay Commission and while
doing so to determine which categories of employees should be
taken to have been included in the terms of reference. We are
unable to appreciate this point. Either the Government has made
reference in respect of all government employees or it has not. But
if it has made a reference in respect of all government employees
and it accepts the recommendations it is bound to implement the
MOHD YAKUB recommendations in respect of all government employees. If it
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commits a breach of Articles 14 and 16 of the Constitution. This
is what the Government has done as far as these petitioners are
concerned.”
(Emphasis supplied)
41.1. Furthermore, a two-Judge bench of the Hon’ble Apex Court in
Secretary Mahatama Gandhi Mission and another vs. Bhartiya Kamgar Sena
and others 2017 INSC 27has categorically held that once the recommendations
of the Pay Commission are accepted by the Government, they assume the
character of a Government decision, thereby binding the State to extend the
resultant benefits to its employees. Speaking through Justice Jasti
Chelameswar, the following observations were made:
“58. The source of the rights, if any, of the employees* of the
appellants to receive pay and allowances in terms of the
recommendations of the Sixth Pay Commission is first required to
be identified.
59. The Sixth Pay Commission appointed by the Government of
India is only a body entrusted with the job of making an
assessment of the need to revise the pay structure of the employees
of the Government of India and to suggest appropriate measures
for revision of the pay structure. The recommendations of the pay
commission are not binding on the Government of India, much less
any other body. They are only meant for administrative guidance
of the Government of India. The Government of India may accept
or reject the recommendations either fully or partly, though it has
never happened that the recommendations of the pay commission
are completely rejected by the Government so far.
60. Once the Government of India accepted the
recommendations of the pay commission and issued orders
signifying its acceptance, it became the decision of the
Government of India. That decision of the Government of India
created a right in favour of its employees to receive pay in terms
of the recommendations of the Sixth Pay Commission and the
Government of India is obliged to pay.”
(Emphasis supplied)
42. As noted above, the 6th Pay Commission had categorically
recommended in Paras 7.10 and 7.11 to continue with the payment of DA on
the Central Government ‘pattern’ and that there should not be any time lag in
releasing the DA as a delay in releasing the same would erode its efficacy as a
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hedge against inflation. Further, in Para 7.7, it is expressly stated that the
methodology of assessing the level of inflation for the purpose of grant of DA
is based upon AICPI. Moreover, there is no denial to the fact that from the very
inception i.e. from 1st Pay Commission onwards, the Government of Punjab has
historically paid the Dearness Allowance at the same frequency and rates as the
Central Government. In terms of the recommendations of the successive Pay
Commissions, necessary amendments have been carried out in the applicable
Service Rules and DA has been made part of the salary since the year 1973.
Further still, Rule 2.13 of the Punjab Civil Services Rules, Volume I (Part I),
defines the Dearness Allowance as “Compensatory Allowance” in the following
manner:
“2.13. Compensatory allowance means an allowance granted to
meet personal expenditure necessitated by the special
circumstances in which duty is performed. It includes traveling
allowance, dearness allowance but does not include a sumptuary
allowance, nor the grant of a free passage by sea to or from any
place outside India.”
(Emphasis supplied)
43. After the adoption of the recommendations of the 6th Pay
Commission by the Council of Ministers in its Meeting held on 18.06.2021, a
Notification dated 05.07.2021 (Annexure P-13) was issued, notifying Punjab
Civil Services (Revised Pay) Rules, 2021 under the proviso to Article 309 of
the Constitution of India, for revision of the pay structure of the employees of
the Government of Punjab w.e.f. 01.01.2016. Rule 3 of the aforesaid Rules is
the definition clause and Sub-Rules (c) and (j) define ‘existing emoluments’
and ‘revised emoluments,’ respectively, which read as under:
“(c)”existing emoluments” means the sum of-
(i) existing basic pay as on the 31st day of December, 2015;
and
(ii)dearness allowanceappropriate to the pay in the existing
basic pay;
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(j) “revised emoluments” means the pay in the Level of a
Government employee in the revised pay structure and includes
dearness allowance.”
(Emphasis supplied)
44. It must be pointed out that the above-mentioned Rules of 2021 do
not provide a specific rate or the precise frequency at which DA would be
released. Rather, the Rules merely include ‘Dearness Allowance’ within the
definitions of ‘existing emoluments’ and ‘revised emoluments’ under Rule 3(c)
and Rule 3(j), respectively. In the absence of any explicit criteria within the
statutory Rules for the calculation of DA, a reference must be made to the
recommendations of the 6th Pay Commission, which were duly approved by the
Council of Ministers. A cumulative reading of the recommendations contained
in Paras 7.7, 7.10 and 7.11 of the 6th Punjab Pay Commission Report, alongside
Rules 3(c) and (j) of the Rules of 2021, clearly indicates that the term ‘Dearness
Allowance’ must be interpreted to mean ‘Dearness Allowance on the Central
Government pattern,’ thereby ensuring structural and temporal uniformity.
Therefore, this Court holds that the argument of the learned Senior counsel
regarding the absence of any statutory rule for the grant of DA at a specific rate
or frequency is liable to be rejected.
45. Further still, surprisingly, it is noteworthy that at no point did the
Government of Punjab take a categorical stand that it would depart from the
Central Government pattern; nor has it placed on record any alternative
methodology for the computation of Dearness Allowance other than that
followed by the Central Government. Moreover, neither the agenda nor the
approval recorded in the meeting of the Council of Ministers held on
18.06.2021 even whispers of any deviation from the Central Government
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pattern. Accordingly, the validity of acceptance of the recommendations made
by the 6th Pay Commission by the Government of Punjab must be assessed
solely on the reasons recorded therein and cannot be supplemented or justified
by subsequent explanations. Reliance in this regard may be placed upon the
judgment rendered by a Constitution Bench of the Hon’ble Supreme Court in
Mohinder Singh Gill and another vs. The Chief Election Commissioner, New
Delhi and others (1978) 1 SCC 405, wherein, speaking through Justice Krishna
Iyer, the following was held:
“8. The second equally relevant matter is that when a statutory
functionary makes an order based on certain grounds, its validity must
be judged by the reasons so mentioned and cannot be supplemented by
fresh reasons in the shape of affidavit or otherwise. Otherwise, an
order bad in the beginning may, by the time it comes to court on account
of a challenge, get validated by additional grounds later brought out. We
may here draw attention to the observations of Bose J. in Gordhandas
BhanjiCase:
“Public orders, publicly made, in exercise of a statutory authority
cannot be construed in the light of explanations subsequently
given by the officer making the order of what he meant, or of what
was in his mind, or what he intended to do. Public orders made by
public authorities are meant to have public effect and are intended
to effect the acting and conduct of those to whom they are
addressed and must be construed objectively with reference to the
language used in the order itself.””
(Emphasis supplied)
46. Accordingly, the contention advanced by learned Senior counsel
that the recommendations of the 6th Pay Commission were merely accepted to
the limited extent of adopting the Central Government pattern and thus, the
release of the benefits flowing therefrom is the sole prerogative of the
Government of Punjab subject to its discretion and priority, is liable to be
rejected. As such, in the light of the law laid down in Purshottam Lal (supra)
and SecretaryMahatama Gandhi Mission (supra), the adoption of the
recommendations of the 6th Pay Commission cannot be treated as a mere
MOHD YAKUB
formality or symbolic exercise. Upon acceptance, the State incurs a binding
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obligation to implement the recommendations in their entirety and to disburse
all consequential benefits to its employees and pensioners without exception.
