2026 INSC 123 C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 1 of 124

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. OF 2026

(Arising out of SLP(C)Nos.22628-22630 of 2022)

STATE OF WEST BENGAL

& ANR. …APPELLANT(S)

VERSUS

CONFEDERATION OF STATE

GOVERNMENT EMPLOYEES,

WEST BENGAL & ORS. …RESPONDENT(S)

WITH

CONTEMPT PETITION NO(s).________________ of 2026

arising out of DIARY NO.(s) 35252 of 2025

CONTEMPT PETITION NO(s).________________ of 2026

arising out of @DIARY NO.(s) 39626 of 2025

AND

CONTEMPT PETITION NO(s).________________ of 2026

arising out of @DIARY NO.(s) 41566 of 2025

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 2 of 124

J U D G M E N T

SANJAY KAROL J.

This judgment is divided into the following parts:

INDEX

EXORDIUM ............................................................................................... 3

THE CONTROVERSY IN SUMMARIUM ............................................. 8

A GLOSSARY OF TERMS AND DEFINITIONS ................................. 8

RoPA Rules ........................................................................................... 10

First Memorandum ............................................................................... 19

PROCEEDINGS BEFORE THE TRIBUNAL ..................................... 25

BEFORE THE HIGH COURT -ROUND ONE ..................................... 28

ON REMAND BEFORE THE TRIBUNAL ......................................... 32

BEFORE THE HIGH COURT - ROUND TWO .................................. 38

RIVAL CONTENTIONS ........................................................................ 42

A. Submissions on behalf of the Appellant-State ............................. 42

B. Submissions of the Respondents ................................................... 49

QUESTIONS TO BE CONSIDERED ................................................... 53

ANALYSIS AND DISCUSSION ............................................................ 55

Dearness Allowance .................................................................................. 55

Question 1: ARTICLE 309 ...................................................................... 61

Questions 2, 3 and 4 ................................................................................. 64

Question 5: ARBITRARINESS OF APPELLANT -STATE’S ACTION

AND LEGITIMATE EXPECTATION OF ITS EMPLOYEES ......... 78

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Question 6 and 7: CONFLICT, IF ANY, BETWEEN LIST I AND II

OF THE VII

th

SCHEDULE AND FINANCIAL AUTONOMY OF

THE STATE ............................................................................................. 93

Question 8: EFFECT OF FINDINGS IN FIRST ROUND OF

LITIGATION ......................................................................................... 103

Question 9: WHETHER THE RESPONDENTS ARE ENTITLED TO

DA TWICE A YEAR? ........................................................................... 106

Question 10: DOES PAUCITY OF FUNDS DEFEAT A LEGAL

RIGHT? .................................................................................................. 107

Question 11: FISCAL POLICY AND JUDICIAL REVIEW ............ 112

Question 12: DEARNESS ALLOWANCE - A FUNDAMENTAL

RIGHT? .................................................................................................. 118

Question 13: DELAY AND LATCHES ............................................... 118

DIRECTIONS AND CONCLUSIONS ................................................ 121

Leave Granted in SLP(C)Nos.22628-22630 of 2022.

These appeals are at the instance of the State of West

Bengal and arise out of two prior rounds of litigation wherein the

State suffered judgments against itself.

EXORDIUM

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

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‘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

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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.

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

1

:

“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

1

(1981) 1 SCC 608

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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

2

, 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

2

(1999) 6 SCC 667

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very core of social cohesion. Thus, the constitutional vision of

dignity necessarily presupposes policies that protect living

standards.

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 .

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THE CONTROVERSY IN SUMMARIUM

8. The State of West Bengal

3

in these appeals by special

leave, questions the legality and correctness of the final

judgments and orders dated 20

th

May 2022 passed in WPST

No.102 of 2020; 22

nd

September 2022 in RVW No.159 of 2022,

and CAN 1 of 2022, passed by the High Court at Calcutta. At

heart, the grievance of the State is that the High Court declared

Dearness Allowance

4

as a facet of Article 21 of the Constitution

of India

5

and directed the State Government to pay to the

respondents the said allowance at the rate prevalent in the Central

Government in accordance with the All-India Consumer Price

Index

6

. Here, we are concerned with the disbursement of arrears

of DA as claimed by the employees of the appellant-State for the

period 2008-2019.

For the purpose of clarity, it is stated that the position of

the parties is referred to as before this Court.

A GLOSSARY OF TERMS AND DEFINITIONS

9. Certain terms, which will be repeatedly used throughout

this judgment, may be explained/defined at the beginning, before

3

appellant-State

4

DA

5

Constitution

6

AICPI

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we proceed to the matter in issue, to facilitate ease of

understanding:

Dearness Allowance: Dearness Allowance or ‘DA’ is defined as

that amount of money which is added to a person's basic pay

or pension, by the employer because of rising prices and

other costs

7

. In similar terms are the “Cost of Living Adjustments”

which is defined as “an increase in a person's wages, pension,

etc. that is made once a year according to how much the prices

of things such as food, transport, and housing have increased”.

8

Inflation: The International Monetary Fund defines ‘inflation’ as

the rate of increase in prices over a given period. “Inflation is

typically a broad measure, such as the overall increase in prices

or the increase in the cost of living in a country. But it can also

be more narrowly calculated - for certain goods, such as food, or

for services, such as a haircut, for example. Whatever the

context, inflation represents how much more expensive the

relevant set of goods and/or services has become over a certain

period, most commonly a year”.

9

Consumer Price Index:- The United States Bureau of Labour

Statistics, defines the Consumer Price Index as “a measure of the

7

https://dictionary.cambridge.org/dictionary/english/dearness-allowance

8

https://dictionary.cambridge.org/dictionary/english/cost-of-living-adjustment

9

https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-

Basics/Inflation

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 10 of 124

average change over time in the prices paid by urban consumers

for a market basket of consumer goods and services.”

10

BACKGROUND TO THE LEGAL PROCEEDINGS

10. The appellant-State set up the Fifth Pay Commission

11

in

2008 to examine the structure of emoluments to be paid to the

State Government employees. In the report submitted, the

Commission made several recommendations, including the

revision of the DA to be paid. In furtherance of such

recommendations, the appellant - State, in accordance with the

powers conferred under Article 309 of the Constitution, brought

into force the West Bengal (Revision of Pay and Allowance)

Rules, 2009

12

, by Notification dated 23

rd

February 2009. The

said Rules provide for revision of pay and allowances, viz.,

Dearness Allowance, House-Rent allowance, Medical

Allowance, and Non-Practicing Allowance, and were to have

retrospective effect, i.e., from 1

st

January 2006..

RoPA Rules

11. The relevant rules are as under, for ready reference:

“Rules

10

https://www.bls.gov/cpi/

11

Commission

12

RoPA Rules

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1. Short title and commencement– (1) These rules may

be called the West Bengal Services (Revision of Pay and

Allowance) Rules, 2009.

(2) They shall be deemed to have come into force on the

first day of January, 2006.

x------------------------------x----------------------------x

3. Definitions. – (1) In these rules, unless the context

otherwise requires, –

… … …

(c) “existing emoluments” mean the aggregate of –

(ii) existing basic pay,

(iii) dearness pay appropriate to the basic pay, and

(iv) dearness allowance appropriate to the basic pay plus

dearness pay at index average 536 (1982 =100);

x-----------------------------x---------------------------------x

7. Fixation of initial pay in revised pay structure – (1)

The initial pay of a Government employee who elects or

is deemed to have elected under rule 6 to be governed by

the revised pay structure on and from the 1

st

day of

January, 2006, shall, unless in any case the Governor by

special order otherwise directs, 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 his

lien not been suspended, and in respect of his pay in the

officiating post held by him in the following manner

namely:–

(a) in case of all employees, –

(i) the pay in the pay band of a Government

employee who continued in service after 31

st

December, 2005, shall be determined notionally as

on 1

st

day of January, 2006, by way of multiplying

his existing basic pay by a factor of 1.86 and

rounding off the resultant figure to the next

multiple of 10:

Provided that if the minimum of the

revised pay band is higher than the amount so

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arrived at in accordance with the provisions of this

item, the pay shall be fixed at the minimum of the

revised pay band;

(ii) after the pay in the pay band so

determined, grade pay corresponding to the

existing scale shall be added;

(b) in case of medical officers and veterinarians

who are in receipt of non-practising allowance, the pay in

the revised pay structure shall be fixed notionally in

accordance with the provisions of clause (a):

Provided that the pre-revised dearness allowance

appropriate to the existing non-practising allowance

admissible at index average of 536 (1982=100) shall be

added while fixing the pay in the revised pay band, and

the amount of non-practising allowance at the rate as

specified in Part F of Schedule I shall be drawn with effect

from the 1

st

day of January, 2006 or the date of option for

revised pay structure notionally, in addition to the pay so

fixed in the revised pay structure.

Note 1.– A Government employee who is on leave on the

date of commencement of these rules and is entitled to

leave salary, shall become entitled to pay in the revised

pay structure from the date of actual effect of the revised

emoluments. Similarly, where a Government employee is

on study leave shall get the benefit of these rules.

Note 2.– A Government employee under suspension, shall

continue to draw subsistence allowance based on existing

scale of pay and his pay in the revised pay structure shall

be subject to the final order of the pending disciplinary

proceedings.

Note 3.–Where the amount of existing emoluments

exceeds the revised emoluments in respect of any

Government employee, the difference amount shall be

allowed as personal pay to be absorbed in future increases

in pay.

Note 4.– Where in the fixation of pay under sub-rule (1),

the pay of a Government employee, who, immediately

before the 1

st

day of January, 2006, was drawing more pay

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in the existing scale than another Government employee

junior to him in the same cadre, gets fixed in the revised

pay band at a stage lower than that of such junior, his pay

shall be stepped upto the same stage in the revised pay

band as that of the junior.

Note 5. – In the case where a senior Government

employee promoted to a higher post before the 1

st

day of

January, 2006, draws less pay in the revised pay structure

than his junior who is promoted to the higher post on or

after the 1

st

day of January, 2006, the pay in the pay band

of senior Government employee shall be stepped up to an

amount equal to the pay in the pay band as fixed for his

junior in that higher post. The stepping up shall be done

by the Government with effect from the date of promotion

of the junior Government employee subject to the

fulfillment of the following conditions:–

(i) both the junior and the senior

Government employees should belong to

the same cadre and the posts in which

they have been promoted should be

identical in the same cadre;

(ii) the pre-revised scale of pay and the

revised grade pay of the lower and higher

posts in which they are entitled to draw

pay should be identical;

(iii) the senior Government employee at the

time of promotion should have been

drawing equal or more pay than the

junior;

(iv) the anomaly should arise directly as a

result of the application of the provisions

of the normal rule or any other rule or

order regulating fixation of pay on such

promotion in the revised pay structure. If

even in the lower post, the junior officer

was drawing more pay in the pre-revised

scale than the senior by virtue of any

advance increments granted to him, the

provisions of this Note shall not be

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applicable to step up the pay of the senior

officer.

Note 6. – Where a Government employee is in receipt of

personal pay on the 1

st

day of January, 2006, which

together with his existing emoluments exceeds the revised

emoluments, the difference representing such excess shall

be allowed to such Government employee as personal pay

to be absorbed in future increases of the pay.

(2) Subject to provisions of rule 5, if the pay as

fixed in the officiating post under sub-rule (1) is lower

than the pay fixed in the substantive post, the former shall

be fixed at the same stage as the substantive pay.

x-------------------------------x--------------------------------x

10. Date of increment in revised pay structure.– (1) In

respect of all Government employees, there shall be a

uniform date of annual increment and such date of annual

increment shall be the 1st day July of every year:

Provided that in case of a Government employee

who had been drawing maximum of the existing scale of

pay for more than a year on the 1

st

day of January, 2006,

the next increment in the unrevised pay scale shall be

allowed on the 1

st

day of January, 2006 and thereafter the

provision of this rule shall apply.

Note 1.– In case of Government employees completing

six (6) months and above in the revised pay structure as

on 1

st

day of July, shall be eligible to be granted the

increment. The first increment after fixation of pay on

the 1

st

day of January, 2006 in the revised pay structure

shall be granted notionally on the 1

st

day of July, 2006

for those employees for whom the date of next increment

was between 1

st

July, 2006 to 1

st

January, 2007.

Note 2. – In case of the Government employees who

earned their last increment between the period

commencing from the 2

nd

day of January, 2005 and

ending on the 1

st

day of January, 2006, after fixation of

their pay under revised pay structure, such Government

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employee should get next increment on the 1

st

day of

July, 2006.

Note 3. – In case of the Government employees whose

date of next increment falls on the 1

st

day of January,

2006, after granting an increment in the pre-revised pay

scale as on the 1

st

day of January, 2006, their pay in the

revised pay structure should be fixed on the 1

st

day of

January, 2006 and such Government employees should

get their next increment on the 1

st

day of July, 2006.

Note 4. – If a Government employee opts to come under

revised pay structure after any date between the 1

st

day of

January, 2006 to the 1

st

day of July, 2006, his pay in the

revised pay structure should be fixed accordingly, but his

date of next increment should be 1

st

day of July, 2007.

x--------------------------------x--------------------------------x

12. Payment of arrears.– (1) Notwithstanding anything

contained elsewhere in these rules, or in any other rules

for the time being in force, no arrears of pay to which a

Government employee may be entitled in respect of the

period from the 1

st

day of January, 2006 to the 31

st

day of

March, 2008, shall be paid to the Government employee.

(2) (a) The arrears of pay to which the Government

employee may be entitled to in respect of the period from

the 1

st

day of April, 2008 to the 31

st

day of March, 2009,

shall be paid in three consecutive equal yearly

installments in cash from the year 2009-2010.

(b) A Government employee, who retired on any date

between the 1

st

day of January, 2006 to the 31

st

day of

March, 2008, shall not be entitled to any arrears of pay for

the period up to the 31

st

day of March, 2008.

A Government employee, who retired between the

periods from the 31

st

day of March, 2008 to the 1

st

day of

April, 2009, but before publication of these rules in the

Official Gazette, shall receive arrears pay for the period

from the 1

st

April, 2008 to the date of his retirement, in

cash.

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Explanation.– For the purpose of this rule, “arrears of

pay”, in relation to a Government employee, means the

difference between the aggregate of pay and allowances

to which he is entitled on account of the revision of pay

and allowances under these rules for the period in question

and the aggregate of the pay and allowances to which he

would have been entitled for that period had his pay and

allowances not been so revised. The revised allowance

(except for dearness allowance and non-practicing

allowance) shall be payable only with effect from the 1

st

day of April, 2009.

Note.– Non-practising allowance at the new rate on the

revised pay structure shall be admissible to the officers of

the West Bengal Homeopathic Educational Service, the

West Bengal Ayurvedic Educational Service, the West

Bengal Homeopathic Health Service and the West Bengal

Ayurvedic Health Service with effect from 1

st

day of

April, 2009.

x-------------------------------x--------------------------------x

14. Overriding effect of rules.– The provisions of these

rules shall have effect notwithstanding anything to the

contrary contained in any other rules, orders or

notifications for the time being in force, and all such rules,

orders and notifications including the West Bengal

Service Rules, Part I, shall have effect subject to the

provisions of these rules.

15. Relaxation of rules. – Where the Governor is satisfied

that the operation of all or any of the provisions of these

rules causes undue hardship in any particular case or class

of cases, he may, by order, dispense with or relax the

requirement of all or any of these rules to such extent and

subject to such conditions as he may consider necessary

for dealing with the case or class of cases in a just and

equitable manner.”

(Emphasis Supplied)

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Clarificatory Memorandum

“Government of West Bengal

Finance Department

Audit Branch

No. 1691-F Dated the 23

rd

February, 2009

MEMORANDUM

Subject: Clarificatory Memorandum on the West Bengal

Services (Revision of Pay & Allowance) Rules, 2009

and on allied matters dealt with by the Fifth Pay

Commission.

In Finance Department Resolution No. 6020-F

dated the 28

th

August, 2008 the Government constituted

a Pay Commission –

(1) to examine the present structure of pay and conditions of

service after taking into account the total package of

benefits available to the following categories of

employees and to suggest changes which may be

desirable and feasible keeping in view the decisions of

Central Government on the recommendations of the

Sixth Central Pay Commission:-

(a) employees under the rule making control of the

Government of West Bengal except members of the All

India Services, West Bengal Judicial Service and the

members of the services to whom the University Grants

Commission Scales of pay and AICTE scales of pay

are applicable;

(b) teaching and non-teaching employees of

Government sponsored or aided –

(i) educational institutions,

(ii) Training Institutions of Primary Teachers,

(iii) Libraries,

(iv) Polytechnics and Junior Technical

Schools;

(c) non-teaching employees of non-Government

Colleges (Sponsored or Aided);

(d) employees of the Municipalities, Municipal

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Corporations, Notified Area Authorities, District

Primary School Councils and Panchayat Bodies;

(2) to examine the existing promotion policies and related

issues and to suggest changes which may be desirable

and feasible, having regard to need for improving

people orientation, social accountability and efficiency

of the administration;

(3) To examine special allowance and other allowances,

concessions including leave travel concession and

benefits in kind which are available to the employees in

addition to pay and suggest changes which may be

desirable and feasible;

(4) To examine issues relating to retirement benefits; and

(5) To make recommendations on each of the above having

regard inter alia to the prevailing pay structure under the

Central Government, Public Sector Undertakings and

other State Governments etc., the economic conditions

of the country, financial responsibility to the

Government of India and the pattern of allocation of

revenues to the State, the resources of the State

Government and the demands thereon on account of the

commitment of the State Government to developmental

activities.

