The Supreme Court has held that Dearness Allowance (DA) cannot be claimed as a fundamental right, and that financial constraints of a state government are a relevant factor in determining payment of such allowances.
The bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra clarified that employees may pursue remedies if there is a specific statutory or rule-based entitlement that is denied arbitrarily, but courts should not impose financial liabilities on governments in the absence of such binding provisions.
A dispute arose between the State of West Bengal and the Confederation of State Government Employees, West Bengal.
The case arose from demands by state government employees in West Bengal seeking payment of Dearness Allowance at rates comparable to those granted to Central Government employees. Employee associations argued that DA is meant to offset inflation and that denial or delay in payment violated their rights, including equality principles.
The Calcutta High Court had earlier ruled in favour of employees, directing the State to pay DA at rates similar to those provided to central government staff, treating the claim as enforceable.
The State of West Bengal challenged this ruling before the Supreme Court, contending that DA is governed by service rules, executive decisions, and fiscal policy, and that the financial capacity of the State must be taken into account.
The Supreme Court examined the nature of Dearness Allowance and clarified that dearness Allowance is not a fundamental right enforceable under the Constitution. The payment and revision of DA depend on statutory rules, government policies, and financial considerations. Courts must exercise restraint in directing governments to incur financial expenditure unless there is a clear statutory obligation.
The Court emphasised that paucity of funds does not automatically justify denial of a lawful entitlement, but at the same time, economic capacity and fiscal planning are legitimate considerations in determining allowances and pay structures.
A key aspect of the ruling was the Court’s recognition of the financial autonomy of state governments. The bench observed that compelling a state to match Central Government pay structures without examining fiscal implications could interfere with budgetary priorities and governance.
The Court noted that pay parity with Central Government employees is not an automatic or vested right, particularly where service conditions are governed by different rules and financial frameworks.
The Supreme Court held that the issue of DA must be considered within the framework of applicable rules, policies, and financial realities, rather than being treated as an absolute enforceable right equivalent to a constitutional guarantee.
Case Details
Case Title: Shashin Patel And Anr. Versus Uday Dalal And Ors.
Case No.: SLP (Civil) No(s). 36106 of 2025
Date: 05/02/2026
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