The Government of Punjab has not only approved the recommendations of the
6th Pay Commission, but has also acted upon it by paying some of the
installments to its employees and pensioners. Thus, Issue No.2 framed above is
answered accordingly. The Government of Punjab cannot be allowed to take a
sudden U-turn and deny the petitioners their legitimate claim towards DA.
Succinctly, after acceptance of the recommendations of the Pay Commission, it
becomes an enforceable right.
ISSUE 3: Financial Constraints as a ground to deny the payment of
Dearness Allowance
47. Learned Senior counsel for the State of Punjab has advanced
another star argument that the present issue falls within the domain of policy,
and that any decision in this regard is contingent upon the financial capacity
and priorities of the Government of Punjab. It appears that the plea of financial
constraints is a recurring defense taken by the Executive to justify denial or
deferment of service benefits such as Dearness Allowance etc. However, the
Constitutional Courts have consistently held that financial hardship cannot be
invoked as a blanket justification to deny the legitimate, accrued service
benefits. In Confederation of Government of West Bengal Employees (supra),
a specific argument was raised by the State of West Bengal before the Hon’ble
Apex Court that the payment of DA would create a liability of more than
Rs.41,000/- crores. However, the Hon’ble Supreme Court rejected the aforesaid
argument of paucity of funds and declared that the payment of DA, being a
legal right, cannot be deferred or denied on account of financial constraints.
The aforesaid ratio applies on all fours to the instant lis. The relevant extract
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from Confederation of Government of West Bengal Employees (supra), is
reproduced as under:
“50. …The least that is expected of a State in a democracy is that
it honours its obligations and commitments, arising from a
legislation or judicial decisions, for such obligations are not
discretionary in any way, shape or form. This clear position
protects such statutory obligations for, if such a ground of
limited financial ability was readily available to the Government
of West Bengal, which may undoubtedly in certain situations
face tough times, it would render these obligations illusory.
When it comes to employees’ dues, this proposition would be
extremely dangerous and stifling since the amounts received
thereby are not handouts or acts of charity but are earned
compensation / consideration for services given, and denial of
such consideration would have a direct impact on the right to life
and livelihood enshrined in Article 21 of the Constitution.”
(Emphasis supplied)
47.1. On this legal issue, reliance can also be placed upon the judgments
rendered by the Hon’ble Apex Court in D.S. Nakara and others vs. Union of
India 1982 INSC 103, All Manipur Pensioners Association vs. State of
Manipur 2019 INSC 748, State of Rajasthan vs. Mahendra Nath Sharma
2015 INSC 465 and Punjab State Cooperative Agricultural Development
Bank Limited vs. Registrar Cooperative Societies and others 2022 INSC 34.
As such, the Government of Punjab cannot deny the payment of DA to the
petitioners on the ground of financial position and priorities of the Government.
Further, this Court is of the considered view that the present situation is a self-
created problem. Having adopted the recommendations of the 6th Pay
Commission on 18.06.2021, the Government of Punjab should have made the
requisite budgetary allocation with respect to payment of DA in its successive
budgets.
47.2. Moreover, this Court is of the considered view that the reliance
placed by the learned Senior counsel for the State of Punjab on the judgment of
the Hon’ble Supreme Court in Tamil Nadu Electricity Board (supra) is
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this document
Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -68-
misplaced. In the aforesaid case, the Hon’ble Supreme Court had held that there
is no rule or mandatory obligation on a State Government to always adopt the
rate of DA as revised by the Central Government, and that a State is competent
to determine its own rates based on its specific financial position. However, in
the present case, the Government of Punjab had explicitly accepted the
recommendations of the 6th Pay Commission regarding the grant of DA on the
Central Government pattern. While the Constitution envisions sufficient
freedom for the State to choose its path in financial matters, the choice in this
regard had been made by the Government of Punjab itself. In the matter at
hand, the Government of Punjab has not carried out any legislative exercise in
this regard but instead, has issued the notification dated 18.06.2021 in terms of
the approval of the recommendations of the 6th Pay Commission. As such, at
this stage, the Government of Punjab cannot be allowed to make a U-turn since
it has voluntarily bound itself with the recommendations of the 6th Pay
Commission. Accordingly, this Court is unable to accept the contention of
learned Senior counsel that the judgment of the Hon’ble Supreme Court in
Confederation of Government of West Bengal Employees (supra) is per
incuriam merely on the ground that the argument regarding Tamil Nadu
Electricity Board (supra) was not specifically dealt with therein.
47.3. Further still, it must be pointed out that the State’s discretion in
framing and prioritizing welfare schemes, even if driven by electoral
considerations, is not absolute. It is constitutionally constrained by the
mandates of fairness, non-arbitrariness, and the obligation to honour accrued
and vested rights. In this backdrop, the State cannot justify the neglect or denial
of legitimate dues to its employees and pensioners on the ground that resources
are being diverted towards other welfare schemes. Government employees
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -69-
constitute the backbone of the administrative apparatus and the State’s capacity
to implement welfare policies itself rests upon their functioning.
47.4. More importantly, the pensioners stand on a higher footing as not
only have they rendered long years of service but they often exclusively rely on
their pensions and other allied benefits post-retirement to support them in their
sunset years. Thus, their entitlement to timely disbursal of retiral benefits,
including DR, is a matter of right, not charity. A welfare State cannot
selectively extend benefits to one class of citizens while depriving another,
particularly its own workforce and retired employees, without falling foul of
the equality doctrine. Such action constitutes manifest arbitrariness and violates
the constitutional guarantee of dignity, especially for pensioners who are
economically vulnerable. While pursuing broader welfare objectives, the State
is constitutionally bound to strike a balance and cannot abandon those who
have sustained its functioning. Thus, Issue No.3 is answered accordingly. The
Government of Punjab cannot take shelter of financial constraints to justify
depriving its employees and pensioners of their entitlements while promoting
fiscal spending for electoral welfare schemes at their cost. Such an approach is
legally untenable, being arbitrary, discriminatory, and contrary to the
foundational principles of a welfare State.
ISSUE 4: Validity of the Letter/Liquidation Plan dated 18.02.2025
(Annexure P-29 in CWP No. 9514 of 2026)
48. Further, learned Senior counsel for the State of Punjab has
opposed the prayer made by the petitioners on the ground that a Cabinet Sub-
Committee was constituted to examine the issue and the report submitted in this
regard was approved by the Council of Ministers in its Meeting held on
13.02.2025. A schedule of payment in installments was accordingly framed for
MOHD YAKUB
pensioners as well as serving employees. The same was adopted by the
2026.04.19 14:09
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -70-
respondent-PSPCL vide Finance Circular dated 03.04.2025. Further, the
liquidation plan prepared by the Cabinet Sub-Committee was approved by the
Division Bench of this Court in Ajoy Kumar Sinha (supra). Thus, learned
Senior counsel has submitted that the petitioners cannot claim any relief beyond
the schedule provided by the Cabinet Sub-Committee. The schedule of payment
prepared by the Sub-Committee is reproduced as under:
“(1) For the State Pensioners/Family Pensioners
a. Pensioners / Family Pensioners age 85 years and above (as on
01.10.2024) and deceased family pensioners- During the
Financial Year 2024-25 payment of arrear of Revised
Pension/Family Pension (including DR arrear) (as per 6thPPC)
will be made in two equal monthly installments (Feb., 2025 and
March, 2025) to the pensioners/ Family Pensioners having age
of 85 years and above and deceased family pensioners (to their
legal heirs).
