whether the order of the learned Single Judge directing the appellant-Board to pay Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to the members of respondent(s)-union on par with the Central Government employees is correct ? =the Dearness Allowance would be paid to the employees of the Board as granted by the State Government to its employees. It is pertinent to note that the representation of respondent-CITU dated 12.07.2002 was rejected by the Board vide order dated 13.09.2002 which refers to BP(FB) No.58 dated 18.07.1998 to the effect that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The learned Single Judge and the Division Bench did not keep in view the terms of the Settlement and the Board Proceeding BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness Allowance would be revised on par with the State Government employees and that it has been consistently followed by the appellant-Board. The High Court erred not keeping in view the extremely difficult financial position of the State Government and the Board and also the additional financial burden which would be imposed upon the appellant-Board if the demands of the respondent(s)-union are acceded to. The High Court, in our view, was clearly in error in allowing the writ petition and the impugned judgment cannot be sustained and liable to be set aside


Hon’ble Mrs. Justice R. Banumathi

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1653 OF 2019
(Arising out of SLP(C) No.25005 of 2015)
TAMIL NADU ELECTRICITY BOARD …Appellant
REP. BY ITS CHAIRMAN
VERSUS
TNEB-THOZHILALAR AYKKIYA …Respondent
SANGAM BY ITS GENERAL SECRETARY
WITH
CIVIL APPEAL NO. 1654 OF 2019
(Arising out of SLP(C) NO.14627 OF 2016)
J U D G M E N T
R. BANUMATHI, J.
Leave granted.

  1. These appeals arise out of the judgment dated 27.03.2015 in
    W.A. No.497 of 2015 and judgment dated 21.08.2015 in W.A.
    No.1166 of 2015 in and by which the High Court affirmed the order
    of the learned Single Judge directing the appellant-Board to pay
    Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to the
    members of respondent(s)-union on par with the Central
    Government employees.
    1
  2. These appeals relate to the claim of employees of the
    appellant-Board for the payment of difference of Dearness
    Allowance (DA) for a period of nine months as under:-
  • 4% of DA (difference of 49% – 45%) from 01.01.2002 to
    30.06.2002
  • 7% of DA (difference of 52% – 45%) from 01.07.2002 to
    30.09.2002
  1. Brief facts giving rise to these appeals are as under:-
    A Memorandum of Settlement dated 08.07.1998 was
    recorded under Section 18(1) of the Industrial Disputes Act, 1947
    between the appellant-Tamil Nadu Electricity Board (Board) and its
    workmen represented by unions for settlement of pay related
    issues. The Settlement covered about eighty thousand employees
    of the Board in Class III and IV service and it was for a period of
    four years from 01.12.1996 to 30.11.2000. The terms of
    settlement also dealt with the payment of Dearness Allowance.
    As per Clause 5 of the terms of settlement agreement, it was
    agreed that the Dearness Allowance rates will be revised twice in a
    year i.e. on 1st January and on 1st July taking into account the
    variations in the previous twelve months average of the All India
    Consumer Price Index numbers, adopting the same formula as
    followed by the State Government. In pursuance of the said
    settlement, order dated 18.07.1998 was issued by the appellantBoard in Board Proceedings BP (FB) No.58 wherein, it was inter alia
    provided that the revised Dearness Allowance would be sanctioned
    2
    to the employees of the Board as granted by the State
    Government to their employees at the same rate and from the
    same date. The Board by its various proceedings has been
    adopting the revised rate of Dearness Allowance payable to State
    Government employees at the same rate and from the same date.
  2. The Government of India, Ministry of Finance, Expenditure
    Department vide Office Memorandum dated 20.03.2002 enhanced
    the Dearness Allowance payable to Central Government
    employees from the existing rate of 45% to 49% w.e.f. 01.01.2002.
