State Can't Solve Its Financial Crisis By Withholding Employees' And Pensioners' Dues: P&H High Court

The Punjab and Haryana High Court has dismissed a batch of Letters Patent Appeals filed by the Punjab Government and Punjab State Power Corporation Limited (PSPCL), affirming that once the State adopted the Central Government pattern for grant of Dearness Allowance and Dearness Relief, it incurred a binding obligation to release the accrued instalments and could not defer them indefinitely under the guise of financial constraint.Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor said, "A welfare State cannot balance its budget by silently taxing the erosion of its own employees' and pensioners' subsistence, that in substance, is what indefinite withholding of DA/DR amounts to, for every month of non-release, the cost of inflation is transferred from the exchequer to the kitchen of the employee and the pensioner." The Court said that that the plea of financial burden fares no better. "The figures placed before us, i.e., an annual salary and pension outgo of approximately Rs. 58,064.05 crore, and an arrear liability of Rs. 14,191 crore, establish the magnitude of the obligation, not the impossibility of performing it, and the law on the point is definite," it noted.The division bench said that the State employees are right in submitting that DA, in its constitutional setting, gives practical effect to Articles 21, 38, 39 and 43 of the Constitution. It is the mechanism by which the promise of a living wage retains its substance. "We also find that respondents' argument, that while the issue of financial constraints is being raised as a ground for withholding the legitimate dues of the State's own employees, however, as per the information available in the public domain, the State is expending large amounts of money on grant of freebies, doles, advertorial campaigns, and other expenditure, which would not strictly fall within the domain of essential expenditure by a welfare State, cannot be brushed aside, lightly. In any case, the legitimate dues that are payable to the employees of the State cannot be withheld on the ground of any new alleged welfare schemes," it added.The bench emphasised that, "Viewed in any manner, large scale advertising campaigns in print or social media and other unproductive expenses cannot justify denial of dues admissible to the State employees."The Court also issued a pointed direction restraining the State from unproductive expenditure pending compliance "till all such dues are cleared, the State of Punjab shall not resort to any unproductive expenditures, such as large-scale advertising campaigns in print or social media, as these expenses cannot justify the denial of dues admissible to State employees."The 6th Punjab Pay Commission, which submitted its report on 30.04.2021, recommended that the grant of Dearness Allowance on the basis of the All India Consumer Price Index (AICPI) should be continued on the Central Government pattern. The Department of Finance, Government of Punjab, recommended acceptance of this recommendation, and the Council of Ministers, in its meeting on 18.06.2021, approved the proposals of the Finance Department. The decision was translated into the Punjab Civil Services (Revised Pay) Rules, 2021, notified under the proviso to Article 309 of the Constitution of India, and was implemented through successive instructions issued in the name of the Governor, granting DA at rates mirroring the Central 7th CPC series.PSPCL adopted the State's instructions, with the approval of its Board of Directors, and framed the Punjab State Power Corporation Limited (Revised Pay) Regulations, 2021 on the same pattern.However, from 01.07.2021 onwards, the State began falling behind the Central DA rates. Whereas the Central Government DA progressed from 17% to 60% in successive instalments, the State of Punjab's DA remained at 42% as of the date of the litigation, with four pending instalments (from 42% to 55%) kept in abeyance, pending a decision.On 13.02.2025, the Council of Ministers approved a Liquidation Plan for phased payment of accumulated arrears — covering pay/pension arrears for 01.01.2016 to 30.06.2021 and DA/DR arrears for 01.07.2021 to 31.03.2024 — involving a total liability of approximately Rs. 14,191 crore, phased over five financial years (2024-25 to 2028-29). For pensioners below 75 years of age, the Plan provided for payment in as many as 42 monthly instalments. The Plan was adopted by PSPCL vide Finance Circular No. 03/2025 dated 03.04.2025.A Single Judge, vide the impugned common judgment dated 08.04.2026, allowed the writ petitions filed by retired and serving employees of PSPCL and the Municipal Corporation, Ludhiana, quashing the Liquidation Plan as violative of Article 14, directing payment of all arrears by 30.06.2026, and directing the grant of all pending DA/DR instalments at the rates applicable to IAS/IPS/IFS officers. The judgment was held to operate in rem.The Punjab Government and PSPCL preferred Letters Patent Appeals...

State Can't Solve Its Financial Crisis By Withholding Employees' And Pensioners' Dues: P&H High Court

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State Can't Solve Its Financial Crisis By Withholding Employees' And Pensioners' Dues: P&H High Court

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