b. Pensioners/Family pensioners age 75 years but below 85 years
(as on 01.10.2024) and deceased pensioners- During the
Financial Year 2025-26 payment of arrear of Revised
Pension/Family Pension (including DR arrear) (as per 6thPPC)
will be made in 12 equal monthly installments (April, 2025 to
March, 2026) to the pensioners age 75 years but below 85 years
and deceased pensioners (to the family pensioner / legal heirs).
c. Pensioners/Family Pensioners age below 75 years- Payment of
arrear of Revised Pension/Family Pension (including DR arrear)
will be made in 42 monthly installments to the pensioners below
age of 75 years as below:-
Sr. No. Year to which the No. of equally Period for
arrears relates Monthly payment
Installments
1 For the years 15 Instalment will
2016 and 2017 start from the
month of April,
2025
2 For the years 18 Instalment will
2018 and 2019 start from the
month of July,
2025
3 For the years 09 Instalment will
2020 and 2021 start from the
(upto 30.06.2021) month of January,
2028MOHD YAKUB
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Punjab & Haryana High Court,
Chandigarh.
CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -71-
d. Arrears of revised Leave Encashment- Payment of arrear of
revised Leave Encashment of the Government employees retired
between 01.01.2016 to 30.06.2021 will be made in 04 equal six
monthly installments (i.e. April, 2025, October, 2025, April, 2026
and October, 2026)
(2) For Government Employees
e. Arrear of revised pay- The payment of arrear of revised pay
(including DA arrear) to the employees will be paid in 36 monthly
installments as below:-
Sr. No. Year to which the No. of Period for
arrears relates equally payment
Monthly
Installment
s
1 For the year 2016 12 Installment will
Start from the
month of April,
2026
2 For the years 2017, 24 Installment will
2018, 2019, 2020 Start from the
and 2021 (up to month of April,
30.06.2021) 2027
f. After liquidation of the arrears of 6thPunjab Pay Commission
any arrear on account of enhanced DA/DR from 01.07.2021 to
31.03.2024 will be considered for payment in installments.
However the Government may also consider for early payment
keeping in view the financial resources of the State.”
(Emphasis supplied)
49. The arguments made by learned Senior counsel for the State of
Punjab regarding the validity of the schedule of payment are liable to be
rejected out-rightly on the following grounds: firstly, the Division Bench of this
Court, while dealing with contempt appeal in Ajoy Kumar Sinha (supra), has
not commented on or decided any issue on merits. It is trite law that while
exercising contempt jurisdiction, the Court cannot expand the scope of inquiry
by adjudicating anything on merits. The jurisdiction of the contempt Court is
confined to merely examining compliance with the directions issued. Reliance
in this regard can be placed upon the recent judgment of the Hon’ble Supreme
MOHD YAKUB
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Punjab & Haryana High Court,
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -72-
Court in SLP (C) No.20915 of 2024, titled as Jalim Singh vs. Nand Kishore,
decided on 17.03.2026.
50. Secondly, the aforesaid schedule of payment cannot pass the
constitutional muster in view of the law laid down by the Constitution Bench of
the Hon’ble Supreme Court in D.S. Nakara (supra),which has been further
reiterated in All Manipur Pensioners Association (supra). The Government of
Punjab cannot justify arbitrary classification by dividing the pensioners into
different categories. A two-Judge bench of the Hon’ble Supreme Court in All
Manipur Pensioners Association (supra) has examined the aforesaid issue and
speaking through Justice M.R Shah, made the following observations:
“7. The short question which is posed for consideration before
this Court is, whether in the facts and circumstances of the case,
the decision of this Court in the case of D.S. Nakara (supra)
shall be applicable or not, and in the facts and circumstances of
the case and solely on the ground of financial constraint, the
State Government would be justified in creating two classes of
pensioners, viz., pre-1996 retirees and post-1996 retirees for the
purpose of payment of revised pension and whether such a
classification is arbitrary, unreasonable and violative of Article
14 of the Constitution of India or not?
7.1 At the outset, it is required to be noted that in the present
case, the State Government has justified the cut-off date for
payment of revised pension solely on the ground of financial
constraint. On no other ground, the State tried to justify the
classification. In the backdrop of the aforesaid facts, the
aforesaid question posed for consideration before this Court is
required to be considered.
7.2 It is not in dispute that the State Government has adopted the
Central Civil Services (Pension) Rules, to be applicable to the
State of Manipur. The State has also come out with the Manipur
Civil Services (Pension) Rules, 1977. It is also not in dispute that
subject to completing the qualifying service the government
servants retired in accordance with the pension rules are entitled
to pension. Therefore, as such, all the pensioners form only one
homogeneous class. Therefore, it can be said that all the
pensioners form only one class as a whole. Keeping in mind the
increase in the cost of living, the State Government increased the
quantum of pension and even pay for its employees. The State
Government also enhanced the scales of pension/quantum of
pension with effect from 1.1.1996 keeping in mind the increase
in the cost of living. However, the State Government provided the
MOHD YAKUB
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cut-off date for the purpose of grant of benefit of revised pension
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -73-with effect from 1.1.1996 to those who retired post-1996 and
denied the revision in pension to those who retired pre-1996. The
aforesaid classification between these pensioners who retired
pre-1996 and post-1996 for the purpose of grant of benefit of
revision in pension is the subject matter of this appeal. As
observed hereinabove, the aforesaid classification is sought to be
justified by the State Government solely on the ground of
financial constraint.
7.3 At the outset, it is required to be noted that in the case of
D.S.Nakara (supra), such a classification is held to be arbitrary,
unreasonable, irrational and violative of Article 14 of the
Constitution of India…
xxx xxx xxx
8. Even otherwise on merits also, we are of the firm opinion that
there is no valid justification to create two classes, viz., one who
retired pre-1996 and another who retired post-1996, for the
purpose of grant of revised pension, In our view, such a
classification has no nexus with the object and purpose of grant of
benefit of revised pension. All the pensioners form a one class who
are entitled to pension as per the pension rules. Article 14 of the
Constitution of India ensures to all equality before law and equal
protection of laws. At this juncture it is also necessary to examine
the concept of valid classification. A valid classification is truly a
valid discrimination. It is true that Article 16 of the Constitution of
India permits a valid classification. However, a very classification
must be based on a just objective. The result to be achieved by the
just objective presupposes the choice of some for differential
consideration/treatment over others. A classification to be valid
must necessarily satisfy two tests. Firstly, the distinguishing
rationale has to be based on a just objective and secondly, the
choice of differentiating one set of persons from another, must
have a reasonable nexus to the objective sought to be achieved.
The test for a valid classification may be summarised as a
distinction based on a classification founded on an intelligible
differentia, which has a rational relationship with the object
sought to be achieved. Therefore, whenever a cut-off date (as in
the present controversy) is fixed to categorise one set of
pensioners for favourable consideration over others, the twin test
for valid classification or valid discrimination therefore must
necessarily be satisfied. In the present case, the classification in
question has no reasonable nexus to the objective sought to be
achieved while revising the pension. As observed hereinabove, the
object and purpose for revising the pension is due to the increase
in the cost of living. All the pensioners form a single class and
therefore such a classification for the purpose of grant of revised
pension is unreasonable, arbitrary, discriminatory and violative
of Article 14 of the Constitution of India. The State cannot
arbitrarily pick and choose from amongst similarly situated
persons, a cut-off date for extension of benefits especially
pensionary benefits. There has to be a classification founded on
some rational principle when similarly situated class is
MOHD YAKUB differentiated for grant of any benefit.