The Commission submitted its report on the 12

th

February,

2009. After due consideration of the recommendations of the

Commission, the Governor has been pleased to make the

decisions set out in the following paragraphs in respect to the

employees under category 1(a) above :-

2. Scales of Pay – The Government has accepted the

recommendation of the Commission in respect of

running pay bands and grade pay corresponding to each

scale of pay without any modification.

The revised pay structure which has been

prescribed by the Government are set out in –

(a) Schedule I to the West Bengal Services

(Revision of Pay and Allowance) Rules, 2009 relating to

services generally published with the Finance

Department Notification No. 1690-F dated the 23

rd

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February, 2009.

(b) Rules relating to Subordinate Executive

Staff of the Police Force, published with notification No.

688-PL, 689-PL and 690-PL dated the 23

rd

February,

2009.

(c) Regulations relating to the officers and

staff of the West Bengal National Volunteer Force,

published with the notification No. 342-CD dated the

23

rd

February, 2009.

(d) Regulations relating to the officers and staff of

the Public Service Commission, West Bengal, published

with the Finance Department notification No. 1693-F

dated the 23

rd

February, 2009.

These rules and regulations have been published in

the extraordinary issue of Kolkata Gazettee dated the

23

rd

February, 2009.

… … …

10. Dearness Allowance – Consequent upon revision of pay

of Government employees in accordance with the West

Bengal Services (Revision of Pay and Allowance)

Rules, 2009, the dearness allowance to which a

Government employee is entitled from time to time since

the 1

st

day of January, 2006 needs to be related to pay in

the revised pay structure. Necessary Government Order

in this regard has been issued with Finance Department

Memo. No. 1692-F dated the 23

rd

February, 2009.

… … …”

(Emphasis Supplied)

First Memorandum

“Government of West Bengal

Finance Department

Audit Branch

No.1692-F Dated the 23rd February,2009

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MEMORANDUM

Subject: Drawal of Dearness Allowance in the revised

pay structure under the West Bengal Services (Revision

of pay and Allowance) Rules, 2009.

Consequent upon the revision of Pay Scales of

Government employees under the provisions of West

Bengal Services (Revision of Pay and Allowance) Rules,

2009. It has become necessary to relate Dearness

Allowance admissible to a Government employee to his

basic pay in the revised pay structure in the case he has

elected or is deemed to have elected to draw pay in the

revised pay structure prescribed under the aforesaid Rules.

2. As it has been laid down in Rule 12 of the West Bengal

Servies (Revision of pay and Allowance) Rules, 2009, that

no arrears of pay and allowances to which any Government

employee may be entitled in respect of the period from the

1st January,2006 to 31st March 2008, shall be paid to the

Government employee, the Dearness Allowance admissible

to a Government employee needs to be related to his pay in

the revised pay structure with effect from the 1st April,

2008 only.

3. Accordingly the Governor is pleased to decide that the

Dearness Allowance payable to a Government employee

with effect from 1st April, 2008, shall be at the following

rates :-

Period for which payable Rate of Dearness Allowance

per month on basic pay

01.04.2008 to 31.05.2008 2%

01.06.2008 to 31.10.2008 6%

01.11.2008 to 28.02.2009 9%

01.03.2009 to 31.03.2009 12%

01.04.2009 onwards 16%

4. The payment of Dearness Allowance under this order

from the dates indicated above shall be made after adjusting

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 21 of 124

the instalments of Dearness Allowance already sanctioned

and paid to the State Government employee with effect

from 01.04.2008, 01.06.2008, 01.11.2008 and 01.03.2009,

vide Order No. 13-F dated 01.01.2008, No. 4236-F dated

12.06.2008, No.8195-F dated 04.11.2008 and 1370-F dated

12.02.2009 respectively.

5. The term ‘basic pay’ for the purpose of calculation of

Dearness Allowance shall mean the Pay drawn in the

revised pay band including the Grade Pay and NPA, where

admissible, but shall not include any other type(s) of pay.

In the case of those employees who do not opt for revised

pay structure as per the West Bengal Services (Revision of

Pay and Allowance) Rules 2009, the ‘Pay’ shall mean the

Basic pay in the scales of pay as per the West Bengal

Services (Revision of Pay and Allowance) Rules, 1998 plus

Dearness Allowance as sanction to the State Government

employees with effect from 01.04.2007, vide Finance

Department Memo. No. 2416-F dated 27.03.2007.

6. The Dearness Allowance admissible in the para 4 of this

memorandum shall be rounded off to the nearest rupee in

each case.

By Order of the Governor,

Sd/- S.K. Chattopadhyay

Special Secretary to the Governor of West Bengal”

(Emphasis Supplied)

12. At this stage itself, it is imperative to take note of the

position regarding the payment of DA prevalent in the

Central Government at the relevant point in time.

“MINISTRY OF FINANCE

(Department of Expenditure)

NOTIFICATION

New Delhi, the 29th August, 2008

G.S.R. 622 (E).- In exercise of the powers conferred by

the proviso to article 309, and clause (5) of article 148 of

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 22 of 124

the Constitution and after consultation with the

Comptroller and Auditor General in relation to persons

serving in the Indian Audit and Accounts Department, the

President hereby makes the following rules, namely : -

3. Definitions- In these rules, unless the context

otherwise requires -

(1) "existing basic pay" means pay drawn in the

prescribed existing scale of pay, including stagnation

increment(s), but does not include any other type of pay

like 'special pay', etc.

… … …

(3) "existing emoluments" mean the sum of (i) existing

basic pay, (ii) dearness pay appropriate to the basic pay

and (iii) dearness allowance appropriate to the basic pay

'+ dearness pay at index average 536 (1982=100)

… … …”

(Emphasis Supplied)

13. The appellant - State clarified by way of the above said

Clarificatory Memorandum that DA would be linked to revised

pay, from 1

st

January 2006. Also, it was stated in the First

Memorandum issued on the same day, to the effect that starting

from 1

st

April 2008 rate of DA would be increased periodically,

to 16% from 1

st

April 2009. On 9

th

December 2009, DA was

revised with effect from 1

st

December 2009 to 22%. The rate at

which DA would be payable was further revised.

14. A table depicting the same as also the change carried out

by the Central Government, facilitating comparison thereof, as

submitted by the appellant State, is as follows:

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 23 of 124

Government of West Bengal

G.O. No. of Finance

Department,

Government of W.B.

Rate of DA

(%) released

by State

Government

Date of effect

given by State

Government

1692-F dt. 23.02.2009 2 01.04.2008

Do 6 01.06.2008

Do 9 01.11.2008

Do 12 01.03.2009

Do 16 01.04.2009

10900-F dt.

09.12.2009

22 01.12.2009

2580-F dt. 06.04.2010 27 01.04.2010

10850-F dt.

23.11.2010

35 01.12.2010

11080-F dt.

12.12.2011

45 01.01.2012

10615-F dt.

31.12.2012

52 01.01.2013

8840-F dt. 16.12.2013 58 01.01.2014

143-F dt. 14.12.2015

13

65 01.01.2015

8430-F dt. 14.12.2015 75 01.01.2016

18-F(P2) dt.

02.01.2017

85 01.01.2017

5724-F (P2) dt.

12.09.2017

100 01.01.2018

4037-F(P2) dt.

21.06.2018

125 01.01.2019

Government of India

Rate of DA (%) released by

Central Government

Date of effect given

by Central

Government

2 01.07.2006

6 01.01.2007

9 01.07.2007

12 01.01.2008

13

Notification on record reveals the actual date to be 9

th

January 2015

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 24 of 124

16 01.07.2008

22 01.01.2009

27 01.07.2009

35 01.01.2010

45 01.07.2010

51 01.01.2011

58 01.07.2011

65 01.01.2012

72 01.07.2012

80 01.01.2013

90 01.07.2013

100 01.01.2014

107 01.07.2014

113 01.01.2015

119 01.07.2015

125 01.01.2016

The case put up by the respondents before the Tribunal was that

although various revisions were made to the DA, it was not paid

to the employees between 1

st

July 2010 and 1

st

January 2012.

After the latter date when DA was paid, it was paid at a rate

different to what was paid to Central Government employees.

Further revisions were made to the DA payable, on 31

st

December 2012, to be applicable henceforth @ 52%. The same

was increased to 58% for the next year on 16

th

December 2013;

then to 65% for the following year on 9

th

January 2015, with

effect from the beginning of the year; and then further to 75% for

the year following, on 14

th

December 2015.

15. Since the employees were not paid the DA as per the rates

notified, hence a representation was made to the officials of the

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 25 of 124

Government of the appellant - State on 10

th

August 2016

regarding the non-payment of DA.

PROCEEDINGS BEFORE THE TRIBUNAL

16. Respondents, employees and their Union

14

, filed O.A. No.

1154 of 2016 under Section 19 of the Administrative Tribunal

Act, 1985 alleging that the State had not granted DA in terms of

the recommendation of the Commission. It was submitted that

the real value of the salary earned by the employees of the State

has continuously been eroded due to the pressures of inflation. It

was highlighted that there is stark difference between the pay

structures of the appellant-State and the Central Government

(75% of basic pay vis-à-vis 125% of basic pay) and the former

had not followed a uniform pattern of payment along with large

delay in disbursal of funds. There is further disparity, it is

submitted, between the employees of the appellant-State serving

in the State and those who serve outside the State i.e. ‘Banga

Bhawan in New Delhi’ and ‘State Youth Service Department in

Chennai, Tamil Nadu’ since the latter enjoy DA at the rates

prevalent in the Central Government. The payment of DA is not

a bounty or grace. Lastly, it was submitted that since the

14

Respondent no.1 is the Confederation of the Employees, West Bengal;

Respondent no.2 is Unity Forum; Respondent no.3 is Indranil Mitra, Member of

Respondent no.1; Respondent no.4 is Gopal Majumder, member of Respondent

no.2

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 26 of 124

employees of the appellant-State are not in any way responsible

for the increasing rates of inflation, they cannot be expected to

suffer at hand thereof. It was, therefore, prayed that the DA

payable from 1

st

July 2010 be paid to the employees. The

following reliefs were sought:

“a) A direction upto the respondents authorities to

forthwith release the 50% dearness allowances which is due

to up to January, 2006 Immediately within a period of

1(one) month from the date of receiving of the order.

b) A direction upon the respondent authorities to

immediately comply with the report and the

recommendations of the 5

th

pay Commission Report

positively and without fail within a period of 1 (one) month

from the communication of the order,

c) A direction upon the respondent authorities to

release the 50% of dearness allowances as the State

Government without releasing the 50% dearness allowance

for mere eye wash set up a 5

th

pay Commission who

recommended for 10% interim relief upon the basic pay,

But no whisper about due 50% dearness allowances and

unless the court Intervene into it there may be every

possibility of forfeiture of that 50% due dearness

allowances which is the penultimate goal and gain of the

State Government and the applicants will Suffer Irreparable

loss and Injury.

d) The applicants pray for relief order directing the

respondent authorities to grant 50% of the Dearness

Allowance as that of the, Central Government with arrear

up to January, 2015, within a period of two weeks, from

the data of order.”

16.1 The appellant-State in response submitted as follows:

(a) There exists no justification for seeking the

payment of DA at rates equivalent to the Central

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 27 of 124

Government particularly since payment thereof is

subject to the availability of resources with the State;

(b) Insofar as the employees of the appellant-State

serving outside the State, it was said that such

employees were not affected by inflation in the same

manner as those employed within the State and as such

no infringement or discrimination, that would be

offensive to Article 14 of Constitution of India, can be

found;

(c) Given that the rules on the basis of which claim

for DA is being made, were brought into force under

Article 309 of the Constitution of India, the

respondents ought to have taken a different remedy and

that the application was not maintainable;

(d) The reliance of the Respondents herein on the

Consumer Price Index has been termed as a ‘hilarious

error’, since the concept of DA has a wartime origin

and therefore for employees to claim discrimination for

payment to one and non-payment to another is

misconceived.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 28 of 124

16.2 By order dated 16

th

February 2017, the Tribunal

dismissed the application making the following observations:

(a) The payment of DA is not a legal right of an

employee, and it is the discretion of the employer, in this

case, the State Government;

(b) The results and recommendations of the Pay

Commission are at best a persuasive value and cannot

be held to be mandatory;

(c) The question of discrimination between the

employees of the State serving in and outside the State,

no finding was given observing that, “we feel the issue

cannot be grappled and no analogy on the basis of the

same can be derived in this context.”

BEFORE THE HIGH COURT -ROUND ONE

17. Aggrieved by such findings of the Tribunal, the

respondents appealed to the High Court

15

. It was submitted inter

alia that for the Tribunal to hold that the DA is not an accrued

right of the employees is ex facie illegal since DA forms a part of

pay; that once the recommendations of the Commission have

been accepted, the appellant-State commenced itself to act

15

WPST No. 45 of 2017

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 29 of 124

thereupon and the said recommendation can no longer be said to

hold only persuasive value.

17.1 The learned Division Bench

16

framed the following

issues for its consideration:

“A. Whether the claim of the employees serving under

the Government of West Bengal for Dearness Allowance

is a legally enforceable right?

B. Whether the claim of the employees serving under the

Government of West Bengal for Dearness Allowance on

the basis of the recommendations of the 5th Pay

Commission is legally enforceable right?

C. Whether the discrimination in the matter of payment

of Dearness Allowance to the Employees of the State of

West Bengal with their counterparts serving in Banga

Bhawan at New Delhi and Youth Hostel in Chennai

including the Employees of West Bengal State Electricity

Development Corporation required consideration?”

17.2 On the first question the High Court observed that

“there is no doubt that the Government of West Bengal

accepted Dearness Allowance basically as a component of

pay which is a fixed percentage of basic pay”. It was held

that once this is the accepted position, the Tribunal could not

have come to the conclusion that the DA was the absolute

prerogative of the State. It was further held that the right to

DA stands recognized by the State as per Rule 12 of RoPA

Rules and office memoranda to that effect have also been

issued. In other words, the recommendations of the

16

Judgment dated 31

st

August 2018. Hereafter “ Judgement in Round One”

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 30 of 124

Commission have been accepted and acted upon thereby

constituting a legal right in favour of the respondents herein.

17.3 On the second issue it was observed that the State

Government has accepted the recommendations of the 5

th

Pay

Commission till the period of 1

st

April 2009 leaving the

calculation for the subsequent period for its future

consideration at a rate on the basis of the accepted guidelines

and therefore the Tribunal could not have rejected the right

of the employees on the basis of general theory of law.

17.4 The third question for its consideration was decided

by the High Court saying that the different effects of inflation

as per the region, cannot be accepted as a basis for differing

payment of DA, particularly when the logical and evidentiary

basis thereof was not allowed to be brought on record, by the

Tribunal. It was observed that the Central Government,

irrespective of region, has similar slabs for payment of DA

throughout the country, in the same manner, so should the

State.

17.5 The conclusions of the High Court are as follows:

“82. In view of the discussions and observations

made hereinabove, I sum up as follows:-

(i) The claim of the employees

serving under the Government of West

Bengal for Dearness Allowance is based on

legally enforceable right on the all

employees serving under the Government

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 31 of 124

of West Bengal up to such extent of the

recommendations of the 5th Pay

Commission which has been accepted by

the Government of West Bengal by virtue

of the provisions of sub-rule (1) Rule 12 of

ROPA Rules, 2009 read with paragraph 10

of the clarificatory memorandum bearing

No.1691- F dated February 23, 2009 on

ROPA Rules, 2009 issued by the

Government of West Bengal, Finance

Department, Audit Branch, and paragraph

3 of memorandum bearing No.1692-F

dated February 23, 2009 in the matter of

drawl of Dearness Allowance in revised

pay structure under the ROPA Rules, 2009

issued by the Government of West Bengal,

Finance Department, Audit Branch.

(ii) The claim of the employees

serving under the Government of West

Bengal to get Dearness Allowance at a rate

equivalent to that of the employees of the

Central Government requires adjudication

upon consideration of the relevant

materials on record for the purpose

indicated hereinabove.

(iii) The claim of the employees

serving under the Government of West

Bengal for Dearness Allowance at a rate

equivalent to that of the employees

discharging their functions in Banga

Bhawan at New Delhi and in Youth Hostel

at Chennai requires consideration of the

materials which may be brought on record

by the Government of West Bengal for

adjudication of the issue of arbitrariness in

payment of Dearness Allowance at

differential rates.”

