The Supreme Court on Thursday provided partial relief to the Bengal government by ruling that state employees were not entitled to equal dearness allowance with their central counterparts, and that each state had the right to determine the DA in the light of its own financial pragmatism.
“There is no legal obligation on state governments to automatically adopt the rates of DA as fixed by the central government. Each state is entitled to assess its own financial position and determine appropriate rates accordingly,” the bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra said.
“DA is a balanced and pragmatic instrument of wage policy, aimed at mitigating the impact of inflation while respecting regional diversity and economic feasibility.”
While directing the Bengal government to clear the DA arrears, the bench rejected a plea from state employees to be paid DA on a par with central government staff.
Further, it said the state employees were not entitled to DA payment twice a year as demanded by them, since Bengal’s Revision of Pay and Allowances Rules “nowhere provide that DA will be or can be paid twice a year”.
“Anything that is not provided for in the Rules which govern the distribution of ‘existing emoluments’ for the time period in question cannot be said to be a right accruing on any party,” the judgment, authored by Justice Karol, said.
“The argument based on the principle of legitimate expectation of the employees’ right of disbursal of DA twice a year, as alleged to have been disbursed earlier, needs to be repelled for the same does not emanate from the statutory text.”
But the apex court faulted the state government for failing to clear its DA dues.
“…DA by its very nature is non-static, fluid and subject to change. How that change is to be carried out is through AICPI (All India Consumer Price Index),” it said.
“In the present facts, since a legislative exercise did incorporate AICPI into the framework, deviation therefrom without any basis as discussed above falls in the ‘lacking in reasoned principle’, manifest arbitrariness, apart from legislative competence.
“For the appellant (Bengal) to have deviated from the recognised position to something else without laying the groundwork, therefore, compromises the exercise by rendering it capricious.”
The bench said that once Calcutta High Court had held that the employees had a legally enforceable right, “the defence of the appellant… so as to its financial ability or rather inability has to be kept at bay”.
“The only question that remains thereafter is, how such a right has to be enforced, and considering the nature of the right, at what rate,” the apex court said.
It brushed aside the state government plea that implementing the high court directive would cripple the exchequer.
“One of the implications of accepting the respondent’s (employees’) contention as submitted by the appellant… 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,” the court said.
“We find this position difficult to accept.... Once a legal right has been established, as is the undoubted position in this case by virtue of (the high court judgment)… as also our discussion supra, irrespective of whether it pertains to salary, pension, gratuity or other statutory benefits, it is not within the realm of permissible actions for the state to refuse payment... on account of financial inability/ paucity of funds.”
The court added: “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.”