2026.04.19 14:09
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Punjab & Haryana High Court,
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -74-8.1 As observed hereinabove, and even it is not in dispute that as
such a decision has been taken by the State Government to revise
the pension keeping in mind the increase in the cost of living.
Increase in the cost of living would affect all the pensioners
irrespective of whether they have retired pre-1996 or post-1996.
As observed hereinabove, all the pensioners belong to one class.
Therefore, by such a classification/cut-off date the equals are
treated as unequals and therefore such a classification which
has no nexus with the object and purpose of revision of pension
is unreasonable, discriminatory and arbitrary and therefore the
said classification was rightly set aside by the learned Single
Judge of the High Court. At this stage, it is required to be
observed that whenever a new benefit is granted and/or new
scheme is introduced, it might be possible for the State to provide
a cut-off date taking into consideration its financial resources. But
the same shall not be applicable with respect to one and single
class of persons, the benefit to be given to the one class of persons,
who are already otherwise getting the benefits and the question is
with respect to revision.”
(Emphasis supplied)
51. In light of the above, this Court is of the firm conclusion that the
letter/liquidation plan dated 18.02.2025 is patently violative of Article 14 of the
Constitution of India, to the extent that it seeks to create an impermissible
differentiation within a homogeneous class of pensioners. As established by the
Constitutional Bench in D.S. Nakara (supra) and reaffirmed in All Manipur
Pensioners Association (supra), all pensioners form one single class for the
purpose of receiving retirement benefits. By segregating retirees into three
distinct tiers, i.e., granting arrears in 02 installments for those above 85 years,
12 installments for those between 75 and 85 years, and a staggering 42
installments for those below 75 years, the State has created a class within a
class without any reasonable justification. Such a classification lacks a rational
nexus to the object sought to be achieved. The object of Dearness Allowance is
to provide a hedge against inflation, a market force that erodes the purchasing
power of all retirees with equal severity, regardless of whether they are 65 or 85
years of age. Consequently, relegating younger pensioners to a nearly four-
MOHD YAKUB
year-long payment schedule while inflation continues to rise unabated is both
2026.04.19 14:09
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -75-
arbitrary and discriminatory. However, it is clarified and reiterated that the
letter/liquidation plan dated 18.02.2025 is being set aside only to the extent that
it mandates a discriminatory and tiered schedule for the payment of arrears of
revised pension/family pension (including DR) among the pensioners. Thus,
Issue No.4 is answered accordingly. The State cannot be permitted to fulfill its
constitutional obligations to one segment of a homogeneous class by effectively
abandoning or indefinitely deferring the rights of another.
ISSUE 5: Obligation of the Government of Punjab to maintain parity in
grant of Dearness Allowance to all the employees receiving their
emoluments from the same Consolidated Fund of the State of Punjab
52. At this juncture, this Court must point out that there is no denial to
the fact the Government of Punjab had issued a notification dated 30.10.2014
(Mark ‘X’) whereby, keeping in view the welfare of the entire workforce, the
Government of Punjab took a conscious decision to release DA to all its
employees, even prior to its release to officers of the All India Services
(IAS/IPS/IFS). The All India Services (Dearness Allowance) Rules, 1972 were
fully applicable and governed the service conditions of All India Service
Officers during this time. However, this practice was discontinued vide
notification dated 14.10.2019 (Mark ‘Y’) when the payment of DA to All India
Service Officers was de-linked from that of other employees and it was decided
that such officers would receive Dearness Allowance as and when it was
revised by the Government of India. The aforesaid past practice of the
Government of Punjab clearly reflects an informed policy decision prioritising
its own employees, particularly those at the bottom of the pyramid, over the
relatively privileged class of All India Service Officers, a position which now
stands reversed to the detriment of State Government employees.The
justification advanced by the Government of Punjab for paying Dearness
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -76-
Allowance (DA) to All India Service officers (IAS/IPS/IFS) on the basis of
distinct service rules is untenable. A classification founded solely on differing
service rules cannot sustain unequal treatment in the grant of DA as the
fundamental purpose of DA is to offset the effects of inflation, a burden that
impacts all employees and pensioners uniformly.Thus, the entitlement to
Dearness Allowance must be viewed through the lens of economic uniformity
and constitutional equality, not through the narrow prism of fragmented service
regulations. Any attempt to justify disparity on the basis of differing rules
governing hierarchical posts is legally untenable, as it disregards both the
purpose of the Dearness Allowance and the mandate of equal treatment under
the Constitution.
53. Further, there is no denial to the fact that the Government of
Punjab has implemented the recommendations of the 6th Pay Commission by
paying some DA/DR installments to its employees and pensioners. However,
w.e.f. 01.07.2021, the installments of DA/DR have not been paid.
Subsequently, the Government of Punjab had introduced a structured
liquidation plan dated 18.02.2025 (Annexure P-29 in CWP No. 9514 of 2026)
to discharge its liability in terms of 6th Pay Commission, which has already
been declared unsustainable by this Court in view of the law laid down in D.S.
Nakara (supra). Conspicuously, during the pendency of the present writ
petitions, the Government of Punjab has constituted another Sub-Committee
vide notification dated 07.04.2026 (Annexure R-3 attached in CWP-7264-
2026) to formulate another payment plan.
54. Thus, this Court is confronted with three distinct decisions taken
by the Council of Ministers of the Government of Punjab concerning the
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payment of dues arising from the recommendations of the 6th Pay Commission.
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -77-
A cumulative reading of these decisions indicates an apparent attempt on the
part of the State to wriggle out of its responsibility to discharge its fiscal
obligations. While the Government of Punjab continued to change its stance for
its own employees, it continued to pay DA to All India Service Officers. Once
the recommendations of the 6th Pay Commission were duly approved on
18.06.2021, it was incumbent upon the Government to implement the same in
letter and spirit. Although the present Government, upon assuming office in the
year 2022, has taken certain steps towards discharging its liability, the
compliance remains partial, and the obligations flowing from the approved
policy have not been substantially fulfilled.
● A constitutional democracy demands not only the power to
decide but also the responsibility to act with stability, reason, and
accountability.
55. This Court is of the considered view that Government policies
which have a bearing on the wage structure of the entire workforce must be
characterised by continuity, consistency, and stability. Thus, any deviation from
such welfare-oriented policy measures must be justified by compelling
considerations of public interest. A three-Judge bench of the Hon’ble Supreme
court in State of Tamil Nadu vs. K. Shyam Sunder 2011 INSC 555 examined
the scope of change of policy with a change of Government. Speaking through
Dr. Justice B.S Chauhan, the following was held:
“I. CHANGE OF POLICY WITH THE CHANGE OF GOVERNMENT:
16. The Government has to rise above the nexus of vested interests and
nepotism and eschew window-dressing. “The principles of governance
have to be tested on the touchstone of justice, equity, fair play and if a
decision is not based on justice, equity and fair play and has taken into
consideration other matters, though on the face of it, the decision may
look legitimate but as a matter of fact, the reasons are not based on
values but to achieve popular accolade, that decision cannot be allowed
to operate”. (Vide: Onkar Lal Bajaj etc. etc. v. Union of India & Anr.