    The State Government faced acute financial crisis during the
    period 2001-2002 due to which, Government of Tamil Nadu was
    paying Dearness Allowance at the rate of 45% on that date to its
    employees. The appellant-Board also followed the same rate of DA
    at 45%. On 07.05.2002 and 12.07.2002, the respondent-CITU
    submitted representations to the Board. After giving personal
    hearing to the representatives of the respondent, the Chairman of
    the Board rejected the representation on 13.09.2002 stating that
    as per the settlement dated 08.07.1998, Dearness Allowance
    would be sanctioned to the employees of the Board as granted by
    the State Government to their employees at the same rate and
    from the same date.
  3. The Government of Tamil Nadu subsequently vide G.O.Ms.
    No.346 dated 21.10.2002 issued an order revising the Dearness
    Allowance from existing rate of 45% to 49% w.e.f. 01.10.2002 in
    3
    view of its difficult financial position. The appellant-Board also
    adopted G.O. Ms. No.346 dated 21.10.2002 and issued orders in
    BP(FB) No.58 dated 29.10.2002 revising the Dearness Allowance to
    49% from 01.10.2002 to its employees on par with the State
    Government employees.
  4. The Central Government revised the rates of payment of
    Dearness Allowance to Central Government employees from the
    existing rate of 49% to 52% w.e.f. 01.07.2002. The Government of
    Tamil Nadu vide G.O. No.215 dated 27.06.2003 revised the rate of
    Dearness Allowance to its employees w.e.f. 01.07.2003 from the
    existing rate of 49% to 52%. The appellant-Board adopting the
    G.O. No.215 dated 27.06.2003 revised the Dearness Allowance to
    its employees to 52% from 01.07.2003 on par with the State
    Government employees.
  5. Respondent-Union filed the writ petition in WP No.9525 of
    2003 before the High Court of Madras seeking direction to pay
    Dearness Allowance at the rate of 49% of the basic pay w.e.f.
    01.01.2002 to 30.06.2002 and at the rate of 52% of the basic pay
    w.e.f. 01.07.2002 respectively. Similarly, another respondent
    union-CITU filed the writ petition in WP No.36197 of 2002 with the
    same prayer. By order dated 14.09.2012, the learned Single Judge
    allowed the Writ Petition No.36197 of 2002 observing that the
    question involved was already concluded in W.P. No.10474 of 1999
    and held that it is not open to the Board to postpone the arrears of
    4
    Dearness Allowance and credit the same to the General Provident
    Fund account of the employee without the consent of the
    employees.
  6. By order dated 22.03.2013, Writ Petition No.9525 of 2003
    was also allowed in terms of the order passed in Writ Petition
    No.36197 of 2002 by holding that the Board cannot postpone the
    arrears of Dearness Allowance and credit the same to the General
    Provident Fund of the employee without the consent of the
    employees. The appeal preferred by the appellant-Board also
    came to be dismissed with the direction that the appellant-Board
    was liable to pay Dearness Allowance at the revised rate w.e.f.
    01.01.2002 to 30.09.2002.
  7. Mr. Ramamoorthy, learned senior Counsel for the appellantBoard has submitted that as per the settlement dated 08.07.1998,
    the Dearness Allowance rates will be revised twice in a year i.e. on
    1
    st January and on 1st July taking into account the variations in the
    previous twelve months average of the All India Consumer Price
    Index numbers adopting the same formula as followed by the State
    Government. It was submitted that the above settlement has been
    followed in Board Proceedings BP (FB) No.58 dated 18.07.1998
    which stipulates that the revised Dearness Allowance will be
    sanctioned as granted by the State Government to its employees
    and respondent(s) cannot seek for revision of Dearness Allowance
    contrary to what was granted by the State Government to its
    5
    employees. It was submitted that the High Court did not keep in
    view the well settled principle that the obligation to pay enhanced
    Dearness Allowance depends upon the employer’s financial
    position and other factors. It was contended that the High Court
    erred in holding that the issue is covered by judgment in W.P.
