Chandigarh, September 1, 2026: The Punjab Government has approached the Supreme Court challenging the Punjab and Haryana High Court’s August 3, 2026 judgment concerning Dearness Allowance (DA) and Dearness Relief (DR) for state government employees and pensioners.

In its Special Leave Petition (SLP), the Punjab Government has maintained that it is willing to ensure salary parity with comparable Central Government employees, but has argued that parity should be assessed on the basis of actual total salary and take-home pay rather than by mechanically matching the Central Government’s DA percentage.

The state has offered to increase DA wherever necessary to ensure that Punjab employees receive salary parity in absolute terms with analogous Central Government categories.

Punjab Says Employees Already Earn Higher Salaries in Several Categories

The Punjab Government has placed comparative salary figures before the Supreme Court, arguing that employees in several representative categories are already receiving higher aggregate salaries than their Central Government counterparts at the existing 42% DA.

For example, the state has cited the following comparisons:

• Clerks: Punjab basic pay is ₹38,600, with total emoluments of ₹54,812 at 42% DA, compared with ₹36,960 for the corresponding Central category at 60% DA.
• Drivers: Punjab basic pay is ₹28,600 and total emoluments are ₹40,612, compared with ₹36,960 for the corresponding Central category.
• Stenographers: Punjab basic pay is ₹39,700 and total emoluments are ₹56,374, compared with ₹47,360 for the Central category.
• ETT Teachers: Punjab basic pay is ₹47,600 and total emoluments are ₹67,592, compared with ₹65,760 for the Central category.
• Constables: Punjab basic pay is ₹38,600 and total emoluments are ₹54,812, compared with ₹36,960 for the corresponding Central category.

According to the state’s submission, Punjab’s total emoluments in these five categories are already higher than the corresponding Central Government salaries, with the difference ranging from approximately ₹1,832 to ₹17,852 per month.

The government has argued that the DA percentage cannot be considered separately from the basic salary because DA is calculated as a percentage of basic pay.

Punjab Challenges Mechanical Matching of Central DA Rate

The state has argued that mechanically increasing Punjab’s DA to match the Central Government’s percentage could create a significantly higher overall salary because Punjab’s basic pay is already higher in several cadres.

For instance, Punjab has pointed out that a Clerk or Constable with a basic pay of ₹38,600 would receive total emoluments of approximately ₹61,760 if the DA rate were increased to 60%. This would be substantially higher than the cited Central Government aggregate of ₹36,960.

The Punjab Government has therefore told the Supreme Court that total salary package, including basic pay and DA, should be the appropriate basis for determining parity.

Punjab Pay Structure Higher in Several Cadres

The state has also relied upon differences between Punjab’s pay structure and the Central Government pay structure.

According to the government’s submission, the Sixth Punjab Pay Commission revised state pay using a multiplication factor of 2.59, rising to 2.72, while the Seventh Central Pay Commission adopted a factor of 2.57.

Punjab has argued that this has resulted in higher basic pay for state employees across several parts of the pay matrix.

The government has therefore maintained that applying the Central DA percentage directly to Punjab’s higher basic-pay structure would not necessarily result in genuine salary parity.

Punjab Says Salary and Pension Expenditure Takes 51% of Revenue

A major part of Punjab’s argument before the Supreme Court relates to the state’s financial position.

According to material compiled by the Cabinet Sub-Committee, expenditure on salaries and pensions accounts for approximately 51% of Punjab’s revenue receipts, compared with an all-India average of around 38%.

The state has further stated that committed liabilities, including interest payments, account for approximately 82% of revenue receipts.

Punjab has argued that fully aligning its DA with the Central Government rate would create an additional recurring financial burden of approximately ₹6,500 crore annually.

The government has stated that an 18-percentage-point increase in DA would raise salary and pension expenditure from approximately 52% to 57.5% of revenue receipts.

According to the state, the financial impact must be considered while determining the rate and timing of DA payments because recurring expenditure on salaries, pensions and DA directly affects the funds available for schools, hospitals, infrastructure, development and other public services.

Punjab Challenges High Court Order on DA and Arrears

The Punjab Government has challenged the High Court’s direction requiring payment of pending DA/DR instalments to state employees and pensioners at rates applicable to All India Services officers serving in Punjab.

The High Court had also directed the release of pending amounts within a fortnight and provided for 6% simple interest in case of default. It had further quashed the Liquidation Plan to the extent that it staggered payment of admitted arrears of approximately ₹14,191 crore.

Punjab has now sought relief from the Supreme Court against these directions.

Punjab Says Its Rules Do Not Mandate Automatic Central DA Parity

The state has argued that Punjab has its own statutory framework governing salaries and service conditions.

