Court warns of 6% interest penalty if payment not made by end of this month

In a major setback to the Aam Aadmi Party (AAP) government in Punjab, the Punjab and Haryana High Court has ordered the release of pending Dearness Allowance (DA) to nearly 800,000 state employees and pensioners within 15 days. The court made it clear that if payment is not made by the end of this month, the government will also have to pay 6% interest.

Employees have been suffering delays in DA payments since 2023. A detailed written order from the court is still awaited. The government has consistently opposed the DA payment throughout the case, and it is therefore likely to challenge the High Court's decision in the Supreme Court.

'Court Rejects Government's Arguments'

During the hearing, the Punjab government told the court that it had not accepted the report dated June 18, 2021. The government also informed the court that a new scheme had been presented under the report dated February 18, 2025. The state government further argued that Punjab provides its employees with higher pay scales compared to other states, and therefore there was no need to provide DA separately.

Advocate Sunny Singla, representing the employee organisations, argued that the Punjab government is bound to provide Dearness Allowance to its employees and pensioners in line with the central government's pattern. He said that IAS, IPS, IFS and judicial officers are being given DA as per the central government, while other employees and pensioners are being deprived of it.