    No.10474 of 1999 which relates to entirely a different issue i.e.
    payment of arrears of Dearness Allowance in cash instead of
    crediting the arrears of Dearness Allowance into the General
    Provident Fund account of the employees concerned. Learned
    senior counsel urged that at the relevant time and also presently,
    appellant-Board is facing extremely difficult financial position and
    the payment of revised Dearness Allowance for the disputed period
    to more than eighty thousand of its employees would have a huge
    financial implication on the Board.
  8. Per contra, Mr. Chandrasekhar, learned counsel for the
    respondent has submitted that the employees of TNEB are not
    government servants and there is no parity in their service
    conditions and status and hence, comparison of the Board
    employees with the employees of the State Government will be
    inapposite. Learned counsel inter-alia submitted that employees of
    TNEB are governed by the labour laws like Industrial Disputes Act,
    Payment of Wages Act, Payment of Bonus Act, etc. and when the
    settlement dated 08.07.1998 stipulates that the revision in
    Dearness Allowance depends upon the All India Consumer Price
    6
    Index number, the Board by its Board Proceedings BP (FB) No.58
    dated 18.07.1998 ought not to have unilaterally changed the terms
    of the settlement restricting the payment of Dearness Allowance to
    the Board employees on par with the employees of the State
    Government. It was further submitted that restricting the payment
    of revised Dearness Allowance only from 01.10.2002 instead of
    giving effect from 01.01.2002 is contrary to the agreed terms in
    the settlement dated 08.07.1998.
  9. We have carefully considered the submissions and perused
    the impugned judgment and materials on record. The following
    points arise for consideration:-
    (i) Pursuant to the Memorandum of Settlement dated
    08.07.1998 recorded under Section 18(1) of the Industrial
    Disputes Act, 1947 and BP (FB) No.58 dated 18.07.1998,
    when the Board has been adopting the formula of the
    State Government in revising the rate of Dearness
    Allowance on par with the State Government employees,
    whether the High Court was right in directing the
    appellant-Board to pay the revised DA at the rate of 49%
    from 01.01.2002 and 52% from 01.07.2002?
    (ii) When the settlement dated 08.07.1998 between the
    appellant and the unions has been followed by the Board
    stipulating that the revision of Dearness Allowance would
    be on par with the rate sanctioned by the State
    Government to its employees, in deviation therefrom,
    whether the respondents are right in insisting upon
    revision of Dearness Allowance at the abovesaid rates?
    7
  10. In the settlement dated 08.07.1998 recorded under Section
    18(1) of the Industrial Disputes Act, 1947 between the appellantBoard and the respondent-CITU, Clause 5 of the settlement deals
    with Dearness Allowance which reads as under:-
    “5. Dearness Allowance
    The revised rates of Dearness Allowance for various pay
    ranges will be as indicated in Annexure III. The Dearness
    Allowance rates will be revised twice in a year on 1st
    January and 1st July taking into account the variations in the
    previous twelve months average of the All India Consumer
    Price Index numbers, adopting the same formula as
    followed by the State Government.”
    On 18.07.1998, orders were issued by the Board in Board
    Proceedings BP (FB) No.58 in accordance with the terms of the
    provisions of the settlement dated 08.07.1998 stating that the
    revised Dearness Allowance would be sanctioned to the employees
    of the Board as granted by the State Government to their
    employees at the same rate and from the same date. The relevant
    portion of the order in BP (FB) No.58 which deals with Dearness
    Allowance reads as under:-
    “III Dearness Allowance
    (a) The existing pay structure has been revised at All India
    Consumer Price Index of 1510 points and the revised dearness
    allowance will be sanctioned to the employees of the Board as
    granted by the State Government to their employees at the
    same rates and from the same date.”
