The Punjab and Haryana High Court has ordered the Punjab government to clear all up-to-date pending Dearness Allowance (DA) and Dearness Relief (DR) installments for its employees and pensioners within 15 days, while placing an immediate freeze on state-funded promotional campaigns until the dues are fully settled.
Strict Deadline And Penalty Imposed
A division bench comprising Acting Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor issued the directive while dismissing appeals filed by the Punjab government and the Punjab State Power Corporation Limited (PSPCL). The court ruled that if the state fails to release the funds within the two-week deadline, it will be required to pay a six percent simple interest penalty on the total outstanding amount. To ensure implementation, the bench ordered the Punjab Chief Secretary to oversee full compliance and submit a formal compliance affidavit by August 31, 2026.
Court Rejects Financial Inability Defense
The state government had appealed against earlier court orders by claiming it lacked the financial capacity to clear arrears exceeding Rs 15,000 crore. Rejecting this argument, the division bench noted public domain information showing that the state continues to allocate significant sums to freebies, subsidies, and advertising campaigns. The bench emphasized that unproductive expenditures and publicity drives across print and social media cannot justify withholding legitimate salary and pension entitlements from state personnel.
Wide Impact Across State Workforce
The decision is set to benefit nearly 800,000 active state employees and pensioners. With the implementation of the court order, individual monthly salaries could see an increase ranging from approximately Rs 10,000 to Rs 15,000. Under the ruling, state workers and retirees must receive DA and DR at parity with rates granted to All India Services officers—including IAS, IPS, and IFS cadres—in line with the central government pattern.
Legal Backdrop And Unpaid Arrears
The ruling upholds an April 8 judgment by a single bench of Justice Harpreet Singh Brar, which had directed the state and PSPCL to disburse 58 percent DA alongside arrears by June 30. The Punjab government currently pays 42 percent DA, leaving an 18 percent gap compared to central government standards. Employee groups pointed out that DA installments have remained unpaid since July 1, 2023, with certain pending allowances dating back to January 1, 2016.
The bench also rejected a government proposal to liquidate the pending arrears over five financial years and 42 interest-free installments for pensioners under 75 years of age, characterizing the schedule as discriminatory. Although the state argued that it introduced a new plan on February 18, 2025, and maintained that its base pay scales were already higher than those in other states, advocate Sunny Singla, representing employee organizations, argued that the government was bound by its June 2021 policy adopting central DA parity. Employee associations further cited Supreme Court rulings establishing that Dearness Allowance is an essential component of salary rather than a discretionary bonus.
