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State Government not obligated to adopt Dearness Allowance revised by the Central Government: Supreme Court

kartik mago 15 Feb 2019 3:11am

State Government not obligated to adopt Dearness Allowance revised by the Central Government: Supreme Court

An order by the Madras High Court directed the Electricity Board to pay Dearness Allowance at the rate of 49% with effect from 01.01.2002 to its employees on par with the Central Government employees.

The Board approached the Supreme Court of India with the contention that there is a crisis in the financial condition of the Board. The payment of revised Dearness Allowance (as per the disputed period of time) would affect more than 80,000 employees which would have an adverse implication on the Board.

The contention was recognized by the Apex Court and it held that the revision of Dearness Allowance depends upon the ability and financial capacity of the employer. The Bench observed:

"Having regard to the difficult financial situation which the State and the Board were facing and having regard to the terms of the settlement, respondent(s) union cannot seek for sanction of enhanced rate of Dearness Allowance on par with the Central Government employees."

Another observation made by the Court was that each State Government will follow their own rate of Dearness Allowance payable to their employees and they may adopt the revised Dearness Allowance of the Central Government. In the light of this, the Court said:

"There is no rule or obligation on the State Government to always adopt the Dearness Allowance as revised by the Central Government. It is absolutely not necessary for the State Government to adopt the Dearness Allowance rates fixed by the Central Government. It should be looked from the financial position of the State Government to adopt its own rates/revised rates of Dearness Allowance. The Board, being the State Government undertaking, the money has to come from the State Government.”

Tagged: MadrasHighCourt   supremecourt   centralgovernment  
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