  11. Pursuant to the settlement and Board Proceedings
    BP(FB)No.58 dated 18.07.1998, the Board passed various
    orders/proceedings adopting the revised Dearness Allowance rates
    8
    as per the State Government orders revising Dearness Allowance
    to the State Government employees. We may refer to few earlier
    Government orders followed by the Board orders adopting the
    same rate of revised Dearness Allowance rates with effect from the
    same date:-
    (i) On 12.05.2001, Proceedings (Per) BP (FB) No.24 was
    issued by the Board whereby the Board adopted the
    revised DA rates as per GO No.188 dated 26.04.2001 i.e.
    43% w.e.f. 01.01.2001.
    (ii) On 31.12.2001, by G.O. No.525, the Tamil Nadu
    Government had revised the rate of DA to 45% to the
    State Government employees from 01.07.2001. Adopting
    the revised Dearness Allowance rates as per G.O No.525
    dated 31.12.2001, Board vide its proceedings BP (FB)
    No.3 dated 17.01.2002 adopted the revised Dearness
    Allowance rates i.e. 45% w.e.f. 01.07.2001.
    It is clear from the above that the Board has been sanctioning the
    revised rates of Dearness Allowance at the same rate and from the
    same date as has been sanctioned by the State Government to its
    employees.
  12. On 20.03.2002, the Government of India enhanced the
    Dearness Allowance for the Central Government employees from
    45% to 49% w.e.f. 01.01.2002. Due to extremely difficult financial
    position which the State Government was facing, the State
    Government was paying the Dearness Allowance at the rate of
    45% on the said date without enhancing it to 49%. Accordingly,
    the appellant-Board also followed the same rate i.e. 45% as paid
    by the State Government on the said date. As pointed out earlier,
    9
    Chairman of the Board rejected the respondent-CITU’s
    representation on 13.09.2002 stating that as per the settlement
    dated 08.07.1998 followed by Board Proceedings BP (FB) No.58
    dated 18.07.1998, Dearness Allowance would be sanctioned to the
    employees of the Board as granted by the State Government to
    their employees at the same rate and from the same date. While
    rejecting CITU’s representation, it was made clear that the State
    Government had not issued any order revising Dearness Allowance
    at the rate of 49% w.e.f. 01.01.2002 on par with the Central
    Government employees.
  13. On 21.10.2002, the Government of TN issued G.O. Ms.No.346
    revising the Dearness Allowance from 45% to 49% w.e.f.
    01.10.2002 in view of extremely difficult financial position faced by
    the State Government. Para 3 of the said G.O. reads as under:-
    “3. In view of the extremely difficult financial position faced by
    the Government, the Government after having discussions with
    the Tamil Nadu Government Officer’s Union, Tamil Nadu Arasu
    Aluvalarkazhagam (C&D Group) and Tamil Nadu Secretariat
    Association, has decided to sanction one additional instalment of
    Dearness Allowances at 4% to the employees of the State with
    effect from 01.10.2002. Accordingly, the Government now
    sanction the revised rate of Dearness Allowance to the State
    Government employees as indicated below:-
    Date from which payable Revised rate of DA
    (per month)
    1
    st October 2002 49 per cent of pay
    Following the State Government’s G.O. Ms.No.346, appellant-Board
    vide orders in BP (FB) No.58 dated 29.10.2002 revised the
    10
    Dearness Allowance to its employees from 45% to 49% w.e.f.
    01.10.2002 and thus followed the terms of the settlement dated
    08.07.1998 followed by the Board Proceedings BP (FB) No.58 dated
    18.07.1998.
  14. Likewise, when Government of India revised the rate of
    Dearness Allowance from 49% to 52% w.e.f. 01.07.2002, the State
    Government as well as the Board have been paying Dearness
    Allowance at the rate of 49% only. On 27.06.2003, the State
    Government issued G.O. No.215 revising the Dearness Allowance
    from 49% to 52% w.e.f. 01.07.2003. Accordingly, on 09.07.2003,
    Board issued orders revising the Dearness Allowance from 49% to
    52% from 01.07.2003 adopting the G.O. No.215 dated 27.06.2003.
