Differential rates of dearness allowance and relief for serving employees and pensioners are discriminatory and violate Article 14 of the Constitution as both are similarly affected by inflation.

JUDGMENT :

MANOJ MISRA, J.

1. Leave granted.

2. These two appeals impugn a common judgment and order of the High Court of Kerala at Ernakulam¹[The High Court] dated 22.11.2022 passed in Writ Appeal Nos.131 and 202 of 2022 which arose from W.P. (C) No.12062 of 2021 and W.P. (C) No.6411 of 2021. As these appeals impugn a common judgment, they were heard together and are being decided by a common judgment.

ISSUE

3. The short question posited for our consideration in these appeals is: If dearness allowance²[DA] and dearness relief³[DR] are to be added on salary and pension payable to serving employees and retired employees, respectively, whether there could be a higher rate for enhancement of DA than what it is for DR?

FACTS

4. Retired employees of Kerala State Road Transport Corporation⁴[KSRTC] filed a writ petition questioning the lower rate fixed for enhancement of DR on pension than what was fixed for enhancement of DA on salary. Their grievance was that the serving employees got enhancement of DA by 14 per cent whereas the pensioners’ DR was enhanced by 11 per cent. Claiming that there was no rationale for different rates, and the same violated the mandate of Article 14⁵[Article 14. – The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India] of the Constitution of India⁶[Constitution], writ petitions were filed before a Single Judge of the High Court.

5. The learned Single Judge, vide order dated 14.12.2021, dismissed the writ petitions holding that serving employees and pensioners do not constitute one class, and therefore, different rates of enhancement are permissible.

6. Aggrieved by the order of the learned Single Judge, intra court appeals were filed before a division bench of the High Court.

7. The Division Bench, after considering the submissions, formulated the following question for its consideration:

“Whether, after having taken a decision to extend the benefits of the order of the State Government declaring the enhancement of DA/DR to its employees and pensioners, to the KSRTC and its employees and pensioners, the State Government/KSRTC could effect a classification between the employees and pensioners of KSRTC for the purposes of granting the DA/DR at differential rates?”

8. After considering several decisions of this Court, the High Court held as under:

“15. The principles that can be gleaned from the aforesaid decision, when applied in the context of the cases before us, compel us to hold that the action of the State and the KSRTC in restricting the benefit of enhancement of DR to the pensioners of KSRTC to 109 % with effect from March, 2021, while extending the benefit of enhanced DA to its employees @ 112 % with effect from March, 2021, is to be seen as discriminatory and violative of Article 14 of our Constitution. It cannot be disputed that a valid classification must be justified vis-a-vis the object that is sought to be achieved through the measure that is adopted by the Government. In the cases before us, the object of extending an enhanced rate of DA/DR was essentially to balance the effects of ongoing inflation so as to ensure that the inflation does not interfere with the enjoyment of life to which an employee /pensioner is accustomed. Through the payment of the allowances in question, the objective aforesaid was to be attained, both in respect of employees as well as the pensioners. A restriction of the enhanced benefit to employees alone to the exclusion of pensioners on the specious plea of reasonable classification, appears to us to be violative of the equality clause enshrined in our Constitution. As already noticed, while it was open to the State Governm