Source: Internet: https://www.scconline.com/blog/post/2026/02/06/dearness-allowance-supreme-court-da-right/
Some Extracts:
Dearness Allowance is a Right, Not a Bounty; State cannot cite financial crunch to deny it: Supreme Court “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.”
Published on February 6, 2026 By Prachi Bhardwaj ...
Supreme Court: In a significant ruling on the rights of government employees, the Supreme Court has held that Dearness Allowance (DA) is a statutory and enforceable right, and not a discretionary benefit that a State can withhold citing financial constraints. The Bench of Sanjay Karol* and Prashant Kumar Mishra, JJ., made it clear that once Dearness Allowance becomes payable under the governing rules, the State is legally bound to release it, observing that denial of such dues directly impacts employees’ right to life and livelihood under Article 21 of the Constitution....
The Court emphasised that DA is not a bounty but a mechanism to protect employees from erosion of wages due to inflation. It explained that 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.” It further explained that 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....
Financial Constraint Not a Legal Defence to Deny DA
While examining whether the State could deny payment of DA on the ground of financial burden, the Supreme Court firmly rejected the plea of paucity of funds as a defence against enforcement of a crystallised legal right. The State had argued that granting DA as claimed would impose a massive financial liability and adversely affect its fiscal stability. The Court found this submission legally untenable once the right itself stood recognised and held that “Constitutional duties cannot be evaded on the ground of paucity of funds.” The Court observed that: “Once a legal right has been established… irrespective of whether it pertains to salary, pension, gratuity or other statutory 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.” It was, further, explained that once a legally enforceable right has been established, the defence of the 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 i.e. in accordance with AICPI....
State Must Act as a Model Employer
In a strong observation on governance, the Court reminded the State of its constitutional responsibility: “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.”...
The Court strongly observed that, “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 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.”...
Supreme Court’s Directions on Payment of DA Arrears
The Supreme Court upheld the employees’ entitlement to Dearness Allowance and ruled that the State cannot deny or indefinitely withhold DA once it is payable under the governing rules or resolutions. The plea of financial incapacity was rejected as insufficient in law. Hence, the Court directed the State to release the arrears for the time 2008-2019.
Retired Employees Also Covered
The Court clarified that employees who retired during the pendency of the litigation will also be entitled to the DA benefits under the judgment.
High-Level Committee to Oversee DA Payments
While recognising both the huge financial burden on the State and the employees’ right to receive their lawful dues, the Supreme Court chose a balanced, structured approach for implementation of its directions on DA. Instead of ordering an immediate lump-sum payout, the Court constituted a high-powered monitoring Committee to ensure phased and accountable compliance....
End of Extracts
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To,
The Government of India and L.I.C of India
Wage Revisions are essentially based on the fact that wages have to keep pace with rising inflation.
We must also get our Wage Revision Arrears along with Difference in Statutory Retirement Benefits like Provident Fund and Gratuity, as well as other perks arising due to wage revision, as we were on the Salary Rolls of the Corporation then. Even the SC has given its judgment in 2007 in this regard. But the Corporation 'conveniently' chooses to ignore it during every Charter for Wage Revision, indulging in "Willful Contempt of Court".
As L.I.C of India is a government owned enterprise, the Government of India is duty-bound to pay all our above-mentioned dues along with Compound Interest from the date on which Wage Revision was announced till the actual date of payment.
Quote from the SC judgment in the above-cited case: "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.”...
Interestingly L.I.C of India is awash with funds but thoroughly lacking in ethics, conscience, will-power and responsibility towards all of us.
Wake up LIC! Pay up ASAP. Before you divest your stake in the Corporation, or else the new stake-holders/share-holders/owners will have to pay up to clear the Balance Sheet and Books of Accounts!
We are only requesting for immediate payment of our legally rightful dues and not charity!
We have all been waiting for nearly three decades!
Awaiting an immediate and positive response at least this year!
Thanks.
Long-suffering, resigning, ex-employees of L.I.C of India