(Emphasis Supplied)

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 32 of 124

17.6 Having observed as above, the matter was remanded

to the Tribunal for adjudication of two issues:

“(i) Whether the claim of the employees serving

under the Government of West Bengal for Dearness

Allowance at a rate equivalent to that of the

employees of the Central Government, and (ii)

Whether the discrimination in the matter of payment

of Dearness Allowance to the Employees of the State

of West Bengal with their counterparts serving in

Banga Bhawan at New Delhi and Youth Hostel in

Chennai…”

ON REMAND BEFORE THE TRIBUNAL

18. The parties were heard on the two issues framed by the

learned Division Bench and judgment was delivered thereupon

by the Tribunal on 26

th

July 2019, the observations wherein are

summarised hereinbelow:

(a) It was noted that the learned counsel for the State had

accepted that when the DA as revised by the RoPA Rules

was at 16% w.e.f. 1

st

April 2009, it was done following the

pattern of the Central Government;

(b) On comparison, the policies followed for computation

of DA, by the Central and State Governments respectively,

are the same. The Central Government, as per the 6

th

Commission, has released DA twice a year and the

appellant-State initially did the same, but has since faltered.

The relevant observations are as follows:

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 33 of 124

“29. On comparison of payment of DA by the

Central Government to its employees and by the

State Government to its employees, we find that

the principles followed by the State Government

in terms of relationship between DA and basic

pay, use of AICPI as a measure of inflation,

relationship between DA and AICPI, and

computation of DA are the same as that of the

Central Government. The State Government has

followed the same principles for computation and

payment of DA on basic pay fixed under 5th State

Pay Commission as has been done by the Central

Government under 6th Central Pay Commission.

The Central Government has revised DA twice in

a year on 1st January and 1st July and paid them

within 3rd month on which the DA is payable,

whereas the State Government initially paid DA

twice in a year, but discontinued to pay twice in a

year after the year 2010 and has delayed

payments of DA without following any principle

in an arbitrary manner…”

(Emphasis Supplied)

(c) If the real value of pay decreases due to inflation, the

employees of the appellant-State have a right to be

compensated therefor, and if it is not so done, their legal

right stands infringed;

(d) The appellant-State has failed to place on record any

other method for calculation of DA other than what has been

followed by the Central Government as per AIPCI number,

i.e., (1982=100), which is used throughout the country. It

was held:

“31. We have already observed that the payment

of rate of DA on the basic pay is calculated to

mitigate the loss of value of basic salary

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 34 of 124

consequent upon inflation on the basis of AICPI

number. The State respondents have failed to place

any material on record to establish that there is any

other mode of calculation of rate of DA for its

employees. On the contrary, the State respondents

have followed the pattern of releasing rate of DA

on basic pay as followed by the Central

Government for payment of DA for its employees,

though the State Government has been releasing

DA at a lesser rate and with effect from subsequent

date. In the absence of production of materials to

establish any alternative mode of calculation for

release of DA to the employees by the State

Government, we are constrained to hold that the

State Government is duty bound to pay DA to its

employees by taking into consideration inflation

measured by Labour Bureau by publication of

AICPI number with the base year 1982

(1982=100), which is used for determination of

rate of DA of the Government employees of the

entire country.”

(Emphasis Supplied)

(e) The appellant-State not being in a position, fiscally, to

clear the backlog of DA payable to the employees, due to

lack of financial resources, cannot be accepted as a ground

for non-payment of the same;

(f) In view of the lack of mandate either statutory, or in

the RoPA Rules, it could not be held that the employees of

the appellant-State are entitled to DA at the same rate as

Central Government employees. It was although held that

the former are entitled to get DA, determined by the AICPI,

for the time prior to the setting up of the 6

th

Pay Commission

by the appellant-State. It would be within the discretion

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 35 of 124

thereof either to pay the amounts due in cash, or by

depositing the same in the General Provident Fund, with

suitable restrictions on withdrawing the amount. The

pertinent observations are as follows:

“33. We have already observed that there is no

mandate either under the statutory rules viz. ROPA

Rules, 2009 or in the administrative directions

issued by the State Government in the form of

Memorandum No. 1691-F dated February 23,

2009 and Memorandum No. 1692-F dated

February 23, 2009 that the DA will be paid to the

employees by the State Government at a rate and

from the date as paid by the Central Government

to its employees. In the absence of any mandate

under the statutory rules or the administrative

directions, we are unable to hold that the State

Government employees are entitled to get DA at a

rate payable to its employees by the Central

Government. However, from the discussion made

by us hereinabove, we can hold without hesitation

that the State Government employees are entitled

to get DA on the basic pay at the rate to be

calculated on the basis of AICPI number published

from time to time by taking the base year 1982

(1982=100). It is the bounden duty of the State

Government to evolve norms/principles for

payment of DA to its employees by calculating the

same on the basis of AICPI on the basic pay fixed

in terms of ROPA Rules, 2009 till the date of

giving effect to the recommendation of 6th Pay

Commission set up by the Government of West

Bengal. The State Government is also duty bound

to pay arrears of DA to its employees after fixing

the rate on the basis of AICPI number before

implementation of the report of 6th Pay

Commission set up by the Government of West

Bengal. We would like to observe that the State

Government has the discretion to make payment of

arrears of DA to its employees either in cash or by

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 36 of 124

giving direction for depositing the same in the

General Provident Fund (GPF) with suitable

restriction on withdrawal of the same within

specific period of time. The first issue whether the

employees of the State Government are entitled to

get DA at the rate payable to its employees by the

Central Government is decided accordingly.”

(Emphasis Supplied)

(g) When it comes to the employees of the appellant-State

posted at the ‘Banga Bhawan’ in New Delhi or at the ‘State

Youth Service Department’, Chennai it is held that given

that the manner of recruitment, terms and conditions of

service, promotional avenues, and retirement benefits of

those employees are the same as the others who are posted

in the State; they cannot be justifiably treated as a separate

class so far as Article 14 is concerned, following the

principle laid down in Air India v. Nargesh Meerza

17

, D.S

Nakra v. Union of India

18

and Harakchand Ratanchand

Banthia v. Union of India

19

. There is nothing that stops the

appellant-State from granting those posted in Delhi and

Chennai, special allowances;

(h) Inflation, which is sought to be combatted by the grant

of DA, is calculated by the Labour Bureau, Shimla for the

17

(1981) 4 SCC 335

18

(1983) 1 SCC 305

19

(1969) 2 SCC 166

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 37 of 124

whole country. The appellant-State, cannot justifiably grant

DA at a separate rate.

The concluding paragraphs of the order of the Tribunal

and the directions issued therein are as follows: -

“38. The function of the pleadings is only to state the

material facts and it is for the Court or Tribunal to

determine the legal result of those facts and to mould the

relief in accordance with that result, as decided by the

Federal Court in "Messers Moolji Jaitha and Co. v.

Khandesh Spinning and Wearing Mills Co. Ltd."

reported in AIR 1950 FC 83:1950 SCC online FC3.

Accordingly, we would like to give the following

directions on the basis of the findings made by us. The

respondent No. 1, Chief Secretary to the Government of

West Bengal is directed to evolve norms/principles

within a period of three months from the date of this

order for release of DA on the basic pay of the State

Government employees fixed in terms of ROPA Rules,

2009 by taking into consideration inflation on the basis

of AICPI number (1982=100), so that DA can be paid to

the State Government employees at least twice in a year

till the date of giving effect to the recommendation of 6

th

Pay Commission set up by the Government of West

Bengal for its employees. The respondent No. 1 is

directed to implement the norms/principles evolved as

per direction of the Tribunal within a period of six

months from the date of the order. The respondent No. 1

is further directed to make payment of arrears of DA on

the basic pay to the State Government employees by

taking into account level of inflation on the basis of

AICPI number (1982=100) by following the

norms/principles evolved as per direction of the Tribunal

within a period of one year from the date of this order or

before giving effect to the recommendation of 6

th

Pay

Commission set up by the Government of West Bengal,

whichever is earlier. The respondent No. 1 is at liberty

to decide the mode and manner of payment of arrears of

DA to the State Government employees within the

period of time fixed by us. The respondent No. 1 is also

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 38 of 124

directed not to give any effect to the office

orders/memorandums issued for payment of DA to the

State Government employees posted in New Delhi and

Chennai at a rate payable to the employees of the Central

Government, but the respondent No. 1 will not make any

recovery for excess payment of salary to those State

Government employees. The respondent No.1 is at

liberty to give incentive to the State Government

employees working in New Delhi and Chennai by

payment of special allowance or any other allowances as

the State Government may deem fit and proper. With the

above directions, the original application stands

disposed of.”

(Emphasis Supplied)

BEFORE THE HIGH COURT - ROUND TWO

19. Aggrieved by the findings of the Tribunal, the appellant-

State once again approached the High Court. It is these

proceedings that led to the judgment under challenge before this

Court. The findings of the impugned judgment (Two Judges

writing separate but concurring opinions) are:

First, that the appellant-State had accepted the

recommendations of the Commission, and that accordingly, DA

was a part of ‘existing emoluments’ as defined under RoPA.

Second, it was observed that the first round of litigation

before the High Court, which recognized the right to DA as an

enforceable right had also stood the test of review, and therefore,

had become binding. Further, reference was made to another

judgment of the High Court in West Bengal State Electricity

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 39 of 124

Transmission Company Limited v. West Bengal State

Electricity Board Engineers Association

20

which held that the

employees of the former were entitled to DA at a rate equal to

that payable to Central Government Employees.

Third, it was held that the right to receive DA while is

unquestionably, a statutory right, is also a facet of Article 21 of

the Constitution of India. Denial of this right to those employees

who keep the State Government running cannot be allowed to be

adversely affected, on account of financial difficulties or

inability. The Writ Petition was, therefore, dismissed.

The concurring opinion records in some detail, the origins

of Dearness Allowance. It says that in view of the conclusions

arrived at by the High Court in the first round of litigation, the

only question before the Tribunal on remand and therefore, the

Division Bench, was regarding the modalities by which the same

shall be made. The learned judge specifically rejected a

contention made by the appellant-State that DA is variable as per

‘place of posting’, as held by this Court in Indian General

Navigation and Railway Co. v. Workmen & Ors

21

. The rejection

was because, in the said factual situation, there were no rules

governing the grant of DA, as in the present case. It was then

observed that the Clarificatory Memorandum issued on 23

rd

20

MAT 501 of 2020 with MAT 502 of 2020

21

AIR 1960 SC 1286

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 40 of 124

February 2009 relating to the release of DA leaves no room for

any doubt as to it being imperative on the State to pay DA,

calculated as per index average 536(1982=100). In other words,

there can be no departure from statutory text, and the

Government cannot, to save itself from the same, take a defense

of inability. It was observed:

“…The said rule manifestly exposes the lucid and

explicit intention of the Government in a doctrine of the

recommendation of the 5

th

Pay Commission and while

defining “existing emoluments” under Clause 3(C)

thereof. The method of ascertaining the DA has been

clearly spelt out to be based upon at the index average

536 (1982=100). It is logically inferred from the

aforesaid stand of the State that the rate of DA declared

by the Central Government though at the index average

536 (1982=100) cannot be extended to the State

Government employee because of the variability in the

living cost price within the State but the State

Government cannot deny the applicability of the index

average 536 (1982=100) under the said statutory rules.

On the same day when the said rule was published in

the official gazette, the Memorandum 1690-F dated

23

rd

February, 2009 was issued by the Special

Secretary, Government of West Bengal indicating the

conscious decision of the Government relating to the

release of the DA admissible to the Government

employees in the revised pay structure but the DA

between the period from 1

st

January, 2006 to

31

st

March, 2008 was decided not to be paid to such

employees. Consequent upon the said Memorandum,

the clarification was made vide Memo No. 1691-F

dated 23

rd

February, 2009 wherein the DA which the

State Government employees were entitled from time

to time since 1

st

January, 2006 was to be paid in terms

of the said Memo No. 1692-F dated 23

rd

February,

2009. The subsequent memorandum clarifying the

stand of the Government leaves no ambiguity that it is

imperative on the part of the State to pay the DA to its

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 41 of 124

employees on and from 1

st

April, 2008 at the rate

calculated on the basis of the index average

536 (1982=100). There cannot be any departure from

the provisions of the statutory rules nor the State

Governments can act contrary thereto taking shelter

under the incapability and/or incapacity to meet such

requirement. In fact, the Tribunal also held that it would

not be proper to direct the State Government to pay the

DA at the rate of the Central Government but in view

of the discussions made hereinabove, there is no

infirmity in the direction passed by the Tribunal for

evolving the norms/principles in fixing the DA on the

basis of the AICPI 536 (1982=100)…. ”

(Emphasis Supplied)

Continuing further, it was observed that the directions of the

Tribunal to compute DA as per AICPI were found to be in

consonance with law. Once the method of releasing DA twice a

year has been adopted, which was indeed so adopted, the same

cannot be deviated from, save and except in view of valid and

compelling reasons. In so far as the employees of the appellant-

State posted at New Delhi or at Chennai are concerned, it was

concluded that the RoPA Rules make DA payable at AICPI rates

to all employees of the appellant-State. They, therefore, form a

homogenous class. Even though ‘class within a class’ is

permissible, one AICPI is the base for all, different DA based on

location cannot be accepted.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 42 of 124

RIVAL CONTENTIONS

20. Mr. Kapil Sibal, Mr. Shyam Divan and Mr. Huzefa

Ahmadi, learned senior counsel, presented arguments on behalf

of the appellant-State. The Respondents were represented by

Mr. Gopal Subramaniam, Mr. P.S Patwalia, Mr. Bikash Ranjan

Bhattacharya and Ms. Karuna Nundy, learned senior counsel. We

have heard them at great length and also perused the respective

written submissions filed.

A. Submissions on behalf of the Appellant-State

I. At the outset, it is submitted that the High Court

misunderstood the order of the Tribunal and, therefore,

proceeded on a wrong assumption that the Tribunal issued

directions on both issues in favour of the respondents. It is

their case that one issue had in fact been decided against

them, that being the one regarding parity with the

employees of the Central Government.

II. The direction to release DA to the employees of the

appellant-State twice a year is without any basis as the

RoPA Rules do not provide for the same. The legislative

intent is clear that the State did not want to keep itself open

to that possibility. There is no material on record to suggest

that the State has accepted this as the norm.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 43 of 124

III. It is argued that, in the ‘judgment in Round One’ the

respondents herein had specifically contended that DA

should be paid twice a year as per the pattern of the

Central Government, but the same was not accepted.

Since that judgment has attained finality, the subsequent

Division Bench, in its impugned judgment, in view of res

judicata, could not have directed as such.

IV. The finding of the Court that DA is a fundamental

right has been disputed as having grave ramifications,

making the same payable even if the State does not have

the financial capacity to do so. Such a finding, it is

submitted, is in contravention of a judgment of this Court

reported as Tamil Nadu Electricity Board v. TNEB

Thozhilalar Aykkiya Sangam

22

. [See also: Mahatma

Gandhi Mission v. Bhartiya Kamgar Sena

23

& State of

Madhya Pradesh v. C. Mandawar

24

]

V. The appellant - State has already paid DA in

accordance with RoPA Rules to the extent of 125% of

basic pay in 2019. This position stands acknowledged by

the Tribunal. An approximate sum of Rs.1,79,874 crores

stood paid as DA between 2008 and 2019, as under:

22

(2019) 15 SCC 235

23

(2017) 4 SCC 449

24

AIR 1954 SC 493

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 44 of 124

Rs.76,189 crores for the years 2008 to 2016 and Rs.1,03,

685 crores for the years 2016 to 2019. The effect of this

order, if it is allowed to stand, it is submitted, would be

an additional liability of approximately Rs.41,770.95

crores which, in view of TNEB Thozhilalar Aykkiya

Sangam (supra) the Respondents would not be entitled

to. Further relying on Bengal Chemical and

Pharmaceutical Works Ltd v. Workmen and Anr.

25

it

was submitted that the appellant-State is not bound to

provide hundred percent neutralisation to its employees

as the same would lead to inflation. The extent of DA has

to depend on the ability of the employers since it is them

who must bear the burden.

VI. The judgment and order dated 31

st

August 2018

only contemplated a limited remand to the Tribunal. It is

submitted that the Tribunal went over and above the

limited remand. The part of the order which oversteps the

limited remand was a direction to the Chief Secretary of

the appellant-State to evolve norms for payment of DA in

accordance with AICPI. This aspect was not considered

when the matter travelled in appeal to the High Court,

once again. The said direction is also unnecessary since

25

AIR 1969 SC 360

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 45 of 124

the State is already following the determination of DA in

accordance with AICPI.

