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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Supreme Court State Government is not under any obligation to always adopt Dearness Allowance as revised by Central Government MANU/SC/0194/2019 - (13 Feb 2019) </td> </tr> <tr> <td align="left" valign="top">Tamil Nadu Electricity Board Vs. TNEB-Thozhilalar Aykkiya Sangam</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">Instant Appeals arise out of the judgment 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. 1st January, 2002 to the members of Respondent(s)-union on par with the Central Government employees. Present 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 
Question involved in present case is Pursuant to the Memorandum of Settlement dated 8th July, 1998 recorded under Section 18(1) of the Industrial Disputes Act, 1947 and BP (FB) No. 58 dated 18thJuly, 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 1st January, 2002 and 52% from 1st July, 2002. 
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 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. 
The High Court, 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. 1st October, 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 Allowance to the employees of the State Government w.e.f. 1st October, 2002. In view of 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. 
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 1st October, 2002 cannot be said to be arbitrary or in violation of the terms of the settlement. 
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 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. 
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. 
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 and the Division Bench did not keep in view the terms of the Settlement and the Board Proceeding BP(FB) No. 58 dated 18th July, 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 impugned judgments of the High Court are set aside. Appeals are allowed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Dearness Allowance, Direction, Validity</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>