  15. Comparative table of the Dearness Allowance paid to the
    employees of the Central Government, State Government and the
    Board in the relevant period are as under:-
    From Percentage of
    Dearness
    Allowance
    allowed by the
    Central
    Government
    Percentage of
    Dearness
    Allowance
    allowed by the
    State
    Government
    Percentage
    of Dearness
    Allowance
    allowed by
    the appellant
    Board
    01.01.2002 49% 45% 45%
    01.07.2002 52% 45% 45%
    01.10.2002 52% 49% 49%
    01.01.2003 55% 49% 49%
    01.07.2003 59% 52% 52%
    11
  16. As discussed earlier, payment of Dearness Allowance is
    governed by the Wage Settlement dated 08.07.1998 and the
    Board Proceedings BP (FB) No.58 dated 18.07.1998. The increases
    in Dearness Allowance which fell due w.e.f. 01.07.1998,
    01.01.1999, 01.07.1999, 01.01.2000, 01.07.2000, 01.01.2001 and
    01.07.2001 were all paid as per the above agreed term only. As
    per settlement dated 08.07.1998, the Dearness Allowance rates
    will be revised twice in a year i.e. on 1st January and on 1st July
    taking into account the variations in the previous twelve months
    average of the All India Consumer Price Index numbers adopting
    the same formula as followed by the State Government. The
    Board Proceeding BP(FB) No.58 dated 18.07.1998 stipulated
    that the revised Dearness Allowance would be sanctioned to the
    employees of the Board as granted by the State Government to
    their employees at the same rate and from the same date. It is
    pertinent to note that in the subsequent wage settlement entered
    into between the appellant-Board and the respondent-union on
    15.10.2005 (w.e.f. 01.12.2002) stipulates the existing practice of
    sanction of Dearness Allowance to the employees of the Board as
    granted by the State Government to their employees at the same
    rate and from the same date. The subsequent settlement also
    reiterates that all along the revision of Dearness Allowance to the
    employees of the Board was on par with the employees of the
    State Government. The respondent(s) union having agreed that
    12
    the revised Dearness Allowance will be sanctioned as granted by
    the State Government to their employees, the appellant-Board has
    been consistently adopting the revised rates of Dearness
    Allowance following various State Government orders. Having
    agreed for the grant of revised Dearness Allowance on par with the
    State Government employees, the respondent(s) union cannot
    seek for revision in Dearness Allowance at a higher rate than what
    was granted by the State Government to its employees.
  17. The appellant-Board has been adopting the formula of the
    State Government in revising the rate of Dearness Allowance,
    which was settled under Section 18(1) of the Indian Disputes Act,
    1947 and the settlement between the appellant-Board and the
    respondent union. The appellant-Board is not bound to adopt the
    revised rate of Central Government, when the settlement
    prescribes the formula to be adopted from the rates of the State
    Government.
  18. The High Court, in our view, did not keep in view the well
    settled principles that the revision of wage or Dearness Allowance
    would depend upon the ability and the financial position of the
    employer. In G.O. Ms. No.346 in and by which the Government of
    TN revised the Dearness Allowance from 45% to 49% (w.e.f.
    01.10.2002), it was made clear that the Government of TN was
    facing extremely difficult financial position and therefore, decided
    to sanction additional four per cent (45% to 49%) of Dearness
    13
    Allowance to the employees of the State Government w.e.f.
    01.10.2002. Having regard to the difficult finance situation which
    the State and the Board were facing and having regard to the
    terms of the settlement, respondent(s) union cannot seek for
    sanction of enhanced rate of Dearness Allowance on par with the
    Central Government employees.