VII. Employees of the Central Government and State

Government, are separate classes of employees as

evidenced by Entry 70 of List I of the VII

th

Schedule of

the Constitution and in Entry 41 of List II thereof. This

implies that if the former chooses to pay DA at a

particular rate or not to pay at all, it is not incumbent upon

the latter to follow the same. The only right that vests with

the respondents is to seek enforcement of payment of DA

consistent with the notifications issued by the State

Government.

VIII. The Union Legislature may issue directions on

matters under the control of the State under Articles 252

and 73 of the Constitution, with the consent of the State.

The imposition of AICPI, in this particular manner,

would be without the consent of the State and therefore,

would deprive it of the legislative and executive functions

in perpetuity, taking away from its control, all discretion

in the fixation of DA.

IX. In support of its position, the appellant - State

further submits that there are as many as 12 other States

who do not follow the same rates, as far as DA is

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 46 of 124

concerned, as declared by the Central Government. It is

highlighted that should this Court pass an order directing

that DA be paid the same rate, the effect thereof shall be

felt across all these States and, therefore, these States

should also have the opportunity to make their case. Still

further, examples are drawn from the State of

Chhattisgarh which, similar to the appellant-State,

includes Dearness Allowance in its definition of ‘existing

emoluments’ but posited it is, that the index average to be

used is as on 1

st

January 2016. The DA rate payable there

is 53%. The State of Himachal Pradesh employees index

average of 1510 (1960 = 100) as on 1

st

January 1996; the

DA rate payable there is 45%. The State of Meghalaya

employs, for the purposes of DA the index average as on

1

st

January 2017; the DA rate payable there is 49%; and

the State of Sikkim employs the Central Government

standard of index average 536 (1982 =100).

X. Given that it has been held by the Tribunal and

affirmed by the High Court that the employees of the

appellant-State are not entitled to get DA at the rate

payable to the Central Government employees and that

further it has been held that they are entitled to get DA on

the basis of the AICPI number, it is submitted that the

findings of the Tribunal are incorrect and contradictory,

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 47 of 124

since the directions are to bring about parity without there

being any statutory/constitutional basis for the same.

XI. Since there was no challenge to the provisions of

RoPA, they continue to hold the field and cannot be

bypassed. The entitlement to DA flows therefrom and

from the subsequent memoranda issued in respect

thereto. It is submitted that none of these memoranda

explicitly accept the recommendations of the

Commission, unconditionally, and in fact, wherever the

recommendation has been accepted, it is particularly

stated to be so.

XII. The RoPA Rules nowhere mandate DA rates to be

according to a particular index. Holding so would be

making an addition to the rules which, in effect, would

take away the discretion of the State. It would also

amount to judicial review of policy in which the Court is

not an expert. The discretion with the State is not

unguided and the rates fixed are so fixed after taking into

consideration various factors such as availability of

funds, financial benefits which already stand granted to

the employees etc. No arbitrariness whatsoever,

therefore, can be spoken of in this regard.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 48 of 124

XIII. Rule 3(1)(c) which defines the term ‘existing

emoluments’ is a definition and does not create any

obligation/entitlement. The phrase ‘existing emoluments’

bears importance only insofar as the fixation of initial pay

in the revised pay structure under Rule 7.

XIV. The employees of the appellant-State posted at

New Delhi and Chennai, were considered by the State to

be a separate class of employees given their geographic

location. In the former, the separate notification applied

only to 34 employees posted there and in the latter 35

employees. The said notifications were issued under para

10 of Memorandum No. 1691 – F_dated 23

rd

February

2009.

XV. The period that forms the claims of the respondents

is 1

st

April 2008 to 31

st

December 2019. This claim is

affected by delays and laches since the original

application before the Tribunal was filed only in

November 2016, and it is the matter of record that the

State differed with the rates employed by the Central

Government from 2008 itself.

XVI. A list of judicial pronouncements has also been

provided, demonstrating as to how the judgments relied

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 49 of 124

on by the Respondents would not be applicable to the

instant case. We have perused the same.

B. Submissions of the Respondents

I. Firstly, it is submitted that the entitlement to DA in

terms of RoPA Rules as held by the Division Bench in

the ‘judgment in Round One’, has attained finality.

II. The DA, which the Tribunal and the High Court,

both held the employees of the appellant-State to be

entitled to, was to be construed in terms of RoPA, and

nothing more or above what is provided therein.

III. The AICPI index number i.e., 536 (1982 = 100) has

been admitted by the appellant-State for the purposes of

calculation of ‘existing emoluments’ which, as per the

definition provided in the Rules, includes DA.

IV. Regarding the ‘obligation’ of the appellant-State to

pay DA twice a year, it is submitted that the grant of this

amount is to protect the employees against the effect of

inflation in the market. It is not an additional benefit but

is the minimum protection provided. Arbitrariness, it is

submitted, has led the State to stop the practice of

adjusting/updating the DA twice a year, as it initially did

after the enforcement of RoPA Rules. Discrimination is

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 50 of 124

also alleged between the respondents’ and the employees

of the appellant-State serving in New Delhi and Chennai

on the ground that DA for the latter is still

adjusted/updated twice a year.

V. It has been held by a bench of five learned judges of

this Court in Purushottam Lal and Ors v. Union of India

& Anr

26

that if a State accepts the recommendations of a

Pay Commission, the same must be implemented in

respect of all government employees. It is submitted that

while it is true that there will be significant variance in

cost of living between States, at the same time, there shall

be significant variance of different cities within the State.

That on its own cannot be a ground for different DA. The

different DA payable through the employees of the

appellant-State only on account of location is therefore

arbitrary, capricious and in violation of Article 14 of the

Constitution. In this regard, reference is made to E.P.

Royappa v. State of T.N

27

.

VI. The appellant - State’s reliance on Mandawar

(supra) is untenable as the same is distinguishable on

facts. In that judgment, the Rules referred granted

26

(1973) 1 SCC 651

27

(1974) 4 SCC 3

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 51 of 124

discretion to the State whereas, in the present facts, the

Rules reflect a particular decision having been made

which is that emoluments to be paid to employees, in

accordance with RoPA Rules will be calculable as per the

index rate set out therein. The Court in Mandawar

(supra) had observed that the claim before it was not of

arrears of DA which had occurred due to the rules in force

relating thereto. It is highlighted that, taking support of

this judgment, the appellant-State, in the review petition

preferred against the impugned judgment before the High

Court argued that binding precedent had been ignored

and repelling such contention, the High Court

distinguished the present facts.

VII. There are number of States that do not follow the

rate adopted by the Central Government. An example is

drawn from the State of Kerala, where the State has

devised its own method of calculation based on an index

which is prepared by research centres located at different

places in the State. If the State chooses not to accept the

process and the rates laid down by the Central

Government, it ought to devise its own method and

mechanism. In the present facts, there is a complete

absence of facts and figures collected and analysed by the

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 52 of 124

State and as such the decision not to follow AICPI is

arbitrary.

VIII. The first and subsequent memoranda issued by

the appellant-State are not in conformity with RoPA as

they do not reflect the incorporation of the AICPI

number 536 (1982 = 100) even though the appellant-State

had accepted the same. The former, therefore, cannot

override the latter in view of Rule 14 in the latter. The

well-established position that circulars/memoranda

cannot override statutory provisions has been echoed in

Ajaya Kumar Das v. State of Orissa & Ors

28

and Ashok

Ram Parhad v. State of Maharashtra

29

.

IX. Paucity of funds is not a ground to deny the

employees of the appellant-State, the payment of DA.

Reliance is placed on Haryana State Minor Irrigation

Tube Wells Corporation v. GS Uppal

30

; Punjab State

Cooperative Agricultural Development Bank Ltd v.

Registrar Co-Operative Societies and Ors

31

and State of

Andhra Pradesh & Anr v. Dinavahi Lakshmi

Kameswari

32

.

28

(2011) 11 SCC 136

29

(2023) 18 SCC 768

30

(2008) 7 SCC 375

31

(2022) 4 SCC 363

32

2021 SCC OnLine SC 237

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 53 of 124

X. A sliding scale is inbuilt in the structure of calculation

of DA, is the next submission advanced with reference to

Hindustan Times Ltd v. Workmen

33

.

QUESTIONS TO BE CONSIDERED

From the aforesaid, in our considered view following

questions require consideration:-

1. What is the scope and extent of the power under Article

309 of the Constitution of India?

2. What is the scope and extent of the Rules framed by the

appellant-State i.e., RoPA Rules and the First Memorandum

dated 23

rd

February 2009? Whether the Notifications/Official

memoranda issued subsequent to the clarificatory memoranda

dated 23

rd

February 2009 i.e., 9

th

December 2009; 6

th

April 2010;

23

rd

November 2010; 12

th

December 2011; 31

st

December 2012;

16

th

December 2013; 9

th

January 2015 and 14

th

December 2015

issued by the appellant-State revising the rates of DA are in

consonance with RoPA Rules?

3. Given that the definition of ‘existing emoluments’ in RoPA

is identical to the Central Government Rules, i.e., legislation by

incorporation, could the State have then deviated from the index

33

1962 SCC OnLine SC 190

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 54 of 124

being adhered to by the Central Government? In other words, was

the incorporation of the AICPI number a one-time measure?

4. Whether DA, as a concept, is static or dynamic and

whether, by the act of legislative recognition of a particular

index, does the character thereof, change?

5. Whether the actions of appellant-State are vitiated by

manifest arbitrariness as also negatively affecting the legitimate

expectation accruing in favour of the employees?

6. Whether adoption of the AICPI, would render the distinct

legislative domains under List I Entry 70 and List II Entry 41,

otiose?

7. What is the impact of the direction of the Tribunal for the

State to follow the AICPI, in so far as the financial autonomy of

the State is concerned in the federal structure of the country?

8. What is the effect of the findings returned by the High

Court in the first round of litigation?

9. Do the Respondent-employees have any right to receive

DA twice a year in line with the pattern of the Central

Government?

10. Is financial capability of a State, a ground available to deny

the payment of DA, if under the existing rules, the same is held

to be a legal right?

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 55 of 124

11. Since the question involved in this lis is the payment of

DA which is an aspect of fiscal policy of a State, what is the

extent of judicial review which is permissible?

12. Can DA be said to be a fundamental right under Article 21

of the Constitution of India as held by the High Court?

13. The claim of the respondents is for the period 2008-19

however the legal redressal of the alleged grievance was only

initiated in 2016. Was the claim of the respondent affected by

delay and laches, as such, liable to be dismissed?

ANALYSIS AND DISCUSSION

In view of the submissions made, as noted hereinabove, and the

cases cited across the bar, which we have taken note and applied,

where relevant, we proceed to the merits of these appeals.

Dearness Allowance

21. Prior to proceeding to the merits of the matter, the position

held qua DA as recognized through judicial pronouncements

must necessarily be taken note of: –

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 56 of 124

(A) Chief Justice Subba Rao, writing for the

Constitution Bench in Hindustan Antibiotics Ltd. v.

Workmen

34

, observed:

“25…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… Even on

the basis of the increased wages, dearness

allowance was necessary to neutralise the rise in

prices. That is exactly what the Tribunal has done.

(Emphasis Supplied)

(B) In Workmen v. Indian Oxygen Ltd.

35

, a bench of

three learned judges held in respect of uniform rates of DA

to be applied in India, as follows:

“Uniformity, to an uninformed mind, appears to be

very attractive. But let it not be forgotten that

sometimes this uniformity amongst dissimilar

persons becomes counter-productive… But when

it comes to dearness allowance any attempt at

uniformity between workmen in such metropolitan

areas like Delhi, Bombay, Madras, Calcutta and in

smaller centres would be destructive of the concept

of dearness allowance. 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,

34

1966 SCC OnLine SC 106

35

(1985) 3 SCC 177

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 57 of 124

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. Any

uniformity in the matter of dearness allowance

may confer a boon on persons employed in smaller

centres and those in big metropolitan areas would

be hard hit. Deafness allowance by its very form

and name has an intimate relation to the prevailing

price structure of basic necessities at the centre in

which the workman is employed. … This view to

some extent was affirmed in the Remington Rand

of India Ltd. v. Workmen [(1968) 1 SCR 164 :

(1967) 2 LLJ 866 : 33 FJR 133] . Leaving aside

basic wages in the matter of dearness allowance

especially the Court should lean in favour of

adjudication of dispute on the principle of

industry-cum-region because dearness allowance

is linked to cost of living index of a particular

centre which has a local flavour. If the concept of

uniformity on an all-India basis is introduced in the

matter of dearness allowance, it would work

havoc, because the price structure in a market

economy at places like Bombay, Madras, Calcutta,

Delhi, Ahmedabad has little or no relation to

smaller centres like Kanpur, Varanasi etc. If

workmen working in such disparate centres are put

on par in the matter of dearness allowance in the

name of proclaimed. all-India uniformity, not only

unequals will be treated as equals but the former

would suffer irreparable harm. Such an approach

would. deal a fatal blow to the well-recognised

principle of industrial adjudication based on

region-cum-industry developed by courts by a

catena of decisions. Realising this situation courts

have leaned in favour of determination of dearness

allowance linked to cost of living index, if

available for the centre where the workman is

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 58 of 124

employed and in the matter of neutralisation on the

industry-cum-region principle.”

(Emphasis Supplied)

(C) A bench of three judges in Bengal Chemical &

Pharmaceutical Works Ltd. v. Workmen

36

, after the

review of earlier decisions, formulated the following

principles:

“21. … … …

The following principles broadly emerge from the

above decisions:

“1. Full neutralisation is not normally 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

the 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.”

(Emphasis Supplied)

(D) In TNEB (supra) it was held-

36

1968 SCC OnLine SC 101

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 59 of 124

“21. Each State Government following their own

rate of dearness allowance payable to their

employees may be adopting the revised dearness

allowance of the Central Government. There is no

rule or obligation on the State Government to

always adopt the dearness allowance as revised by

the Central Government. It is absolutely not

necessary for the State Government to adopt the

dearness allowance rates fixed by the Central

Government. It should be looked from the

financial position of the State Government to

adopt its own rates/revised rates of dearness

allowance. The Board, being the State

Government undertaking, the money has to come

from the State Government…”

(Emphasis Supplied)

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,

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 60 of 124

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.

24. Uniformity in DA, though seemingly attractive at first

glance, can be counter-productive when applied to regions with

vastly different price structures. Metropolitan centres such as

Delhi, Mumbai, Chennai and Kolkata experience levels of

inflation that bear little comparison with smaller towns and semi-

urban centres. Since DA is directly linked to the loss of real wages

caused by inflation, imposing a uniform rate across such disparate

regions would defeat its very purpose. It would confer undue

benefit on employees in lower-cost centres while seriously

disadvantaging those employed in high-cost metropolitan areas.

25. In determining DA, other relevant considerations include

parity among employees receiving the same wages and the

financial capacity of the employer to bear the additional burden.

These factors assume particular significance in the case of State

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 61 of 124

Governments and their undertakings. 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. DA is a balanced and pragmatic instrument of wage

policy, aimed at mitigating the impact of inflation while

respecting regional diversity and economic feasibility.

Question 1: ARTICLE 309

26. At first instance, what is to be understood is the scope of

power under Article 309 of the Constitution. The Article reads as

follows:

“309. Subject to the provisions of this Constitution, Acts

of the appropriate Legislature may regulate the

recruitment, and conditions of service of persons

appointed, to public services and posts in connection

with the affairs of the Union or of any State:

Provided that it shall be competent for the President or

such person as he may direct in the case of services and

posts in connection with the affairs of the Union, and for

the Governor of a State or such person as he may direct

in the case of services and posts in connection with the

affairs of the State, to make rules regulating the

recruitment, and the conditions of service of persons

appointed, to such services and posts until provision in

that behalf is made by or under an Act of the appropriate

Legislature under this article, and any rules so made shall

have effect subject to the provisions of any such Act.”

Over the years, many-a-rule promulgated hereunder has been the

subject matter of controversy before the Courts. While the

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 62 of 124

propriety of the exercise of power under this Article is not in

question in the instant lis, it would still be appropriate to refer to

judgments to understand the scope, enforceability, limitations

and other aspects.

(A) A Constitution Bench of this Court in B.N. Nagarajan

v. State of Mysore

37

, held that insofar as rules made under

this Article direct something to be done in a specific manner,

the Government must abide thereby. The same cannot be

side-stepped by exercise of power under Article 162 of the

Constitution. [See: R.N. Nanjundappa v. T. Thimmiah

38

,]

(B) This power cannot be circumscribed by any agreement

or by function of estoppel. So was held in C.

Sankaranarayanan v. State of Kerala

39

.

(C) State of Assam v. Basanta Kumar Das

40

held that

executive instructions have less force than statutory rules.

No direction can be issued, which in effect is an amendment

to the rules framed under this Article. [See: S.L. Sachdev v.

Union of India

41

]

37

1966 SCC OnLine SC 7

38

(1972) 1 SCC 409

39

(1971) 2 SCC 361

40

(1973) 1 SCC 461

41

(1980) 4 SCC 562

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(D) If, in the rules enacted under this Article, there exist

some gaps, it is open for the Government to fill up such gaps

by way of administrative instructions. This Court held thus

in Distt. Registrar v. M.B. Koyakutty

42

.

