The Supreme Court on Friday decided that the state cannot distinguish between active and retired employees when enhancing allowances to combat inflation.
In a landmark ruling upholding the right to equality of pensioners, a bench comprising Justice Manoj Misra and Justice Prasanna P Varale dismissed the appeals filed by the Kerala State Road Transport Corporation (KSRTC) and held that inflation is hitting active employees and pensioners “equally hard”.
Justice Mishra, who delivered the ruling, said: “Equality is a dynamic concept that has many facets and dimensions, and cannot be restricted and confined within traditional and sectarian boundaries. From a positive point of view, equality contrasts with arbitrariness. In fact, equality and arbitrariness are two sworn enemies; one belongs to the rule of law in the republic while the other belongs to the whim and whim of an absolute monarch.”
Referring to Article 14 (Right to Equality) of the Constitution, the ruling said it prohibits caste legislation but allows for reasonable classification which must satisfy two dual tests.
She added that according to the twin tests, the classification must be based on a clear difference that distinguishes those who are grouped together from others, and secondly, “this difference must have a rational relationship to the goal that the law seeks to achieve.”
The bench said that the provisions cited by the KSRTC do not deal with the situation where there is no dispute as to the entitlement to the benefit in question.
“Here, retired employees are not only entitled to a pension, but are also entitled to a dearth benefit, which may be adjusted from time to time, on the basis of inflation. The issue, therefore, is not one of entitlement to the benefit, but of the differential rates at which those benefits are provided, depending on whether the recipient is a serving or retired employee.”
“When these benefits serve a common purpose and are linked to inflation, and inflationary pressures do not discriminate between a serving employee and a pensioner, fixing different rates of dearness allowance enhancement and dearth relief has no rational nexus with the objective sought to be achieved and is clearly discriminatory and arbitrary,” the bench said.
She said that there is no doubt that the financial crisis may be a guiding factor to postpone the disbursement of some benefits or may justify separate dates for the implementation of beneficial schemes.
“But once a decision has been made to provide certain allowances and also increase them, on the basis of inflation, fixing a higher rate of increase for those in service as compared to pensioners, would be arbitrary and a violation of Article 14…”
The case arose out of a 2021 government order issued by the Kerala government. To counter inflationary pressures, the government decided to enhance the dearness allowance (DA) for KSRTC employees by 14 per cent, while limiting the dearness allowance (DR) for pensioners to only 11 per cent.
The retired employees have challenged this discrepancy in the Kerala High Court.
While a single-judge bench originally rejected their petition, a sub-judicial bench later ruled in favor of the retirees, prompting the state and KSRTC to move the high court.