  19. Each State Government following their own rate of Dearness
    Allowance payable to their employees may be adopting the
    revised Dearness Allowance of the Central Government. There is
    no rule or obligation on the State Government to always adopt the
    Dearness Allowance as revised by the Central Government. It is
    absolutely not necessary for the State Government to adopt the
    Dearness Allowance rates fixed by the Central Government. It
    should be looked from the financial position of the State
    Government to adopt its own rates/revised rates of Dearness
    Allowance. The Board, being the State Government undertaking,
    the money has to come from the State Government. Keeping in
    view the extremely difficult financial position of the State
    Government, Board’s order revising the Dearness Allowance rate
    from 45% to 49% only from 01.10.2002 cannot be said to be
    arbitrary or in violation of the terms of the settlement.
  20. The main source of finance of the Electricity Board is the
    State Government; the Board is run by the State Government.
    Unless the funds are provided by the State Government, the
    14
    Electricity Board would not have sufficient funds of its own to pay
    the wages and the revised Dearness Allowance to its employees.
    Considering the financial difficulties which the State Government
    was facing, the revision of the Dearness Allowance from the above
    said dates at above said rate cannot be said to be arbitrary or
    without any reason.
  21. While considering the grievance of wage structure or
    Dearness Allowance, the importance of considering the financial
    implications while providing benefits to employees has been noted
    by the Supreme Court in number of judgments. The Supreme Court
    in Workmen of Gujarat Electricity Board, Baroda v. Gujarat
    Electricity Board, Baroda (1969) 1 SCC 266 while dismissing the
    appeal preferred by the workmen, has confirmed the view taken by
    the Tribunal which rejected the demand of the employees of the
    Board for Dearness Allowance that it should be fixed with the scale
    prescribed for the Ahmedabad Mill Owners’ Association on the
    ground that the Board does not have the capacity to meet the
    additional expenditure that would have to be incurred if such
    demands are acceded to.
  22. The Supreme Court in Bengal Chemical & Pharmaceutical
    Works Ltd. v. Its Workmen [1969] 2 SCR 113 after referring to
    Kamani Metals & Alloys Ltd. v. Their Workmen [1967] 2 SCR
    463 has laid down that one-hundred per cent neutralisation is not
    advisable as it will lead to inflation and therefore, dearness
    15
    allowance is often a little less than one-hundred per cent
    neutralisation. Explaining the purpose of Dearness Allowance and
    that it should depend upon the ability of the employer to bear such
    burden, the Supreme Court held as under:-
    “1. Full neutralization is not normally given, except to the very
    lowest class of employees.
  23. The purpose of dearness allowance being to neutralise a
    portion of the increase in the cost of living, it should ordinarily
    be on a sliding scale and provide for an increase on the rise in
    the cost of living and a decrease on a fall in the cost of living.
  24. The basis of fixation of wages and dearness allowance is
    industry-cum-region.
  25. Employees getting the same wages should get the same
    dearness allowance, irrespective of whether they are working as
    clerks or members of subordinate staff or factory workmen.
  26. The additional financial burden which a revision of the wage
    structure or dearness allowance would impose upon an
    employer, and his ability to bear such burden, are very material
    and relevant factors to be taken into account …………

[underlining added]

” In T.N. Electricity Board v. R. Veerasamy and Ors.