(E) The power exercised under this Article must be

exercised in a just, fair and reasonable manner for the same

is not immune to the tests of Articles 14 and 16 of the

Constitution. [See: Baleshwar Dass v. State of U.P.

43

]

(F) In Accountant-General v. S. Doraiswamy

44

, the

rules made under this power, are generally prospective in

operation unless a statute conferring/asking for rules made

hereunder provides for such rules’ retrospective application.

When retrospective application is directed, the date from

which the rules in question are made retrospectively

applicable should have reasonable nexus to the provisions

contained in the rules.

(G) A bench of three judges held in Lila Dhar v. State of

Rajasthan

45

, that unless oblique motives can be

demonstrated, it is not open for the Courts to redetermine

42

(1979) 2 SCC 150

43

(1980) 4 SCC 226

44

(1981) 4 SCC 93

45

(1981) 4 SCC 159

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 64 of 124

methods of selection when the same has been done in

accordance with the rules framed under this power.

(H) K. Nagaraj v. State of A.P.

46

, held that the power

under this Article to promulgate rules also carries with it,

the power to amend the same, even retrospectively.

The principles noticed hereinabove, are non-exhaustive.

Questions 2, 3 and 4

27. As is clearly established from the above, the power under

Article 309 is extensive and expansive. In the present case, the

exercise of this power has resulted in the promulgation of the

RoPA Rules. Even though the said rules conceived ‘existing

emoluments’ to be paid for by the State, to be employing the same

formula as given under the rules promulgated by the Central

Government known as the Central Civil Services (Revised Pay)

Rules 2008

47

, by the first and subsequent memoranda the rates

were changed, particularly when it came to DA. We must then

consider the power to issue such memoranda. It appears that the

Rules themselves do not provide the power to issue subsequent

memoranda/notifications. That being said, the position now will

be governed by the principle laid down in M.B. Koyakutty

46

(1985) 1 SCC 523

47

Central Government Rules

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(supra) as reiterated by the majority in Mahanadi Coalfields Ltd.

v. Rabindranath Choubey

48

, which is to the effect that in the

absence of rules, executive instructions would be binding.

Obviously, such executive instructions would be subservient to

the rules, and the word ‘absence’ indicates that there would be a

gap, to which effect the executive instruction in question, stands

issued.

The question then is, whether the memoranda issued after

23

rd

February 2009, were indeed issued to fill in some gaps or in

the absence of statutory rules for the specific area.

28. It would be appropriate at this stage to consider the impact

of the definition of ‘existing emoluments’ being word for word

same as that of the Central Government rules.

In other words, the definition has been lifted from the

Central Government Rules and placed in RoPA Rules. This falls

within one of two types of legislation other than it being written

‘from scratch’. The two types are ‘legislation by reference’ and

‘legislation by incorporation’. Plainly put, the former means that

the provision of another Act is referred to, and by act of such

reference, the provision is made applicable to the Legislation in

which it has been placed. The latter implies a bodily lifting of the

48

(2020) 18 SCC 71

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provision given elsewhere, and its insertion into the Legislation

being enacted subsequently.

This Court speaking through G.P Mathur J., in Rakesh Vij

v. Raminder Pal Singh Sethi (Dr.)

49

,while referring to an earlier

decision rendered by a co-ordinate bench of three judges in U.P.

Avas Evam Vikas Parishad v. Jainul Islam

50

stated the general

position of law as follows:

“30. …. This Court, after referring to a large number of

earlier decisions, laid down the following principle in

para 17 of the report : (SCC pp. 480-81)

“17. A subsequent legislation often makes a

reference to the earlier legislation so as to make

the provisions of the earlier legislation

applicable to matters covered by the later

legislation. Such a legislation may either be (i)

a referential legislation which merely contains

a reference to or the citation of the provisions

of the earlier statute; or (ii) a legislation by

incorporation whereunder the provisions of the

earlier legislation to which reference is made

are incorporated into the later legislation by

reference. If it is a referential legislation the

provisions of the earlier legislation to which

reference is made in the subsequent legislation

would be applicable as it stands on the date of

application of such earlier legislation to matters

referred to in the subsequent legislation. In

other words, any amendment made in the earlier

legislation after the date of enactment of the

subsequent legislation would also be

applicable. But if it is a legislation by

incorporation the rule of construction is that

repeal of the earlier statute which is

incorporated does not affect operation of the

49

(2005) 8 SCC 504

50

(1998) 2 SCC 467

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subsequent statute in which it has been

incorporated. So also any amendment in the

statute which has been so incorporated that is

made after the date of incorporation of such

statute does not affect the subsequent statute in

which it is incorporated and the provisions of

the statute which have been incorporated would

remain the same as they were at the time of

incorporation and the subsequent amendments

are not to be read in the subsequent legislation.

In the words of Lord Esher, M.R., the legal

effect of such incorporation by reference ‘is to

write those sections into the new Act just as if

they had been actually written in it with the pen

or printed in it, and, the moment you have those

clauses in the later Act, you have no occasion

to refer to the former Act at all’. (See : Wood's

Estate, Re [(1886) 31 Ch D 607 : 55 LJ Ch 488]

Ch D at p. 615.) As to whether a particular

legislation falls in the category of referential

legislation or legislation by incorporation

depends upon the language used in the statute

in which reference is made to the earlier

legislation and other relevant circumstances.”

Regarding incorporation, the discussion made by the

Constitution Bench in Girnar Traders (3) v. State of

Maharashtra

51

is also important for our purposes. Relevant

extracts are:

“89. … Reference to an earlier law in the later law could

be a simple reference of provisions of earlier statute or a

specific reference where the earlier law is made an

integral part of the new law i.e. by incorporation. In the

case of legislation by reference, it is fictionally made a

part of the later law. We have already noticed that all

amendments to the former law, though made subsequent

to the enactment of the later law, would ipso facto apply

51

(2011) 3 SCC 1

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and one finds mention of this particular aspect in Section

8 of the General Clauses Act, 1897. In contrast to such

simple reference, legal incidents of legislation by

incorporation is that it becomes part of the existing law

which implies bodily lifting provisions of one enactment

and making them part of another and in such cases

subsequent amendments in the incorporated Act could

not be treated as part of the incorporating Act.

91. Another feature of legislation by incorporation is

that the language is explicit and positive. This

demonstrates the desire of the legislature for legislation

by incorporation…. When the later law depends on the

former law for procedural/substantive provisions or is

to draw its strength from the provisions of the former

Act, the later Act is termed as supplemental to the

former law…”

(Emphasis Supplied)

29. Taking cue from the above it can be seen that the intent of

the Legislature at the relevant point in time is demonstrated by

incorporating the definition as given under the Central

Government Rules, i.e., to follow the pattern thereof. Now then,

it is to be examined, to bridge which gap or to fill in what void

left by the RoPA Rules, were the subsequent memoranda issued?

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

amending the RoPA Rules. This, however, was not advanced as

an argument. Instead, there appeared to be an adaptation of

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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

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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. Bhartiya Kamgar Sena

52

:

“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

directly against its purpose, object and intent. It is not so much

52

(2017) 4 SCC 449

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the 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

53

]

but it is the statutory recognition of AICPI and the method for

calculating existing emoluments, which is essential.

32. The AICPI is compiled and published by the Labour Bureau,

under the aegis of the Ministry of Labour and Employment,

Government of India. The Bureau with its headquarters at Shimla

is tasked with overseeing the process, from start to finish, i.e.,

survey design and data collection to computation and publication.

Each month, price data are gathered through an extensive network

of field investigators covering 78 industrially significant centres

across the country. These data are drawn from representative

retail outlets and markets that reflect the consumption patterns of

industrial workers. After validation and aggregation, the Bureau

computes the All-India Index, which serves as a key measure for

revising DA and for wage indexation across both public and

private sectors.

The calculation of AICPI is a structured and statistically

rigorous procedure which tracks changes in the cost of living. The

process begins with the identification of a representative basket

of goods and services, (which is determined per regional needs

53

(1969) 3 SCC 745

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and requirements) determined through a Family Living Survey

conducted for the base year

54

. This basket includes essential items

such as food, housing, clothing, fuel, healthcare, education, and

transport. Each item is assigned a weight according to the

proportion it occupies in the total household expenditure,

corresponding to the frequency of purchase for a particular item,

ensuring that a true picture is presented with more frequently

purchased items exerting a greater influence on the final index.

Every month, retail prices for all items in the basket are collected

from the 78 centres.

These individual item indices are then combined, using

their expenditure weights, to produce a centre-level-index. The

AICPI is derived as a weighted average of these centre indices,

where each centre’s weight reflects its relative industrial

workforce population. At the cost of brevity and repetition, the

relevant extract from the Labour Bureau is hereunder

55

:

“The index is compiled by using Laspeyre’s base

weighted formula. In the first stage, price quotations of

an item in all outlets of all the markets in a month are

averaged for a centre. On the basis of this average centre

price, a price relative (over base period price) is worked

out. However, in case of items which are supplied

through subsidised outlets (fair price shop also) the

54

See generally, Manual on Consumer Price Index 2010 Government of India

Ministry of Statistics and Programme Implementation Central Statistics Office

Sansad Marg, New Delhi

Accessible at:

https://mospi.gov.in/sites/default/files/publication_reports/manual_cpi_2010.pdf?

utm_source=chatgpt.com

55

https://labourbureau.gov.in/CPI

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 73 of 124

procedure is slightly different. In their case, first the

weighted average price of open market and fair price

outlets in each selected market of a centre is worked out

(weights being availability ratio in the respective outlets

in that month). In the next stage, a simple average of

these market prices is worked out to arrive at the centre

price. The sub-group/group Index is worked out as a

weighted average of item/sub-group Index, respectively,

the general index of a centre is worked out as weighted

average of group indices. Thus, the index for each centre

is derived in several stages, i.e. sub-group, group and

general (all combined). All-India index is a weighted

average of 78 centre indices. The weight assigned to

each centre is the proportion of the estimated consumer

expenditure of the centre to the aggregate consumer

expenditure of all the centres. These indices are

compiled on monthly basis with a time lag of one month

and are released through Press Note, Monthly Index

letter and Indian Labour Journal...”

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

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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.

34. Having dealt with AICPI at a concept level, as also

legislation by incorporation we now turn back to the issue of

executive memoranda. We have observed above that Rules do not

themselves provide for any rule making power to rest with the

Executive. It is also given that when rules are promulgated under

Article 309 it is done in the name of the Governor. The

Constitution also provides for the State to have executive powers

in so far as the subjects enumerated in List II and concomitantly

to issue instructions thereon. It reads as under:

“162. Extent of executive power of State: Subject to

the provisions of this Constitution, the executive power

of a State shall extend to the matters with respect to

which the Legislature of the State has power to make

laws:

Provided that in any matter with respect to which the

Legislature of a State and Parliament have power to

make laws, the executive power of the State shall be

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subject to, and limited by, the executive power expressly

conferred by the Constitution or by any law made by

Parliament upon the Union or authorities thereof.”

35. It is not in doubt that the First Memorandum dated 23

rd

February 2009 was issued under Article 309 of the Constitution.

We will come to this later (Question No 5). At first, we address

the memoranda issued thereafter. It appears that these

subsequent memoranda are issued under Article 162. We say so

for the reason that it has not been pleaded before us by the

appellant-State that the subsequent memoranda are also issued

under Article 309, when the power to issue the same was a

significant point of contention across the Bar. A coordinate

bench in R.N. Nanjundappa (supra) observed:

“26. The contention on behalf of the State that a rule

under Article 309 for regularisation of the appointment

of a person would be a form of recruitment read with

reference to power under Article 162 is unsound and

unacceptable. The executive has the power to appoint.

That power may have its source in Article 162. In the

present case the rule which regularised the appointment

of the respondent with effect from February 15, 1958,

notwithstanding any rules cannot be said to be in

exercise of power under Article 162. First, Article 162

does not speak of rules whereas Article 309 speaks of

rules. Therefore, the present case touches the power of

the State to make rules under Article 309 of the nature

impeached here. Secondly when the Government acted

under Article 309 the Government cannot be said to

have acted also under Article 162 in the same breath.

The two articles operate in different areas.

Regularisation cannot be said to be a form of

appointment...”

(Emphasis Supplied)

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36. The above extracted view has been accepted by a

Constitution Bench in State of Karnataka v. Uma Devi

56

. In that

view of the matter what was to be shown is that the executive

instructions were issued only to supplement a gap in the original

Notification under Article 309, which the appellant-State has

been unsuccessful in doing.

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.

It has to be observed that consequent to the above,

subsequent memoranda are hereby held to have been issued in an

improper exercise of power. Despite this improper exercise of

power, the RoPA Rules will remain unaffected. The doctrine of

severance as discussed in the case of Harakchand (supra), would

apply to these memoranda as well. The relevant extract thereof is

as under:

“27. The only other point that remains to be decided is

whether as a result of some of the sections of the

impugned Act being struck down, what is left of the

56

(2006) 4 SCC 1

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impugned Act should survive or whether the whole of

the impugned Act should be declared invalid. We are of

opinion that the provisions which are declared invalid

cannot effect the validity of the Act as a whole. In a case

of this description the real test is whether what remains

of the statute is so inextricably bound up with the invalid

part that what remains cannot independently survive or

as it is sometimes put whether on a fair review of the

whole matter it can be assumed that the legislature would

have enacted at all that which survives without enacting

the part that is ultra vires. The matter is clearly put

in Cooley on Constitutional Limitations, 8th Edn. at p.

360:

“It would be inconsistent with all just

principles of constitutional law to adjudge

these enactments void because they are

associated in the same Act; but not

connected with or dependant on others

which are unconstitutional. Where,

therefore, a part of a statute is

unconstitutional, that fact does not

authorise the courts to declare the

remainder void also, unless all the

provisions are connected in subject-matter,

depending on each other, operating

together for the same purpose, or otherwise

so connected together in meaning, that it

cannot be presumed the legislature would

have passed the one without the other. The

constitutional and unconstitutional

provisions may even be contained in the

same section, and yet be perfectly distinct

and separable, so that the first may stand

though the last fall. The point is not whether

they are contained in the same section for

the distribution into sections is purely

artificial; but whether they are essentially

and inseparably connected in substance. If,

when the unconstitutional portion is striken

out, that which remains is complete in

itself, and capable of being executed in

accordance with the apparent legislative

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intent, wholly independent of that which

was rejected, it must be sustained.”

Applying the test to the present case we are of opinion

that the provisions held to be invalid are not inextricably

bound up with the remaining provisions of the Act.”

This principle would apply both to the First Memorandum

and the subsequent memoranda.

In sum, it is hereby concluded that DA by its very nature is

non-static, fluid and subject to change. How that change is to be

carried out is through AICPI. The First Memorandum as also the

subsequent memoranda fall prey to the fatal flaw that they do not

make reference to the AICPI which is absolutely essential to the

determination of DA which in turn is indispensable to the

computation of the total amount of ‘existing emoluments’. As a

necessary follow up thereto, it must be observed that the

incorporation of the AICPI cannot be termed as a one-time

measure and once DA was defined using it, to take a different

path would be impermissible. Questions 2, 3 and 4 are answered

accordingly.

Question 5: ARBITRARINESS OF APPELLANT -

STATE’S ACTION AND LEGITIMATE

EXPECTATION OF ITS EMPLOYEES

38. Once it is established as above, clearly, that no basis is

found for the rates at which DA was to be disbursed as per the

memoranda issued subsequent to RoPA Rules, another argument

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of the Respondents comes into play. They allege violation of

Article 14 of the Constitution. Article 14, as is well known and

understood, provides for equality before law or equal protection

of the law

57

. It is also well understood that classification is

permitted by Article 14 so long as there are reasonable nexus and

intelligible differentia backing the same or the action under

question is not manifestly arbitrary. Equally so is the position in

law that all State action must pass the test of Article 14 or in other

words, State action must be reasonable and must not be arbitrary,

whimsical or capricious.

(a) Article 14 is one of the constituents of the golden

thread that wraps around the Constitution. It is necessary

to understand its importance in its true majesty. It is not a

declaration of formal uniformity, simpliciter; it is instead

a profound assertion of the rule of law itself. It only stands

to reason that amongst other things, exercise of State

power must also answer to fairness, justice and reason.

This evolution from formal equality to an embodiment of

the rule of law shows the development and maturing of

Indian constitutional thought. In the early articulation, the

aim and object of the Courts was to preserve legislative

flexibility while preventing arbitrary discrimination and

to do that there came to be evolved the twin test of

57

1958 SCCOnline SC 7

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reasonable nexus and intelligible differentia. In other

words, Article 14 in this avatar, was a restraint on

legislative excess rather than a principle of substantive

justice. As time moved further, a deeper understanding

emerged and the repeated phrase that arbitrariness is the

antithesis of equality became the new basis with rational

governance being infused into the much narrower interest

approach. Still further, its modern iteration is the test of

proportionality. The State’s legitimate objects must be

pursued through suitable means ensuring that individual

rights are not curtailed beyond necessity. This flows from

the idea of constitutional morality which insists on the

dignity of an individual, making that, the scales upon

which any and all exercise of authority is to be judged.

