Court directs State of Punjab and PSPCL to release all pending Dearness Allowance and Dearness Relief installments at Central Government rates within fortnight, condemns staggered payment plan as violative of Article 14
In a landmark judgment dated August 3, 2026, the Punjab and Haryana High Court (Division Bench) decisively ruled that the State of Punjab and the Punjab State Power Corporation Limited (PSPCL) are legally bound to implement the recommendations of the 6th Punjab Pay Commission concerning Dearness Allowance (DA) and Dearness Relief (DR) on the pattern of the Central Government. The court held that the indefinite withholding of accrued DA/DR installments and the adoption of a staggered 'Liquidation Plan' for payment of arrears without interest were arbitrary, discriminatory, and violative of Article 14 of the Constitution of India.
The case arose from multiple writ petitions and Letters Patent Appeals filed by serving and retired employees of the Punjab government and PSPCL, challenging the State’s failure to release DA/DR installments as per the Central Government pattern recommended by the 6th Punjab Pay Commission. The State had, after initially adopting the Central pattern, frozen installments between January 2020 and June 2021 and later devised a Liquidation Plan approved in February 2025 to pay arrears in phased installments spread over five financial years. The Plan also categorized pensioners by age for payment schedules ranging from 2 to 42 installments, with younger pensioners subjected to longer payment periods.
The High Court scrutinized the facts and legal submissions extensively. It noted that the 6th Punjab Pay Commission had unequivocally recommended that DA/DR be continued on the Central Government pattern, which the Punjab government’s Council of Ministers had approved on June 18, 2021. This decision was communicated and implemented through the Punjab Civil Services (Revised Pay) Rules, 2021, notified under Article 309 of the Constitution, and further instructions issued by the Governor of Punjab. PSPCL had also adopted these instructions mutatis mutandis.
Rejecting the State’s contentions that the Pay Commission’s recommendations were not binding and that the State had discretion under the Rules to fix DA rates, the court held that once the State adopted the recommendations and acted upon them by paying DA installments for several years, it created an enforceable right for its employees and pensioners. The court emphasized that withholding accrued DA/DR installments indefinitely, while continuing to pay full DA to All India Services officers (IAS/IPS/IFS) from the same State exchequer, was arbitrary and discriminatory.
The court further quashed the Liquidation Plan, condemning the staggered payment schedule without interest as manifestly arbitrary and violative of Article 14. It observed that creating a classification among pensioners based on age, resulting in the youngest pensioners waiting up to 42 months for arrears, was an unjustified discrimination lacking any rational nexus to the object of DA, which is to offset inflation uniformly for all retirees.
Responding to the State’s argument about financial constraints and competing welfare expenditures, the court reiterated that financial burden does not justify denying accrued benefits, citing authoritative Supreme Court precedents. It directed the State and PSPCL to release all pending DA/DR installments at the same rates paid to IAS/IPS/IFS officers within two weeks, with a 6% per annum interest on delayed payments. The Chief Secretary was tasked with ensuring compliance and filing a report by August 31, 2026, with a directive that the State refrain from unproductive expenditures such as large-scale advertising campaigns until dues are cleared.
The court also addressed procedural challenges regarding non-joinder of PSPCL and roster jurisdiction, finding no prejudice or jurisdictional infirmity. It affirmed that the relief granted operates in rem, extending to all similarly situated employees and pensioners, to avoid discrimination between litigants and non-litigants.
This ruling underscores the principle that a State’s acceptance of Pay Commission recommendations creates binding obligations enforceable by courts. It reinforces pensioners' and employees' rights to timely and full DA/DR payments, reflecting constitutional guarantees of equality and dignity. The judgment also clarifies the limits of judicial review in fiscal policy, distinguishing between policy formulation and enforcement of legal rights.
Bottom Line:
Dearness Allowance (DA) and Dearness Relief (DR) - State of Punjab and Punjab State Power Corporation Limited are bound to implement the 6th Punjab Pay Commission's recommendation for granting DA/DR on the Central Government pattern. The indefinite withholding of DA/DR instalments or staggered payment of arrears through a 'Liquidation Plan' without interest is arbitrary and violative of Article 14 of the Constitution.
Statutory provision(s): Constitution of India Articles 14, 21, 38, 39, 43, 166(1); Punjab Civil Services (Revised Pay) Rules, 2021; Punjab State Power Corporation Limited (Revised Pay) Regulations, 2021