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etc. etc., AIR 2003 Supreme Court 2562).
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -78-
17. In State of Karnataka & Anr. v. All India Manufacturers
Organisation & Ors., AIR 2006 Supreme Court 1846, this Court
examined under what circumstances the Government should revoke a
decision taken by an earlier Government. The Court held that an
instrumentality of the State cannot have a case to plead contrary from
that of the State and the policy in respect of a particular project
adopted by the State Government should not be changed with the
change of the Government.
The Court further held as under:-
“It is trite law that when one of the contracting parties is State
within the meaning of Article 12 of the Constitution, it does not
cease to enjoy the character of “State” and, therefore, it is
subjected to all the obligations that “State” has under the
Constitution. When the State’s acts of omission or commission are
tainted with extreme arbitrariness and with mala fides, it is
certainly subject to interference by the Constitutional Courts.”
(Emphasis added)
18. While deciding the said case, reliance had been placed by the Court
on its earlier judgments in State of U.P. & Anr. v. Johri Mal, AIR 2004
Supreme Court 3800; and State of Haryana v. State of Punjab & Anr.,
AIR 2002 Supreme Court 685. In the former, this Court held that the
panel of District Government Counsel should not be changed only on the
ground that the panel had been prepared by the earlier Government. In
the latter case, while dealing with the river water-sharing dispute
between two States, the Court observed thus:
” ………in the matter of governance of a State or in the matter of
execution of a decision taken by a previous Government, on the
basis of a consensus arrived at, which does not involve any
political philosophy, the succeeding Government must be held
duty-bound to continue and carry on the unfinished job rather
than putting a stop to the same.”
19. In M.I. Builders Pvt. Ltd. v. V. Radhey Shyam Sahu & Ors., AIR
1999 Supreme Court 2468, while dealing with a similar issue, this Court
held that Mahapalika being a continuing body can be estopped from
changing its stand in a given case, but where, after holding enquiry, it
came to the conclusion that action was not in conformity with law, there
cannot be estoppel against the Mahapalika.
20. Thus, it is clear from the above, that unless it is found that act done
by the authority earlier in existence is either contrary to statutory
provisions, is unreasonable, or is against public interest, the State
should not change its stand merely because the other political party has
come into power. Political agenda of an individual or a political party
should not be subversive of rule of law.”
(Emphasis supplied)
MOHD YAKUB
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -79-
56. In a constitutional democracy, governance is anchored in
principles of accountability, transparency, stability and adherence to the rule of
law. The decisions taken by the Council of Ministers, being the highest
executive authority, are expected to reflect careful deliberation, collective
responsibility and a commitment to implementation in the public interest.
Frequent changes in such decisions, particularly without cogent reasons or
follow-through, raise serious concerns from the standpoint of public policy and
constitutional governance.
57. Moreover, Cabinet decisions are not casual or tentative
expressions of intent, rather, they are outcomes of structured processes
involving inter-ministerial consultations, expert inputs and accountability.
Repeated reversals may dilute this principle and signal a lack of coherence or
consensus within the Government, thereby weakening institutional integrity and
eroding public confidence in the Government’s ability to govern effectively.
Such conduct is also inconsistent with the doctrine of legitimate expectation, a
well-recognized principle in law. When the government announces or adopts a
policy, stakeholders may reasonably expect its implementation unless there are
overriding public interest considerations justifying a departure. Arbitrary or
frequent reversals without transparent reasoning may be viewed as a violation
of this doctrine and invites judicial scrutiny. While it is true that policy
flexibility is sometimes necessary to respond to changing circumstances, such
flexibility must be exercised judiciously, transparently and in good faith.
Changes in policy should be supported by rational justifications, grounded in
public interest and communicated clearly to maintain trust and legitimacy. In
that vein, there was no occasion for the Government of Punjab to have deviated
from the decision taken by it on 18.06.2021. Once a decision has been taken, it
MOHD YAKUB
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Punjab & Haryana High Court,
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -80-
must be owned and implemented by the Executive as a whole and failure to act
upon it without cogent reasons, is contrary to sound public policy.
● The Selective conferment of benefits and their denial to other
employees creates class legislation
58. It is settled law that Article 14 forbids class-legislation but it does
not forbid reasonable classification. The classification must not be arbitrary,
artificial or evasive, but must be based on some real and substantial bearing
and must have a just and reasonable relation to the object sought to be achieved
by the legislation. The Constitution Bench of the Hon’ble Supreme Court in the
State of West Bengal vs. Anwar Ali Sarkar,1952 INSC 1, speaking through
Justice Patanjali Sastri, laid down two essentials or conditions that are required
to be satisfied to pass the test of reasonable classification. The same are
reproduced below:
“55…..(1) that the classification must be founded on an intelligible
differentia which distinguishes those that are grouped together
from others and (2) that that differentia must have a rational
relation to the object sought to be achieved by the Act….”
59. The Preamble of the Constitution of India promises social and
economic justice. The Directive Principles of State Policy enshrined in Articles
38 and 43 of the Constitution mandate the State to secure a social order
promoting welfare and ensure a decent standard of life for workers. Public
administration in a democratic State must operate on fairness and equity rather
than a hierarchy-based privilege. Even in policy decisions relating to service
conditions, the State is bound by the mandate of Article 14 of the Constitution
of India. Reliance in this regard can also be placed on the judgment rendered by
the Hon’ble Supreme Court inShrilekha Vidyarthi vs. State of Uttar Pradesh,
MOHD YAKUB
1990 INSC 294 wherein it was held that every action of the State must satisfy
2026.04.19 14:09
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CWP-7291-2026, CWP-9514-2026 &
CWP-10301-2026 -81-
the test of fairness and non-arbitrariness. In a constitutional democracy,
governance must prioritize the protection of the vulnerable rather than the
privilege of the powerful. Any policy that reverses this order invites judicial
scrutiny and constitutional correction.
● Inflation does not discriminate between classes of employees;
any State action that does the same, stands exposed as
Constitutionally arbitrary.
60. All employees and pensioners of the Government of Punjab
constitute a single class and must be treated at par as far as payment of
Dearness Allowance is concerned. The Constitution Bench in D.S. Nakara
(supra), has declared that pensioners cannot be categorised into different
groups for the release of pensionary benefits and any attempt to create a
classification must be supported by an intelligible differentia that has a rational
nexus with the object the said classification has sought to achieve. The same
analogy applies squarely to the present lis as all employees and pensioners of
the Government of Punjab form a homogeneous class with regards to the
impact of inflation and therefore, any artificial classification amongst them for
the payment of DA would be unconstitutional.
61. Public power cannot be exercised as a personal prerogative as it
works on accountability and public trust. This Court is of the view that the
impugned action of the respondents is not founded on any discernible
principles, rational criteria or legally sustainable justifications, rather, it reflects
an exercise of naked executive discretion driven by whims and caprice, which
is wholly antithetical to the constitutional mandate of equality. Reliance in this
regard can be placed on D.S. Nakara‘s case (supra), wherein, speaking through
Justice D.A. Desai, the following was observed:
MOHD YAKUB
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CWP-10301-2026 -82-“13. The other facet of Article 14 which must be remembered is
that it eschews arbitrariness in any form. Article 14 has,
therefore, not to be held identical with the doctrine of
classification. As was noticed in Maneka Gandhi’s case in the
earliest stages of evolution of the Constitutional law, Article 14
came to be identified with the doctrine of classification because
the view taken was that Article 14 forbids discrimination and
there will be no discrimination where the classification making
the differentia fulfils the aforementioned two conditions.