According to the government, the Punjab Civil Services (Revised Pay) Rules, 2021, framed under the proviso to Article 309 of the Constitution, do not prescribe a fixed DA percentage, Central Government index, automatic formula or automatic linkage to the DA rate announced by the Centre.

The government has therefore maintained that there is no automatic statutory requirement for Punjab to adopt the Central Government’s DA percentage.

Punjab has cited its previous DA revisions, stating that DA was increased from:

• 17% to 28% in November 2021
• 28% to 34% in October 2022
• 34% to 38% in December 2023
• 38% to 42% in November 2024

The state has argued that although the Central DA rate has historically been considered as a reference point, Punjab has never been under an automatic statutory obligation to match every Central revision on the same date and at the same percentage.

Cabinet Decision Did Not Create Automatic DA Obligation, Says Punjab

Punjab has also challenged the High Court’s interpretation of the Sixth Punjab Pay Commission recommendations and the Cabinet decisions and communications issued in June 2021.

The state has argued that the subsequent Punjab Civil Services (Revised Pay) Rules, 2021 did not incorporate an automatic mechanism linking Punjab DA to the Central Government’s DA.

Punjab has highlighted the use of terms such as “may accept” and “may endeavour” in the relevant government decisions.

According to the state’s argument, these expressions indicate policy intent rather than an unconditional statutory obligation.

The government has further submitted that the Cabinet decision was never incorporated into the statutory Rules through an amendment and therefore cannot be treated as a permanent statutory requirement.

Punjab Questions Comparison With IAS Officers

Another major issue raised before the Supreme Court is the comparison between Punjab Government employees and All India Services officers for determining DA parity.

The state has argued that DA for All India Services officers is determined by the Central Government under Union law, while Punjab Government employees are governed by the state’s own statutory framework.

Punjab has therefore contended that the DA applicable to IAS officers cannot automatically become a mandatory benchmark for all state employees.

The state has also argued that treating the Central DA rate as compulsory for state employees could affect the constitutional division of powers between the Union and the states.

₹14,191 Crore DA Arrears Under Liquidation Plan

The second major issue before the Supreme Court concerns admitted DA/DR arrears of approximately ₹14,191 crore, primarily relating to the period between 2016 and 2021.

Punjab has maintained that it is not denying the admitted arrears. Instead, the government formulated a Liquidation Plan to clear the liability in phases.

The plan provides for payment over five financial years, with an age-based instalment mechanism for pensioners intended to prioritise older pensioners.

The Council of Ministers approved the Liquidation Plan on February 13, 2025, and the government issued the order implementing it on February 18, 2025.

Punjab has argued that payments have already been made under the plan and that employees and pensioners would not lose their admitted dues. The dispute, according to the government, concerns the timing and manner of payment.

Punjab Says ₹14,191 Crore Cannot Be Paid Within 14 Days Without Legislative Process

The state has challenged the High Court’s direction to release the entire pending amount within a fortnight.

Punjab has argued that the approximately ₹14,191 crore liability is close to three months of the state’s annual salary and pension expenditure, which it has placed at around ₹58,064.05 crore according to the Revised Estimates for FY 2025-26.

The government has further submitted that withdrawing such a large amount from the Consolidated Fund of the State requires compliance with the constitutional procedure involving supplementary expenditure, grants, legislative approval and appropriation.

Punjab has therefore argued that the executive cannot simply withdraw the entire amount without following the constitutionally prescribed financial process.

Punjab Challenges 6% Interest and Restrictions on State Expenditure

The state has also challenged the High Court’s direction regarding 6% simple interest in case of default.

Punjab has argued that the interest direction treats the disputed DA differential as an already accrued liability even though the higher DA rate was not, according to the state’s position, fixed under the applicable statutory Rules.

The government has also challenged the High Court’s direction restricting “unproductive expenditure”, arguing that the term is undefined and that such a direction interferes with the executive’s authority over budgetary and fiscal policy.

Punjab Seeks Stay on High Court Judgment

The Punjab Government has asked the Supreme Court to stay the operation and implementation of the August 3, 2026 High Court judgment during the pendency of its SLP.

Alternatively, the state has sought a stay on directions concerning DA/DR payments, interest, restrictions on expenditure and the quashing of the Liquidation Plan.

At the same time, Punjab has reiterated that it is willing to continue disbursing admitted arrears under the existing Liquidation Plan.

The state has also offered before the Supreme Court to increase DA to the extent necessary to provide parity in absolute take-home salary with analogous Central Government categories.

The Supreme Court’s decision will determine how DA parity for Punjab Government employees and pensioners is to be assessed, and whether the state’s existing statutory framework and fiscal capacity can be considered while determining the rate and timing of DA and arrears payments.