No difference between employees and pensioners in DA benefits: SC

The Supreme Court of India has ruled that the State cannot differentiate between serving employees and pensioners while granting inflation linked benefits, holding that both must receive equal treatment when allowances are revised.

Dismissing appeals filed by the Kerala government and Kerala State Road Transport Corporation, the bench of Justice Manoj Misra and Justice Prasanna B Varale reaffirmed that inflation affects everyone equally and therefore cannot justify unequal rates of relief.

The court was hearing a challenge to a 2021 government order in Kerala that increased Dearness Allowance (DA) for serving employees by 14 per cent, while limiting Dearness Relief (DR) for pensioners to 11 per cent. The High Court had already ruled in favour of pensioners before the matter reached the Supreme Court.

Explaining the principle behind its decision, the court noted that DA is paid to serving employees while DR is given to pensioners , but both serve the same purpose: protecting income from rising prices. While the names differ, the function is identical. Inflation affects daily living costs such as food, healthcare, rent, and essentials in the same way for both groups, making any distinction in rates unjustified.

The bench observed that once the State decides to grant inflation based relief, it cannot apply different percentages without a valid reason. It held that such differentiation has no rational link to the objective of neutralising inflation and violates the equality principle under Article 14 of the Constitution.

The court also clarified that although financial constraints may influence timing or rollout of welfare measures, they cannot justify unequal treatment in the rate of benefits once they are granted.

With this ruling, the Supreme Court has reinforced that DA and DR, though differently named, are fundamentally the same inflation adjustment mechanism , and must therefore rise equally to ensure fairness between employees and pensioners.