DA arrears: Punjab moves SC, says not ‘lawfully possible’ to pay Rs 14,191 cr in 15 days

Seeking the top court’s leave to appeal against the HC judgement, Punjab has argued that payment of the entire amount would have serious fiscal and constitutional implications. The State has also contended that money cannot be withdrawn from the Consolidated Fund without following the prescribed appropriation process.

“Expenditure of this order cannot be met without a supplementary statement of expenditure under Article 205(1)(a), a demand for a grant, which by Article 203(3), may be made only upon the recommendation of the Governor, the assent of the House under Article 203(2), and an Appropriation Act under Article 204, without which, by Article 204(3), no money may be withdrawn from the Consolidated Fund of the State at all,” read the plea. It adds that “every one of those steps presupposes a sitting of the Legislative Assembly summoned by the Governor under Article 174.”

A division bench of the high court had asked the State to release, within a fortnight, every pending installment of DA and DR “to every State employee and pensioner at the rates applicable to officers of the All India Services serving in connection with the affairs of the State”. It had also directed that the State would have to pay 6 per cent simple interest in case of default. It also “restrained” the State government “from ‘unproductive” expenditure until all dues are cleared. The high court had also quashed a liquidation plan submitted by the State government “as it staggers the admitted arrears of approximately Rs 14,191 crore.”

The State, in its plea, said the directions produce a “disproportionate outcome”.

In its plea, the Punjab government argued that its rules do not mandate payment of DA to State employees at the rate fixed by the Centre for its employees. It said the Punjab Civil Services (Revised Pay) Rules, 2021, prescribe no specific index, formula, rate or interval for DA and leave the matter to the State government’s discretion.

It further submitted that the State pays DA to All India Services officers at the central rate because they are governed by Union law and the State has no power to determine their service conditions.

It pointed out that the Sixth Punjab Pay Commission had revised the State’s pay by a multiplication factor of 2.59, rising to 2.72, against the 2.57 adopted by the Seventh Central Pay Commission, “so that Punjab’s basic pay is higher than the corresponding Central basic pay across most of the matrix”. It said that DA being a percentage applied to basic pay, “an identical percentage upon a higher base does not produce an identical emolument but a larger one.”

It submitted that “in five categories — clerk, driver, stenographer, ETT teacher, and constable — of the seven, the Punjab employee already draws more at the existing 42 per cent (DA) by between Rs 1,832 and Rs 17,852 a month” and it was only in two categories – Superintendent and Police Inspector – that it fell short.

The plea said the State “offered upon oath to cure it, undertaking in principle to raise DA so far as required to extend to its employees parity with analogous Central categories in absolute carry home salary…Yet the impugned judgment did not advert to the undertaking, even though the application was on the file from 28.07.2026, six days before pronouncement.”

On the fiscal stress that the order puts on the state, it said, “upon the material compiled by the Cabinet Sub-Committee constituted on 07.04.2026, committed expenditure upon salaries and pensions is approximately 51% of the petitioner’s revenue receipts, the highest among the major States against an all India average of about 38%, and committed liabilities including interest consume about 82%”. It adds that the “impugned order does not remedy an under payment, it compounds an over payment, from one of the fiscally most constrained major State in India.”

Its aid that clearing Rs 14,191 crore in one go would amount to roughly three months of the State’s entire wage and pension bill. “Such an expenditure”, according to the government, “cannot be undertaken without disturbing welfare and other essential spending” and “cannot be withdrawn from the Consolidated Fund without following the constitutional appropriation process”.

The government said its Cabinet had approved a liquidation plan in February 2025 under which arrears of around Rs 14,191 crore were to be paid in phases over five financial years, but this was quashed by the HC.

The plea also challenges the high court’s direction restraining the state from incurring unproductive expenditure, arguing that no such expenditure was pleaded or supported by evidence before the court.