In Brief
The Tamil Nadu Electricity Board (appellant) appealed against High Court orders requiring it to pay increased Dearness Allowance (DA) to employees at Central Government rates from January 2002. The Supreme Court held that the Board's obligation to pay DA was governed by a 1998 Settlement and Board proceedings requiring payment at the rate granted by the State Government, not the Central Government. The Court found the Board consistently followed this agreed formula for years and was entitled to adopt State Government rates (49% from October 2002) given the State's severe financial difficulties. The Court held financial position is a material factor in wage revisions and the Board did not unilaterally alter the settlement. The High Court's judgment was set aside and the appeals allowed.
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