(1999) 3 SCC 414 which has been relied upon by the respondent,
in which TNEB itself was the appellant, the Supreme Court while
dealing with the prospective application of a pension scheme
observed that financial constraint is a valid ground for introducing
a cut-off date and took note of the financial burden that the Board
will have to borne if the scheme would be made effective
retrospectively. In State of Punjab and Others v. Amar Nath Goyal and
Others (2005) 6 SCC 754, the Supreme Court negatived the
contention of the employees that the decision of the Central
16
Government/State Governments to limit the benefit only to certain
employees after calculating the financial implications thereon, was
irrational or arbitrary and held as under:-
“28. ………the final recommendations of the Pay Commission
were not ipso facto binding on the Government, as the
Government had to accept and implement the recommendations
of the Pay Commission consistent with its financial position. This
is precisely what the Government did. Such an action on the part
of the Government can neither be characterised as irrational,
nor as arbitrary so as to infringe Article 14 of the Constitution.” It is within the power of the Board to set a cut-off date for
payment of revised Dearness Allowance keeping in view its
financial constraints. Moreover, the settlement agreement and the
decisions taken by the Board in the Board Proceedings are to be
harmoniously construed. Having regard to the financial difficulties
which the State Government was facing, appellant-Board being a
State Government undertaking, decided to adopt the State
Government’s revised Dearness Allowance at the same rate and
from the same date. In view of extremely difficult financial
situation, not only the State Government employees but all the
employees of various other corporations were granted revised
Dearness Allowance at the rate of 49% only w.e.f. 01.10.2002 and
52% w.e.f. 01.07.2003. The respondent(s) union cannot insist for
revision of Dearness Allowance at a higher rate than what was
being paid to the State Government employees. Mr. C.K. Chandrasekhar, learned counsel for respondent(s)
submitted that as per Clause 5 of the settlement dated
17
08.07.1998, Dearness Allowance rates will be revised twice in a
year taking into account the variations in the previous twelve
months average of the All India Consumer Price Index numbers
adopting the same formula as followed by the State Government
and based on the same, the employees were periodically given
revision of Dearness Allowance in every six months without any
deviation on par with Central Government Dearness Allowance by
applying the State Government formula. It was submitted that B.P.
(FB) No.58 dated 18.07.1998 issued by the Board to pay Dearness
Allowance only on par with the State Government and based on
the same revising the Dearness Allowance from 45% to 49% from
01.10.2002 instead of giving effect from 01.01.2002 was contrary
to the settlement dated 08.07.1998. It was submitted that in
BP(FB) No.58 dated 18.07.1998, the Board has unilaterally altered
the terms of the settlement and even though All India Consumer
Price Index was revised and Dearness Allowance increased from
45% to 49% with effect from 01.01.2002, the Board’s unilateral
action is contrary to the terms of the settlement. It was urged that
instead of following the formula for Dearness Allowance based on
All India Consumer Price Index, the Board’s action in restricting the
payment from 01.10.2002 following State Government order in
G.O. No.346 Finance Department dated 21.10.2002 is contrary to
the binding settlement dated 08.07.1998. As per Clause 3 of the
Board Proceeding BP(FB) No.58 dated 18.07.1998, Dearness
18
Allowance will be sanctioned to the employees of the Board as
granted by the State Government to their employees at the same
rate and from the same date. Based on the same, the employees
were periodically given revision of DA in every six months without
any deviation by applying the State Government formula, at the
same time, it was on par with the Central Government dearness
allowance. There is no merit in the contention that by BP (FB) No.58
dated 18.07.1998, the Board has unilaterally altered the terms of
settlement between the parties. On perusal of Board’s proceeding
BP (FB) No.58 dated 18.07.1998, it is seen that Clause 2 of the
Board proceedings inter alia provides for various other terms like
work norms, retrenchment etc. It is not the case of the
respondent(s) union that those terms of the settlement were not
acted upon. The respondent(s) union are not right in taking one
clause from the Board proceeding dated 18.07.1998 and
contending that in so far as payment of Dearness Allowance is
concerned, the Settlement dated 08.07.1998 has been unilaterally
altered. It is pertinent to note that the respondent(s) have not
challenged that portion of the Board’s proceeding BP(FB) No.58
dated 18.07.1998; the respondent(s) cannot approbate and
reprobate the Board Proceedings dated 18.07.1998. Therefore, the
contention that revision of Dearness Allowance as granted by the
19
State Government to their employees is the unilateral alteration of
the terms of settlement lacks merit. Contention of the respondent(s) is that the employees of the
appellant-Board are not State Government employees and they
cannot be treated on par with the State Government employees. It
is not the contention of the appellant-Board that the employees of
the Board are to be treated on par with the State Government
employees nor the same is the issue for consideration before us. It
is not disputed that Board is run by the State Government and
unless the funds are provided by the State Government, the
Electricity Board would not have adequate funds of its own to pay
the wages. In that factual scenario, the decision of the Board to
adopt the rate of Dearness Allowance as granted by the State
Government cannot be said to be arbitrary. The learned Single Judge as well as the Division Bench
proceeded under the erroneous footing that the issue has been
covered by the orders of the High Court issued in the two batches
of W.P. Nos.8574-8578 of 1992 and W.Ps. No.10474 of 1999 etc.