However, in E.P. Royappa v. State of Tamil Nadu, (1974) 2 SCR
348 it was held that the basic principle which informs both
Articles 14 and 16 is equality and inhibition against
discrimination. This Court further observed as under :
“From a positivistic point of view, equality is antithetic to
arbitrariness. In fact, equality and arbitrariness are sworn
enemies; one belongs to the rule of law in a republic while
the other, to the whim and caprice of an absolute monarch.
Where an act is arbitrary it is implicit in it that it is unequal
both according to political logic and constitutional law and
is, therefore, violative of Article 14 and if it affects any
matter relating to public employment, it is also violative of
Article 16. Articles 14 and 16 strike at arbitrariness in State
action and ensure fairness and equality of treatment.”
14. Justice Iyer has in his inimitable style dissected Article 14 as
under :
“The article has a pervasive processual potency and
versatile quality, equalitarian in its soul and allergic to
discriminatory diktats. Equality is the antithesis of
arbitrariness and ex cathedra ipse dixit is the ally of
demagogic authoritarianism. Only knight-errants of
‘executive excesses’, if we may use current cliche, can fall in
love with the Dame of despotism, legislative or
administrative. If this Court gives in here it gives up the
ghost. And so it is that I insist on the dynamics of limitations
on fundamental freedoms as implying the rule of law; Be
you ever so high the law is above you.” ((1978) 2 SCR 621
at p. 728 : AIR 1978 Supreme Court 597 at p. 661).
Affirming and explaining this view the Constitution Bench in
Ajay Hasia etc. v. Khalid Mujib Sahravardi, (1981) 2 SCR 79
held that it must, therefore, now be taken to be well settled that
what Article 14 strikes at is arbitrariness because any action that
is arbitrary must necessarily involve negation of equality. The
Court made it explicit that where an act is arbitrary it is implicit
in it that it is unequal both according to political logic and
constitutional law and is, therefore, violative of Article 14. After
a review of large number of decisions bearing on the subject, in
Air India etc. v. Nargesh Meerza, (1982) 1 SCR 438 the Court
formulated propositions emerging from an analysis and
examination of earlier decisions. One such proposition held well
established is that Article 14 is certainly attracted where equals
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15. Thus the fundamental principle is that Article 14 forbids
class legislation but permits reasonable classification for the
purpose of legislation which classification must satisfy the twin
tests of classification being founded on an intelligible differentia
which distinguishes persons or things that are grouped together
from those that are left out of the group and that differentia must
have a rational nexus to the object sought to be achieved by the
statute in question.
16. As a corollary to this well established proposition the next
question is, on whom the burden lies to affirmatively establish
the rational principle on which the classification is founded
correlated to the object sought to be achieved ? The thrust of
Article 14 is that the citizen is entitled to equality before law and
equal protection of laws. In the very nature of things the society
being composed of unequals a welfare State will have to strive by
both executive and legislative action to help the less fortunate in
society to ameliorate their condition so that the social and
economic inequality in the society may be bridged. This would
necessitate a legislation applicable to a group of citizens
otherwise unequal and amelioration of whose lot is the object of
state affirmative action. In the absence of the doctrine of
classification such legislation is likely to flounder on the bed
rock of equality enshrined in Article 14. The Court realistically
appraising the social stratification and economic inequality and
keeping in view the guidelines on which the State action must
move as constitutionally laid down in Part IV of the Constitution,
evolved the doctrine of classification. The doctrine was evolved to
sustain a legislation or State action designed to help weaker
sections of the society or some such segments of the society in
need of succour. Legislative and executive action may
accordingly be sustained if it satisfies the twin tests of reasonable
classification and the rational principle correlated to the object
sought to be achieved. The State, therefore, would have to
affirmatively satisfy the Court that the twin tests have been
satisfied. It can only be satisfied if the State establishes not only
the rational principle on which classification is founded but
correlates it to the objects sought to be achieved. This approach is
noticed in Ramana Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCR 1014 at p. 1034 when at page
1034 the Court observed that a discriminatory action of the
Government is liable to be struck down, unless it can be shown by
the Government that the departure was not arbitrary, but was
based on some valid principle which in itself was not irrational,
unreasonable or discriminatory.”
(Emphasis supplied)
62. Furthermore, the Constitutional Bench of the Hon’ble Supreme
Court in Olga Tellis vs. Bombay Municipal Corporation 1985 INSC 151,has
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recognized that economic deprivation can threaten the fundamental right to life
enshrined in Article 21 of the Constitution of India. For employees and
pensioners who depend primarily on a fixed income, withholding DA/DR
directly undermines their ability to maintain a dignified existence. As the
lower-rank government employees and pensioners depend heavily on DA/DR
adjustments to maintain basic economic stability, denying them such protection
against inflation while extending the benefit to the highest paid officers creates
a structural imbalance in the service framework. Further, while service
hierarchies may justify differences in basic pay, they cannot justify selective
denial of inflation-neutralizing benefits whose purpose is universal protection
against rising prices. Such treatment lacks any rational nexus with the objective
of mitigating inflation or financial constraints. Instead, it results in reverse
welfare, where the financially secure receive preferential treatment. It amounts
to economic discrimination against the most vulnerable. In a welfare State
governed by the Constitution, public policy must operate to protect the weaker
sections of society rather than reinforce hierarchical privilege within the
administrative structure.
63. Furthermore, learned Senior counsel for the State of Punjab has
contended that DA/DR is paid to officers of the All India Services
(IAS/IPS/IFS) under a different set of Rules. However, she was unable to point
out any rational basis or distinguishing circumstance which would justify
granting such officers preferential treatment in the matter of DA/DR,
particularly when the impact of inflation is uniform for all employees. If the
State is indeed facing financial constraints, then, as a welfare State, the burden
of austerity must begin from the top rather than imposing it upon employees at
the bottom of the pyramid.
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64. It is reiterated that DA/DR is intrinsically linked to the AICPI and
is intended to offset the erosion of real income caused by inflation. The concept
of DA/DR has deep historical roots in India’s wage policy and it became an
institutionalized component of the wage structure through the recommendations
of successive Pay Commissions. Thus, for employees in lower pay scales and
retired pensioners, DA/DR forms a substantial component of their livelihood.
Since their income remains fixed while the cost of living continues to rise,
withholding DA/DR from employees and pensioners effectively reduces the
real value of their pay/pension and undermines their post-retirement dignity.
65. Further, this Court is of the considered opinion that the issue raised
in the present writ petitions is squarely covered by the judgment rendered
recently by a two-Judge Bench of the Hon’ble Apex Court in State of
Kerala vs. M. Vijaya Kumar and others 2026 INSC 352, wherein, speaking
through Justice Manoj Misra, the following was opined:
“21. DA is paid to serving employees whereas DR is paid
to pensioners. The object of both DA and DR is common, which
is to enable the serving employees/pensioners meet the exigencies
of inflation. As the object of both DR/DA is common, which is to
meet inflationary pressures, and the inflation index is common
to both the serving and the non-serving/retired
employees, qua the measure, that is, the rate(s) of increase of
DA/DR, could serving and retired employees be differentiated, is
the issue which we shall address.