(b) It is within this moral and intellectual landscape that

the doctrine of manifest arbitrariness takes its place as the

natural culmination of the equality principle. The word

‘manifest’ confines the scope of judicial intervention to

those cases where reason is ex-facie absent or

compromised, or in other words, such reason is not

apparent on the face of the action or law in question. This

necessarily implies that the existence of arbitrariness is a

matter of plain deduction and not subjective opinion. The

remit of the Courts in applying this doctrine is to examine

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the possibility of whether the subjectivity of opinion has

creeped into a particular legislative exercise thereby

compromising its sanctity in as much as it may have no

rational basis or discernible principle in connection with

the object sought to be achieved. This morphs into

illegality. In Nergesh Meerza (supra) it was observed:

“71. This brings us now to the next limb of the

argument of Mr Setalvad which pertains to the

question as to whether and not the conditions

imposed on the AHs regarding their retirement

and termination are manifestly unreasonable or

absolutely arbitrary. We might mention here

that even though the conditions mentioned

above may not be violative of Article 14 on the

ground of discrimination but if it is proved to

our satisfaction that the conditions laid down

are entirely unreasonable and absolutely

arbitrary, then the provisions will have to be

struck down.”

(Emphasis Supplied)

This doctrine thus extends the reach of Article 14 to all

forms of State action. The Constitution, being supreme,

demands that every exercise of power, whether clothed in

the form of a statute or an executive order, must remain

subject to the discipline of rationality. Manifest

arbitrariness, in this sense, is not a departure from

legislative supremacy but its constitutional completion,

for the very legitimacy of law in a democratic order lies

in its reasoned foundation.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 82 of 124

(c) In Shayara Bano v. Union of India

58

, Nariman J, for

the majority held:

“100. To complete the picture, it is important to

note that subordinate legislation can be struck

down on the ground that it is arbitrary and,

therefore, violative of Article 14 of the

Constitution. In Cellular Operators Assn. of

India v. TRAI [Cellular Operators Assn. of

India v. TRAI, (2016) 7 SCC 703] , this Court

referred to earlier precedents, and held : (SCC

pp. 736-37, paras 42-44)

“Violation of fundamental rights

42. We have already seen that one of

the tests for challenging the

constitutionality of subordinate

legislation is that subordinate

legislation should not be manifestly

arbitrary. Also, it is settled law that

subordinate legislation can be

challenged on any of the grounds

available for challenge against

plenary legislation. [See Indian

Express Newspapers (Bombay) (P)

Ltd. v. Union of India [Indian

Express Newspapers (Bombay) (P)

Ltd. v. Union of India, (1985) 1 SCC

641 : 1985 SCC (Tax) 121] , SCC at

p. 689, para 75.]

43. The test of “manifest

arbitrariness” is well explained in

two judgments of this Court.

In Khoday Distilleries Ltd. v. State

of Karnataka [Khoday Distilleries

Ltd. v. State of Karnataka, (1996) 10

SCC 304] , this Court held : (SCC p.

314, para 13)

58

(2017) 9 SCC 1

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 83 of 124

‘13. It is next submitted

before us that the amended

Rules are arbitrary,

unreasonable and cause

undue hardship and,

therefore, violate Article 14

of the Constitution.

Although the protection of

Article 19(1)(g) may not be

available to the appellants,

the Rules must,

undoubtedly, satisfy the test

of Article 14, which is a

guarantee against arbitrary

action. However, one must

bear in mind that what is

being challenged here under

Article 14 is not executive

action but delegated

legislation. The tests of

arbitrary action which

apply to executive actions

do not necessarily apply to

delegated legislation. In

order that delegated

legislation can be struck

down, such legislation must

be manifestly arbitrary; a

law which could not be

reasonably expected to

emanate from an authority

delegated with the law-

making power. In Indian

Express Newspapers

(Bombay) (P) Ltd. v. Union

of India [Indian Express

Newspapers (Bombay) (P)

Ltd. v. Union of India,

(1985) 1 SCC 641 : 1985

SCC (Tax) 121] , this Court

said that a piece of

subordinate legislation does

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 84 of 124

not carry the same degree of

immunity which is enjoyed

by a statute passed by a

competent legislature. A

subordinate legislation may

be questioned under Article

14 on the ground that it is

unreasonable;

“unreasonable not in the

sense of not being

reasonable, but in the sense

that it is manifestly

arbitrary”. Drawing a

comparison between the

law in England and in India,

the Court further observed

that in England the Judges

would say, “Parliament

never intended the authority

to make such rules; they are

unreasonable and ultra

vires”. In India,

arbitrariness is not a

separate ground since it will

come within the embargo of

Article 14 of the

Constitution. But

subordinate legislation

must be so arbitrary that it

could not be said to be in

conformity with the statute

or that it offends Article 14

of the Constitution.’

44. Also, in Sharma

Transport v. State of A.P. [Sharma

Transport v. State of A.P., (2002) 2

SCC 188] , this Court held : (SCC pp.

203-04, para 25)

‘25. … The tests of arbitrary

action applicable to executive

action do not necessarily

apply to delegated legislation.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 85 of 124

In order to strike down a

delegated legislation as

arbitrary it has to be

established that there is

manifest arbitrariness. In

order to be described as

arbitrary, it must be shown

that it was not reasonable and

manifestly arbitrary. The

expression “arbitrarily”

means : in an unreasonable

manner, as fixed or done

capriciously or at pleasure,

without adequate

determining principle, not

founded in the nature of

things, non-rational, not done

or acting according to reason

or judgment, depending on

the will alone.’ ”

(emphasis in original)

… … …”

(d) In Assn. for Democratic Reforms (Electoral Bond

Scheme) v. Union of India

59

:

“200. It is now a settled position of law that a

statute can be challenged on the ground that it is

manifestly arbitrary. The standard laid down by

Nariman, J. in Shayara Bano [Shayara

Bano v. Union of India, (2017) 9 SCC 1 : (2017) 4

SCC (Civ) 277] , has been citied with approval by

the Constitution Benches in Navtej Singh

Johar [Navtej Singh Johar v. Union of India,

(2018) 10 SCC 1 : (2019) 1 SCC (Cri) 1]

and Joseph Shine [Joseph Shine v. Union of India,

(2019) 3 SCC 39 : (2019) 2 SCC (Cri) 84] . Courts

while testing the validity of a law on the ground of

manifest arbitrariness have to determine if the

59

(2024) 5 SCC 1

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 86 of 124

statute is capricious, irrational and without

adequate determining principle, or something

which is excessive and disproportionate. This

Court has applied the standard of “manifest

arbitrariness” in the following manner:

… … …

204. The above discussion shows that manifest

arbitrariness of a subordinate legislation has to be

primarily tested vis-à-vis its conformity with the

parent statute. Therefore, in situations where a

subordinate legislation is challenged on the ground

of manifest arbitrariness, this Court will proceed to

determine whether the delegate has failed “to take

into account very vital facts which either expressly

or by necessary implication are required to be

taken into consideration by the statute or, say, the

Constitution.” [Indian Express Newspapers

(Bombay) (P) Ltd. v. Union of India, (1985) 1 SCC

641] In contrast, application of manifest

arbitrariness to a plenary legislation passed by a

competent legislation requires the Court to adopt a

different standard because it carries greater

immunity than a subordinate legislation. We

concur with Shayara Bano [Shayara

Bano v. Union of India, (2017) 9 SCC 1 : (2017) 4

SCC (Civ) 277] that a legislative action can also

be tested for being manifestly arbitrary. However,

we wish to clarify that there is, and ought to be, a

distinction between plenary legislation and

subordinate legislation when they are challenged

for being manifestly arbitrary.”

(e) Keeping in view the judgments referred to above,

the principle of manifest arbitrariness under Article 14

refers to legislation that is capricious, irrational, lacking

in reasoned principle, or excessive and disproportionate;

such arbitrariness vitiates both subordinate and plenary

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 87 of 124

legislation alike. 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’ prong

of manifest arbitrariness, apart from legislative

competence. For the appellant-State to have deviated

from the recognised position to something else without

laying the groundwork therefor, compromises the

exercise by rendering it capricious.

39. This limb of ‘manifest arbitrariness’ within the discussion

of Article 14 would equally apply to the First Memorandum

dated 23

rd

February 2009. As already observed supra, an

exercise undertaken by means of Article 309 of the Constitution

has statutory force. Accordingly, the vires thereof can be

adjudicated on the same grounds as well. Having said that, we

notice that while the substantive RoPA Rules provide explicitly

for a method to calculate the ‘existing emoluments’ more

particularly DA by way of the AICPI, the First Memorandum

and the subsequent memoranda, issued, allegedly to clarify the

same, without any reference thereto, quite apparently departs

from the stipulation of the substantive law which was to follow

the AICPI. To say the least, it is quite strange that the First

Memorandum issued on the same day as the substantive law,

deviates therefrom at the very inception. Such an action, in our

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 88 of 124

view, cannot stand judicial scrutiny, and will be hit by ‘manifest

arbitrariness’ for it fails to establish a link between the two i.e.,

the RoPA Rules and the First Memorandum. It does not show

adequate determining principle in so far as it completely ignores

the stipulation of AICPI within the RoPA Rules. As observed

herein, doing so would have been permissible had the State

carried out its own determinative exercise. The Memorandum

dated 23

rd

February 2009 would also accordingly have to be held

to be contrary to law. The doctrine of severance in

Harankchand (supra) would dictate the said Memorandum to

be ultra vires the substantive Rules.

40. Next, we now deal with the issue of legitimate expectation.

(a) The modern origins of this doctrine have

authoritatively been traced to a judgment of the House

of Lords, penned by Lord Denning in Schmidt v.

Secretary of State for Home Affairs

60

. The doctrine

has, over time become well recognised in India also.

Sivanandan C T v. High Court of Kerala

61

in

reference to Union of India v. Hindustan

Development Corporation

62

culled out the following

60

[1969] 2 WLR 337

61

(2024) 3 SCC 799

62

(1993) 3 SCC 499

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factors to be considered for application of the

doctrine:

“25. …(i) legitimate expectation arises based on a

representation or past conduct of a public

authority;

(ii) legitimacy of an expectation can be inferred

only if it is founded on the sanction of law or

custom or an established procedure followed in

regular or natural sequence;

(iii) legitimate expectation provides locus standi to

a claimant for judicial review;

(iv) the doctrine is mostly confined to a right of a

fair hearing before a decision and does not give

scope to claim relief straightaway;

(v) the public authority should justify the denial of

a person’s legitimate expectation by resorting to

overriding public interest; and

(vi) the Courts cannot interfere with the decision

of an authority taken by way of policy or public

interest unless such decision amounts to an abuse

of power.”

(b) In Ram Pravesh Singh v. State of Bihar

63

the

doctrine was explained as under:

“15. What is legitimate expectation? Obviously, it

is not a legal right. It is an expectation of a benefit,

relief or remedy, that may ordinarily flow from a

promise or established practice. The term

“established practice” refers to a regular,

consistent, predictable and certain conduct,

process or activity of the decision-making

authority.”

(Emphasis Supplied)

63

(2006) 8 SCC 381

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(c) In Jitendra Kumar v. State of Haryana

64

this

Court observed:

“58. Application of doctrine of legitimate

expectation or promissory estoppel must also be

considered from the aforementioned viewpoint. A

legitimate expectation is not the same thing as an

anticipation. It is distinct and different from a

desire and hope. It is based on a right.

[See Chanchal Goyal (Dr.) v. State of

Rajasthan [(2003) 3 SCC 485 : 2003 SCC (L&S)

322] and Union of India v. Hindustan

Development Corpn. [(1993) 3 SCC 499] ] It is

grounded in the rule of law as requiring regularity,

predictability and certainty in the Government's

dealings with the public. We have no doubt that the

doctrine of legitimate expectation operates both in

procedural and substantive matters.”

(Emphasis Supplied)

(d) In Punjab State Coop. Agricultural

Development Bank Ltd. v. Coop. Societies

65

, it was

observed:

“46. This Court, after taking note of the earlier

view on the subject further held in Railway

Board [Railway Board v. C.R. Rangadhamaiah,

(1997) 6 SCC 623 : 1997 SCC (L&S) 1527] as

under : (SCC pp. 637-38 & 640, paras 20, 24-25 &

33)

“20. It can, therefore, be said that a rule

which operates in futuro so as to

govern future rights of those already in

service cannot be assailed on the

ground of retroactivity as being

violative of Articles 14 and 16 of the

Constitution, but a rule which seeks to

64

(2008) 2 SCC 161

65

(2022) 4 SCC 363

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 91 of 124

reverse from an anterior date a benefit

which has been granted or availed of

e.g. promotion or pay scale, can be

assailed as being violative of Articles

14 and 16 of the Constitution to the

extent it operates retrospectively.

***

24. In many of these decisions [K.C.

Arora v. State of Haryana, (1984) 3

SCC 281 : 1984 SCC (L&S)

520]

,

[P.D. Aggarwal v. State of U.P.,

(1987) 3 SCC 622 : 1987 SCC (L&S)

310]

,

[K. Narayanan v. State of

Karnataka, 1994 Supp (1) SCC 44 :

1994 SCC (L&S) 392]

,

[T.R.

Kapur v. State of Haryana, 1986 Supp

SCC 584]

,

[Union of India v. Tushar

Ranjan Mohanty, (1994) 5 SCC 450 :

1994 SCC (L&S) 1118]

,

[K.

Ravindranath Pai v. State of

Karnataka, 1995 Supp (2) SCC 246 :

1995 SCC (L&S) 792] the expressions

“vested rights” or “accrued rights”

have been used while striking down

the impugned provisions which had

been given retrospective operation so

as to have an adverse effect in the

matter of promotion, seniority,

substantive appointment, etc. of the

employees. The said expressions have

been used in the context of a right

flowing under the relevant rule which

was sought to be altered with effect

from an anterior date and thereby

taking away the benefits available

under the rule in force at that time. It

has been held that such an amendment

having retrospective operation which

has the effect of taking away a benefit

already available to the employee

under the existing rule is arbitrary,

discriminatory and violative of the

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 92 of 124

rights guaranteed under Articles 14

and 16 of the Constitution. We are

unable to hold that these decisions are

not in consonance with the decisions

in Roshan Lal Tandon [Roshan Lal

Tandon v. Union of India, (1968) 1

SCR 185 : AIR 1967 SC 1889] , B.S.

Vadera [B.S. Vadera v. Union of

India, (1968) 3 SCR 575 : AIR 1969

SC 118] and Raman Lal Keshav Lal

Soni [State of Gujarat v. Raman Lal

Keshav Lal Soni, (1983) 2 SCC 33 :

1983 SCC (L&S) 231]”

We have also perused various other judgments

concerning the doctrine of legitimate expectation viz.

State of Jharkhand v. Brahmputra Metallics

66

,

Navjyoti Coop. Group Housing Society v. Union of

India,

67

; Food Corporation of India v. Kamdhenu

Cattle Feed Industries

68

.

Once it is the established that a right exists, the

following observation in G.C. Mandawar (supra)

becomes relevant:

“5. …Under this provision, it is a matter of

discretion with the Local Government whether it

will grant dearness allowance and if so, how much.

That being so, the prayer for mandamus is clearly

misconceived, as that could be granted only when

there is in the applicant a right to compel the

performance of some duty cast on the opponent.

Rule 44 of the Fundamental Rules confers no right

on the government servants to the grant of

66

2020 SCC OnLine SC 968

67

(1992) 4 SCC 477

68

(1993) 1 SCC 71

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dearness allowance; it imposes no duty on the

State to grant it. It merely confers a power on the

State to grant compassionate allowance at its own

discretion, and no mandamus can issue to compel

the exercise of such a power. Nor, indeed, could

any other writ or direction be issued in respect of

it, as there is no right in the applicant which is

capable of being protected or enforced.”

(Emphasis Supplied)

(e) We are of the view that in light of the principles

referred to above, legitimate expectation on the part of

the respondents did arise in view of the change of law

i.e., enactment of RoPA Rules and its recognition of

AICPI as the determinative factor for the computation

of DA.

Question 6 and 7: CONFLICT, IF ANY, BETWEEN

LIST I AND II OF THE VII

th

SCHEDULE AND

FINANCIAL AUTONOMY OF THE STATE

41. In India, governance is through a federal structure. This

means that authority is divided constitutionally between

different levels of government allowing each of them to

legislate, administer and adjudicate in relation to matters

assigned to them by the Constitution. This division of power is

not a mere formality but is legal and enforceable precluding any

level from unilaterally encroaching upon the domain of the

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 94 of 124

other. This enables constitutional recognition of diversity be it

geographical, cultural, linguistic or economic within a unified

political framework thereby balancing the scales of unity and

regional autonomy facilitating national cohesion.