The orders in those batch of writ petitions were only against
crediting of the arrears of Dearness Allowance sanctioned. After
referring to the earlier judgment in W.P. Nos.8574-8578 of 1992
dated 16.10.1992 and W.Ps. No.10474 of 1999 dated 11.08.1999,
the High Court held that “there is no stipulation in the settlement
that the arrears of Dearness Allowance for the past period would
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be credited to the General Provident Fund account of the individual
employee and in the absence of any stipulation in the settlement,
it is not open to the Board to credit arrears of Dearness Allowance
for the earlier period to the credit of General Provident Fund
account of the respective employee unless individual employee
gives the written consent”. The orders of the High Court in those
earlier writ petitions were only against crediting of the arrears of
the Dearness Allowance in the respective provident fund account
of the employees, wherein, the court directed the Board to pay
arrears in cash and restrained the Board from deducting any
arrears of the Dearness Allowance and crediting the same into the
General Provident Fund account of the workmen. Of course, in the earlier batch of writ petitions i.e. Writ
Petition Nos.8574-8578, the High Court inter-alia held that the
Board cannot unilaterally transgress from the terms of the
settlement and observed as under:-
“The settlement, as long as it is in force, will govern both the
parties. One of the parties cannot unilaterally transgress the
terms of the agreement or ignore the same. Caluse-4 referred to
above does not enable the respondent to make the payment in
the mode adopted by the Government. Clause-4 only directs
that the formula which is followed by the Government should be
adopted by the Board and that is only for the purpose of
calculating the dearness allowance on the basis of the Price
Index and nothing more than that. Hence, the contention that
the respondent is bound to adopt the method followed by the
Government for payment is without any substance.” The learned Single Judge as well as the Division Bench did
not keep in view that in the present dispute, settlement dated
08.07.1998 was followed by BP(FB) No.58 dated 18.07.1998 which
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clearly stipulates that the Dearness Allowance would be paid to
the employees of the Board as granted by the State Government
to its employees. It is pertinent to note that the representation of
respondent-CITU dated 12.07.2002 was rejected by the Board vide
order dated 13.09.2002 which refers to BP(FB) No.58 dated
18.07.1998 to the effect that the revised Dearness Allowance
would be sanctioned to the employees of the Board as granted by
the State Government to their employees at the same rate and
from the same date. The learned Single Judge and the Division
Bench erred in not considering the matter in the proper
perspective and erred in holding that the issue has been covered
by the earlier judgment in Writ Petition No.10474 of 1999 dated
11.08.1999. The learned Single Judge and the Division Bench did not keep
in view the terms of the Settlement and the Board Proceeding
BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness
Allowance would be revised on par with the State Government
employees and that it has been consistently followed by the
appellant-Board. The High Court erred not keeping in view the
extremely difficult financial position of the State Government and
the Board and also the additional financial burden which would be
imposed upon the appellant-Board if the demands of the
respondent(s)-union are acceded to. The High Court, in our view,
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was clearly in error in allowing the writ petition and the impugned
judgment cannot be sustained and liable to be set aside. In the result, the impugned judgments of the High Court in
W.A. No.497 of 2015 and W.A. No.1166 of 2015 dated 27.03.2015
and 21.08.2015 respectively are set aside and these appeals are
allowed. No costs.
………….……………………….J.
[R. BANUMATHI]
……………………………..J.
[INDIRA BANERJEE]
New Delhi;
February 13, 2019
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