In Brief
Tamil Nadu Electricity Board employees sought payment of Dearness Allowance at Central Government rates (49% from January 2002, 52% from July 2002), contending the Board should not lag behind. However, the Board followed a settlement agreement stipulating that DA would match State Government rates at the same rate and date. Given the State's severe financial crisis from 2001–2002, the Board adopted State rates (45% then 49% from October 2002). The Supreme Court held the Board entitled to follow the agreed formula, as wage revision depends on employer capacity. The settlement had been consistently followed, and financial constraints justified deferring the increase. The Court reversed the High Court's orders and dismissed the employees' appeals.
The lawyer headnote and full judgment text are available to registered users.