The Supreme Court on Thursday directed the Bengal government to clear its employees’ dearness allowance arrears accrued between 2008 and 2019, with a yet-to-be-specified first instalment to be paid by March 31, rejecting the state’s plea that such an order would cripple it financially.

However, in a partial relief to the Mamata Banerjee government, the top court ruled that state employees cannot seek DA parity with their central government counterparts — which is what the employees had sought. Nor have they a right to DA payment twice a year, which is a matter for the state’s discretion.

The Supreme Court formed a four-member committee of three retired judges and a senior bureaucrat that will by March 6 decide the volume of the arrears to be paid and a schedule for staggered payment.

The first instalment must be paid by March 31.

State employees “who have retired in the pendency of this litigation shall also be entitled to benefits in accordance herewith”, the apex court said.

No subsequent change in law relating to state employees’ emoluments will affect Thursday’s order, the bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra clarified.

Sources in Bengal said the directive would benefit about 14.5 lakh serving and retired state government employees. They suggested the state might have to pay up more than ₹40,000 crore.

Calcutta High Court had in 2022 directed the state to pay the DA arrears, and later initiated contempt action for the its failure to comply, prompting it to file the present appeal before the top court.

DA a ‘right’

The apex court said that DA is a “legally enforceable right” and that a government cannot go back on its own rules and decisions relating to employees’ pay.

“The time period in question is 2008 to 2019, that is, approximately a period of 11 years. Each month that the requisite DA was not paid, is a wrong committed against the respondents (Confederation of State Government Employees),” the bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra said.

“Certainly, when that is the case, ‘fiscal policy’ cannot grant a cloak of protection to the appellant — (the) 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.

“To receive dearness allowance is a legally enforceable right that has accrued in favour of the respondents….”

The apex court noted that Bengal had in 2008-2009 committed itself to paying DA in keeping with Fifth Pay Commission recommendations by incorporating them in its Revision of Pay and Allowance Rules. Under these rules, the All India Consumer Price Index was to be followed in deciding the emoluments.

Committee

The top court formed the four-member committee for a “structured” release of funds “so as to not prejudicially impact State’s exchequer while at the same time balancing the rights of the employees”.

It will have as members the former Supreme Court judge, Justice Indu Malhotra; two former high court judges, Justice Tarlok Singh Chauhan and Justice Goutam Bhaduri; and the comptroller and auditor general of India or the senior-most officer in the CAG’s establishment, nominated by him.

In consultation with the state authorities, the committee will determine the total amount to be paid and a schedule for the payments that the state will be bound to follow. Periodically, the committee will verify the release of the amounts.

The state government must file a status report after the payment of the first instalment, “indicating the determination made by the committee, the schedule adopted, the status of the first payment”, the top court said.

The next hearing, “for compliance”, will be on April 15.