22. Article 14 of the Constitution forbids class
legislation but permits reasonable classification which must
satisfy twin tests: (1) that the classification must be founded on
an intelligible differentia which distinguishes those that are
grouped together from others, and (2) that differentia must have
rational nexus with the object sought to be achieved by the Act –
The differentia which is the basis of the classification and the
object of the Act are distinct things and what is necessary is that
there must be a nexus between the two. Legislative and executive
action may accordingly be sustained if it satisfies the twin tests of
reasonable classification and the rational principle correlated to
the object sought to be achieved. The burden of proof lies on the
State to affirmatively establish that these twin tests have been
satisfied. The State must therefore not only establish the rational
MOHD YAKUB
principle on which classification is founded but correlate it to the
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CWP-10301-2026 -86-objects sought to be achieved. Besides, equality is a dynamic
concept with many aspects and dimensions, and it cannot be
cribbed, cabined and confined within traditional and doctrinaire
limits. From a positivistic point of view, equality is antithetic to
arbitrariness. In fact, equality and arbitrariness are sworn
enemies; one belongs to the rule of law in a republic while the
other, to the whim and caprice of an absolute monarch. Where an
act is arbitrary, it is implicit in it that it is unequal both according
to political logic and constitutional law and is therefore violative
of Article 14, and if it affects any matter relating to public
employment, it is also violative of Article 16. Articles 14 and 16
strike at arbitrariness in State action and ensure fairness and
equality of treatment. They require that State action must be based
on valid relevant principles applicable alike to all similar situate
and it must not be guided by any extraneous or irrelevant
considerations because that would be denial of equality.
23. In Ajay Hasia and others v. Khalid Mujib
Sehravardi and others, (1981) 1 SCC 722, paragraph 16, this
Court observed that doctrine of classification is the judicial
formula for determining whether the legislative or executive
action in question is arbitrary and therefore constituting denial
of equality. If the classification is not reasonable and does not
satisfy the two conditions referred to above, the impugned
legislative or executive action would plainly be arbitrary and the
guarantee of equality under Article 14 would be breached.
Wherever therefore there is arbitrariness in State action whether
it be of the legislature or of the executive or of an authority
under Article 12, Article 14 immediately springs into action and
strikes down such State action.
24. In State of Punjab &Ors. v. Davinder Singh &Ors,
(2025) 1 SCC 1, Dr. D.Y. Chandrachud, C.J. (as His Lordship
then was), while explaining the contours of Article 14, wrote:
“85. The Constitution permits valid classification if two
conditions are fulfilled. First, there must be an intelligible
differentia which distinguishes persons grouped together
from others left out of the group. The phrase “intelligible
differentia” means difference capable of being understood.
The difference is capable of being understood when there is
a yardstick to differentiate the class included and others
excluded from the group. In the absence of the yardstick, the
differentiation would be without a basis and hence,
unreasonable. The basis of classification must be deducible
from the provisions of the statute; surrounding
circumstances or matters of common knowledge. In making
the classification, the State is free to recognize degrees of
harm. Though the classification need not be mathematical in
precision, there must be some difference between the
persons grouped and the persons left out, and the difference
must be real and pertinent. The classification is
unreasonable if there is little or no difference. Second, the
differentia must have a rational relation to the object sought
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CWP-10301-2026 -87-to be achieved by the law, that is, the basis of classification
must have a nexus with the object of the classification”.
(Emphasis supplied)
25. Now, applying the twin-tests principle, we shall test
the validity of the Government Order to the extent it provides a
lower rate of increase for DR than what it provides for DA. The
object and purpose of dearness allowance/dearness relief is to
mitigate the hardship faced by salaried employees/pensioners on
account of inflation. The Government Order in question
increases the rate of DA by 14% and DR by 11% even though the
increase is to serve a common object, which is to mitigate the
hardship faced by the serving employees and pensioners on
account of inflation. Indisputably, inflation hits both serving and
retired employees with equal force, therefore, differentiating the
two qua the rate of increase of DA and DR, in our view,
has no rational nexus to the object sought to be achieved.
26. The issue here is not about entitlement to DR on
pension. Therefore, in our view, the decisions cited by the
learned counsel for the appellants are not applicable on the facts
of the case on hand. Besides, once pension is admissible and,
based on inflation, DR is admissible on it, announcing DR at a
rate lower than at what DA is provided, when both are linked to
inflation and serve a common object, would be nothing but
discriminatory as well as arbitrary. Therefore, in our view,
the High Court was justified in holding the same to be
discriminatory and violative of Article 14.”
(Emphasis supplied)
I. Doctrinal Foundation: From ‘In Personam’ to ‘In Rem’
66. Another issue that weighs on the mind of this Court is whether the
relief granted by this Court upon finding the impugned action to be arbitrary
and unconstitutional, ought to be confined only to the present petitioners only
or be extended in rem to all similarly situated employees and pensioners of the
Government of Punjab.
67. Ordinarily, relief under service law is in personam. However,
where the adjudication invalidates a rule/policy, declares a principle of law, or
finds systemic constitutional infirmity, the judgment transcends individual
parties and acquires in rem character, binding the State qua all similarly
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situated employees. This shift is rooted in Articles 14 and 16 of the
Constitution of India as a void rule cannot survive selectively for non-
petitioners. Further, the doctrine of ‘similarly situated employees’ requires that
equal treatment is mandatorily meted out to the entirety of a homogeneous
class.
68. The following principles delineate the circumstances in which a
judgment operates in rem, binding the State universally, and when it remains in
personam, confined to the parties before the Court:
Grounds for ‘in rem’ applicability of a judgment or relief
69. A judgment or relief shall be applicable in rem where:
1. A statutory rule, policy, or notification is struck down as
unconstitutional, it is void erga omnes and cannot be selectively
applied [See:D.S. Nakara (supra), Behram Khurshid Pesikaka vs.
State of Bombay 1954 INSC 80].
2. A declaration of arbitrariness or discrimination under Articles 14
and 16 of the Constitution is given, which operates universally and
is not confined to the petitioners [See:D.S. Nakara (supra)].
3. Employees form a homogeneous class, thereby making artificial
distinctions impermissible [See: D.S. Nakara (supra), State of U.P.
vs. Arvind Kumar Srivastava, 2014 INSC 735].
4. Relief against systemic discrimination must extend to the entire
affected class and cannot be granted selectively [See: Inder Pal
Yadav vs. Union of India, (1985) 2 SCC 648].
5. Legal principles of general application declared by the Court govern
all similarly situated cases within their ambit [See: K.I. Shephard
vs. Union of India, (1987) 4 SCC 431].
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6. The cause of action arises from a common policy or notification, its
invalidation benefits all persons affected by it. [See: Inder Pal
Yadav (supra)].
7. Denial of relief to similarly situated persons solely for not litigating
amounts to fresh discrimination under Article 14 of the Constitution
[See: State of Karnataka vs. C. Lalitha, (2006) 2 SCC 747].
8. Beneficial service schemes must be interpreted liberally and applied
uniformly, without arbitrary exclusions [See: Dr. Ishar Singh vs.
State of Punjab, 1993 SCC Online P&H 49 (FB)].
