Supreme Court Upholds Legal Right to Dearness Allowance for West Bengal Employees, Mandates Arrears Payment Court rules State cannot deviate from statutory formula based on Consumer Price Index; financial incapacity not a defense against payment; twice-yearly DA payment not mandatory
In a landmark judgment dated 5th February 2026, the Supreme Court of India delivered a detailed verdict in the appeal filed by the State of West Bengal against the Confederation of State Government Employees, West Bengal, affirming the employees' legal right to Dearness Allowance (DA) and directing the State to pay arrears for the period 2008-2019. The judgment underscores DA as a statutory entitlement linked to inflation, protected under constitutional principles, and clarifies the extent of State’s obligations in disbursing it.
Dearness Allowance, designed to neutralize the impact of inflation on real wages, was acknowledged by the Court as integral to "existing emoluments" under the West Bengal Services (Revision of Pay and Allowance) Rules, 2009 (RoPA Rules). The Court emphasized that the State had incorporated the Central Government’s method of calculating DA based on the All-India Consumer Price Index (AICPI) with base 1982=100, thereby creating a legal right for employees to receive DA adjusted accordingly.
The Court rejected the State's attempts to justify non-payment or delayed payment of DA by citing financial constraints, affirming that such statutory rights cannot be negated by paucity of funds. It stated that once a legal right accrues, the State’s obligation to pay is mandatory, and failure to do so violates employees’ rights, potentially infringing their right to life and dignity under Article 21 of the Constitution.
However, the Court clarified that while DA is a statutory right, the RoPA Rules do not mandate payment of DA twice a year, as is the practice in the Central Government. Therefore, employees cannot claim a right to biannual payments, and the State retains discretion over the frequency of DA disbursement within the statutory framework.
The Court also held the subsequent memoranda issued by the State, which deviated from the AICPI-based calculation, to be ultra vires and arbitrary. It underscored that executive instructions cannot override statutory rules framed under Article 309 of the Constitution and that any deviation from the formula must be backed by a formal amendment, not mere administrative orders.
Addressing claims of discrimination, the Court found no justification for paying different DA rates to employees based on their place of posting within or outside the State, holding that employees of the State of West Bengal, whether posted in Kolkata, New Delhi, or Chennai, form a homogeneous class entitled to DA calculated uniformly by reference to AICPI.
Recognizing the significant arrears involved, the Court constituted a high-powered Committee headed by retired Supreme Court Justice Indu Malhotra to oversee the computation and phased release of DA arrears, balancing the employees’ rights with the State’s fiscal concerns. The Committee is tasked with determining total payable amounts and scheduling payments, with the first installment expected by 31st March 2026.
Importantly, the judgment also states that employees retired during the pendency of litigation are entitled to benefits and that the State cannot recover amounts already paid in compliance if subsequent laws alter DA provisions.
This decision marks a significant affirmation of employees’ rights to inflation-adjusted pay and limits the State’s ability to circumvent statutory obligations on financial grounds. It also clarifies the constitutional and legislative contours of DA, reinforcing the principle that statutory benefits must be honored to uphold dignity and economic security.
Bottom Line:
Dearness Allowance (DA) is a legally enforceable right of State Government employees, determined by the All-India Consumer Price Index (AICPI), and its non-payment cannot be excused by the State's financial incapacity; however, the State is not obligated to pay DA twice a year as per Central Government pattern.
Statutory provision(s): Constitution of India Articles 14, 21, 162, 246, 248, 309; West Bengal Services (Revision of Pay and Allowance) Rules, 2009; Administrative Tribunal Act, 1985 (Section 19)