42. In the context of federalism, while the central authorities

retain power on issues connecting the entire country such as

defence, foreign affairs, emergency provisions, residuary

powers etc., but at the same time States have the legislative,

executive and judicial authority for a variety of issues such as

public order, public health, fisheries, public debt etc. There is

another aspect which is equally important - the division of power

acts as a security blanket. Each level of Government has its

sphere of actions defined and cannot transgress. Should it do so,

the Judiciary is bound to step in to reinforce these boundaries. It

has to be importantly added here that a federal structure is not

only sustained by law making or executive power, it also

necessarily includes financial autonomy. In absence thereof, an

elected Government, which is installed by the participation of

the people in the electoral process, having put forth a vision

which is by such process, accepted, would be rendered

dependent and reliant on the otherwise all - powerful Central

Government for handouts. The constitutional vision has put in

place checks and balances to ensure that the States are not

reduced to destitution. This is most obviously displayed by

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separate consolidated funds being in place for the Centre and the

State, among other moorings within the Constitution that

reinforce this discipline.

Dr B.R. Ambedkar speaking in the Constituent Assembly

said the following significant words: (CAD Vol. 11)

“There is only one point of constitutional import to

which I propose to make a reference. A serious

complaint is made on the ground that there is too much

of centralisation and that the States have been reduced

to municipalities. It is clear that this view is not only

an exaggeration, but is also founded on a

misunderstanding of what exactly the Constitution

contrives to do. As to the relation between the Centre

and the States, it is necessary to bear in mind the

fundamental principle on which it rests. The basic

principle of federalism is that the legislative and

executive authority is partitioned between the Centre

and the States not by any law to be made by the Centre

but by the Constitution itself. This is what

Constitution does. The States under our Constitution

are in no way dependent upon the Centre for their

legislative or executive authority. The Centre and the

States are co-equal in this matter. It is difficult to see

how such a Constitution can be called centralism. It

may be that the Constitution assigns to the Centre too

large a field for the operation of its legislative and

executive authority than is to be found in any other

federal Constitution. It may be that the residuary

powers are given to the Centre and not to the States.

But these features do not form the essence of

federalism. The chief mark of federalism as I said lies

in the partition of the legislative and executive

authority between the Centre and the units by the

Constitution. This is the principle embodied in our

Constitution.”

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In State of W.B. v. Union of India

69

, BP Sinha, CJI

writing for the majority explained the following features of

federalism:

“25…(a) A truly federal form of Government

envisages a compact or agreement between

independent and sovereign units to surrender partially

their authority in their common interest and vesting it

in a Union and retaining the residue of the authority in

the constituent units. Ordinarily each constituent unit

has its separate Constitution by which it is governed

in all matters except those surrendered to the Union,

and the Constitution of, the Union primarily operates

upon the administration of the units. Our Constitution

was not the result of any such compact or agreement :

Units constituting a unitary State which were non-

sovereign were transformed by abdication of power

into a Union,

(b) Supremacy of the Constitution which cannot be

altered except by the component units. Our

Constitution is undoubtedly supreme, but it is liable to

be altered by the Union Parliament alone and the units

have no power to alter it.

(c) Distribution of powers between the Union and the

regional units each in its sphere coordinate and

independent of the other. The basis of such

distribution of power is that in matters of national

importance in which a uniform policy is desirable in

the interest of the units authority is entrusted to the

Union, and matters of local concern remain with the

States.

(d) Supreme authority of the courts to interpret the

Constitution and to invalidate action violative of the

Constitution. A federal Constitution, by its very

nature, consists of checks and balances and must

contain provisions for resolving conflicts between the

executive and legislative authority of the Union and

the regional units.

69

1962 SCC OnLine SC 27

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In our Constitution characteristic (d) is to be found in

full force (a) and (b) are absent. There is undoubtedly

distribution of powers between the Union and the

States in matters legislative and executive, but

distribution of powers is not always an index of

political sovereignty. The exercise of powers

legislative and executive in the allotted fields is

hedged in by numerous restrictions so that the powers

of the States are not coordinate with the Union and are

in many respects independent.”

In S.R. Bommai v. Union of India

70

, PB Sawant J. for

himself and Kuldip Singh J., held as under:

“99. The above discussion thus shows that the States

have an independent constitutional existence and they

have as important a role to play in the political, social,

educational and cultural life of the people as the

Union. They are neither satellites nor agents of the

Centre. The fact that during emergency and in certain

other eventualities their powers are overridden or

invaded by the Centre is not destructive of the

essential federal nature of our Constitution. The

invasion of power in such circumstances is not a

normal feature of the Constitution. They are

exceptions and have to be resorted to only

occasionally to meet the exigencies of the special

situations. The exceptions are not a rule.”

K. Ramaswamy J., in the same judgment held as under:

“247. Federalism envisaged in the Constitution of

India is a basic feature in which the Union of India

is permanent within the territorial limits set in

Article 1 of the Constitution and is indestructible.

The State is the creature of the Constitution and the

law made by Articles 2 to 4 with no territorial

integrity, but a permanent entity with its boundaries

alterable by a law made by Parliament. Neither the

relative importance of the legislative entries in

70

(1994) 3 SCC 1

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Schedule VII, Lists I and II of the Constitution, nor

the fiscal control by the Union per se are decisive to

conclude that the Constitution is unitary. The

respective legislative powers are traceable to

Articles 245 to 254 of the Constitution. The State

qua the Constitution is federal in structure and

independent in its exercise of legislative and

executive power. However, being the creature of the

Constitution the State has no right to secede or claim

sovereignty. Qua the Union, State is quasi-federal.

Both are coordinating institutions and ought to

exercise their respective powers with adjustment,

understanding and accommodation to render socio-

economic and political justice to the people, to

preserve and elongate the constitutional goals

including secularism.”

43. Schedule VII embodies the federal structure and clearly

delineates the spheres of action referred to above. List I is the

exclusive domain of the Central Government while List II is for

the State. The overlapping aspects that were also touched upon

above are represented by List III.

S.M.Sikri CJI, for the majority in Union of India v. H.S.

Dhillon

71

, while dealing with the question of the constitutional

validity of Section 24 of Finance Act 1969, observed as under

in connection with the law making power of the Parliament:

“14. Reading Article 246 with the three lists in the

Seventh Schedule, it is quite clear that Parliament has

exclusive power to make laws with respect to all the

matters enumerated in List I and this notwithstanding

anything in clauses (2) and (3) of Article 246. The

State Legislatures have exclusive powers to make

71

(1971) 2 SCC 779

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laws with respect to any of the matters enumerated in

List II, but this is subject to clauses (1) and (2) of

Article 246. The object of this subjection is to make

Parliamentary legislation on matters in Lists I and III

paramount. Under clause (4) of Article 246

Parliament is competent also to legislate on a matter

enumerated in State List for any part of the territory

of India not included in a State. Article 248 gives the

residuary powers of legislation to the Union

Parliament. It provides:

“248. (1) Parliament has exclusive power to make any

law with respect to any matter not enumerated in the

Concurrent List or State List.

(2) Such power shall include the power of making any

law imposing a tax not mentioned in either of those

lists.”

… … …”

In State of U.P. v. Lalta Prasad Vaish

72

, it was held:

“50. The demarcation of legislative fields is based on

a deliberate design as well as on the principles of

federalism. Matters requiring coordination between

different regions of the country or of national

importance have been placed in the field of

Parliament. Matters requiring localised focus and

limited or no coordination between States have been

placed in the State List. Fields of legislation which

may require either uniform legislation for the entire

nation or context and region -specific

accommodation, depending on the circumstance, are

placed in the Concurrent List. Moreover, the three

Lists make a clear distinction between general entries

and taxation entries. The power of taxation cannot be

derived from a general entry. … The entries in the

legislative lists do not cast an obligation to legislate

or to legislate in a particular manner. Within the

confines of an entry, the legislature exercises plenary

power subject to the provisions of the Constitution.

[United Provinces v. Atiqa Begum, 1940 SCC

72

(2024) 17 SCC 1

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OnLine FC 11 : (1940) 2 FCR 110 : AIR 1941 FC

16; Constitution of India, Article 13.]”

It is the appellant - State’s contention that since Entry 70 List I

and Entry 41 of List II, both dealing with public service

employees, have been separately mentioned in two distinct lists;

there can be no overlap and as such the central scheme of

payment of DA cannot apply to the States. There cannot be any

qualms with that argument, but at the same time, the State in its

independent wisdom incorporated the definition of ‘existing

emoluments’ from the Central Government Rules, and it is once

again the State who, despite having the requisite power to depart

from what has been laid down in RoPA Rules, chose not the

direct route but the side road, so to speak, to alter the rate of DA,

and that too, without any basis for the same. It is, therefore, not

open for the State to take the defence of separation of powers as

enumerated in the Constitution, for that would amount to having

your cake and eating it too.

44. Here itself we may deal with a further argument of the

appellant - State that the conclusion in this adjudication has

pan-India implications since there are as many as twelve States

that do not follow the Central Government pattern in payment

of DA whereas there are only four that do. It is submitted that

should the conclusion be that the appellant - State is to follow

the latter’s pattern, these other States would be in considerable

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 101 of 124

trouble and difficulty. At first, this argument appears attractive

but on a considered view of the matter, we find it imprudent to

adjudicate the present lis keeping in view the supposed impact

on States who are not parties before us. It is not anybody’s case

that the position the appellant - State finds itself in, is a

consequence of a direction issued by the Central Government.

While making rules under Article 309, of its own wisdom, the

State incorporated for itself the definition employed by the

Central Government. A legislative exercise carried out by the

State presupposes that the requisite groundwork has been

completed and the culmination of all the information received

and collected along with the opinions of the necessary experts

among other things has resulted in such an exercise. Once this is

the position, judicial review thereof cannot account for

perceived negative impacts on others particularly when such a

decision is squarely within the financial autonomy of each body

(State). It is also to be noted that in the subsequent evolution of

wisdom, the successor Rules to the RoPA Rules that is, the

RoPA 2019 omits the reference to the AICPI 536(1982=100)

and instead provides for DA to be paid on the admissible rates

as on 1

st

January 2016.

45. Still further, it be observed that after the enactment of

RoPA 2009 it was entirely within the competence of the State to

deviate from the prior position and disburse DA in accordance

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 102 of 124

with what had been stipulated in the said Rules of following the

pattern of the Central Government, but the appellant - State

chose to continue the same pattern. The above discussion sheds

light on the fact that the Constitution envisions sufficient

freedom upon the State to choose its path in financial matters.

The choice had been made by the State itself. The Central

Government has not imposed its definition of ‘existing

emoluments’/ any condition upon the former. In Mahatama

Gandhi Mission (supra), it has been observed:

“62. The fact that the Government of India accepted the

recommendations of the Sixth Pay Commission (for

that matter any Pay Commission) does not either oblige

the States to follow the pattern of the revised pay

structure adopted by the Government of India or create

any right in favour of the employees of the State or

other bodies falling within the legislative authority of

the State. The Government of India has no authority

either under the Constitution or under any law to

compel the States or their instrumentalities to adopt the

pay structure applicable to the employees of the

Government of India.”

The alleged conflict, in our considered view, is a figment

of imagination of the appellant - State. The argument seems to

have been conjured up in thin air. Where is the exercise of

power by the Union, legislative or executive, imposing any

condition on the appellant - State? On the contrary, the power

exercised is only by the appellant - State through the Governor,

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 103 of 124

permissible under Constitutional scheme in terms of Article 309

of the Constitution.

Question 8: EFFECT OF FINDINGS IN FIRST

ROUND OF LITIGATION

46. When the findings returned by a Court are reaffirmed

through the dismissal of a review petition, such findings acquire

finality and become binding upon the parties to the litigation, in

the event that no appeal thereagainst, is filed before this Court.

The law recognizes that a review is not a rehearing of the matter,

but a narrow and exceptional jurisdiction intended only to

correct a patent error apparent on the face of the record, or to

consider newly discovered evidence which could not, with and

despite due diligence, have been produced earlier. The scope of

review is thus, limited in nature. When, upon due consideration,

the Court dismisses a review petition, it reaffirms the correctness

of its earlier judgment, declining to interfere with the findings

that stood returned. The inevitable consequence is that its

findings, having passed through the process of judicial scrutiny

a second time, attain conclusive finality as between the parties.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 104 of 124

47. This principle finds authoritative exposition in the

judgment of this Court in Lily Thomas v. Union of India

73

,

wherein it was emphatically held that the power of review

cannot be exercised to re-argue a matter already decided, and

that once a review is dismissed, the earlier decision stands

undisturbed and attains finality. The Court observed that review

jurisdiction exists only for the correction of a manifest error, and

not to substitute one view for another; hence, the dismissal of a

review petition signifies reaffirmation of the original

adjudication.

The principle of finality is further illuminated in

Kunhayammed & Ors. v. State of Kerala & Anr.

74

, where the

Court expounded the doctrine of merger and clarified that once

the avenues of review are exhausted, the order under review

merges with the final order of dismissal, thereby acquiring

complete and binding effect. The discussion made therein

pertains to special leave petitions before this Court, the

underlying principle applies to the High Courts as well.

Thus, the dismissal of a review petition is not a mere

procedural event but a substantive judicial affirmation of the

correctness of the earlier decision. It signals the end of the

Court’s revisiting power and bestows upon the findings, a seal

73

(2000) 6 SCC 224

74

(2000) 6 SCC 359

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of finality, both factual and legal. The parties, having invoked

and exhausted their right to seek reconsideration, are thereafter

bound by those findings, which operate as res judicata in all

future proceedings. This doctrine safeguards the integrity and

conclusiveness of judicial decisions and ensures that litigation,

once finally adjudicated and reaffirmed, is not perpetually

reopened to uncertainty.

48. In the instant facts, the effect that flows from the above

discussion is that once the High Court in the ‘Judgment in

Round One’ had declared the receipt of DA to be a legally

enforceable right and a review sought against this judgment

stood dismissed with no appeal to this Court being filed, the

findings arrived at therein, would attain finality and thereby bind

the parties to that proceeding. Once a legally enforceable right

has been established, the defence of the appellant - State 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 answer to this question, as we have already discussed in the

preceding paragraphs of this judgment is that the right has to be

enforced in accordance with AICPI.

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Question 9: WHETHER THE RESPONDENTS ARE

ENTITLED TO DA TWICE A YEAR?

49. The short answer to the question framed above is ‘no’. This

is for the reason that the RoPA Rules which we have extracted

supra 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 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.

[See: Sivanandan C T (supra)] In Ashok Ram Parhad v. State

of Maharashtra

75

, it has been held that service rules are liable

to prevail. The Government has power to issue resolutions that

are in consonance with the Rules or are aimed at expounding the

Rules but not in conflict with them. It is undisputed that the

RoPA Rules do not provide for disbursement of benefits such as

DA to be paid a specific number of times a year (in this case

twice as originally prayed for by the applicants in the OA,

respondents herein), the same cannot be introduced through

judicial direction. There is deliberate omission in the State’s

75

(2023) 18 SCC 768

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 107 of 124

rules showing an intention to leave the same to discretion to

some extent rather than mandate a fixed payment structure. This

deliberate omission acquires significance since it pertains to an

issue which has a direct bearing on the fiscal affairs of the State

and is inextricably linked to budgetary planning, allocation of

resources, assessment of financial capacity. Judicial interference

therein amounts to intrusion with the fiscal autonomy of the

State which in the absence of any stipulation, would be entirely

unnecessary and therefore, avoidable. The direction of the

Tribunal for DA to be paid twice a year till the implementation

of the 6

th

Pay Commission of the State, in our view is without

the authority of law.

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 it pertains to salary, pension, gratuity or other statutory

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 108 of 124

benefits, it 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

State Government, 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.

In State of H.P. v. H.P. State Recognised & Aided Schools

76

, it

has been held by a bench of three judges that constitutional

duties cannot be evaded on the ground of paucity of funds.

Granted, we have not given any finding with respect to DA

being a facet of Article 21 but at the same time it has to be

acknowledged that DA is an integral part of salary which is the

76

(1995) 4 SCC 507

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means by which various other facets of right to life under Article

21 can be seen to a logical and desirable end.

(a) In Haryana State Minor Irrigation Tubewells

Corpn. v. G.S. Uppal

77

, this Court observed as under:

“33. The plea of the appellants that the

Corporation is running under losses and it cannot

meet the financial burden on account of revision of

scales of pay has been rejected by the High Court

and, in our view, rightly so. Whatever may be the

factual position, there appears to be no basis for the

action of the appellants in denying the claim of

revision of pay scales to the respondents. If the

Government feels that the Corporation is running

into losses, measures of economy, avoidance of

frequent writing off of dues, reduction of posts or

repatriating deputationists may provide the

possible solution to the problem. Be that as it may,

such a contention may not be available to the

appellants in the light of the principle enunciated

by this Court in M.M.R. Khan v. Union of

India [1990 Supp SCC 191 : 1990 SCC (L&S) 632

: (1991) 16 ATC 541] and Indian Overseas

Bank v. Staff Canteen Workers' Union [(2000) 4

SCC 245 : 2000 SCC (L&S) 471] . ..”