9. Non-litigating employees forming part of the same class are entitled
to equal treatment and cannot be denied relief [See: K.I. Shephard
(supra); Inder Pal Yadav (supra)].
10.The State must extend the benefit of a judicial declaration to
similarly situated persons to avoid multiplicity of litigation [See:
Amrit Lal Berry vs. Collector of Central Excise, (1975) 4 SCC
714].
Negative Test: When relief remains in personam
70. On the other hand, a judgment or relief shall only be applicable in
personam where:
1. There is inordinate delay or laches since fence-sitters cannot claim
parity after others succeed [See: Arvind Kumar Srivastava,
(supra)].
2. There is acquiescence, i.e., acceptance of the adverse action without
protest and enjoyment of consequential benefits [See: U.P. Jal
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Nigam vs. Jaswant Singh 2007 (1) SCT 224; Arvind Kumar
Srivastava (supra)].
3. Judgments are based on individual facts, merit, or personal
eligibility and thus, do not extend automatically to others [See:C.
Lalitha (supra)].
4. The Court expressly or impliedly limits relief to the petitioners
[See: Arvind Kumar Srivastava (supra)].
5. Extension to others would prejudice third parties or disturb settled
rights due to passage of time [See: Union of India and Others v.
Tarsem Singh 2008 INSC 930].
71. Indubitably, all employees and pensioners are equally affected by
the impact of inflation and, therefore, constitute a homogeneous class.
Consequently, any arbitrary classification within such a class would be
violative of Article 14 of the Constitution. As a natural corollary, the directions
issued by this Court must extend to all similarly situated employees and
pensioners, and cannot be confined merely to the petitioners herein.
72. In light of the aforementioned grounds, it is evident that the
present judgment necessarily operates in rem, notwithstanding that the lis is
between specific parties. The legal principle enunciated herein would,
therefore, govern all similarly situated persons. Once a policy or rule is struck
down, it cannot be permitted to survive selectively, and its invalidation must
operate uniformly. Any attempt to confine the relief only to the petitioners
would give rise to fresh causes of action and trigger a multiplicity of litigation
by similarly placed employees, thereby imposing an avoidable burden on the
judicial system. Moreover, selective extension of benefits would foster
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administrative arbitrariness, erode public confidence, and be contrary to
constitutional morality.
73. Further still, the State cannot be permitted to adopt a litigation-
centric stance, forcing every affected employee to approach the Court
individually as it would be contrary to the principles of fair governance and
sound public policy. It is a settled proposition that equality cannot be enforced
in a piecemeal manner; once a classification is held arbitrary, it collapses for
all.
74. Moreover, beneficial service measures must receive liberal
interpretation in matters relating to pay scales, DA/DR, pensionary benefits etc.
Thus, once the vice of arbitrariness is judicially removed, its cure must operate
across the entire class and not merely for those who have approached the Court.
In the factual backdrop of the present case, this Court holds that the relief must
not be confined to those who litigate, but must extend to those who are entitled.
75. Nonetheless, at this juncture, this Court must also address its
earlier decision in CWP-23651-2024, titled as Surinder Singh and others vs.
State of Punjab and others, decided on 12.03.2026. The petitioners therein
were retired employees drawing pension from various Boards and Corporations
of the State, whose primary grievance was the withholding of revised pension
along with arrears of revised DA/DR despite the revision having been accepted
pursuant to the recommendations of the 6th Pay Commission. In that instance,
this Court had directed that all pensioners of the State of Punjab, including the
petitioners therein, be paid their admissible revised dues strictly in accordance
with the schedule approved by the Council of Ministers in its meeting dated
13.02.2025, i.e., the liquidation plan dated 18.02.2025. Thus, the aforesaid
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decision was actuated solely on the basis of the existence of the liquidation plan
without an occasion to adjudicate upon its legal or constitutional validity.
76. In view of the above, this Court has no hesitation in holding that
the earlier judgment of this Bench in Surinder Singh‘s case (supra) is per
incuriamandsub silentio, having been rendered due to judicial oversight and in
the absence of adequate assistance. Since the relevant material and legal
precedents, specifically those used to determine the validity of the liquidation
plan dated 18.02.2025 in the present case, were not placed before this Court at
the time of the pronouncement of the earlier judgment, that decision cannot be
deemed a declaration of law on the validity of the plan itself. Reliance in this
regard can be placed on the judgments of the Hon’ble Supreme Court in State
of U.P. vs. Jeet S. Bisht, 2007 INSC 656, and State of U.P. vs. Synthetics and
Chemicals Ltd,. 1991 INSC 159, which clarify that precedents rendered
without argument or conscious consideration of a specific legal point are of no
moment.
J. CONCLUSION AND RELIEF
77. In light of the peculiar facts and circumstances discussed
hereinabove, and keeping in view that the entire workforce, including
pensioners, stands affected by the arbitrary and discriminatory manner in which
Dearness Allowance/Dearness Relief (DA/DR) is being disbursed by the
Government of Punjab, this Court, in the interest of justice, equity, and fair
play, deems it appropriate to dispose of the subject-captioned writ petitions
bearing CWP No. 7291 of 2026,CWP No. 9514 of 2026, and CWP No. 10301
of 2026 in the following terms:
(i) The letter/liquidation plan dated 18.02.2025
(Annexure P-29 in CWP-9514-2026) issued by respondent No.2-
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Department of Finance, Government of Punjab, is hereby quashed
qua pensioners/family pensioners as the Government of Punjab
has segregated them into three different categories for payment of
arrears of revised pension/family pension (including DR arrears),
arising out of the recommendations of the 6th Punjab Pay
Commission, being violative of D.S. Nakara (supra) and All
Manipur Pensioners Association (supra). As such, the
Government of Punjab and the respondent-Corporations are
directed to pay the arrears of revised pension/family pension
(including DR arrears) as per 6th Punjab Pay Commission to all
their pensioners and family pensioners, within a period of 02
months i.e. on or before 30.06.2026, as has been paid to the
pensioners/family pensioners up to the age of 85 years and above.
(ii) The State of Punjab and respondent-Corporations are
directed to grant and release all up-to-date pending installments
of Dearness Allowance/Dearness Relief (DA/DR) to all its
employees and pensioners, respectively, at the same rates as has
been paid to the members of the All India Services (IAS/IPS/IFS)
serving within the State of Punjab, in accordance with the Central
Government pattern, on or before 30.06.2026.
(iii) In the event of non-compliance with the directions of
this Court within the stipulated period, the question of entitlement
of the employees and pensioners to interest shall remain open for
consideration.
(iv) The Chief Secretary to the Government of Punjab is
directed to ensure scrupulous compliance of the directions issued
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herein and file a compliance report by way of affidavit before the
Registry of this Court on or before 02.07.2026.
78. Pending miscellaneous application, if any, also stands disposed of.
79. A photocopy of this order be placed on the file of other connected
cases.
80. The Registry is directed to tag ‘Mark X’, ‘Mark Y’, ‘Mark A’ and
‘Mark B’, respectively at appropriate places and list the matters before this
Court on 02.07.2026, for compliance report.
81. Before parting with this order, this Court would like to express its
gratitude to Mr. Raman B. Garg, learned Amicus Curiae for the valuable
assistance rendered by him.
(HARPREET SINGH BRAR)
JUDGE
08.04.2026
yakub
Whether speaking/reasoned: Yes/No
Whether reportable: Yes/No
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