Punjab & Haryana High Court Directs Punjab To Release Pending DA/DR, Quashes Staggered Pension Arrears Plan

The Punjab and Haryana High Court has directed the State of Punjab to release all pending installments of Dearness Allowance (DA) and Dearness Relief (DR) to its employees and pensioners in line with the Central Government pattern, holding that financial constraints cannot be a ground to deny accrued service benefits.

The Court also struck down the State's “Liquidation Plan” dated February 18, 2025, which staggered payment of pension arrears based on age, terming it arbitrary and violative of Article 14 of the Constitution.

Justice Harpreet Singh Brar said, "The letter/liquidation plan dated 18.02.2025...issued by respondent No.2-Department of Finance, Government of Punjab, is hereby quashed qua pensioners/family pensioners as the Government of Punjab has segregated them into three different categories for payment of arrears of revised pension/family pension (including DR arrears), arising out of the recommendations of the 6th Punjab Pay Commission, being violative of D.S. Nakara (supra) and All Manipur Pensioners Association..."

As such, the Government of Punjab and the respondent-Corporations are directed to pay the arrears of revised pension/family pension (including DR arrears) as per 6th Punjab Pay Commission to all their pensioners and family pensioners, within a period of 02 months i.e. on or before 30.06.2026, as has been paid to the pensioners/family pensioners up to the age of 85 years and above.

Background

The petitioners had challenged the State's failure to grant DA/DR installments in accordance with the recommendations of the 6th Punjab Pay Commission. Although the State had accepted payment of DA/DR on the “Central Government pattern,” it delayed implementation citing financial constraints.

They also assailed the liquidation plan, which divided pensioners into age-based categories for staggered payment of arrears. It was further highlighted that while State employees and pensioners were denied updated DA/DR, officers of All India Services (IAS/IPS/IFS) continued to receive full benefits from the same Consolidated Fund.

Judicial Review In Policy Matters

The Court reiterated that while policy decisions ordinarily fall within the executive domain, they are subject to judicial review if found arbitrary, irrational, or violative of constitutional provisions. It emphasized that constitutional courts retain the power to ensure accountability and uphold fundamental rights.

'Central Government Pattern' Must Be Followed In Substance

Interpreting the expression “Central Government pattern,” the Court held that it includes not only the rate and formula for calculating DA but also the timing and frequency of its revision.

It observed that once the State adopts this pattern, it must mirror the Central Government system in entirety. Accepting the pattern but delaying implementation defeats its very purpose.

The Court further held that once the recommendations of the Pay Commission are accepted, the State is bound to implement them fully, and the benefits flowing therefrom cannot be denied.

Financial Constraints No Defence

Rejecting the State's plea of financial difficulty, the Court held that financial constraints cannot justify denial of legitimate, accrued benefits.

It observed that Dearness Allowance is not a discretionary benefit but a mechanism to offset inflation, and withholding it undermines employees' real income and pensioners' dignity. The Court termed the situation a “self-created problem,” noting that the State ought to have made budgetary provisions after accepting the Pay Commission recommendations.

Liquidation Plan Held Unconstitutional

The Court declared the liquidation plan unconstitutional to the extent it classified pensioners based on age for payment of arrears.

Holding that all pensioners form a homogeneous class, the Court ruled that such classification lacked any rational nexus to the objective of mitigating inflation. It noted that inflation affects all pensioners equally, and forcing younger pensioners to wait years for arrears was arbitrary and discriminatory.

Parity Among Employees Mandatory

The Court also rejected the State's justification for granting DA/DR to All India Service officers under separate rules while denying the same to other employees.

It held that all employees and pensioners drawing emoluments from the same Consolidated Fund constitute a single class and must be treated equally. Any disparity in payment of DA/DR was found to be constitutionally impermissible.

Judgment To Apply To All Employees

Significantly, the Court held that its ruling would operate in rem, extending to all similarly situated employees and pensioners, and not just the petitioners.

It observed that once a policy is found unconstitutional, its invalidation must apply uniformly, and the State cannot compel each employee to litigate individually for relief.

Directions Issued

The Court issued the following directions:

The liquidation plan dated February 18, 2025, was quashed insofar as it imposed a tiered payment structure for pensioners. The State was directed to release arrears of revised pension and DR to all pensioners within two months, by June 30, 2026.

The State and its corporations were directed to release all pending DA/DR installments to employees and pensioners at the same rates applicable to All India Service officers, in accordance with the Central Government pattern, by June 30, 2026.

The Chief Secretary was directed to ensure compliance and file a report before the Court by July 2, 2026.

The Court further clarified that in case of non-compliance, the issue of awarding interest on delayed payments would remain open.

Title: Nirmal Singh Dhanoa and others v. Additional Chief Secretary to Government of Punjab, Department of Finance, Punjab Civil Secretariat, Chandigarh

Mr. Sunny Singla, Advocate and Ms. Ritti Aggarwal, Advocate for the petitioner(s) (in CWP-7291-2026).

Mr. Kanwar Abhay Singh, Advocate for the petitioner(s) (in CWP-9514-2026).

Mr. Rashpinder Singh Sohi, Advocate for the petitioner(s) (in CWP-10301-2026).

Ms. Anu Chatrath, Addl. A.G., Punjab/Senior Advocate with Mr. Maninder Singh, Addl. A.G., Punjab/Senior Advocate and Mr. Vikas Arora, DAG, Punjab assisted by Dr. V.N. Zade, IAS, Secretary (Expenditure). Mr. Neeraj Sharma, Advocate for respondent No.4 (in CWP-9514-2026). Mr. Rahul Sharma, Senior Advocate with Mr. Karundeep Singh, Advocate for respondent No.4 (in CWP-10301-2026).

Mr. Raman B. Garg, Amicus Curiae with Mr. Mayank Garg, Advocate, Ms. Komal Parveen, Advocate and Mr. Ajay Sharma, Advocate.

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