(Emphasis Supplied)

(b) In State of A.P. v. Dinavahi Lakshmi

Kameswari

78

:

“13. The direction for the payment of the deferred

portions of the salaries and pensions is

unexceptionable. Salaries are due to the employees

of the State for services rendered. Salaries in other

77

(2008) 7 SCC 375

78

(2021) 11 SCC 543

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 110 of 124

words constitute the rightful entitlement of the

employees and are payable in accordance with

law. Likewise, it is well settled that the payment of

pension is for years of past service rendered by the

pensioners to the State. Pensions are hence a

matter of a rightful entitlement recognised by the

applicable rules and regulations which govern the

service of the employees of the State. …”

(Emphasis Supplied)

(c) In Punjab State Coop. Agricultural Development

Bank Ltd. v. Coop. Societies

79

, this Court observed:

“57. In our view, non-availability of financial

resources would not be a defence available to the

appellant Bank in taking away the vested rights

accrued to the employees that too when it is for

their socio-economic security. It is an assurance

that in their old age, their periodical payment

towards pension shall remain assured. The pension

which is being paid to them is not a bounty and it

is for the appellant to divert the resources from

where the funds can be made available to fulfil the

rights of the employees in protecting the vested

rights accrued in their favour.”

51. It has often been recognised 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

79

(2022) 4 SCC 363

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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. The position stated by us above

has been recognised in a number of judgments of this Court. In

Bhupendra Nath Hazarika v. State of Assam

80

, a coordinate

Bench took note of various past pronouncements as follows:

“61. Before parting with the case, we are compelled to

reiterate the oft stated principle that the State is a model

employer and it is required to act fairly giving due regard

and respect to the rules framed by it. But in the present

case, the State has atrophied the rules. Hence, the need

for hammering the concept.

62. Almost a quarter century back, this Court in Balram

Gupta v. Union of India [1987 Supp SCC 228 : 1988

SCC (L&S) 126 : (1987) 5 ATC 246] had observed thus:

(SCC p. 236, para 13)

“13. … As a model employer the

Government must conduct itself with high

probity and candour with its employees.”

In State of Haryana v. Piara Singh [(1992) 4 SCC 118 :

1992 SCC (L&S) 825 : (1992) 21 ATC 403] the Court

had clearly stated: (SCC p. 134, para 21)

“21. … The main concern of the court in

such matters is to ensure the rule of law and

to see that the Executive acts fairly and

gives a fair deal to its employees consistent

with the requirements of Articles 14 and

16.”

… … …

80

(2013) 2 SCC 516

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65. We have stated the role of the State as a model

employer with the fond hope that in future a deliberate

disregard is not taken recourse to and deviancy of such

magnitude is not adopted to frustrate the claims of the

employees. It should always be borne in mind that

legitimate aspirations of the employees are not

guillotined and a situation is not created where hopes end

in despair. Hope for everyone is gloriously precious and

a model employer should not convert it to be deceitful

and treacherous by playing a game of chess with their

seniority. A sense of calm sensibility and concerned

sincerity should be reflected in every step. An

atmosphere of trust has to prevail and when the

employees are absolutely sure that their trust shall not be

betrayed and they shall be treated with dignified fairness

then only the concept of good governance can be

concretised. We say no more.”

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.

Question 11: FISCAL POLICY AND JUDICIAL

REVIEW

53. The judicial review of a fiscal policy is a limited but

important domain. The various facets of fiscal policy such as

taxation, subsidies, public expenditure etc., are primarily

concerns of the Executive and Legislature, but are not beyond the

pale of judicial scrutiny. The brief that is entrusted to the

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Judiciary is to ascertain that such a policy flows from the

Constitution, is procedurally lawful and non-arbitrary. Article

265, for example mandates that no tax shall be levied in the

absence of the authority of law. Here, it would be the domain of

the Courts to examine that fiscal measures are not imposed by

executive fiat. Discipline in matters of fiscal policy is not only

judicially enforced but provided for in the Constitution itself by

virtue of Article(s) such as 266 and 283 by regulating the

custody, appropriation and withdrawal of public funds.

54. Separation of powers which is a feature of the basic

structure of the Indian Constitution

81

postulates that the complex

assessment of economic conditions, social priorities etc., are

evaluated and assessed by those institutions possessing

democratic legitimacy. Herefrom arises the consistently

articulated judicial position that Courts do not adjudicate upon

the wisdom/adequacy or desirability of a chosen economic

policy. At the same time, it is unquestionably the role of the

judicial institutions to check fiscal policy that transgresses

constitutional limitations. While reasonable classification and

intelligible differentia are permitted, such classifications cannot

be discriminatory or devoid of rational nexus to the avowed

objectives thereof. That apart, Courts are also the arbiter of

81

Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225

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federal balance that is between the Centre and the State ensuring

that the two powers stay within their own lanes as prescribed by

Article 246. In essence, the role is to ascertain constitutional

compliance and is, thus, a position of calibrated deference but

most certainly not of abdication or no authority. In the context of

the above, the following judgments spell out the well-recognised

position:

(a) A bench of three Judges in BALCO Employees'

Union v. Union of India

82

, observed:

“92. In a democracy, it is the prerogative of

each elected Government to follow its own

policy. Often a change in Government may

result in the shift in focus or change in

economic policies. Any such change may result

in adversely affecting some vested interests.

Unless any illegality is committed in the

execution of the policy or the same is contrary

to law or mala fide, a decision bringing about

change cannot per se be interfered with by the

court.

93. Wisdom and advisability of economic

policies are ordinarily not amenable to judicial

review unless it can be demonstrated that the

policy is contrary to any statutory provision or

the Constitution. In other words, it is not for the

courts to consider relative merits of different

economic policies and consider whether a wiser

or better one can be evolved. …”

(Emphasis Supplied)

82

(2002) 2 SCC 333

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(b) In State of T.N. v. National South Indian River

Interlinking Agriculturist Assn.

83

:

“10… An examination of this issue must begin

with the primary question of the meaning of the

phrase “policy”. A policy is the reasoning and

object that guides the decision of the authority,

which in our case is the State of Tamil Nadu.

Statutes, notifications, Ordinances, or

government orders are means for the

implementation of the policy of the State.

Therefore, it is not possible to completely

appreciate the law without reference to the

policy behind the law. The judicially evolved

two-pronged test to determine the validity of

the law vis-à-vis Article 14 of the Indian

Constitution, refers to the objective of the law

because the “policy” behind the law is never

completely insulated from judicial attention.

11. However, it is settled law that the Court

cannot interfere with the soundness and wisdom

of a policy. A policy is subject to judicial

review on the limited grounds of compliance

with the fundamental rights and other

provisions of the Constitution. …It is also

settled that the Courts would show a higher

degree of deference to matters concerning

economic policy, compared to other matters of

civil and political rights. In R.K. Garg v. Union

of India [R.K. Garg v. Union of India, (1981) 4

SCC 675 : 1982 SCC (Tax) 30] , …

“8. Another rule of equal importance is

that laws relating to economic

activities should be viewed with

greater latitude than laws touching

civil rights such as freedom of speech,

religion, etc. It has been said by no less

a person than Holmes, J. [Ed. : The

83

(2021) 15 SCC 534

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reference appears to be to Bain Peanut

Co. of Texas v. Pinson, 1931 SCC

OnLine US SC 34 : 7 L Ed 482 : 282

US 499 (1931). See also Missouri,

Kansas & Texas Railway Co. of

Texas v. Clay May, 1904 SCC OnLine

US SC 118 : 48 L Ed 971 : 194 US 267,

269 (1904).] , that the legislature

should be allowed some play in the

joints, because it has to deal with

complex problems which do not admit

of solution through any doctrinaire or

straitjacket formula and this is

particularly true in case of legislation

dealing with economic matters, where,

having regard to the nature of the

problems required to be dealt with,

greater play in the joints has to be

allowed to the legislature. The court

should feel more inclined to give

judicial deference to legislative

judgment in the field of economic

regulation than in other areas where

fundamental human rights are

involved. Nowhere has this admonition

been more felicitously expressed than

in Morey v. Doud [Morey v. Doud,

1957 SCC OnLine US SC 105 : 1 L Ed

2d 1485 : 354 US 457 (1957)] where

Frankfurter, J., said in his inimitable

style:

‘In the utilities, tax and

economic regulation cases,

there are good reasons for

judicial self-restraint if not

judicial deference to

legislative judgment. The

legislature after all has the

affirmative responsibility.

The courts have only the

power to destroy, not to

reconstruct. When these are

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added to the complexity of

economic regulation, the

uncertainty, the liability to

error, the bewildering conflict

of the experts, and the

number of times the Judges

have been overruled by

events — self-limitation can

be seen to be the path to

judicial wisdom and

institutional prestige and

stability.’”

(Emphasis Supplied)

55. The case of the appellant - State obviously is that the High

Court in terms of the impugned judgment has overstepped the

bounds of judicial review and that of the respondents is that the

High Court had only protected them against actions of the

appellant - State which are sans basis.

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

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made, it cannot deviate therefrom. It is this deviation which is a

subject matter of judicial review.

Question 12: DEARNESS ALLOWANCE - A

FUNDAMENTAL RIGHT ?

56. In terms of the impugned judgment, the High Court held

that payment of DA was a facet of Article 21 of the Constitution

of India. Before this Court, however, the opposing parties have

jointly agreed that none will press this question, either way. That

being the accepted position we need not give any finding thereon

and leave the question open to be decided in an appropriate case.

Question 13: DELAY AND LATCHES

57. Delay and latches do not defeat a claim on mere passage of

time in all cases. It does defeat a claim, however, when the delay

in question is unreasonable, unexplained and inequitable.

Whether any of these vices affect a claim is to be determined

inter-alia on the anvil of forum that has been invoked, the right

that has been asserted and the consequences in granting the relief

asked for. It is a doctrine of equity informed by public policy and

judicial discretion. Delay is said to reflect acquiescence and

waiver of right. For example, if a claim for seniority is brought

after a long lapse of time, acceptance of such a claim would be

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few and far between, if at all, given that the parties involved

remained quiet for number of years and also that the consequence

of such an act would be that the seniority of other serving

members would be disturbed as a result. It has been recognised

that in cases where there is a continuing wrong/recurring cause

of action as against completed causes of action, delay in bringing

a challenge would not be fatal. [See: Union of India v. Tarsem

Singh

84

; M.R. Gupta v. Union of India

85

]

S.M.Sikri J. (as he then was) in Tilokchand & Motichand

v. H.B. Munshi

86

, referred to Joseph Story’s Commentary on

Equity Jurisprudence as follows:

“16. Story on Equity Jurisprudence states the legal

position thus:

“It was, too, a most material ground, in all bills for

an account, to ascertain whether they were brought

to open and correct errors in the account recenti

facto; or whether the application was made after a

great lapse of time. In cases of this sort, where the

demand was strictly of a legal nature, or might be

cognizable at law, courts of equity governed

themselves by the same limitations as to entertain

such suits as were prescribed by the Statute of

Limitations in regard to suits in courts of common

law in matters of account. If, therefore, the ordinary

limitation of such suits at law was six years, courts

of equity would follow the same period of limitation.

In so doing, they did not act, in cases of this sort (that

is, in matter of concurrent jurisdiction) so much

upon the ground of analogy to the Statute of

Limitations, as positively in obedience to such

84

(2008) 8 SCC 648

85

(1995) 5 SCC 628

86

(1969) 1 SCC 110

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statute. But where the demand was not of a legal

nature, but was purely equitable; or where the bar of

the statute was inapplicable; courts of equity had

another rule, founded sometimes upon the analogies

of the law, where such analogy existed, and

sometimes upon its own inherent doctrine, not to

entertain stale or antiquated demands, and not to

encourage laches and negligence. Hence, in matters

of account, although not barred by the Statute of

Limitations, courts of equity refused to interfere

after a considerable lapse of time, from

considerations of public policy, from the difficulty

of doing entire justice, when the original transactions

had become obscure by time, and the evidence might

have been lost, and from the consciousness that the

repose of titles and the security of property are

mainly promoted by a full enforcement of the

maxim, vigilantibus, non dormientibus jura

subveniunt. Under peculiar circumstances, however,

excusing or justifying the delay, courts of equity

would not refuse their aid in furtherance of the rights

of the party; since in such cases there was no

pretence to insist upon laches or negligence, as a

ground for dismissal of the suit; and in one case

carried back the account over a period of fifty years.”

(Third Edn., p. 224, Section 529).”

58. In view of the discussion aforesaid and taking a cumulative

view of all the factors discussed in this judgment, we are of the

considered view that appellant - State’s contention as to delay

and latches must be rejected. This is more so for the reason that

when the law was set in motion the continuing non-payment of

appropriate rates of DA gave the respondent employees sufficient

cause of action and if recourse to law has been taken while the

cause of action subsists, there is obviously no question of

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dismissal of the same on delay. Also, were not the employees

pursuing the remedies available to them, relentlessly?

DIRECTIONS AND CONCLUSIONS

59. Apropos to the above, we pass the following order:

59.1 The appeals are partly allowed and the contempt

petitions stand disposed of.

59.2 To receive dearness allowance is a legally

enforceable right that has accrued in favour of the

respondents-employees of the State of West Bengal.

59.3 Given its incorporation in RoPA Rules, the

AICPI is the standard to be followed by the appellant

– State of West Bengal for determination of ‘existing

emoluments’.

59.4 The employees of the appellant-State shall be

entitled to release of arrears in accordance with this

judgment for the time 2008-2019;

On 16

th

May 2025, we had passed the following

order:

“O R D E R

1. Having heard Dr. Abhishek Manu Singhvi, Mr.

Huzefa Ahmadi learned senior counsel appearing

for the petitioners and Mr.P.S.Patwalia, learned

senior counsel appearing for the respondents, we

are of the considered view that the petitioner State

should release at least 25% of the amount due and

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 122 of 124

payable to all the employees in terms of the

impugned judgment dated 20.05.2022 passed by

the High Court at Calcutta in WPST No.102/2020

titled “The State of West Bengal & Ors.

Vs.Confederation of State Government

Employees, West Bengal & Ors.” and order dated

22-09-2022 in RVW No. 159/2022 22-09-2022 in

CAN No. 1/2022, within a period of six weeks

from today.

2. We find the Tribunal and the High Court to have

adjudicated the right of the employees to receive

Dearness Allowance pursuant to the 5th Pay

Commission. The paucity of funds is a ground

which stands negated both by the Tribunal and the

High Court. Whether or not the right to receive

Dearness Allowance is a fundamental right is an

issue, amongst others, this Court is called upon to

consider. We shall do so. However pending such

consideration, we are of the considered view that

the employees need not be kept waiting endlessly

to receive the money in question.

… … …”

Interim directions issued as herein above shall be complied with

immediately.

59.5 On account of subsequent change in law, if any,

any amount that would be disbursed in compliance of

this judgment shall not be liable to be recovered;

59.6 Considering the financial implications involved

and also recognising the need 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 to receive emoluments due to them,

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 123 of 124

we find it fit to constitute a Committee, to monitor the

implementation of the directions issued herein above,

as follows:

1) A retired Supreme Court Judge namely,

Hon’ble Ms. Justice Indu Malhotra-Chairperson.

2) Former Chief Justice/Judge of High Court

namely Justices Tarlok Singh Chauhan and

Goutam Bhaduri;

3) Comptroller and Auditor General of India or

senior most officer in his establishment,

nominated by him.

59.7 The import of the Committee shall be, in

consultation with the State authorities to determine:

a) total amount to be paid;

b) schedule of payments which then the State

shall be bound to follow;

c) Periodically verify the release of the amounts.

The exercise to determine (a & b) shall be carried out

before 6

th

March, 2026. The next consequential step

i.e. the payment of the first instalment, subject to the

determination of the Committee should be paid by 31

st

March, 2026.

C.A. Nos. @ SLP(C) Nos.22628-22630 of 2022 & connected matters Page 124 of 124

59.8 The Committee shall be accorded all facilities

and privileges including all necessary logistical

arrangements. The expenses shall be borne by the

appellant - State. In so far as the remuneration for the

Committee members is concerned, we leave the same

to the wisdom of the Chairperson.

59.9 It stands clarified that those employees of the

State who have retired in the pendency of this

litigation shall also be entitled to benefits in

accordance herewith.

60. Let the appellant - State, after payment of first instalment,

file a status report indicating the determination made by the

Committee, the schedule adopted, the status of the first payment.

List on 15

th

April, 2026 for compliance.

Pending applications, if any, shall stand closed. In the

circumstances there shall be no order as to cost.

…………………… ……………..J.

(SANJAY KAROL)

……………………….. …………J.

(PRASHANT KUMAR MISHRA)

New Delhi;

February 5, 2026.