The Supreme Court on Thursday ruled in favour of West Bengal government employees in the long-standing dispute over payment of dearness allowance (DA) arrears for the period 2008-2019, holding that they have a legally enforceable right to DA calculated in accordance with the All-India Consumer Price Index (AICPI).
However, the court partly allowed the state’s appeal by holding that employees are not entitled to the payment of DA twice a year.
A Bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra delivered the verdict in the case between the State of West Bengal & employees bodies including the Confederation of State Government Employees, West Bengal, rejecting the state’s defence that financial constraints prevented adherence to the AICPI-based formula.
“To receive dearness allowance is a legally enforceable right that has accrued in favour of the employees of the state of West Bengal. Given its incorporation in the ROPA Rules, AICPI is the standard to be followed by the appellant state for determining existing emoluments,” the court held, directing payment of DA arrears from 2008 to 2019 in accordance with its judgment.
The court noted that the method of calculating DA with reference to AICPI was consciously adopted by the State in the West Bengal (Revision of Pay and Allowance) Rules, 2009 (ROPA).
Having done so, the state could not deviate from that formula through a series of executive or clarificatory memoranda, the Bench observed.
“In sum, DA by its very nature is non-static, fluid and subject to change. How that change is to be carried out is through AICPI.
Once DA was defined using it, to take a different path would be impermissible,” the court said, terming the state’s deviation as manifestly arbitrary and capricious.
The Bench categorically rejected the state’s plea of financial difficulty, holding that a government cannot shirk statutory obligations of its own creation.
“The least that is expected of a state in a democracy is that it honours its obligations and commitments… It is not open for the appellant-state to avoid paying DA on account of financial difficulty,” the court observed.
The court was also not persuaded by the state’s argument that adopting the AICPI method would impact federalism or violate separation of powers.
It noted that while the state was free to change the method of DA calculation by framing new rules under Article 309 of the Constitution, it chose not to do so and instead issued executive instructions, which could not override statutory rules.
However, the Bench accepted the state’s contention that its employees were not entitled to payment of DA twice a year, as is the case with central government employees.
“The ROPA Rules nowhere provide that DA will be or can be paid twice a year,” the court clarified.
Tracing the litigation history, the court noted that employees had approached the West Bengal Administrative Tribunal in 2016, alleging non-payment of DA in line with the cost-of-living index.
While the tribunal initially dismissed the plea in 2017, the Calcutta High Court set aside that order and remanded the matter.
Subsequently, the tribunal directed the clearance of DA arrears, a decision upheld by the High Court, which termed DA a legally enforceable and even a fundamental right.
The state then moved to the Supreme Court.
While leaving open the broader question of whether the right to DA is a fundamental right, the Supreme Court held that employees had a legitimate expectation of being paid DA as per AICPI once the ROPA Rules were notified.
To ensure compliance, the Court constituted a monitoring panel headed by retired Supreme Court judge Justice Indu Malhotra, along with retired Jharkhand High Court Chief Justice Tarlok Singh Chauhan, retired Chhattisgarh High Court judge Justice Goutam Bhaduri, and the Comptroller and Auditor General of India or a senior nominee.
The panel has been tasked with determining payable amounts and preparing a payment schedule by 6 March, with the first instalment to be paid by 31 March.
The court also directed immediate compliance with its interim order to pay 25 per cent of the DA arrears and clarified that retired employees, dependent on the outcome of the litigation, would also be entitled to benefits in accordance with law.
The matter has been listed on 15 May to review compliance with the court’s directions.
Senior advocates Kapil Sibal, Shyam Divan and Huzefa Ahmadi appeared for the State of West Bengal, while senior advocates Gopal Subramaniam, PS Patwalia, Bikash Ranjan Bhattacharya and Karuna Nundy represented the employees.