State can't differentiate between serving and retired employees in respect of DA: Supreme Court

New Delhi: The Supreme Court on Friday said that the state cannot differentiate between serving employees and pensioners while enhancing allowances meant to counter inflation, as “inflationary pressures do not discriminate between a serving employee and a pensioner.”

Upholding the right to equality for retirees, a bench of Justices Manoj Misra and Prasanna B Varale said, “In our view, when those benefits serve a common purpose and are linked to inflation, and inflationary pressures do not discriminate between a serving employee and a pensioner, fixing different rates of enhancement of dearness allowance and dearness relief have no rational nexus to the object sought to be achieved and are clearly discriminatory as well as arbitrary.”

The court said that no doubt a financial crunch might be a guiding factor to defer disbursement of certain benefits or may justify separate dates for implementation of beneficial schemes.

“But once a decision is taken to provide certain allowances as also to increase them, based on inflation, fixing a higher rate of increase for the ones who are serving than the ones who have retired, would be arbitrary and violative of Article 14 of the Constitution,” the bench said.

The court dismissed the appeals filed by the State of Kerala and the Kerala State Road Transport Corporation (KSRTC) against the High Court's 2022 judgment, which held that a classification between employees and pensioners was not justified.

The bench emphasized the object and purpose of dearness allowance or dearness relief is to mitigate the hardship faced by salaried employees/pensioners due to inflation.

The court noted the government order in question increases the rate of DA by 14 per cent and DR by 11 per cent, even though the increase is to serve a common object, which is to mitigate the hardship faced by the serving employees and pensioners on account of inflation.