The Supreme Court on Friday ruled that a State cannot give pensioners a lower increase in Dearness Relief (DR) than the Dearness Allowance (DA) paid to employees. [State of Kerala v. M Vijayakumar & Ors]
A Bench of Justices Manoj Misra and Prasanna B Varale said that giving a higher increase to serving employees than to retired persons is arbitrary and violative of Article 14 of the Constitution.
The Court explained that both DA for employees and DR for pensioners serve the same purpose and help people deal with rising prices and the cost of living. Since inflation affects both working and retired persons in the same way, the Court held that there is no valid reason to give pensioners a lower increase.
“Indisputably, inflation hits both serving and retired employees with equal force. Therefore, differentiating the two in the rate of increase of DA and DR has no rational nexus to the object sought to be achieved,” the Court said.
The Court was dealing with a case arising from a Kerala government order under which employees of the Kerala State Road Transport Corporation (KSRTC) were given a 14% increase in DA, while pensioners received only an 11% increase in DR.
The State of Kerala had challenged the judgment of a Division Bench of the Kerala High Court, which had ruled in favour of pensioners.
Before the Supreme Court, the State argued that serving employees and pensioners form different classes and that granting different rates of DA and DR does not violate Article 14.
KSRTC supported this view, saying that it was facing financial constraints and that the lower increase in DR was a conscious decision based on its financial position.
On the other hand, the pensioners submitted that the object of DA as well as DR is to ensure that serving employees as well as pensioners do not suffer on account of inflation. Since inflation is common to both serving and retired employees, they argued that there is no rationale for differential rates.
The Court agreed with the pensioners.
It explained that while employees and pensioners are different groups, this difference has nothing to do with inflation. Since both DA and DR are meant to deal with rising prices, giving them different rates is not justified and fails the equality test, it added.
“Besides, equality is a dynamic concept with many aspects and dimensions, and it cannot be cribbed, cabined and confined within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness."
It further clarified that financial constraints may justify delaying benefits, but cannot justify giving lower benefits to one group when both are affected equally.
Accordingly, the Court dismissed the appeals filed by the State of Kerala and KSRTC and upheld the decision of the Division Bench of the High Court.
[Read Judgment]